A multiplier is a very simple concept, it’s an added variable that either serves to increase or decrease a given value. When you benchmark between industries it’s not uncommon to establish revenue multipliers for mergers and acquisitions, for instance the purchase value in one industry may be x4 of revenue, and in another x12 of revenue. This is normally done by analyzing previous deals in the same industry, establishing a “normal” multiplier and then applying that to the present deal, with or without modifications. If there is a large discrepancy in market capitalization for the two, or growth estimates are vastly different, then adjustments may be made, if the companies are very similar, they may not.
Perhaps the multiplier that most will be familiar with is marketing. Now marketing in and of itself does not create tangible product value, for instance an Iphone does not get objectively better because it comes in a nice box. However, the nice box helps it appear higher value and quality due to playing with our perception. The bottle- and logo design of Coca Cola does not make the drink more refreshing, more healthy, or a host of other concrete product variables, however it does make it stand out on the shelf.
In a recent tweet, I wrote:
Game is a value multiplier, not a value creator, treat accordingly.
The reasoning behind this is quite simple, and comes from my analysis of the early seduction community argument that “only game matters”, summarized as, “one need not concern oneself with becoming interesting, dressing better, developing the right mindset, going to the gym or a myriad of other avenues of self-improvement, just buy whatever product I’m selling and you will become successful with women”. Perhaps the most obvious example of the flaws in this methodology was the program “The Pick-Up Artist” that aired on VH-1 some years ago, where it rapidly became clear that even personal coaching and training from Mystery in his methods, failed to improve those men who had the lowest value, much if at all. Those who did indeed become successful, were those men who were the male “She’s all that” versions, guys who were average or above average value, but who failed to display that value in some regard. Continue reading