dispatches from TJICistan

http://foundread.com/2007/10/16/un-sexy-…

“Un-sexy is good business,” and other rules from Scott Rafer

Last Friday I sat down to lunch with Lookery-cofounder Scott Rafer. Over Thai noodle soup and green papaya salad, I got an earful on why Rafer thinks entrepreneurs ought to be buckling down and preparing themselves for some hard knocks in the market.

A student of history, Rafer believes we are no more than 5 months away from the next bust… Rafer draws on a lot of experience: he has launched something like 8 startups, among the best-known are: WiFinder, Feedster, Mashery, and most recent, MyBlogLog, which Yahoo! bought for $10 million in January. (There are more companies, Rafer says, but ticking them off for a reporter grew tiresome. “I can’t even remember them all,” he claims.)…

Rafer’s Rule #1: ‘Un-sexy’ is good business. This is a riff on a market principle Rafer picked up from a couple of his ancestors back east: one who ran Rafer’s Kosher Meats; and his grandfather, who ran Rafer’s Army Navy Surplus (both were in business in the 1950s, long before Rafer was born.) The idea here is that there is potential in furnishing a (seemingly) boring business that plenty of people need, but which few people want to do – a.k.a. stuff that ain’t sexy. Which also means you?re likely to have a reliable market for your business, and might not have so much competition – good!

Rafer’s Rule #2: Every Silicon Valley business cycle lasts 8-11 years…

Rafer’s Rule #5: The best defense is to play at the bottom from the start, where such deflation in pricing won’t impact your business as much.

Note:

#1: SmartFlix and HeavyInk put stuff in boxes, then mail them. We do a lot of horrible just-one-step-up-from-screen-scraping. We read through postal regulations to find loopholes. We have shelves full of things and low cost space to hold those shelves.

#2: Our model doesn’t depend on anybody else’s valuation of anything besides obscure video rentals and comic books.

#5: Our videos rent for about 1/7 of purchase price, and our comics are discounted 20%, have free shipping, and have a triple-your-money-back guarantee.

OK, we’re ready for some heavy weather.

This entry was posted on Tuesday, October 16th, 2007 at 10:38 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.