Micro Meets - The monetization

Anyone can buy a ticket for a chance to meet their favorite celebrity, the more tickets someone buys the better the chance they have of meeting the celebrity. For less popular celebrities, the cost per ticket could be $25 dollars. For big names, it could go up to $200 per ticket. I expect the number of tickets sold per meet to range from 20 to 1000. The cost of setting up a meet is fairly minimal, $10 worth of employee time to find a restaurant and make the reservations and maybe $50 for a security guard during the meet, everything else will be online and close to free. I expect the value of a meet would be around $5,000 ($50 a ticket and 100 tickets sold). Half of the revenue would would go to Micro Meets and the other half would go to the celebrity or the charity of their choice.

Micro Meets - The idea

The basic scenario is this: a celebrity finds out that they have a gap in their schedule a few days ahead of time. They then post on twitter that they are going to have lunch with a few fans soon in the city they’ll be in. The link they give on twitter leads to a page where fans can buy tickets to get a chance at the lunch. The more tickets they buy, the better the chance at getting the lunch. A few hours before the lunch, the ticket sales close and the winners get an email. The winners find out where and when the lunch will be.

Micro Meets handles practically everything: finding and making reservations at the restaurant, doing the ticket sales and payment processing, giving the meet location information to the winners, and providing security.

Micro Meets - The motivation

The internet has allowed people with uncommon interests to create large communities with other people who share those interests.  Within these groups, celebrities have emerged who may have hundreds of thousands of fans but who are little known to the general public. There may be tens of thousands of these internet celebrities in the US.  

Celebrities, like most people, travel. While traveling, people often have down time or gaps in the schedule. Instead of killing time by watching re-runs of Top Chef in the hotel room, wouldn’t it be better for the celebrity to meet some fans over a meal and make some money for themselves or their favorite charity?

DC Desalination - The pitch

Waste heat means wasted opportunity. DC desalination could make tens of billions of dollars in profit per DC in water scarce cities.

DC Desalination - The fun part

What I like about this idea is how it uses what would normally be considered waste to add value, billions of dollars of it. Designing a MED that would be very efficient and not require much O&M would be important. The design would also require that the MED handle the fluctuations in load the come with data centers.

DC Desalination - The growth potential

If this was done in LA it could make $80 to 90 billion a year in profit. There are probably five to ten other cities where this would make sense. The global profit could be close a trillion dollars.

DC Desalination - The monetization

The goal would be to convince one of these tech companies to build a DC in one of these water poor regions; DC Desal would then pay the tech company for their waste heat. For an idea how how much this might be worth, lets take a look at Los Angeles. In the dry season, the cost of water is basically $4 per hundred cubic feet or $1.40 per cubic meter. Using electricity for an MED plant, it’s possible to achieve $0.70 per cubic meter of desalinated water, or half of what LA citizens are paying. It’s worth noting that the water cost they are paying is likely heavily subsidized or politically negotiated with other parts of the state. Now, if the company running the DC is paid $0.40 for the heat required to desalinate a cubic meter of water and the water was sold to the city at the current rate, that would be a dollar of profit per cubic meter.

The electricity cost in LA is about $0.20 per kilowatt hour. It takes roughly 3.5 kWh to make a cubic meter of water using MED. Let’s say that the DC that would be built would have an average load of 40 megawatts and 35 of those would turn into heat used for desalination. That means that 240,000 cubic meters (or 63 million gallons) of drinking water could be produced per day. The per capita daily usage of water in LA is 123 gallons, so this could be enough water for about half a million people or an eighth of the city’s population. If revenue from the water is $1 per cubic meter, that would be $88 billion a year. The cost of building the MED would be several hundred million to half a billion dollars, which could be paid for within two days of desalination revenue.

Another, smaller, source of revenue would be the sea salt from the brackish water that comes out of the MED. Ocean water has 35 ppt salt or 35 kilograms per cubic meter of water. The brackish water wouldn’t be pure salt water, but that’s good enough for this approximation. Per day that would be 8,400 kg of sea salt. I think the salt would be worth about $2 per kg. Over a year there would be about $6 million for salt. Clearly the salt isn’t nearly as valuable as the clean water.

