A Journey into Personalized Luxury Fashion: Editorialist YX CEO Rafael Ortiz (Part 2)

Sramana Mitra: Could you describe the process of figuring out what you wanted to eventually build a startup on? What was the process of coming up with that problem?

Rafael Ortiz: What we did is counter to what a lot of people advise. A lot of people advise finding the problem and doing something that you’re passionate about. We didn’t do that. It was very much an MBA kind of exercise. The most important decision was deciding that we were going to start the company. Once you decide, everything then starts happening. The hardest part was making that decision.

We scanned and tried different things. An early idea was that this internet thing is clearly going to be big. There’s no internet access in airports. Let’s build kiosks in airports. It will be ad-supported. There were kiosks out there. We explored it and realized this is a disaster. Then we said, “A marketplace is probably a model that’s going to make sense on the internet.” eBay was still quite young. That was the genesis. We started buying computers. It was so difficult buying computers that we said, “Let’s make the initial marketplace a marketplace for computers.” That was phase one.

Sramana Mitra: There are many ways of starting companies. My first company, I started as a grad student at MIT. My journey was a bit more like your journey. I didn’t have a problem that I was solving. First and foremost, this was 1994. The internet was absolutely brand new. No one understood the internet really well. No one knew how to make money off the internet. There were these vague ideas that I didn’t really know or understand really well.

My decision was that I was going to start a company. We started doing projects to make money. I had a team of engineers in India and I was going back and forth to the US. I did a product company out of that a few years later. The product idea came out of my prospecting for the services business. I then built this prospecting software using AI. As you described, the decision to start a company is what started my journey.

Rafael Ortiz: In that era, there were not very many young Indian women engineers who had decided to start a company.

Sramana Mitra: That’s correct. I was the first Indian female CEO of the Indian IT industry. Let’s come back to your story. Did you decide to do a marketplace for computers? NexTag was a comparison shopping engine, right?

Rafael Ortiz: That’s how the company ended. What we started with was, “What’s the most efficient marketplace in the world? Arguably, it’s the marketplace for equities.” We used that as a framework. How do you create liquidity in a marketplace for stocks? What is the role of information and price discovery? We were going to build a NASDAQ for computer products. It’ll be super-efficient. Prices will be dynamic depending on supply and demand.

We got computer retailers to sign up for that. We gave them this framework that would allow them to deliver dynamic prices depending on their inventory. It was this negotiated marketplace. We signed up retailers, developed a prototype, and raised Series A. It was a complete disaster. It didn’t work at all. I’ve since met others who, at that time, were in business school and also thought about NASDAQ marketplaces for consumer goods. Our idea was really not very unique.

This segment is part 2 in the series : A Journey into Personalized Luxury Fashion: Editorialist YX CEO Rafael Ortiz
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