Sixteen Years Old, $1.7 Million in Revenue: Max Hits It Big as a Pandemic Reseller

repoman0 said:
What are you, 80? Latin and cursive? Lol. This post is the embodiment of a large portion of our problems in the US of A. When teaching the next generations is looked at less favorably and with less value than some zero value add “business” and business for the same of business is worth more than an education … yeah, there are some fundamental structural and cultural problems.
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I'm not 80, but the people designing and teaching the curriculum are - unfortunately. Students are being taught outdated skills instead of focusing on learning useful survival skills (because making the minimum amount of money to take care of basic necessities is key to a happy life).

I actually think a large portion of our problems in the USA is that people like you haven't done research on the education system and its origins, and mistakenly venerate it as some institution designed to provide education and personal growth to our children. In actuality, it was expressly designed to avoid personal growth - the reforms instituted during the industrial revolution were openly stated to equip students with the skills necessary to serve as labor.

This goes to the point of my post - school is largely pointless for this kid since he already is demonstrating the skills necessary to thrive in our modern society. I'm not sure why you think him sitting there and doing some busywork homework assignment in accounting class will help him more than practicing real-world accounting in his business. As for "teaching the next generation," he isn't going to learn anything that would make him "a better citizen" in an average high school; statistically speaking the majority of Americans can't even correctly answer what the three branches of government are. The education system already failed in that regard.
 
paradoxical said:
I'm not 80, but the people designing and teaching the curriculum are - unfortunately. Students are being taught outdated skills instead of focusing on learning useful survival skills (because making the minimum amount of money to take care of basic necessities is key to a happy life).

I actually think a large portion of our problems in the USA is that people like you haven't done research on the education system and its origins, and mistakenly venerate it as some institution designed to provide education and personal growth to our children. In actuality, it was expressly designed to avoid personal growth - the reforms instituted during the industrial revolution were openly stated to equip students with the skills necessary to serve as labor.

This goes to the point of my post - school is largely pointless for this kid, since he already is demonstrating the skills necessary to thrive in our modern society. He isn't going to learn anything that would make him "a better citizen" in an average high school; statistically speaking the majority of Americans can't even correctly answer what the three branches of government are. The education system already failed in that regard.
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Not sure what crappy school you went to (or if it was a hundred years ago perhaps), but mine provided a well-rounded education and set me on the path to continued personal and financial growth. Of course my state actually funds its schools and pays teachers well.
 
paradoxical said:
I'm not 80, but the people designing and teaching the curriculum are - unfortunately. Students are being taught outdated skills instead of focusing on learning useful survival skills (because making the minimum amount of money to take care of basic necessities is key to a happy life).

I actually think a large portion of our problems in the USA is that people like you haven't done research on the education system and its origins, and mistakenly venerate it as some institution designed to provide education and personal growth to our children. In actuality, it was expressly designed to avoid personal growth - the reforms instituted during the industrial revolution were openly stated to equip students with the skills necessary to serve as labor.

This goes to the point of my post - school is largely pointless for this kid since he already is demonstrating the skills necessary to thrive in our modern society. I'm not sure why you think him sitting there and doing some busywork homework assignment in accounting class will help him more than practicing real-world accounting in his business. As for "teaching the next generation," he isn't going to learn anything that would make him "a better citizen" in an average high school; statistically speaking the majority of Americans can't even correctly answer what the three branches of government are. The education system already failed in that regard.
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If you think that's bad, wait til you hear what half of Americans think about the germ theory of disease, vaccinations, and/or evolution!

I agree with the spirit of your posts, and that's as a professor earning more than this young man, while working many fewer hours, in no small part because I'm good with Latin.

Sure, the educational system in this country can be viewed as nothing more than a glorified babysitting service that produces incurious laborers so their incurious parents can labor. Or it can be viewed as one of the last remaining mechanisms for upward social mobility, and one of the only viable ways to become upper middle class and not have to worry about losing your job, your home, or whether your new boss will be a dickhead or not.