DC Desalination - The idea

There are many corners of the world that have access to abundant seawater but where potable water is expensive. Some of those places are also affluent like the cities of Los Angeles and San Diego in California and several cities in the Middle East and southeast Asia. The key to this idea is to find a way of doing desalination that doesn’t require getting the salt water warmer than 80 degrees centigrade because data center processors have a much shorter lifespan above that temperature. That temperature rules out boiling the seawater as well as concentrating it over a series of flash boilers. Thankfully, there is a solution, and that is Multi-effect distillation (MED). Instead of just evaporating water and letting it go into the atmosphere, MED captures the pure water in the form of steam and condenses the drinking water back into its liquid form (while heating up more saltwater). Most MEDs are typically run below 70° C, so we don’t need to worry about overheating the processors. If you know some thermodynamics, MED may sound like magic. If you take room temperature salt water and boil it to get pure water steam, it requires a lot of energy and the heat source must be above 100° C. One of the keys to MED is that the final product that you want is room temperature drinking water, not steam. So, you can use the heat from the steam to heat more saltwater. Theoretically, the only energy lost is from the differential heat of vaporization between pure water and salt water and the pumping energy, which isn’t much compared to the heat of vaporization. It’s possible to be ten or more times more energy efficient than just boiling the salt water.

DC Desalination - The motivation

Tech companies large and small use dozens to hundreds of thousands of processors to make their software work. More and more of these processors are in large data centers (DCs). Of course, large companies have their computers in DCs, but also many small companies are using Amazon’s DCs for their web applications. Moving to datacenters makes financial sense because of economies of scale. One downside of large DCs is that they generate a lot of heat. You can typically measure the size of a datacenter in dozens of megawatts. DCs shed the heat by either dumping it into water bodies (rare) or, more commonly, by using cooling towers like you see for nuclear reactors. All of that heat has value and should be put to use instead of wasted.

Simple Shopper - The pitch

Never enter your credit card or address to another shopping site again. With its clean design, Simple Shopper is sure to make online shopping checkout painless and secure.

Simple Shopper - The fun part

The three important parts. A simple way to import address books and social network connections. A clean UI to manage contacts and credit information. The last part, and perhaps the most important is the API to connect websites that sell products to Simple Shopper.

Simple Shopper - The growth potential

Online shopping is a big business. In Q3, Amazon alone had 13 billion dollars in revenue. Online shopping is in the several hundred billion dollar range. If simple shopper got 5% of the transactions with 2% surcharge, Simple Shopper would be a several hundred million dollar a year business.

Simple Shopper - The monetization

There would be a one to two percent surcharge per transition using Simple Shopper. It's that easy.

Simple Shopper - The idea

Simple Shopper is a product that would contain your address book and your social network contacts as well as your credit information.

When you go to a website you put items into your cart as usual. It’s only when you start to checkout that the magic happens. Instead of having to type in your credit card information, billing address, and shipping address, you are redirected to a Simple Shopper page where you simply select the credit card you want to use, and which contact (or yourself) that you want to ship to.

In addition to being very convenient, there are a few more benefits. The first is that you won’t ever have to save your credit card information on sites that you occasionally shop at. The second is that the websites you buy stuff at will never see your credit card number. A temporary credit card number will be used for all transactions.

Simple Shopper - The motivation

It’s 2013, why the hell do I have to enter my credit card info into every website I want to buy something from? The same goes for my address. We can do better.

Other people have taken different approaches.

Super Green Clean - The pitch

Save the planet, your time, and your wallet with Super Green Clean. We clean your clothes using practically no water, or energy, and save you money at the same time.

Super Green Clean - The fun part

The fun part with this project is finding and eliminating waste. The cleaner business is fairly mature so creating a successful business will require increasing margins by reducing costs. The biggest cost, as stated above, is going to be labor. A smart way of scheduling the effort of hourly workers could be an amazing cost saver.

Super Green Clean - The growth potential

If SGC serviced all of San Francisco, and 25% of the residents signed up, SGC would have 150 million dollars in revenue per year. If it went national, it could be easily ten times that.

Super Green Clean - The monetization

Making this idea take off will require an intense focus on waste, especially human effort.  Super Green Clean is really designed for city dwellers who probably don’t have a washer and dryer in their apartment or condo.  This means that the potential customer will either have access to a bank of washers and dryers in their building or use a public laundromat. In either case, they will probably pay about two to three dollars a load and need to do about two loads a week or about fifteen pounds of clothing. In the Bay Area people can use Purple Tie, which costs $1.69/lb or about $25 per week. This is a little more expensive than most people are willing to pay for laundry. Super Green Clean (SGC) will need to aim for $1/lb. The warm fuzzy feeling of knowing that you are saving energy and water won’t be enough for everyone to want to use this service.

