AttitudeEntrepreneurship

Idea Arbitrage: How to Come Up with Your Next Million Dollar Concept

idea arbitrageA recent study has revealed that a biologist from Duke University may be well on his way to curing cancer!

How? By infecting people with the polio virus – a disease which we have successfully eradicated from most of the world!

It turns out that, although our immune system cannot detect cancer cells, it can detect polio. When a patient is injected with a modified version of polio, the polio virus latches on to cancer cells. Our immune system, in an attempt to destroy the polio virus, kills the cancer cells it latches on to.

Who would have thought that one nasty disease could be used to destroy another? Not only that, but who, in their right mind, would have dedicated their lives to studying the benefits of a virus we were trying to eliminate?

By taking knowledge from one field (the study of polio) and applying it to another (the study of cancer), Matthias Gromeier has made a discovery that could save millions of lives. This is idea arbitrage.

The next time you are looking for a new way to solve a problem, explain a concept, or develop a system, consider using arbitrage.

What is Arbitrage?

In economics, arbitrage is the act of buying something at one price, and turning around to sell it at another price – taking advantage of inefficiencies in the market.

One example that many side-job hustlers are familiar with is the process of buying an item at a yard sale and turning around to sell it for more on Craigslist or eBay. Because the seller had no interest (or knowledge) in posting the item online, and because the buyer had no interest (or knowledge) in attending the yard sale, an opportunity arises for a middleman to profit. If you can be at the yard sale and know how to post the item online, you are able to make a significant profit by using arbitrage.

Meanwhile, in the world of personal finance bloggers, there are a diversity of writers with a plethora of different analogies, views, and ideas. A law graduate who started with 100k in debt will have very different personal finance perspectives than a homeless Sociology major or wealthy trust-fund kid. However, due to their unique experiences, they are each able to bring a fresh perspective to their writing. They combine their knowledge of personal finance, with their knowledge of another field, to provide a fascinating new point of view.

Using Arbitrage for Your Next Great Idea

Many of the greatest inventions, new business methods, and app ideas come from people outside of the given industry. While everyone who “grew up” within the system only knows one way of doing things, someone with an external perspective is able to bring in new ideas that can be integrated with the current models and theories within the industry.

The best way to come up with a novel new way to change the world, make money, or start a business is to use idea arbitrage – taking ideas from two seemingly opposite places and combining them in a creative manner.

The Three Steps to Idea Arbitrage

Idea arbitrage is really quite simple. It only requires three basic steps.

  1. Study across industries as much as you possibly can.
  2. Look for strategies that are unique to each industry.
  3. Find ways to integrate the strategies from one industry into the other.

By constantly being on the lookout for old ideas in new places, you’ll be amazed at how many opportunities will come across your table. When you connect people, ideas, or systems from one place with those from another, great things can happen. You may even cure cancer.

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Rob

Rob is enthusiastic about everything related to money and investing. A financial analyst and instructor, he enjoys using what he’s learned from 10 years of studying business and money to help others achieve financial stability. He founded Money Nomad in 2014!

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