I can’t speak for the rugs you viewed, but some products take literally hundreds of man hours to make.
My partner recently picked up some fine crochet bedspreads. These intricate bedspreads each must have consumed multiple weeks of labour. I understand this is also true of hand crafted Chinese and Afghan rugs - around a month per square metre for an Afghan.
In contrast, those basketball shoes you collect are mass produced and apparently consume around 3 hours of direct labour. You could have many tens or even hundreds of those basketball shoes for the labour value of a moderately size Afghan rug.
Creating a single basketball shoe from an existing template takes three hours. Coming up with that design and all the associated expenses (marketing etc) plus the tooling needed to produce the shoe consumes much more labor and accounts for the vast majority of the shoe's cost.
Hand-woven rugs, on the other hand, are largely unique in design and created by a single person.
It would be case by case for me. In a sense, all of them stem from identity. Another lens to explore this is effects: what first, second third order effects would a sneaker collection have versus minimalism? Some are more functional than others.
Hey HN - long-time lurker and decided to start writing essays (inspired by PG and many of y'all as well). This one came from months of joking with my friends about different "fancy rug" problems which led me to think about my own "fancy rugs". Enjoy!
I have to ask... why the extra lettuce? At In-N-Out I sometimes ask for less lettuce because I feel like it's unnecessary filler compared to the other ingredients, lol. Maybe they've just been giving my unused lettuce to you...
Not OP but I also order extra lettuce on burgers. Lettuce is free "crunch", basically. Crunch is good in general - and especially necessary on burgers, which otherwise tend to sliminess.
Merging all the dimensions of the question into Value as a function of Cost seems part of the challenge.
Value is such a subjective concept. You finally get down to "We all need things transcending pure utility, connecting us to stories bigger than ourselves." at the end of the post.
Even if "bigger than ourselves" takes on some explicit religious angle--thinking the Amish here--there is still copious room to dislike the fact that the Amish are rolling around in "them new-fangled buggies" instead of being on foot like they were in the Good Book.
I think part of the Amish line of thought is instead of randomly and quickly adopting technology/growth a community should take time to understand what the impacts are of using them.
Some people think Amish don't use electricity, but that's not true. You'll find quite a few of them with things like solar panels and LED lights. These things tend to have very long lifespans and no grid connections limiting needs from outsiders.
Interesting read, I'm surprised nobody has brought up Pejman Nozad who is the owner of one of the more popular rug shops. https://pear.vc/team/pejman-nozad/
His money doesn't come from the rug shops. He sells rugs, but the rug shop was where he used to meet investors and founders and make investments. I assume the rug shop in Menlo Park has a similar background.
This is not really Veblen situation. A lot of these are primarily money laundering outfits, the artificially high prices, are simply a means of converting cash into bank deposits. Similar schemes exist in art, sculptures, and jewelry. There are some mom and pop type stores that are legit and some of the money goes to actual artists who make these but the ones in Palo Alto (or similarly unattainable rent neighborhood rug shops), are not that.
That’s internet lore. Nobody is buying a $50,000 rug with cash. If any of the people were, the rug guy wouldn’t have a place to bank. Reality is you can move a few rugs a month and make ok money.
There’s a market for these types of businesses. In my area there’s a dude with a company that sells and maintains $50-150k+ Christmas light and decoration displays. He has ~100 customers. The men’s clothing place I go to is a group of guys hanging out having a good time - it doesn’t look busy, but their 4-5 customers a day are dropping $3-10k/visit.
Stores like that are “laundering” money like the rest of the commercial real estate world… by playing games with various (legal) tax schemes. They are no more illegal than a Hampton Inn or AirBnb guy.
Real money laundering places are restaurant/bar, laundromats, arcades, and low income residential.
Tax schemes are there to save taxes using legalism loopholes, these places are happy to pay the taxes on "cash" purchases to bank the proceeds. Nobody is buying 50K rugs is correct, most of the transactions are self reported for the purpose of paying taxes and depositing funds. IRS and fincen are not in it together, in fact IRS encourages people to pay taxes on ill gotten gains.
This really made me think - and not just because I went to Artsy Rugs last week and talked with the someone there about a rug that I bought at an estate sale and which I would like more information about ( http://provenancevault.com/treasures/12x16-persian-rug-ajrk8... ) but also because I've been moving to a new house the last few months and going through a lot of the possessions I've accumulated, deciding what to keep (definitely things with strong sentimental value or family history) and what to get rid of (a lot) but also what it means to have things. They can be both a joy and a connection with the past as well as a burden.
