THE SECRET MOST GREAT BUSINESSES ARE BUILT ON: ARBITRAGE

Hey Everyone,

Let’s talk about a word that sounds fancy but drives everything from Wall Street to the local car flipper: arbitrage.

I didn’t come from a Wall Street background. I came from the NFL—and now I live in the trenches of lending, real estate, and business ownership. But one lesson that shows up everywhere once you know how to see it is this:

Most great businesses start, grow, and scale by doing one thing well—

They buy something for one price, add value, and sell it for more.

That’s arbitrage.

It’s not complicated. In fact, it’s one of the simplest business models out there. And that’s why it’s so powerful.

What Is Arbitrage?

Arbitrage is when you take a commodity—or access to capital, product, or service—

and create value by:

repackaging it

restructuring it

improving it

or simply connecting it to the right end user…

…and then sell it at a higher price than what you paid.

That difference?

That’s your spread.

That’s your profit.

That’s your business model.

It works in almost every industry:

Retail: Buy wholesale > sell retail

Flipping: Buy distressed > renovate > sell retail

Consulting: Package your experience > sell it to people who want shortcuts

Private Equity: Buy low > grow or cut fat > sell high

Lending (my business): Access capital cheap > lend at a higher return

Arbitrage is everywhere.

How I Use Arbitrage in My Business

At 42 Solutions, I operate a lending business built almost entirely on smart arbitrage.

Here’s what I mean:

I might borrow capital at 7–8% from a line of credit…

I then lend that same capital at 12% + points + fees

I pocket the spread after paying investors or banks

Then I reinvest that spread to do more of the same

That’s clean, controlled, repeatable arbitrage.

The key is not just the spread, but the structure and risk management behind it.

Because I’m lending on real estate—where there’s collateral, personal guarantees, and local relationships—I can control the downside while scaling the upside. That’s what separates good arbitrage from reckless arbitrage.

Arbitrage Is the Engine—But Structure Is the Chassis

Anyone can do arbitrage.

But sustainable, scalable arbitrage? That takes:

✅ Consistent sourcing (deal flow or inventory)

✅ Cost control (low cost of capital or acquisition)

✅ Clear value add (why someone will pay more)

✅ Systems (to do it without burning out)

✅ Discipline (don’t chase bad deals just to keep volume up)

This is why you see many businesses boom for a while, then bust—they lose sight of the spread or the structure. They stop protecting the downside.

I refuse to let that happen.

Your Playbook: Where’s Your Arbitrage?

If you’re building a business or growing your income, here’s a simple question to ask:

“Where can I consistently buy low, add value, and sell high—without creating a job I hate?”

That could be capital like me.

That could be expertise, time, access, relationships, products.

The best businesses—especially early on—don’t need to be original.

They just need to be effective at arbitrage.

Final Word

If you look at some of the wealthiest people in the world, they started with some simple form of arbitrage:

Sam Zell bought distressed buildings no one else wanted.

Warren Buffett raised money at 5% and bought stocks returning 15%.

Jeff Bezos built a marketplace where he got the spread between seller and buyer.

So if you’re early in your journey—or even deep into it like I am—don’t underestimate the power of understanding your core arbitrage engine.

That’s what pays the bills. That’s what grows your wealth. That’s what scales your freedom.

DK 💰

Founder, Kennard Capital & 42 Solutions