There’s a Platonic ideal of how business and entrepreneurship works that we’re taught early on in life.
It goes something like this: you have an idea for a new product or service, something that fills a need.
You put in your life savings or borrow some money from your brother-in-law, and you make that product.
You sell the product and people like it. You pay back your loan and make lots of money.
But there are only so many good ideas, and starting up a whole business is hard!
So increasingly, in the age of scammers, people are more interested in finding loopholes than in making anything.
Consider the strange case of the PFS Buyers Club.
For a long time, there have been points programs on credit cards. People who liked the rewards they got from points have tried to game the system. One way to do this is to buy something expensive, and then sell it immediately, even if the purchase and sale only break even. You spend nothing, but you get thousands of points!
These folks started joining buyers clubs, which organized and professionalized this tendency. The buyers clubs leveraged the volume of purchases from their members make a profit on the re-sale. The points maximizers get their points, the buyers club gets cash, everyone is happy!
But the PFS Buyers Club recently ran into some real trouble.
They had pivoted from buying and selling commemorative coins to scalping concert tickets.
It seems this worked fine when they did it with Taylor Swift tickets.
But then they tried to do it with tickets for shows of rapper Travis Scott.
And after they bought all those tickets, well, Scott’s tour announced more shows! Because of all the demand! Which, y’know, is not great for people hoping to scalp the blocks of tickets they just bought.
Tickets that went for a face value of $60 were re-selling for a mere $10 to $20 online.
PFS and its army of points-monkeys, some of whom had bought thousands of dollars worth of tickets, could be out hundreds of thousands, if not millions of dollars.
This is a fascinating corner of modern capitalism. Everyone involved here is trying to get something for nothing.
The points maximizers are trying to get goodies from their credit card companies without actually spending their own money. The buyers clubs are leveraging the willingness of the maximizers to buy, ship, and re-sell stuff.
No one has made any product or service that adds any value to the world. In fact, until they botched their Travis Scott ticket purchases, they had subtracted value – making coins and electronics and concert tickets more expensive for the final buyers.
The lesson is not that these folks are idiots. Their bet on these tickets could have gone in their favour.
The lesson is that for a lot of people, the easiest way to make money is by exploiting loopholes, and dumping the costs on someone else.