SaaS Interviews with CEOs, Startups, Founders
1176 How this Developer Made $250k+ Selling Powertools He Didn't Own Via Amazon Ebay Arbitrage
13 Oct 2018
Chapter 1: What is the main topic discussed in this episode?
Take calculated risks. It'll work out. He got sick of doing consulting for one of the big guys and said, you know what?
Chapter 2: What motivated Alex to leave consulting for entrepreneurship?
I heard this weird arbitrage story on Beats headphones. I'm gonna go do it myself. He found a niche where it basically said, OK, these power tools are selling for 250 bucks on eBay. I can sell for 300 on Amazon.
He built a script to basically help run that system and did many, many thousands and thousands and thousands of units across many different industries, power tools, DVD, cassette players, etc.,
Chapter 3: How did Alex discover the power tool arbitrage opportunity?
Then some policy changes happened on Amazon. He had to basically shut that down because he didn't want to deal with the additional complexity. Now building a consulting business called Austin Data Solutions here in Austin, Texas. This is the top entrepreneurs podcast where founders share how they started their companies and got filthy rich or crash and burn.
Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million.
Chapter 4: What technology did Alex use to automate his arbitrage business?
I had no money when I started the company.
It was $160 million, which is the size of many IPOs.
We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Alex Kilka.
He's an intellectually curious life hacker, software developer, and small business owner based in downtown Austin.
Chapter 5: What challenges did Alex face with Amazon's policy changes?
He was formerly a management consultant at Accenture, and he currently runs Austin Data Solutions, a five-person consultancy specializing in solving business problems with some of the latest technologies. Alex, are you ready to take us to the top? I'm ready to take you to the top. All right, man.
All right, so tell me what that means, specializing in solving business problems with the latest technology.
Chapter 6: How did Alex scale his consulting business, Austin Data Solutions?
What does your data solutions company do?
so we do a combination of like data analysis diving into people's like survey results trying to figure out what our customers actually complaining about using natural language processing we also do like optical image recognition and we're working on some other technologies for like a coffee company specifically we got some interesting logistics problems and so we're trying to
Figure out what's emerging out there and what can we piece together to solve their solutions in a way that's simpler and more scalable than what they've had in the past.
And it is a consultancy. You're charging some fee per project and you have a team of five that helps you execute.
Exactly.
Okay. And now, what got you into this? What were you doing before this?
Yeah.
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Chapter 7: What were the major products sold through Alex's arbitrage strategy?
Um, well, I was originally in consulting and then, um, I left, uh, you know, work on a lifestyle project, um, which I think is what you want to talk about a little bit.
Yeah. Tell me more about that.
Um, sure. So, um, you know, life as a consultant, um, you know, right out of graduate school was not very, um, fulfilling. It was a lot of work, a lot of travel, um, something I decided I didn't want to do full term, full time, um, or longterm. But, um, Through that process, I met some interesting people. And one of the people I met told me this story.
He was selling some Beats headphones that he had gotten as a gift. And he looked on Amazon and they're going for maybe $300. He looked on eBay, they're going for like $250. And so he sold his pair on Amazon. And interestingly enough, he decided to leave up that listing and he kept selling more and more pairs.
And you just go over to eBay and type in the address if you ever bought it from him and shipped it directly to them and started pocketing this difference.
So just to be clear, he sold his Beats headphones for $300 on Amazon, but saw them selling for $250 on eBay. So he just left his Amazon listing up.
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Chapter 8: What factors did Alex consider when selecting products for arbitrage?
And every time a new order came in for $300 on Amazon, he would just go buy one for $250 and put in the buyer's email or the shipping address from Amazon.
Yeah.
Yeah, I mean, I don't remember the exact numbers, but that was the gist of it. That's funny. Which I thought, wow, this is, you know, what an interesting idea. I didn't realize such arbitrage opportunities existed between these two marketplaces. So we kind of talked about it and thought, well, this could be an easy way to make some money.
You know, let's find a way to write a script to identify these opportunities and then somehow automatically execute on them.
people would argue that was just a unique thing with one Beats headphone. I mean, if someone's listening to this right now, could they this weekend go find one of these manually, like one of these arbitrage opportunities on some product and just start doing it?
Well, I mean... I'm not sure how much of a needle in a haystack it was. I think he was lucky to find such a big discrepancy at that moment in time. And this was like three, four years ago. So perhaps the markets are a little more efficient since then.
But I think there are still opportunities like that across the board if you know how to look for them, especially if you're able to programmatically look for them.
I was going to say, so you're not doing any more, which means I can hit you hard and get all the details since you shut it down. So what were some of the assumptions you built into your tech to help you comb programmatically and look for these arbitrage plays?
Well, some of the assumptions... Oh, gosh. I think we assume that an item on eBay, an item on Amazon, if it's the same listing, it's going to be the same item. Wait, what do you mean by that? Well, for example... You know, some items have product numbers. Some items have very specific product numbers.
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