If a week’s worth of laundry is two loads or 15 pounds, then SGC’s costs for a week’s worth of laundry should be about ten or twelve dollars.  SGC uses very little water and electricity, and probably less than 25 cents worth of detergent per week’s worth of laundry. The dominant cost is labor. Minimum wage in San Francisco is $10.55/hour this year plus employer payroll taxes, which adds at least 7%. So the minimum cost for hourly labor would be around $15 per hour. So, from getting the clothing from the customer drop off location (more on that later) to SGC and back to the drop off location, there must be less than one hour of labor per week’s worth of clothing.

The cost of collection can be reduced by having a small number, four or five, drop off spots within a half mile of the SGC location. The drop off spots would work sort-of like Amazon’s Lockers. Customers would drop off their laundry in a SGC bag, which will have a QR code for billing at the scheduled drop off location. A SGC employee would then go to each of the drop off spots and return to the SGC location with all of the QR-coded bags. If the locations are chosen intelligently, and there are on average at least 10 bags per drop off location, then the transport of the clothing could cost as little as  0.05 hours (or half an hour per trip). I’m assuming that the drive to the drop off location would be used to return clean clothing as well.

Once the clothing reaches the SGC location, then the clothing needs to be sorted and put into the washing machines, transferred to the dryer, and finally folded.  The first step should take only about a minute. Moving clothing to the dryers will take more time as it requires putting clothing on the wire forms. This could take five or ten minutes. The last step, folding, will also be fairly time consuming. It will be important to improve the time it takes to fold by making mechanical tools (like those used to fold t-shirts in retail stores) or simple human-aided robotic solutions.

If the employees are hourly, then other cost saving techniques can be used. Hourly workers need a steady rate of work to do. Otherwise, they just sit idle and waste money. Moving dryered clothing to a holding area waiting to be folded would free up the dryer space and allow the workers to get the clothing when they have a break.

Another way to manage worker load is to have three cleaning plans: same day, next day, and two day. If a customer has time flexibility, then they will pay less per pound.

Super Green Clean - The idea

Washing machines can use up to 40 gallons of water per load. Washing loads on hot water can spend 0.5 kWhs and the dryer can use 5 kWhs. The amount of water usage can be reduced significantly by designing the washer and dryer to be water and energy efficient.

This will require designing the washers and dryers from scratch. The main theme will be reuse. Large tubs of water will be stored behind the washers. The well-insulated tubs will be kept at different temperatures: hot, warm, and cool. The water will be mixed with the minimum amount of soap necessary to get the clothing clean. After the washing is done, the soapy water is removed and the soap and other contaminants are removed from the water, either mechanically (e.g. reverse osmosis [RO]) or chemically (e.g. distillation). The water goes back into the tub of the same temperature. Potentially, in the case of using RO to clean the water, very little heat and water would be lost in this process.

What’s left in the washer is clean, but wet clothing. The next step is to wring out as much water is possible before drying. For sturdy clothing spinning at a high velocity can remove a significant amount of the water.  For less sturdy clothing like wool sweaters, this isn’t an option. After all of water that can be removed in the washer, it’s time to dry.

It’s possible to make drying clothes significantly more energy efficient.  The way the clothes get dry in the dryer if through evaporation. It’s possible to get fast evaporation without as much heat if you can expose all of the clothing’s surface area to the air and use convection to dry the clothing.

The way you would do this is by hanging the clothing on flexible wire frames designed for different clothing articles, t-shirts, jeans, underwear, etc. Once on the wire frames, it will look like a group of invisible people, each wearing single articles of clothing. All of the wire frames will be put in the ‘dryer’. This dryer is a large tube that would look like an elongated donut, the clothes are placed in one part of the donut with all of the holes facing one direction. On the part of the donut without clothes is a de-humidifier, a small heater, and a fan. The fan blows dry warm air through the clothes. Because the clothing has all of it’s surface area exposed to the flowing air, the clothing will dry as almost as a fast as in a conventional dryer.  I think this new dryer design could reduce energy usage by a factor of ten.

Super Green Clean - The motivation

There few appliances that we buy that get less useage over their lifetimes than clothes washers and dryers.  There are two things that cause many people to shy away from using a laundry service: cost and convenience.  One thing that they probably don’t think about is how much water and energy they are using while washing clothing. The real cost to the wallet and planet are larger than they appear.

Inner City Banking - The pitch

The inner city bank is like an anti-big bank. It does have fees for everything you do, it doesn’t have sky high interest rates for loans, and it values its’ customers. The proposed bank is as interested in customers growing real wealth as it is in growing profits. As a hybrid for-profit and non-profit, the proposed bank is designed from the ground up to give back to the community.

Inner City Banking - The fun part

I like the idea of using A/B testing to determine which personal finance aid really works. As a bank that works with a non-profit, the bank could help choose which people are randomly chosen for different services. This would bear fruit when it came time to give someone a loan. Knowing that people have gone through financial training could mean increased probability of having the loan repaid. If a program didn’t work, it would show in the future finances of the individual. Any value would be fairly easy to quantify.