I stridently disagree with your assertion school is largely pointless for this kid. I learned those valuable skills about margins, Quickbooks, etc. when I was in college, alongside Latin. Smart people take advantage of opportunities to learn skills regardless of whether it's in a classroom or hustlin' as a reseller. Props to this kid, I wish I had been this successful reselling Wiis, PSs, and XBoxes a decade ago!
 
auntjemima said:
But all companies scalp... Let's take a piece of furniture, a couch for instance. You go down to your local big box and want to buy a couch. A decent couch could run you over a grand, but that company you are buying it from probably paid less than half of that. How is that not scalping?

It is. People have just become conditioned to accept it if it's a company doing it, but it's a bad thing if it's an individual.
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Aix. said:
We were promised trickle down economics. Now we see what has actually trickled down.
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Let's be fair, here. A retail location has a LOT of overhead, including:
Lease
Insurance
Wages/labor/personnel
Accounting/banking
IT/telecom/website equipment, service, and support
Utilities/water/gas/electricity/sewer
Maintenance/upkeep/janitorial
Advertising
Delivery/distribution
Warehousing/stores
Etc
Etc
Etc

...now think about all the jobs required for all of that - even the jobs from other companies providing all those utilities and services: there's your *actual* trickle down economics.
 
UltraTaco said:
Agreed.

Taco is nt sure why scalping is now considered 'legitimate' business, praised nd defended by many?
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Remember when people hated ticket scalpers so much 15 states made it illegal? But tickets to see the latest popular band is not a luxury good like a console so it IS terrible right? ;)
 
kirbyrj said:
Quite frankly, for only 6.47%, he's stupid for taking on that kind of liability for such little profit.
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Same thought thru my head, He's scalping for 6.5% return? How is he doing it so badly? Taxes are more than he's making.
 
SvenBent said:
I dont think anybody pays taxes on revenue. They do on net income or profit
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for that you need to file taxes properly, otherwise IRS gets a report from Paypal with $1.7M income and asks for their $600k cut.
 
kirbyrj said:
$110,000 profit on $1.7 million in revenue? Realistically, his only expenses are the cost of goods sold and shipping. It doesn't seem like he's really doing that well of a business. It's probably more just that he's 16 and has $1.7 million in revenue that's the story. He's only at a 6.47% profit margin. You can barely call that scalping.
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He has 2 employee (plus himself working 40 hours a week, making possibly 3 full time salary), warehouse space (some of is stuff were above ground swimming pools and gym equipment)
 
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FrgMstr said:
https://archive.is/RkNdj
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Color me unsurprised. The WSJ crowd seems be mostly praise for the "entrepreneurial spirit" of this kid joining the ranks of useless middlemen who scalp and resell with zero benefit to the consumer.

Gigantopithecus said:
If you think that's bad, wait til you hear what half of Americans think about the germ theory of disease, vaccinations, and/or evolution!

I agree with the spirit of your posts, and that's as a professor earning more than this young man, while working many fewer hours, in no small part because I'm good with Latin.

Sure, the educational system in this country can be viewed as nothing more than a glorified babysitting service that produces incurious laborers so their incurious parents can labor. Or it can be viewed as one of the last remaining mechanisms for upward social mobility, and one of the only viable ways to become upper middle class and not have to worry about losing your job, your home, or whether your new boss will be a dickhead or not.

I stridently disagree with your assertion school is largely pointless for this kid. I learned those valuable skills about margins, Quickbooks, etc. when I was in college, alongside Latin. Smart people take advantage of opportunities to learn skills regardless of whether it's in a classroom or hustlin' as a reseller. Props to this kid, I wish I had been this successful reselling Wiis, PSs, and XBoxes a decade ago!
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I choose to believe the optimistic view about social mobility. That said, I do worry about the shift away from "useless" skills (Latin, geography, history, personal finance, home economics, art, music, etc...) in favor of "useful" classes (math, science, and English). I think it's detrimental to kids, our society, everyone. Of course we need math and science to be pillars of education, but primary/secondary schooling seems more and more hyper-focused in a few areas. We need a broad pool of knowledge to foster critical thinking and real understanding. Without this, kids are deprived of life skills and the ability to truly comprehend. I've met young adults who cannot recognize cursive outside of their own signature, those who don't understand how to use a check or how bank accounts work, those who don't understand how our government works, those who can't locate major countries on a map (even very simple tasks like "where is Russia?" or "where is Australia?").
 
