Our $616 Windfall Could Be Yours

December 7, 2012

 

It’s 2012. Why are we still getting mail?

This summer we wrote about the inefficiency of the live event ticket market. The primary sellers – TicketMaster and their ilk – have attempted to maximize profits by not only tacking on dubious charges and fees, but selling tickets as much as 10 months in advance of the show date. That gives said ticket distributors a chance to enjoy your money even earlier. A bird in the hand, etc.

We can’t emphasize this enough, which is why it warrants a 2nd post – buy your tickets as late as possible. (See? We can be repetitive, too! All the greats do it.) You people who claim “I like to collect experiences, not things”, whatever that means, especially should take heed here.

Like that of a lot of goods in the last decade, the market for tickets has changed drastically. The original problem was that it was a pure monopoly, or at least had most of the characteristics of one. You bought your tickets from TicketMaster, or whomever, or you missed out and panicked on the day of the event, which involved going to a scalper at the venue. And for anyone who’s ever done it, buying from a scalper feels slightly less seedy than patronizing a pot dealer or a veiny prostitute.

You don’t have to do this anymore. There’s a better way. As business author and envelope maven Harvey Mackay puts it, “There’s no such thing as a sold-out house.” Here’s how you get tickets for that basketball game/Lady Gaga concert/flea circus without tying up your money unnecessarily.

Wait until the last minute. Not literally the last minute, but close enough. Tickets go on sale this week for a concert that doesn’t take place until April? Major League Baseball released its schedule and you plan to see the Diamondbacks play the Dodgers in the final homestand of the season? Relax. Have a soda. Go for a walk. Fly to Argentina, marvel at the Andes for a few weeks.

Then, 3 (or better yet 2, but it’s hard to get there without practice) days out, hit

  • StubHub
  • eBay
  • The underrated superstar here, Craigslist.

You know how you can lose all sense of discretion when you’re enthralled by a live event, playing air drums along with Neil Peart or cheering a football team onto victory against a division rival? There it is again, that cursed right brain getting in the way and ruining our lunch. Cutting loose during an event is fine, even encouraged, but you still have to be icy and logical during the process of buying your ticket. OMG RAVENS-STEELERS GOTTA BE ON THE 50-YARD LINE NO MATTER WHAT NO MATTER WHAT I SAY is no way to commit what could be a few hundred dollars to what’s only going to last 3 hours or so, tailgating excluded.

Slow down and remember – you’re buying something extremely perishable. Getting excited about buying a car, and risking overpayment because you’re afraid it’ll be gone tomorrow, is dumb. But behaving the same way regarding an event is even stupider because…

On balance, it’s almost always a buyer’s market. Unlike the tickets in the seller’s possession, the cash in your pocket will still be worth something tomorrow. Use that leverage.

But I have to see Chris Brown! It’s the last show of the tour, and he might be in prison a year from now.

Again, slow down. You don’t “have” to see anything. And they’ll play the Super Bowl next year, too. They always do. It’s fun to think that your life becomes more meaningful if you inconvenience yourself to see a concert or a game that you think holds special meaning. Maybe it even does. But if it does, that doesn’t mean you should overpay for the privilege.

If you’ve never used StubHub, it’s straightforward. And credible, after eBay bought it and made it a wholly owned subsidiary. eBay still maintains its own ticket marketplace for some reason, and lets you see availability and prices on both sites side-by-side:

 

 

So that gives you a starting point. Another thing to remember, and this is critical:

Asking prices mean nothing.

This is a corollary to it being a buyer’s market. A seller wants $900 for a pair of tickets with an official price of $100? Good for her. She can offer them at $30,000 if she wants, it doesn’t matter. Maybe some sellers do this in the hopes that some maldextrous buyer will accidentally press the “Buy” button and create the easiest windfall ever.

(Side note: The media attention surrounding the recent “hyperinflated” prices for Twinkies on eBay. A local newspaper reporter in CYC’s hometown claimed that Twinkies were selling for $250 apiece. They weren’t being sold at that price, they were being offered at that price. You need to look at the actual auction closing prices, which were more in the neighborhood of $2.50 per, to gain any useful information here. The exaggeration was 100-fold, but isn’t that what journalism is largely about?)