And because of that, I started building this website https://provenancevault.com/treasures/discover (it's probably not ready to introduce widely yet, but relevant to this conversation)
I always assumed that the rug shops were for money laundering.
Palo Alto may buy a lot of rugs, but it seems like one shop should be sufficient to supply the entire city.
Though now I am imagining Palo Alto rolling out its new, grand vision for commerce: to become the Rug Shop Capital of the Greater Bay Area. In cooperation with Stanford Business School's new program in Rug Store Management, and the department of Rug and Textile Studies.
Rug stores also seem to be perpetually "going out of business", but I don't know if this is actually the case and why.
Very much appreciated the essay. The abstract / meaning / story component of many current-day products (value propositions) these days is unbelievable. I’d like to understand it better.
Basically, if you want to create a successful product, you have to offer some kind of relatable and attractive story for people to buy. And it is not the same thing as producing a good product per se. I’m struggling with that. And see great many people around struggling too.
It’s thirteen years old now (2012), but there’s a fascinating old Forbes article (from when, I think, it was a respectable publication) about the cross-pollination between Palo Alto’s rug dealers, and Palo Alto’s venture capitalists:
I thought those stores are basically hobbies for the wealthy local commercial landowners that own the building(s). They may anecdotally also be money laundering. They don't need to actually be a profitable business. The only cost to run it is basically lost rent for that space.
There are so many of them that I've always kinda suspected this, yea. I maybe-literally never saw anyone in any of them across a few years prior to COVID (despite working near enough to two that I saw them multiple times a day). But at the prices they go for I suppose they might only need to sell ~two a month if they got them for dirt cheap somehow, and owned the property or were grandfathered into extremely low rent? Or one person furnishing a mansion a year.
Sure, let's take a rug as an example. I don't think there is one breakpoint. I think there are a set of axis of quality you invest into, roughly sequentially, as you go up the price scale of objects:
- $50 - Something rug-shaped exists
- $100 - Durability
- $200 - Materials
- $500 - Comfort and design
- $1000 - Basic craftsmanship
- $2000 - Refinement of craft
- $5000 - Artistry & identity
- $10000 - Tradition
- $20000 - Mastery
- $50000 - Rarity/historical importance
- $100000+ - ?
Because most people don't cross-shop $20k rugs and $200 rugs, most people are focused on one or two aspects around their personal budget. The essayist mentioned being amazing by the craftsmanship and artistry (see scale above). A broke college student might just want something that holds up in their dorm room and see what materials it's made out of and comfort as meaningless and abstract. And a billionaire shopping for a rug for their office might take everything other than rarity/historical importance as a given and just be thinking about that.
I think there is a large cognitive bias to consider everything you can easily afford "tangible and important improvements" and everything you can't as "abstract"!
I realize the OP was using rugs as a metaphor, but they are works of art, just as much as samurai swords would be for Japan.
Rugs were prized in nomadic and semi-nomadic cultures like Iran, where all your valuables had to be mobile. Traditional rugs require many, many hours of craftsmanship and are indeed works of art with deep cultural resonance. Turkmenistan even features a rug on its national flag.
Sadly, also a dying art despite its millennia of history as most rug weavers in Iran or Turkey have better options in factories or jobs. For the moment dirt-poor areas of Afghanistan, Pakistan or Tibet still weave, but the future is machine-woven rugs from China, possibly with machines deliberately designed to mimic the imperfections of hand-woven ones.
I can’t speak for the rugs you viewed, but some products take literally hundreds of man hours to make.
My partner recently picked up some fine crochet bedspreads. These intricate bedspreads each must have consumed multiple weeks of labour. I understand this is also true of hand crafted Chinese and Afghan rugs - around a month per square metre for an Afghan.
In contrast, those basketball shoes you collect are mass produced and apparently consume around 3 hours of direct labour. You could have many tens or even hundreds of those basketball shoes for the labour value of a moderately size Afghan rug.
Mentioning the man hours would make sense, if the ones producing the product taking the majority cut from the purchase price.
Otherwise, it's more of a strategy to set a higher price tag, and the reseller and all the middleman taking all the extra revenues.
Creating a single basketball shoe from an existing template takes three hours. Coming up with that design and all the associated expenses (marketing etc) plus the tooling needed to produce the shoe consumes much more labor and accounts for the vast majority of the shoe's cost.
Hand-woven rugs, on the other hand, are largely unique in design and created by a single person.
Silk hand-woven rugs need no marketing at all in order to fetch absurdly large amounts of coins.
“Silk” is the marketing.
