📖 Simple Math (Idea Feature #16)

🧠 Top of Mind Technology

• Scientists have created a new device that leverages AI and powerful camera technology to catch and stop mosquitos that spread deadly diseases. Now we just need them to sell consumer versions for our backyards during the summer.

• If you park your electric vehicle (EV) at the charging pump for a few hours, your car may be the last thing you need to worry about. There has been a recent uptick in crime reporting theft of EV charging cables, which coincides with the all-time high price of copper, which the cables contain.

• Getting warm and cozy on the couch may soon bring more benefits than just comfortability. Researchers from the University of Waterloo in Canada have developed a blanket that converts body heat into electricity.

🍪 Business Bites

• We’re sure many of you have heard that taking online surveys can be a decent way to make additional income. It turns out, however, that aside from the fact that you earn very little money on a per hour basis for completing these surveys, they can seriously compromise your personal data.

• This is not a political newsletter, but we would be naïve if we did not mention the upcoming 2024 Presidential election. Want to know how such a big election can impact the stock market? This article and report from US News and JP Morgan respectively provide clarity into the market’s performance leading up to and after presidential elections of the past 50 years.

• When you hear the words “Track and Field” what is the first event that comes to mind? For most, it is reasonable to assume that it is a running race (springing, distance, etc.) That is also apparently the case for investors, as some are worried “Track and Field” could be divided into two sports based on how investors are placing their money into the sport.

Idea Journal Feature: The Simplified Gold Simulator

⚾The Elevator Pitch - Quickly develop a profitable business by creating a small, focused, and affordable golf simulator location.

 💡The Idea

Since 2020, Golf has exploded into becoming one of the most popular sports in the United States. COVID-19 was the perfect time for beginners to pick up the golf club and begin playing. Today, the game has well more than 25 million people across the country, and it continues to grow.

Historically, golf businesses consisted of golf courses, and the occasional solo driving range, but most “ranges” have typically been tied to individual golf courses. In recent years, as technology has improved, golf simulators and more interactive locations such as X-Golf and TopGolf have joined the golf business scene.

We believe that there is a simple and low upkeep business waiting to be created in the golf industry. The idea is to rent a small indoor location in a suburban area in the northern part of the country to house 4-6 golf simulators and rent out the simulators on a per hour basis to customers. Clearly, places like X-Golf have already developed indoor simulator businesses, but we think there are too many nuts and bolts tied to those businesses. Many golfers just want a place to hit golf balls, especially year-round, something which is difficult during approximately 5-6 months out of the year in certain parts of the country. Furthermore, this is a business that, when built properly, can be run by just 1-2 employees in the location at all times. The simulators would be set to a timer, so customers can only hit balls during their allotted time, and appropriate security measures would be put in place to ensure customers can be held liable for any damages they cause. To see if the business would be profitable, lets do some back of the envelope calculations.

💸Revenue

• Rental Fees – Let’s assume the following:

  • 4 simulators in the location that are each rented out at a rate for $50/hr (look comparable at prices online - that is reasonable)

  • The location is open 7 days a week, 10 hours a day on average

  • Capacity is 50% (meaning on average, 2 out of the 4 simulators are always rented)

  • 2 simulators $50/hr 10 hours * 7 days = $7,000/week, or approximately $30,000/month.

🔻Expenses

• Rent – Assume the location requires approximately 2,000 – 3,000 square feet for all 4 simulators plus a front desk. We assumed approximately $25/sq ft per year, or just over $2/sq ft per month. A conservative estimate would give us a rent estimate of $6,000 /month.

• Employees – Assume 1.5 people working all 70 hours of the week at a rate of $25/hr. This comes out to be about $12,000/month.

• Utilities/Maintenance/Repairs - We are guessing $2500/month

• Insurance - $2500/month

All-in, this puts as at about $23,000/month in expenses, all of which were estimated on the higher end of their bounds.  Of course, initial simulator costs would be in the range of about $80,000 for four simulators, but those could be paid off essentially within a year with the approximately $7,000/month in profit.

👍The Good Stuff

• The Sport/Demand – Driving ranges and simulator locations are crowded ALL THE TIME. The demand is there, this is an additional, more lowkey and quiet option for those really trying to grind at their game.

👎The Risks

• Lacks Entertainment – Maybe the lack of food/drink/service option that places like TopGolf and/or X-Golf provide would lead customers to find a different option. Perhaps they would demand a lower price point that could cut into the profits?

• Capacity Assumption – With no industry experience or research into various locations, it is hard to say whether or not the capacity assumption made is realistic.

🤔 Musing of the Week

Has the emphasis on becoming more well-rounded harmed the ability of younger people to find what they are passionate about?

Note that this is a musing, and of course, not necessarily backed by any form of empirical data and or research.

As the millennial and Gen Z generations have seen, the emphasis on a well-rounded education and upbringing has become more of a requirement, and less of an exploratory path. Long gone are the days where specialties are highlighted, acknowledged, and encouraged at an early age. It would seem to many now that, and for what many would say good reason, kids and young adults are encouraged to explore a vast breadth of activities, whether it be sprots, drama club, robotics, etc. As those kids age, it is reasonable to assume that their curiosity into different things does not leave either. Is it possible that expanding interests so much could actually be harmful? Is the new answer “I have no idea what I want to do with my life” more a result of the fact that a person has tried too many things to really understand any one thing enough to be passionate about it?

This is a contrarian perspective, one which we are not even endorsing. We are simply musing on the fact that perhaps passions can actually be developed from expertise, something that is usually only developed when more focus is placed on certain activities than others, usually leading someone to be less well-rounded.

📚For the Road

• How Much Do Driving Ranges Make Yearly?

• Why there's reason to believe golf’s growth in popularity will endure