Watch one eBay ticket auction, participate if you must. Once it closes, you have the knowledge that turns the buyer’s advantage into an overwhelming one. You’ll know the crucial second half of the equation, and thus where supply and demand intersect. This places the sellers at an even bigger disadvantage.

Here’s a real-life example. We wanted to see Rush play our hometown a few weeks back. And if we were going to go, we wanted to be on the floor. The sticker price for floor seats? $154 each.

By the way, we didn’t get financially independent by making it a habit of dropping $308 for a few hours’ entertainment. Instead we hit a couple of eBay auctions, 2 and 1 nights before the show. Each time we were outbid in the final seconds, which told us a couple of things:

  • There’s some sort of demand for tickets. It’s not as if we could just swoop in and lowball on an item that no one else wanted.
  • Floor tickets were selling for about 10% below cost. Which meant they’d be getting cheaper, not more expensive, as showtime approached.

We were legitimately hoping to win the 2nd auction, but that’s the point. Don’t overpay, which means don’t overbid. We set a maximum bid before we started, and didn’t raise it, no matter how tempting doing so sounded as the clock ticked down to 0.

Then we headed to Craigslist, where buyers aren’t protected as well as eBay buyers are. You might get scammed on Craigslist, but most of the people who do are idiots and are practically pleading to be taken advantage of.

Go to NameOfYourCity.craigslist.org/tix. You can select tickets sold by owners, sold by brokers, or both.

You want tickets sold by owners. It that isn’t obvious, there are several reasons:

  • An individual owner has more incentive to sell his tickets than a broker’s employee does.
  • The former is easier to negotiate with, and probably easier to research (again, covering yourself when dealing with unknown players is critical.)

There were maybe 25 sellers hawking tickets on Craigslist. We eliminated anyone who didn’t advertise what section their tickets were in. (Why are they wasting our time, and why would they waste theirs?)

That left maybe 12, all of whom we sent the same email to. “Will you sell them for (10% below cost)?” (Unless some of the sellers had been already offering them for even less, in which case we’d offer something still less than that. But no one was offering them for so little.)

A few didn’t respond, a few said their tickets were already gone, and one liar claimed that if he didn’t get his asking price, he’d just eat the tickets. That left one guy, who said that we could name our price. Why? Because he was thousands of miles away, and had physical tickets in hand.

We improvised. We suggested he call the venue’s ticket office, explain that he couldn’t go to the show and wanted to transfer ownership to someone local, and plead his case.

And damned if the venue didn’t say yes. Even better, the poor guy had bought 4 tickets – twice as many as we needed. They emailed him a PDF of all 4, he forwarded it to us, and said “enjoy the show”. Your mileage may vary – of course, you can’t assume that you’ll find that one person in a thousand who’s willing to give away $616 worth of tickets that he’d already written off.

Did we sell the remaining pair (for something around 10% below cost) and pocket it, essentially getting paid $277 to go to a concert?

Did we sell the remaining pair and give the proceeds to the original owner?

Yes, maybe, no, that’s not the point. The point is that we never would have been in such a position had we repeatedly hit “Refresh” on TicketMaster.com on the day sales opened, until we could finally purchase a pair. Again, let other people be the profit centers – not you.

Filed Under: Capitalism, Making Smart Choices Tagged With: , , ,

Guest Post – The University in the Desert

August 10, 2012

If you own any of these books, you’re in the 99.9%.

 

It’s as rare as a Venezuelan gold medal – a guest post that meets all our guidelines. Today we welcome W from Off-Road Finance, a regular contributor to the Carnival of Wealth and one of the few personal finance bloggers who has anything interesting to say. No further introduction needed:

I’m lost and have gone to look for myself. If I should get back before I return, please ask me to wait.
– note on a university message board

Somewhere along the way we change from relatively useless and undifferentiated kids into adults. We become someone. If you happen to be around a person you’re not likely to offend, do a little experiment: ask them to describe who they are. Chances are you’ll get a list of descriptions: for example, I’m a husband, engineer, trader, Christian, musician, blogger, cook and rock climber. From that list you could get a reasonable picture of how I spend my hours in a week.