Plus nearly 2,000 years of accumulated marketing spend via the Silk Road and everything around it.
I wonder how many hours it would take to make a rug out of hundreds of disassembled basketball shoes.
Is there an unspoken assumption here that value is absolute and deviations pathological?
I can't understand how heirloom quality is abstract any more than say color scheme.
How is valuing a sneaker collection more abstract than valuing, say, minimalism or utilitarianism?
I've re-read the post multiple times, but I'm clearly missing something basic to allow comprehension.
It would be case by case for me. In a sense, all of them stem from identity. Another lens to explore this is effects: what first, second third order effects would a sneaker collection have versus minimalism? Some are more functional than others.
Hey HN - long-time lurker and decided to start writing essays (inspired by PG and many of y'all as well). This one came from months of joking with my friends about different "fancy rug" problems which led me to think about my own "fancy rugs". Enjoy!
I have to ask... why the extra lettuce? At In-N-Out I sometimes ask for less lettuce because I feel like it's unnecessary filler compared to the other ingredients, lol. Maybe they've just been giving my unused lettuce to you...
Not OP but I also order extra lettuce on burgers. Lettuce is free "crunch", basically. Crunch is good in general - and especially necessary on burgers, which otherwise tend to sliminess.
Thanks for writing. This was an enjoyable read.
So in the spirit of this blog post what kind of rug did you make and where would you guess the audience/audience distribution falls on the graph?
Merging all the dimensions of the question into Value as a function of Cost seems part of the challenge.
Value is such a subjective concept. You finally get down to "We all need things transcending pure utility, connecting us to stories bigger than ourselves." at the end of the post.
Even if "bigger than ourselves" takes on some explicit religious angle--thinking the Amish here--there is still copious room to dislike the fact that the Amish are rolling around in "them new-fangled buggies" instead of being on foot like they were in the Good Book.
I think part of the Amish line of thought is instead of randomly and quickly adopting technology/growth a community should take time to understand what the impacts are of using them.
Some people think Amish don't use electricity, but that's not true. You'll find quite a few of them with things like solar panels and LED lights. These things tend to have very long lifespans and no grid connections limiting needs from outsiders.
Indeed, and the infrastructure behind these are very communally owned.
I guess if the unit of group analysis stays small enough, they can avoid the https://en.wikipedia.org/wiki/Tragedy_of_the_commons .
Interesting read, I'm surprised nobody has brought up Pejman Nozad who is the owner of one of the more popular rug shops. https://pear.vc/team/pejman-nozad/
His money doesn't come from the rug shops. He sells rugs, but the rug shop was where he used to meet investors and founders and make investments. I assume the rug shop in Menlo Park has a similar background.
This is not really Veblen situation. A lot of these are primarily money laundering outfits, the artificially high prices, are simply a means of converting cash into bank deposits. Similar schemes exist in art, sculptures, and jewelry. There are some mom and pop type stores that are legit and some of the money goes to actual artists who make these but the ones in Palo Alto (or similarly unattainable rent neighborhood rug shops), are not that.
That’s internet lore. Nobody is buying a $50,000 rug with cash. If any of the people were, the rug guy wouldn’t have a place to bank. Reality is you can move a few rugs a month and make ok money.
There’s a market for these types of businesses. In my area there’s a dude with a company that sells and maintains $50-150k+ Christmas light and decoration displays. He has ~100 customers. The men’s clothing place I go to is a group of guys hanging out having a good time - it doesn’t look busy, but their 4-5 customers a day are dropping $3-10k/visit.
Stores like that are “laundering” money like the rest of the commercial real estate world… by playing games with various (legal) tax schemes. They are no more illegal than a Hampton Inn or AirBnb guy.
Real money laundering places are restaurant/bar, laundromats, arcades, and low income residential.
Tax schemes are there to save taxes using legalism loopholes, these places are happy to pay the taxes on "cash" purchases to bank the proceeds. Nobody is buying 50K rugs is correct, most of the transactions are self reported for the purpose of paying taxes and depositing funds. IRS and fincen are not in it together, in fact IRS encourages people to pay taxes on ill gotten gains.
What kind of dirty money do you believe these stores are laundering? What kind of illegal businesses/schemes are the source of it?
This really made me think - and not just because I went to Artsy Rugs last week and talked with the someone there about a rug that I bought at an estate sale and which I would like more information about ( http://provenancevault.com/treasures/12x16-persian-rug-ajrk8... ) but also because I've been moving to a new house the last few months and going through a lot of the possessions I've accumulated, deciding what to keep (definitely things with strong sentimental value or family history) and what to get rid of (a lot) but also what it means to have things. They can be both a joy and a connection with the past as well as a burden.
