This is a smart new business

[billbenson]

These are the arguments you could make about the 'Geek Squad' There are plenty of small time repair shops who can fix stuff. But they don't fix cell or tv's. Instead it it is a business that is viable and probably sell for millions. And all it requires is a bunch of techs that can fix stuff computers and their bosses and the infrastructure.

The pet rock made someone millions and you guys are taking every negative side you can come up with.

Suppose the business fails. Think of the business skills and marketing connections / venture capital connections he will walk away from.

By nature of building a business, I am certain I could do it again with a similar business. This 25 y/o by nature of putting this together will walk away with more business skills than everyone on this thread put together.

I have a college fiend who has made a career out of building businesses and selling them in a few years for million.

My money goes on this kid having a real bright future.

[Paul]

The kid will likely have a bright future but not so sure about this business. I’ve worked with a few “network” type structures and with a few “stock plays” too.

I suspect there is a strategy, that may be very successful, but it’s not the “fix a cracked screen” business. The “boutique” investment bank guys are slick. They are NOT in it for long term dividends. They want to flip these deals into public entities or sell out to a larger company. They actually look for guys like this and businesses they can promote. I ‘m sure the kid is not orchestrating this on his own.

I really believe they are going to try to flip this quick somehow. From many perspectives the initial model is not what investors would consider solid. It’s much too fragile and totally dependent on a service that can be obsolete in a year or face major competition. You can compare it to Roto Rooter or Safelite windshield repair. The difference is drains are likely to clog forever and there will always be windshields to repair.

I believe the strategy may be to raise enough cash or share value to acquire a different business and drive the stock until they exit. That strategy can be very, very successful. However, they could also be setting up a basic pump and dump and the kid may not even see it coming. These smaller investment houses are merciless and without conscious.

I don’t know the actual numbers of course but I’ll bet the number they stated as revenue is not all from repairs. It sort of looks like they sell licenses or business opportunities. That initial revenue pumps up the early figures.

Another little red flag for me is their “global” strategy. It doesn’t make sense from a business perspective to do that. There is just too much dilution and stretching of resources to do that with what is basically a repair service. I think it may be part of the “sizzle” strategy that allows them to pump up pro forma projections based on world population. It’s a dream for a company to be able to use those numbers instead of a more realistic domestic growth model.

But, of course everything I say is based on that very short video with a couple of analysts. I don’t know the background of this one but typically you pay for those types of interviews, usually with equity. It was a very soft interview.