But let me suggest something: you know almost nothing about me, as a person, by reading that list. There’s too much there. Am I a mad rock climber who trades and takes the occasional engineering gig to keep myself in rock shoes and gas for my Wrangler? No. I’m kind of a half-assed climber. You could turn my description around, make any given element primary, and generate a bunch of different “people” who would bear little resemblance to one another or me. Let me suggest a much better question than who you are:

What mind do you bring to the problem? This is one of those deep Zen questions. When faced with an arbitrary problem, do you use the mind of a rock climber? That of a musician? Clearly they have different approaches to problems, and not just those that fall in their respective fields. You’d expect differences in approach on everything from risk to creativity.

Different minds. This gets around the problem of multiple descriptors and closes in on who someone really is. Some minds are better at some things than others. The rock climbing mind is fine for hang gliding too. It might not be so good for knitting. I’d bet that the best knitters do not have rock climber minds. That’s not just a figure of speech – I’d wager meaningful money on it. Why?

Because the mind I bring to almost every problem by default is the mind of a gambler. In this, I am unusual. Millions of Americans gamble in some fashion. But essentially none of them have the mind of a gambler, any more than most Porsche owners are GT2 drivers. For the bulk of people gambling is a diversion, a form of entertainment, or an addiction; but it isn’t their way of thinking. I’d guess only a few hundred, perhaps a few thousand, Americans are of the gambling mind. I’ll call these people pro gamblers. That doesn’t mean they make their living by gambling necessarily. (Many, including me, don’t.) Rather, it means they’re mentally equipped to do so. There’s a wide gulf between the pros and those punters at the slot machines in Vegas casinos.

For starters, the pros are interested in the few games at which it’s possible to profit via skill. That means poker, sports betting, and some forms of blackjack. There are also a few good but nearly dead games that crop up – gin, backgammon, dominoes etc. Just as notable is what’s not on the list: slots, craps, roulette, baccarat, any table game other than blackjack, and of course keno (the game with the worst odds in the casino). The pros have all put substantial effort into learning to play at least one of the “good” games. While doing so, the pros develop the gambling mindset. It’s easy to recognize when I meet another pro, but hard to describe. Some of the characteristics:

  • a keen sense of the dollar value and odds associated with various gambling decisions
  • a tendency to view most decisions outside the gambling realm as gambling decisions
  • relative indifference to money
  • intelligence & fast mental math (not that gambling makes you intelligent – rather, stupid people will inevitably fail)
  • a desire to achieve a very high level of skill at their chosen game(s)
  • a strong individualist streak
  • an innate suspicion that others don’t have your best interests at heart. This translates, in most cases, to near-immunity to scams and cons
  • a fierce competitive streak
  • what I’ll call “exploitative empathy” – the ability to get inside other people’s heads, understand whether their position is weak or strong, and use that information
  • contempt for stupidity
  • a weird mix of targeted mental productivity and laziness – it’s a hard way to make an easy living
  • a dry, sarcastic, deadpan sense of humor.

I learned the gambling mindset around the poker table, first in college and then in Las Vegas. A couple of times a year I fly back to Vegas, now with my wife in tow. It’s one of those salmon-returning-to-the-spawning-grounds sort of things.* Spend a little time sitting at the table with the scumbags shooting the breeze about sports, and then taking their money. Plus, the drinks are free. Ahh, that’s the life 🙂

The most recent of these trips was last month. I usually go on the 4th of July week, plus another random long weekend. At the risk of tooting my own horn, the gambling mindset is one of, if not the best, for operating in the financial world. It’s not great for everything – I’ll give an example – but when it comes to making money I don’t think anything comes close. Those first two bullets equate to a better understanding of risk and reward than any other mindset I can think of.

