Business Ideas: Information Arbitrage
Here’s a quick idea for all you future business emperors out there.
Let’s Talk About Arbitrage
In the digital nomad era, we’re used to hearing about arbitrage.
In its most common form, arbitrage is generally referred to in terms of earning in one currency and living in a place where you spend in another currency.
Providing you earn in a stronger currency than the one you spend in, you win. Economically speaking.
So, a person who gets paid in US dollars and importantly at a US wage and lives in a low cost-of-living country tends to find things cheaper, and thus comparatively they live richer, than people in either their home country or their abode.
Here’s an example. Bob is a freelance writer who works for a couple of US companies. They pay him $1000 a month each, and so he earns $2000. Now, both of these companies are based in Silicon Valley, where $2000 a month would pay for a shoebox for him to sleep in and a couple of Paleo soy milkshakes… in short, he’d be pretty hungry.
He moves to a beach somewhere in East Asia. The low cost of living means that he gets three square meals a day and a flat with at least two rooms in for the low, low cost of $800 a month.
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Comparatively, he’s better off than the average Asian guy (who earns $500 a month) and the people he left back home who share shoeboxes and vegan smoothies.
Now, arbitrage isn’t magical; earning dollars won’t help you live like a king in Asia if you only earn twelve of them per month. But this sort of arbitrage isn’t a bad thing if you can work it out.
Let’s widen the net away from economic arbitrage though.
Location and Ideas
For all that a certain segment of the population discusses economic arbitrage in all its gory detail, very few people talk about something that’s:
- More profitable
- Less competitive
- Long-term awesome
- More fun
… that thing is “ideas arbitrage.”
We live in a global, interconnected world where you can absolutely target anyone with an internet connection in any country from anywhere.
The implications of this are huge. In fact, they’re bigger – and the market is bigger – for idea arbitrage than it is for any amount of plastic stuff you can import and export from China.
Take for instance, the fact that if you’re from a country with running water, your experience is not universal. There are countries – and regions within countries – where reliable running water is a problem.
Without putting too much detail into this quick and silly example; information that is useless to you and freely available in a library at absolutely no charge is probably very valuable to someone somewhere in the world.
There is no reason why you can’t sell to those people and make a living whilst giving those people an incredibly important service.
Once upon a time, to sell your wares in developing nations, you’d need a massive adventurer streak, a ton of capital and possibly an army. Now you need an internet connection and the knowledge of how to target Facebook Ads (or whatever.)
A Better Example Of This
I’ve been reading about investing recently. (You can’t keep all of your money in treasure chests, after all.)
Sadly, the amount of information for UK-based investors is pitifully low when compared with the US.
It doesn’t matter why that is, and it doesn’t matter whether there are endemic problems to creating a massive cultural shift (like, people in general in the UK might not get into investing as much as people from the US do.)
What matters is that there are probably people in the UK who want the amount of information at an accessible level like people from the US get.
Ergo, you’ve got a market to sell to. You’ve also got all the raw materials needed from the US-based investing advice.
All you have to do is research the UK equivalents, rewrite the same concepts with said equivalents in, and market it to the new target base.
The hard work has been done for you.
Taking It Further
Here are a few more quick thoughts on this:
- You don’t have to cross borders. Old people and young people sometimes benefit from the same advice
- If you do cross borders, it doesn’t have to be your country>target country.
- There’ll always be the next great trend coming out of mysterious area, or lessons learned from ancient mystic wisdom. We’re constantly swapping info
- This can be as cheap or expensive as you want. It can be ebooks or you can hire your own actors, workers or translators if you really want to run with the idea.
Ideas are pretty cheap, but they offer a high return on investment. When you combine low cost for creation with a global marketplace you have a high potential for big returns.
Add in the fact that most of you reading this are probably from highly developed nations with a high cost of living, and you’ve already got an advantage. For instance, if you’re from the US and you’re buying ads to sell stuff in Cambodia, you’re going to have a comparatively higher budget than someone from Cambodia who wants to sell to the US.
Play around with this and let me know how you get on.