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Comment by jrnkntl | Hacker News Reader

Lesson learned: There is nothing wrong in copying other peoples ideas, just make sure you execute it better than they do.

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"Let’s do the math. We paid webmasters 10 cents every time one of their users used our greeting card engine. We got paid up to $3 by venture-backed firms every time we got those users to register for these venture-backed firms’ services. That’s how we got our margins."

I think the lesson here is that making money on the internet is greatly facilitated when other people are willing to pay irrationally large amounts of money for what you're selling. Product quality may have played a role in this story, but it sure sounds like the critical step was recognizing the ridiculous inefficiency that existed in the market for eyeballs (i.e. paying $3 for something acquired for $0.10)

I interviewed Jason Fried of 37 Signals on my site. He told me that his ebook made hundreds of thousands of dollars. I think his margins were even better than mine.

What margins like these don't take into account is the years of work that came before them.

In my answers to Neil, I tried to keep my explanations simple. But I don't mean to imply that I found a way to turn nickles into dollars by salesmanship alone.

Thanks for bringing this up timr.

Let's be clear: I'm not teasing you for your business model, nor suggesting that it was easy to do what you did. I also don't care that you bought something for ten cents, and sold it for 30x more than that -- that's capitalism. You exploited a market inefficiency, and made a lot of money from it.

I am teasing the OP a little bit, because the comment that "execution" was responsible for your success is basically useless. I'm going to go out on a limb and say that the critical ingredient wasn't the quality of your virtual goods or the writing in your newsletter, but the timing and novelty of your approach.

Isn't timing and approach part of the execution?

Timing is part of execution, sure. But when people toss around the "execute better" cliché, the implication is nearly always that you can make your product better and succeed, even if your timing is abysmal and your approach is unoriginal.

This story isn't about making the better e-mail newsletter. It's about a guy who recognized that he could arbitrage traffic for massive gain.

The difference here is 10 cents for using greeting card engine..then there will drop off for the people who sign up for newsletter..then drop off in terms of maintaining+monitoring the newsletter and the final small conversion ratio in terms of newsletter subscriber signing up for the offer..because the $3 was per sign up..I am actually curious about math..because say there are 1 million subscribers and 1% of they sign up as user for VC funded company's offering then it is just 30k in revenue.. and 1% is not low in the given scenario (a reason most of the newsletters don't host ads is the returns are very low)..I want to learn more how can the returns were much higher in this scenario..unless the users were more like bzzagent where they are going to get something in return and actively monitoring the newsletter to sign up and get some cash incentive.. similar to what bzzagent does or subvertandprofit/usocial etc people do for gaming social media sites

Actually: You can make a lot of money from using someone else's idea.

I don't see anything in the story that makes an ethical judgment one way or the other on the practice.

Microsoft is a shining example of this. You may or may not like them or their products, but you cannot deny it worked for them.

Lately it hasn't been working so well for them. They haven't produced a blockbuster in a long time. Be it a ripoff or original creation.

XBox seems to be the only exception. Did I miss something else?

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