Apparently I’m not the only one who thinks this, because for the last decade major financial institutions have quietly recruited pro gamblers for their top trading desks. Of course that’s not the sort of thing the institutions want to tell Congress or regulators about, but then the SEC wouldn’t know a gambler if they saw one. (The SEC has the bureaucrat mind, in spades).

There’s a cost that goes with the gambler mindset. It’s hard on personal relationships, especially romantic ones. Who wants to date or marry a suspicious, exploitatively empathic person who views your relationship as a gamble? Apparently at least one person, because I’m still happily married.

I do have to tone down my gambler tendencies when dealing with people I like. So now I’m going to make an odd recommendation. The CYC principals said they didn’t mind if I wrote for a tiny audience, so now I’m going to speak to .1% of the people reading this. If you recognize a bit of yourself in my description of the gambling mindset, are young, and haven’t decided what to do with your life, take a reasonable fraction of your net worth and fly to Vegas. Enroll in that great university in the desert. Learn to beat one of the “good” games above (I suggest poker for starters.)

For 99.9% of the population, this would be a retard move. For the other .1%, it’s the only smart move. Not that you should stay a gambler. Just learn the mindset, and leave when the time seems right. You’ll be way ahead of the game for life. Meanwhile, the former money of a bunch of crappy Bellagio 20-40 and 40-80 players will be flying the wife and me to Hawai’i next month. There are tangible benefits to this gambling thing.

 

*Ed. note: W does not return to Vegas to lay eggs and then die.

Filed Under: Guest Posts Tagged With: , ,

Getting Fired Never Felt So Good, Part II

October 14, 2011

No one who refers to his place of employment as “the salt mines” looks like this.

 

If you missed it, go here for Part I of the story of John, an entrepreneurial field experiment. He’s a former wage slave who was lucky enough to get fired by a boss who wasn’t very good at assessing the value of his employees’ human capital. John got fired not over performance, but over money (among other things.)

(A note to bosses: do that, and you’re giving your employee a more accurate idea of his market value than working for you ever could.)

Sudden unemployment forced John to think entrepreneurially. He started a business, incorporated it, and started living for himself, his wife and his kid (drat, that just gave away the ending) rather than his boss’s yacht. John’s making far more than he did before, and can take days off at a stretch if he feels like it.

But there’s more, starting with the pride that accompanies ownership. That goes for what you drive, where you live, and especially where you work. There’s a reason why privately owned houses look nicer than Section 8 housing does. Any sane person will put more effort into maintaining something that’s his own, rather than something he has only a transitory interest in. (When was the last time you washed a rental car?)

Most salaried workers salivate at the idea of getting off work early, whether they choose to admit this or not. Your average successful entrepreneur just wants that day’s work to be completed, and doesn’t care if it takes 13 hours on that particular day, or 1.

In his new life as a business owner, John’s financial fate no longer rested in the hands of a single, capricious, inherently flawed human: a boss whose job description mandates paying John as little as possible.

Instead, all John had to do now was just please customers. The more he pleased (and continues to please) them, the richer it made him. The money is fine in and of itself, but every dollar Dog & Pony earns gains him greater self-determination. So why don’t more people do this?

Going it alone had crossed John’s mind before, but getting fired gave him the necessary impetus.

I had run my own company for a short time while in Detroit, but gave up on it too early. I did sound design for car commercials and used someone else’s studios. It turned a profit, but I just wasn’t prepared. And the paperwork overwhelmed me. When I received an offer to be a salaried employee at another studio I took it, and a year later Omega Center hired me.
Once they fired me, I had no choice, so this time I knuckled down and got it done.

To start a sound design business, you need a big initial outlay on equipment. With his savings hovering around 0, John buttressed them with an, ahem, credit card advance and an $18,000 second mortgage[1].

That took care of capital expenditures. Labor expenditures, at the start, were staring at him in the mirror every morning. Clients, he got through word-of-mouth and “some judicious cold calling.” That leaves the dull but critical process of getting things nice and legal.

