Thursday, 05 January 2012

Free Market Thinking Inside the Van

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Inside the Lucky Dragon van sitting by the curb at the Chinese consulate in New York (left) is a couch, a folding chair, two Mac laptop computers and a printer running off the cigarette lighter/DC connector. On the side of the van is the name: Lucky Dragon Mobile Visa Consultants. They are serving 25 to 50 people every working day of the week. 

When Adam Humphreys, a free-lance artist and member of a local band, tried to obtain the required visa for his trip to China, he found that the form he had downloaded from the embassy’s website was the wrong one. After standing in line only to find that his efforts to complete the form were in vain, Humphreys walked three-and-a-half blocks to a Burger King which had a wireless connection to download and complete the proper form, and then return to stand in line once again.

At the Burger King’s Internet café, Humphreys had a BFO (blinding flash of the obvious): every one of the computers at the café was logged onto the embassy’s website to access the proper form. Smelling an opportunity, Humphreys called his band buddy Steven Nelson and together they rented the van and started a business.

Strategically located near the exit doors of the embassy, they were soon overwhelmed by customers needing the correct form. Many were desperate:

Adam and Steve took time to help me out at the end of a busy Friday. My flight was on Monday evening and I needed to get the forms in before closing. Adam quickly helped me get the form filled out while Steve held up [persuaded] the security guard, and I JUST made it on time. Without their help I wouldn’t be writing this (from the Canton fair).  Signed, Gary]

Marion was grateful: “Adam and Steve, thank you so much for your help! I don’t know what I would have done if I hadn’t found you.”

Actually, the Lucky Dragon van found them. By thinking outside the box, this mobile problem-solving business recognized an opportunity. It was risky. The two had to rent a van, get a license, hire a sign-maker, lease some computers and a printer, and open the back door…and hope they were right. 

The first month they served 500 customers who had a problem and didn’t know how to solve it. In that first month Adam and Steve had some problems of their own to solve: how much to charge, how to avoid potential parking violations, crowd control, customer satisfaction measurement and other competition.

They didn’t know what to charge, so they started at $10 per form. When the line got too long, they raised their charge to $40. The line disappeared. They reduced it to $20 and the line became manageable. The first month they grossed $10,000.

Now they are wondering about opening a permanent storefront nearby. And they are worried about competition, especially after their story became front page news on NPR.

Economist Mark Perry was gleeful:

[Their story] demonstrates how most successful businesses are started with the express goal of trying to solve other peoples’ problems. It’s an example of the invisible hand of the free market at work…

Economist Walter Williams disagrees. He thinks it’s all about greed: “…it’s human greed that gets the most wonderful things done…I’m talking about people trying to get as much as they can for themselves.” Williams them riffs about why there are so many enemies of the free market, especially those “who believe they have superior wisdom to the masses and that God has ordained them to forcibly impose that wisdom on the rest of us…tyrants do not trust that people acting voluntarily will do what the tyrant thinks they should do.”

Whether the Lucky Dragon van succeeds (it just started in October) or fails, it is clear that neither Adam nor Steve were concerned about riches or wealth or fame: they just saw an opportunity that just might work out. It isn’t likely that they know anything about Adam Smith’s invisible hand or agree with Walter Williams’ greed or know anything about tyrants. If it works out, great. If not, they can always go back to painting and playing in their band.