Inner City Banking - The growth potential

I think this could grow to be the primary bank for tens of millions of people. If the inner city bank grew to be one tenth as large as Bank of America it would get $8 billion in revenue. If NUB had a 10% profit after giving to the charity arm, then it would make $800 million in profit each year.

Inner City Banking - The monetization

As described so far, the bank is extremely lean by having no physical locations. Avoiding physical stores reduces costs in several ways. First, the bank doesn’t have to pay rent for the location. Second, they don’t need a vault, extra security, or the costs of armored trucks to transport money. Lastly, they don’t need to have retail representatives who may spend much of the day idle. These costs are significant enough to get McKinsey’s attention, in fact, the costs of branches account for 40%-60% of operating costs. If those costs could be avoided with being replaced by other costs, then this bank could make 25% more profit than other banks. Now, I don’t think that will be the case, as I expect this bank to have less revenue per customer than other banks. I think reducing fees, giving higher savings rates and lower loan rates would cut that 25% down to 15% or 10%. About 5% of the profit would get transferred to the non-profit arm (but that would also reduce the bank’s tax bill).

The in-store ATM equivalent would involve installing a low-end smartphone ($50) that uses only a small amount of data that is required to pass along withdrawal and deposit information. It would also serve as the verification for the transaction (through scanning the QR code and the acknowledgement of the cashier). The local business would take a 1% cut of the transactions. They get other benefits like additional foot traffic.

Inner City Banking - The idea

The normal banking model is broken for poor inner city residents. I aim to tackle each of the hurdles that these residents face. The main themes of this idea are reducing costs, increasing access, and fostering responsible behavior.

Smart phones have become very cheap. Low end smartphones cost less than $100 off-contract.  This is why 62 to 80% of young adults with cell phone plans have smartphones, and this number is only going to continue to rise. The primary way that customers will access their accounts will be through their phones. Depositing a check will be as easy as taking a photo from your phone, which at least 9 banks already do. All balance inquiries, transfers, and initial loan requests can be made using a smartphone, tablet, or laptop.

Deposits and withdrawals will be made using local businesses. It works like this, you request how much you’d like to withdraw and find out if you can take it out of a local business, for example the corner store. If they have enough money, then you get the go-ahead to pick up the money. You go into the store and scan a QR code, and the business verifies the withdrawal with the bank with another smartphone*. Roughly the same thing happens with deposits.

Customers will be able to open (and close) accounts online and apply for loans, which means that there won’t be any reason to have physical bank branches for practically all activities. The only thing that will involve a physical bank location is credit counseling.

The bank would also have non-profit functions to facilitate financial education. There are two ways to make this work, either using a non-profit for-profit hybrid, or creating a low-profit limited liability company (L3C). The goals would be to run workshops on personal finance, one-on-one guidance on financial decisions, and setting up personal finance mentorships in which responsible members of the community help others develop healthy personal finance practices.

The bank would give lower rates to those who have been through one or several workshops and have a personal finance mentor. Another thing that could lower the interest rate is if other members of the community are willing to put up a small amount of collateral (1%-5%) as sponsors of the loan. This collateral would show that people who know the individual believe that he or she will pay back the loan and provide an incentive for community members to help that person to do so.  The bank could facilitate provision of collateral by providing two savings accounts: a normal savings account and an account in which money will be set aside to be used as collateral for a particular loan.

By reducing loan generation costs (by eliminating physical branches), increasing healthy personal finance (from the the non-profit), and increasing community responsibility (using community members’ collateral) it’s possible to give loans out at reasonable rates, say 8%-12% and still get a return of 5%. About 1.5% would be paid out as a high savings rate, which further encourages healthy finances.

*I heard about this general idea from an NPR story. The company was targeting developing countries though.

Inner City Banking - The motivation

It’s surprisingly expensive to be poor. Being poor usually means living in areas that have significantly higher crime than upper middle class suburbs. That means that you’re at a higher risk of being robbed (which is expensive because you then have to replace what was stolen). Another expense of being poor is not having a bank. The first effect of not having a bank is that you need to use a check cashing store to get your money. Check cashing stores usually take a cut of about 3% of the amount of the check. The next problem with not having a bank is that the inability to use credit cards may lead people to turn to payday loans to make ends meet. These loans typically charge interest at an annual percentage rate (ARP) of around 400-600%. Payday loans make credit cards look like a great deal. Not having a bank account is a serious impediment to people trying to get out of poverty.