“Intellectual property has the shelf life of a banana.” – Bill Gates
I was watching Shark Tank the other day and I got fired up.
The sharks were being pitched by a guy who was trying to sell them a patent and the intellectual property (IP) of a clothing technology called Technology Enabled Clothing but not letting them touch his $5M/yr business. Things got heated about the issue of IP and how it plays out in America today.
The capitalist icon shark, Kevin O’Leary defended the IP argument, saying that’s what makes America great. Another shark, Mark Cuban, exploded, saying this is exactly what is screwing American business – guys like Scott Jordan who own TEC file a patent then make all their money going around and killing small businesses that accidentally use his very obtuse technology patent.
I’m here to make a stand and give Mark Cuban a high five – effort and passion should be what drive this country, not litigation and imaginary restrictions.
Trust me, I’m a capitalist and a businessman, but I believe in creating value in certain ways. And instead of whining about it, I’m doing something about it.
Take My Ideas and Go Make A Million
As often as I can, I’m going to blog about ideas I have in the app, web, and marketing world. I’m going to do my best to lay it all out there, from start to finish, in hopes that any hungry business person takes that idea and makes millions of dollars. I’ll never ask for a penny or a shred of recognition. These ideas will sometimes be off the wall and sometimes be pretty straightforward. No matter what, they’ll be ideas that I believe in and would do myself if I had 200 more hours a week.
One thing I will promise you is that I will never, ever put anyone else’s idea up here unless they say it’s OK.
I urge you to comment on these posts with questions and point out all the holes in my ideas so that we can eventually create something that’s a winning idea.
And on that note, here’s an idea for you to chew on….
Application Arbitrage: Insider Trading 3.0
Ever wondered out how you can make money on the gold rush of apps? Better yet, ever wonder how you could make money without owning an app, developing an app, or knowing anything about apps? Well, then this model is for you.
Check out this company – http://www.appbackr.com/ and peruse what they’re doing. Like others out there, they’re creating a wholesale market for apps in order to help developers offset the steep cost of development by creating a margin for the investor in the order of 25-60%.
ABC Apps just spent 6 months developing this awesome iPhone app. It cost them $50,000 and they’re running out of money. They need to get some money fast so that they can start marketing the app.
Enter Johnny the Investor. Johnny will give ABC Apps $5,000 today in exchange for a set number of app copies, say 5,000, and will purchase them for $0.70 on the dollar. When those apps are then sold on the open market (Apple), Johnny gets the full retail price of $0.99 for every copy he “owns.” Johnny makes 29% on each app, thus making about $1,500 on his investment.
That’s the appbackr model. It’s working – lots of people are doing this and there is a large growth model in tact. Please note that in this example I didn’t take into account fees from Apple and Appbackr for simplicity sake.
The bottom line is that you can invest in apps using this system.
The problem is….it takes a long time to get your money back. Unless you’re the first investor, good luck with the return. You’re out a ton of money and just sitting on your hands until a risky investment pays off.
Control The Market, Make Millions
One of the most most blinding economic principles of markets in today’s world is that they are imperfect. There is lag, emotion, and countless other factors that impact supply and demand. In pretty much all wholesale markets, the only way to bridge the gap is to perform marketing. Duh.
But what if you controlled both? What if you controlled both the supply AND the demand? What if you could purchase 5,000 DVDs at wholesale price and then unload those 5,000 DVDs the very same day at retail price the way WalMart does?
Well, then you would be as rich as you could imagine. And guess what? NO ONE IS DOING THIS FOR APPS.
There are hundreds of websites out there getting hundreds of thousands of monthly visitors looking for apps. They’re looking for new games, utilities, whatever. Apple made it easy to build these sites by delivering a clean RSS feed out of their store and everyone capitalized on it. A few examples are:
And so on. Start doing reviews and your traffic increases and you make money. You’d be amazed at how quickly you can get traffic to these sites.
So let’s say you build one of these sites that focuses on Arcade Games for the iPhone. You focus all your energy on that site, getting all the correct RSS data and building reviews and getting the site rocking and rolling. Your traffic increases and you are kicking butt in SEO. You tag all your app links with Apple affiliate coding so that you’re making enough money to break even. You then start building in a marketing funnel with featured apps, email marketing, and targeted traffic direction.
This website funnel has one purpose – drive downloads of ONE app. More specifically, an Arcade Game. Everyone who comes to your site will want to download the app you’re promoting.
Now you have a website that’s humming along with 3-5,000 visitors a week and you’ve got everything in place. I know I glazed over a lot of the details of going from zero to 3,000 visits a week, but that’s another post.
Buy Low, Sell High
You see where I’m going with this? You now have a supply (developers) and controlled demand (a website that will guarantee you downloads of an app that you choose). You can go to developers and purchase a few thousand copies of their app, then turn around and tag your entire website to feature that one app. You sell all copies in 2 days and make a handsome margin.
Then you take the above model and template it across every app category, creating a colossus of a link wheel that drives all investments you have.
You then become a hedge fund for apps that is disguised as an iPhone app marketing firm. You approach developers, tell them you can guarantee them 5,000 downloads in a week AND you’ll pay them to let you do it. You’re PAYING developers to get them downloads! Amazing.
So there you go – a wholesale model that’s 100% legal and has zero competition. I came up with this while swimming the other day and have only had a chance to run it by a few people, so please comment below and give me your thoughts.
And for goodness sakes, STEAL THIS IDEA!!!
Lots more to come,
P.S. Also, someone please buy www.tecnologyenabledclothing.com and every other misspelling and teach that guy a lesson in web marketing.