And because of that, I started building this website https://provenancevault.com/treasures/discover (it's probably not ready to introduce widely yet, but relevant to this conversation)
I always assumed that the rug shops were for money laundering.
Palo Alto may buy a lot of rugs, but it seems like one shop should be sufficient to supply the entire city.
Though now I am imagining Palo Alto rolling out its new, grand vision for commerce: to become the Rug Shop Capital of the Greater Bay Area. In cooperation with Stanford Business School's new program in Rug Store Management, and the department of Rug and Textile Studies.
Rug stores also seem to be perpetually "going out of business", but I don't know if this is actually the case and why.
Very much appreciated the essay. The abstract / meaning / story component of many current-day products (value propositions) these days is unbelievable. I’d like to understand it better.
Basically, if you want to create a successful product, you have to offer some kind of relatable and attractive story for people to buy. And it is not the same thing as producing a good product per se. I’m struggling with that. And see great many people around struggling too.
It’s thirteen years old now (2012), but there’s a fascinating old Forbes article (from when, I think, it was a respectable publication) about the cross-pollination between Palo Alto’s rug dealers, and Palo Alto’s venture capitalists:
https://www.forbes.com/sites/victoriabarret/2012/03/21/silic...
Love this (as someone with a love for rugs). Thanks for sharing.
I really love the recommended background music while reading this article. More blogs should adopt that - really quirky.
I thought those stores are basically hobbies for the wealthy local commercial landowners that own the building(s). They may anecdotally also be money laundering. They don't need to actually be a profitable business. The only cost to run it is basically lost rent for that space.
There are so many of them that I've always kinda suspected this, yea. I maybe-literally never saw anyone in any of them across a few years prior to COVID (despite working near enough to two that I saw them multiple times a day). But at the prices they go for I suppose they might only need to sell ~two a month if they got them for dirt cheap somehow, and owned the property or were grandfathered into extremely low rent? Or one person furnishing a mansion a year.
Sure, let's take a rug as an example. I don't think there is one breakpoint. I think there are a set of axis of quality you invest into, roughly sequentially, as you go up the price scale of objects:
- $50 - Something rug-shaped exists
- $100 - Durability
- $200 - Materials
- $500 - Comfort and design
- $1000 - Basic craftsmanship
- $2000 - Refinement of craft
- $5000 - Artistry & identity
- $10000 - Tradition
- $20000 - Mastery
- $50000 - Rarity/historical importance
- $100000+ - ?
Because most people don't cross-shop $20k rugs and $200 rugs, most people are focused on one or two aspects around their personal budget. The essayist mentioned being amazing by the craftsmanship and artistry (see scale above). A broke college student might just want something that holds up in their dorm room and see what materials it's made out of and comfort as meaningless and abstract. And a billionaire shopping for a rug for their office might take everything other than rarity/historical importance as a given and just be thinking about that.
I think there is a large cognitive bias to consider everything you can easily afford "tangible and important improvements" and everything you can't as "abstract"!
You might need to add a category for rugs that tie the room together. They're worth quite a lot.
What is the downward sloping arrow in those charts?
Enshitification. It's where the price goes up, but the quality actually goes down.
I was thinking more of something like mechanical watches - more expensive than a quartz watch and less accurate.
Those are the same as fancy rugs. A machine will make better rugs, but you're paying for the artisanal story, or whatever your abstract value is.
I appreciate the reading music, thanks.
I realize the OP was using rugs as a metaphor, but they are works of art, just as much as samurai swords would be for Japan.
Rugs were prized in nomadic and semi-nomadic cultures like Iran, where all your valuables had to be mobile. Traditional rugs require many, many hours of craftsmanship and are indeed works of art with deep cultural resonance. Turkmenistan even features a rug on its national flag.
Sadly, also a dying art despite its millennia of history as most rug weavers in Iran or Turkey have better options in factories or jobs. For the moment dirt-poor areas of Afghanistan, Pakistan or Tibet still weave, but the future is machine-woven rugs from China, possibly with machines deliberately designed to mimic the imperfections of hand-woven ones.
What a nice personal website! I like the quotes section, the essays section. It's cozy and personal.
Bro almost discovering Marx, Veblen and the others
Agreed. But don't be harsh, see xkcd's "Today's lucky 10,000": https://xkcd.com/1053/
They reference Veblen in the very first footnote.
...or marginal utility?