kirbyrj said:
$110,000 profit on $1.7 million in revenue? Realistically, his only expenses are the cost of goods sold and shipping. It doesn't seem like he's really doing that well of a business. It's probably more just that he's 16 and has $1.7 million in revenue that's the story. He's only at a 6.47% profit margin. You can barely call that scalping.
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We do not know how much he pay to himself which should eat into his profit since he is working 40 hours a week and the wages of his two staffs and employer taxes. I assuming since he is operating a business, he will have to get liability insurance and he does have warehouse rental cost. So I say a profit of 110k is pretty good as if he pay himself and his staff and other operating cost that isn't listed in the article.
 
ashmelev75 said:
for that you need to file taxes properly, otherwise IRS gets a report from Paypal with $1.7M income and asks for their $600k cut.
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I don't see the connection between what you are saying and my point in that you don't pay taxes on revenue.

You don't pay 600k in taxes for 1.7mill revenue.
You pay taxes on the 110k net income.

If you paid 35% taxes (you numbers) on revenue there would be businnes that could not exist as there income percentage is below the taxation on the revenue.
 
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SvenBent said:
I don't see the connection between what you are saying and my point in that you don't pay taxes on revenue.

You don't pay 600k in taxes for 1.7mill revenue.
You pay taxes on the 110k net income.

If you paid 35% taxes (you numbers) on revenue there would be businnes that could not exist as there income percentage is below the taxation on the revenue.
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To do that you need to show the expenses. I do not expect a 16-year old to realize that he needs to do that, before spending it all on stupid shit and receiving 600k bill from IRS next year.
 
ashmelev75 said:
To do that you need to show the expenses. I do not expect a 16-year old to realize that he needs to do that, before spending it all on stupid shit and receiving 600k bill from IRS next year.
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Does not change the fact that you don't pay on revenue.
You comment was "...he forgot to pay taxes on that 1.7 million revenue" aka you said he needed to pay on revenue otherwise he cannot forget it. That is still an incorrect statement. and no matter how much you make up in your mind about the boy, it does not change what you said was incorrect.
 
DejaWiz said:
Let's be fair, here. A retail location has a LOT of overhead, including:
Lease
Insurance
Wages/labor/personnel
Accounting/banking
IT/telecom/website equipment, service, and support
Utilities/water/gas/electricity/sewer
Maintenance/upkeep/janitorial
Advertising
Delivery/distribution
Warehousing/stores
Etc
Etc
Etc

...now think about all the jobs required for all of that - even the jobs from other companies providing all those utilities and services: there's your *actual* trickle down economics.
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I actually just thought it was a mild opportunity to poke fun at the absolute nonsense that is/was trickle-down economics, even if the person I responded to was being facetious. When unscrupulous activities are not only allowed but championed at both the government and commercial levels there shouldn't be much surprise that individuals will do whatever they can to "get theirs," hence this article.

Personally, I think this sort of thing is part of transitional growing pains as our "legacy" societal structures become challenged, co-opted, and/or subverted by new technologies. Only time will tell, of course, but the internet literally ushered in a new epoch and there's a lot that still needs to get sorted out. So far we've got businesses collecting, selling, and losing our personal data, companies accepting money to build infrastructure and just pocketing the funds instead, people easily grabbing up online items and scalping, someone tried a coup, various movements exposing powerful people from celebrities to law enforcement, nations employing hordes of people/bots to stir up shit globally, etc.

Regardless of how successful this kid is or was doing this, I'd put him in the same category of douchebag as copyright trolls.
 
Let's pretend he flipped everything for 100% profit. He spent $850,000 buying the stuff, sold it for $850,000 profit before expenses.
He pays $60,000 in salary to his two friends. That leaves $790,000 for expenses.
Let's say $3,000 mo for warehouse space and utilities, that's $36,000, leaving $754,000.
That leaves $750K for shipping, boxes, labels, etc...
If he claims $110k in profit, that means he paid himself $600k, which to me means he made $700K.
 
paradoxical said:
Get real, the kid is in high school and understands:

Working capital
Payment terms
P&L, balance sheet, and GAAP
Margins
Time value of money
Opportunity cost
Inventory management
Quickbooks
Forecasting and projections
E-commerce
Rudimentary employment law and management/HR concerns (he employs 2 employees)

Etc, etc, etc, etc. The kid made about triple the salary of his high school teachers (who teach a fuckload of less useful things than the above, like Latin and cursive). If it was my kid I'd tell him he could drop out if he wants and I'd fund a startup for him based on his hustle alone. There is absolutely zero doubt he learned more about the real world and business doing this than he did in school.
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lol the boomer is strong in this post

High schools don't teach cursive or Latin and haven't for decades.
 