I got the business up and licensed with the state and then went to the county to figure that part out. Given the choice between doing business as a limited liability company or an S Corporation, I went with the latter. It gives me tax advantages and better protection from libelous types.

That part can’t be underestimated. We show you how to set up an S corporation (or an LLC, which you shouldn’t immediately rule out) quickly and without fuss in our new ebook.

It took John 6 months to turn a profit. As to the magic formula for transitioning from tentative to successful, here’s it is:

You just have to keep plugging away. There’s no magic formula, just hard work and ignore the self-doubts.

The next MBA-level textbook that has that passage in it will be the first.

John started by creating a studio in his house, using the home equity line of credit to buy a laptop, a microphone and some odds and ends. The line of credit paid for more equipment as the business took off: he soundproofed one end of a hallway and created an isolation chamber to record voice talent in. John purchased an Integrated Services Digital Network line, enabling him to send and receive sound files in real time to and from anywhere. (By the way, he paid the initial advances off in 2 years.)

Eventually, with the business growing several-fold (and John’s family growing by 50%), it came time to move into real offices. Which sounds expensive to the untrained ear, but

I turned to my network and found a great banker who listened to my pitch and believed in my company. 

Today, Dog & Pony has 3 full-time employees and grosses about $600,000 a year. The studios sit in the epicenter of Las Vegas, the city with the worst unemployment in the state with the worst unemployment in the country. Yet Dog & Pony’s revenues have increased in each of the last 4 years.

John did go to college, but not for this. There are hundreds of schools that offer useless degrees in subjects like women’s studies and sociology, but only a handful that have begun teaching the practice and study of entrepreneurship. (They include the University of Nevada-Las Vegas, whose entrepreneurship program CYC’s own Betty Kincaid helped found.)

John’s personality and attention to detail made him popular among peers and clients while he worked for Omega Center, but that reputation only translated into so many dollars while he was an employee. Actually, it only translated into so many 7¢ amounts: see Wednesday’s post. When John became a business owner, his positive reputation turned from a desirable attribute into a force multiplier. The beneficiary of his hard work, commitment, and reputation was now him. Just as it should be.

John didn’t have a 5-year plan. No sales goals, no revenue goals. He had literally no expectations. Which doesn’t mean he thought he was going to fail, but rather it means he took success as it came. He doesn’t hire people on a schedule, but as they become necessary:

I couldn’t handle the phone calls, billing and studio work so I needed an assistant.  When there was too much studio work for just me as a producer, I hired another.  And so on…

As for the numerical drudgery of bookkeeping, taxes, and payroll, those are easy enough to handle that Dog & Pony does most of it internally.

It’s surprisingly easy to run QuickBooks if you just knuckle down and read the damn manual. Our office manager/zookeeper handles it, and a once a month we receive a visit from a professional bookkeeper.  And we have a great accountant.

You can see John is full of regret, and dying for a chance to return to the unpredictability of a “steady” job.

What was the hardest part about deciding “OK, I’m going it alone?”

Just doing it.  Sorry to sound like a Nike commercial, but the biggest impediment is always self-doubt. If you can get past that hurdle, and your skill or business is viable, then you’re on your way.

Controlling your destiny is what this whole personal finance game is ultimately about. We’ll say it again and again. You can do this. John proved as much. But the 2nd, 3rd, 4th, 5th and thousandth steps can’t happen until you take the 1st.

[1] Do we recommend this? Under normal circumstances, of course not. But John wasn’t buying jetskis or installing an atrium. He was purchasing his destiny. To draw a parallel, under normal circumstances you shouldn’t stuff your face with Klondike bars and Jack Links. But if you’re emerging from a week on the Ross Ice Shelf without food, then eat whatever you can get your hands on. Worry about survival first, and only make decisions about quality once you have the luxury of doing so.

 

**This article is featured in the Carnival of Personal Finance #331-Global Stock Markets Edition**

Filed Under: Capitalism, Entrepreneurship, Healthy Living, Making Smart Choices, Role Model Tagged With: , , , ,
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