over 7 years on 2009-10-08

MOVIES4GOLD: NETFLIX + CASH4GOLD = GREATEST COMPANY EVER


just put some gold in with your netflix rental return when you are done watching! http://movies4gold.com or follow @movies4gold


summary

1.  cash4gold: high profitability low penetration
2.  netflix: high penetration with longterm business model issues + scaled envelope distribution & receipt logistics infrastructure and accounting

- both companies have significant affiliate marketing expertise, potential human capital "synergies"

a deal made in heaven (p.s.i have the url and the twitter name all ready, just kick me 50 basis points)


explanation

cash4gold is awesome...  as is well known, not just because of their amazing superbowl commercials, but because of their silly profitability.

their model is simple...  people have lots of gold stuff, and they want to trade that gold stuff for cash.  there are lots of ways to trade gold stuff for cash, but most of them involve small time local dealers/jewelers who have no marketing budget and with whom people are terrified of being ripped off.

so, cash for gold comes in...  sure the amount of cash you get from cash4gold for your gold is sub-optimal...  but you can be sure that they will be professional and not rip you off entirely.  mix in a little marketing and you have crazy free cash flow!

the only problem is physically getting tons of gold collecting envelopes with the proper accounting systems out to the trillions of people trying to send in all their gold for cash!

when i want to swap my gold for cash, i want to do it now, i don't want to mail away and wait three days!  we live in an instant gratification world people.

the solution - movies4gold, a partnership between netflix and cash4gold (i will just take a 50 bp matchmaker fee).

netflix is already sending out and receiving envelopes from millions of members ...  all they need to do, just stick your gold in the envelope along with driving miss daisy!

the beauty, not only does netflix have the logistics all ready to go, they have the accounting in place.

netflix = the fulfillment and the accounting
cash4gold = a business model that works in a digital delivery future

of course, this is just the tip of the iceberg - i am envisioning deals like "send us gold and we will give you discounts on future movies" or, "want to keep your movie, just return some gold instead...". perhaps even "porn4gold" will work even better!  but you have to start somewhere...


original swl blogposts and letters 2007-2010