Rizen said:
lol the boomer is strong in this post

High schools don't teach cursive or Latin and haven't for decades.
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The one I went to still teaches Latin. And you typically learn cursive in grade school, which mine still taught until it closed down. And for context I'm 36. But yeah those were some random examples to pull to be sure.
 
auntjemima said:
But all companies scalp... Let's take a piece of furniture, a couch for instance. You go down to your local big box and want to buy a couch. A decent couch could run you over a grand, but that company you are buying it from probably paid less than half of that. How is that not scalping?

It is. People have just become conditioned to accept it if it's a company doing it, but it's a bad thing if it's an individual.
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Scalping is buying something of limited supply supply and charging well beyond it's original value. Selling retail furniture from a wholesaler is not the same. You as a person could also buy furniture in bulk and sell it individually for profit. That's how reselling works. It is "accepted" because there is still a perceived value for the consumer. Resellers/Retailers have to charge commensurate prices to the market and their competition.
Scalping is a pejorative because it is seen a predatory tactic. There is an ethical angle here as you are essentially depriving someone of the product at original value to resell it at a premium. The scalper is taking advantage of the consumer as the consumer does not have other options if they want the product.

I agree with some previous posters about it being up to the consumer to buy it or not. They have to make that decision and it is their choice to make with their money. These are video game consoles after all, very much so non-essential items. I personally believe it to be sleazy and would not take part in it. Kudos to the kid for having initiative though. I was a bum at that age
 
ashmelev75 said:
To do that you need to show the expenses. I do not expect a 16-year old to realize that he needs to do that, before spending it all on stupid shit and receiving 600k bill from IRS next year.
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I expect a 16 year old to realize that I have to buy something (cost of goods sold) in order to sell it for a profit even if he doesn't know the terminology. You can't sell $1.7 Million worth of items without having to pay for them.
 
CptCabbit said:
The one I went to still teaches Latin. And you typically learn cursive in grade school, which mine still taught until it closed down. And for context I'm 36. But yeah those were some random examples to pull to be sure.
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I guess it's possible but it's rare. When I was in HS 20 years ago the only options were French or Spanish, both of which made sense living in South Florida.
 
Kneejerk thread about clickbait headline going exactly as predicted.

1625703304889.png
 
kirbyrj said:
By your own admission he only made 6.4% profit. How is he furthering a class divide when his actual profit margin is closer to a relatively cheap finders fee.

Quite frankly, for only 6.47%, he's stupid for taking on that kind of liability for such little profit.
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He's furthering the class divide by buying up a good that anyone could have had at one price, and then setting the bar higher and now only those willing to pay twice the price. Probably wrong terminology as there are sure as fuck dumb poor people who would also use the rent check for a system.

That said, while the numbers show that as a profit margin, I gotta believe it's bullshit, or the kid really isn't as good as the article claims, since most everyone else selling shit for twice the price, ended up with a profit margin closer to 100%.
 
sfsuphysics said:
He's furthering the class divide by buying up a good that anyone could have had at one price, and then setting the bar higher and now only those willing to pay twice the price. Probably wrong terminology as there are sure as fuck dumb poor people who would also use the rent check for a system.

That said, while the numbers show that as a profit margin, I gotta believe it's bullshit, or the kid really isn't as good as the article claims, since most everyone else selling shit for twice the price, ended up with a profit margin closer to 100%.
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He only resold ”dozens" of consoles, most of what he sold was other stuff with much lower margins.

The picture in the article shows a bunch of non electronics like a kiddie pool. I bought one during the pandemic and they were mostly sold out and being marked up by third parties, but I was patient and got one for the normal price.
 
If my 17yr old made a legal 100k, you'd never hear the end of it.

