Sunday, April 15, 2007

Two ways to make real money

1) Make something that scales amazingly well. Example: writing the server for an MMO that can service a million players isn't that much more expensive than servicing 100,000. Software is ridiculously easy to copy and distribute so economies of scale here are much easier than trying to achieve economies of scale in say, manufacturing.

2) Or you can be a troll that sits on a bridge and demands a toll for every deal that takes place on that bridge. Example: credit card companies take a 2-3% cut from the merchant for every purchase. The merchant has to either raise their prices and pass this cost on to consumers, eat the cost or have the cash and check paying customers subsidize the credit card users. Why are credit card companies so successful? I would rather not see this extra transaction fee in the marketplace, but it's crazy not to take advantage of the rewards the credit card companies share with you and fund with those fees and also not to earn interest on your money before paying the credit card bill (the float).

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