The Level Up Letter - Vol. 51 - Money in the Margins

Finding spaces to make money inside the rules

Author

Better Board Meeting
December 06, 2024

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THE LEVEL UP LETTER

Hi All!
Here is your weekly Level Up Letter. This week we’re looking at spaces inside the normal set of rules that you can find margin. We’ll explore a few specific areas but these margins can be found in all aspects of life and business. To help us with our margins….please click the sponsor and support us writing this every week. We hope you enjoy!!

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QUOTE OF THE WEEK

THE RULES: GUIDELINES, NOT GOSPEL

Rules exist for a reason—whether it’s to maintain order, ensure fairness, or standardize processes. In real estate, for example, zoning laws and lending standards create boundaries. In the music industry, royalty splits and distribution models govern the flow of income. These frameworks are vital, but they also leave room for interpretation, adaptation, and sometimes reinvention.

The key is understanding these rules intimately. You can’t outmaneuver a game you don’t fully understand. But once you do, you’ll start seeing opportunities where others only see restrictions.

Here’s a truth: Rules aren’t always about what’s allowed or forbidden. Often, they simply shape the path most people take—and where the crowd goes, opportunity gets crowded.

FINDING THE MARGIN: PLAY INSIDE OR FLIP THE SCRIPT

Finding a Niche Inside the Rules Sometimes the most overlooked opportunities are hiding in plain sight, deep within the system. For example:

Real Estate: Investors make money in the margins playing by the rules and it’s done across the board. (LTR, STR, multifamily, industrial etc.)
If I want to buy a rental property, I need to know that I can rent the house for more money than I spend on all my expenses (mortgage, taxes, insurance, repairs etc) - This also defines my margin by buying in locations with a price-to-rent ratio where that’s possible.

Exotic Cars: We all know that cars depreciate like crazy right? Eventually that Honda Civic will go to zero because they keep making new ones and there were millions of your same model already. BUT the same thing is not true for Exotic cars. There is a margin for cars with limited supply. After the initial depreciation, there’s a good chance you could buy an exotic and sell it for the same price, slightly more or slightly below what you paid for it. IF YOU KNOW THE RULES.

Breaking the Norm, Not the Law This is where innovation lives. When you challenge the "normal" way of doing things, you can often carve out an entirely new path. For instance:

  • Uber: The taxi industry was a fortress of regulations and medallion systems that made entry difficult and kept prices high. Uber didn’t break the law but reimagined transportation by leveraging technology to connect riders and drivers directly. By bypassing traditional dispatch systems and embracing ride-sharing, Uber transformed not just how people get from A to B but how they think about owning a car or using public transit.

  • AirBnB: Hospitality used to mean big hotels and standardized experiences. Then came Airbnb, which flipped the script entirely. Instead of building hotels, they created a platform for homeowners to monetize their extra space. By working within (and sometimes challenging) local regulations, Airbnb democratized travel accommodations and opened the door to more personal, cost-effective, and unique stays.

Both of these companies have since helped rewrite laws and regulations to allow for these new industries to thrive and be safe and compliant.

ASK YOURSELF: WHERE’S THE GAP?

Here are a few questions to help you uncover opportunities in your own industry:

  • What are the “rules” everyone blindly follows?

  • Where do those rules create friction, inefficiency, or unmet needs?

  • How can you simplify, specialize, or reframe the value you bring within this structure?

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