It sounds like all of his customers were volunteers - no?
 
ashmelev75 said:
To do that you need to show the expenses. I do not expect a 16-year old to realize that he needs to do that, before spending it all on stupid shit and receiving 600k bill from IRS next year.
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That seems to be unlikely. Considering he created a limited liability corp, he probably had some help in the later stages of planning. I don't remember the entire article, but... It seems like he had some planning/help after it got to a certain point. I am reading between the lines, but it's not unthinkable.
 
Yea, using capitalism to your advantage. $110k in profit off of $1.7 million in revenue isn't terrible for reselling. His COGS was likely much less, maybe $900k. There are tons of overhead in reselling. Specifically with fees to ebay/amazon, shipping, returns, payroll, warehouse rental, capital costs, sourcing tools, financial tools (ie - quickbooks), etc. A lot of it depends on the amount of capital you have available for buying and your risk tolerance for your ROI.
 
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auntjemima said:
But all companies scalp... Let's take a piece of furniture, a couch for instance. You go down to your local big box and want to buy a couch. A decent couch could run you over a grand, but that company you are buying it from probably paid less than half of that. How is that not scalping?

It is. People have just become conditioned to accept it if it's a company doing it, but it's a bad thing if it's an individual.
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It's not the scalping that I have a problem with. I'm all for reselling. I'm not for manipulating the supply and price gouging. If they are buying the stock of things and controlling the price on the market, I'm out. High demand and then some groups control the supply and control the pricing well above the normal retail? Nope. I see it like someone buying all the bottled water before a storm, knowing that the new shipments won't come in. They control the product during the high demand. They then charge 5x the normal market value because of that.

Of course, you also run into the issue with people hording like crazy... Toilet paper runs of last year. Demand was high, supplies were low, prices were low.

Just don't like the price gougers. Individual or company. I'm cheap, though. I won't pay collectors prices for old video games, either...
 
It’s clear. Those of you arguing about his taxes and what is taxed, really have not paid taxes.
 
auntjemima said:
But all companies scalp... Let's take a piece of furniture, a couch for instance. You go down to your local big box and want to buy a couch. A decent couch could run you over a grand, but that company you are buying it from probably paid less than half of that. How is that not scalping?
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I really don't know why this must be explained.

But yes the big box buys from another company and resells. However if I'm not able to buy from that original couch company, which most likely I am not, then it isn't scalping. That level of the big box store is where everyone is "equal" in that anyone can shop their, and even if I could buy from said company (e.g. EVGA) I don't have the buying power to get any sort of discount on said couches, hence not "scalped".

In an aside, 2016 US passed the BOTS act (Better Online Ticket Sales) that makes it a crime to use bots to buy tickets and then resell them. I do think this needs to be a bit more far reaching and be expanding to any goods, not just tickets.
 
Man, wished my kids did this, I would have a house tax applied :watching:
 
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Ur_Mom said:
It's not the scalping that I have a problem with. I'm all for reselling. I'm not for manipulating the supply and price gouging. If they are buying the stock of things and controlling the price on the market, I'm out. High demand and then some groups control the supply and control the pricing well above the normal retail? Nope. I see it like someone buying all the bottled water before a storm, knowing that the new shipments won't come in. They control the product during the high demand. They then charge 5x the normal market value because of that.

Of course, you also run into the issue with people hording like crazy... Toilet paper runs of last year. Demand was high, supplies were low, prices were low.

Just don't like the price gougers. Individual or company. I'm cheap, though. I won't pay collectors prices for old video games, either...
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The difference is that a GPU isn't essential like water is.
 
GoldenTiger said:
The difference is that a GPU isn't essential like water is.
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It's irrelevant to my point. It could be anything. Concert tickets, dildos, whatever. Just doing what you can to control the supply so you're the only one that is selling it.

I find those that sell the Tickle Me Elmo's and similar hot items just as bad. Buying for the sole purpose of selling at a highly inflated, artificial price point because you reduced the supply.

Sure, it's legal. It's making money. I just don't find it very cool. I won't support it, I won't buy from them, I won't say "great job!". They're successfully manipulating the market and the market conditions for their benefit at the expense of others. I'll let those that find GPU's, Xbox's, etc. essential and I just won't buy until I can get one new, warranty, MSRP or less.
 
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