September 19, 2019

Cruise control for a passive income

Simo Elalj @simoelalj

RefurbMe started as a side-gig fixing the broken experience of buying refurbished Apple products online. I succeeded to convert a personal experience into a product that helps thousands of buyers to easily find the product they are looking for – while also ensuring a sustainable business model based on affiliate marketing.

While it was providing me a steady passive income - I didn't had the ambition first to make it as full time occupation and grow since I was still in high-school (in Morocco), and wanted to get to an engineer school in France – This project allowed be to be financially independent very early and support my studies and other side-projects.

It was until 2014 when I moved the Bay Area that I had an "Identity crisis" and realized that I should have a greater vision and ambition, and that there was room to scale up, expand to other verticals and raise funds (like every one is doing in the Silicon Valley).

I decided to quit a software engineer positon at a non-profit and move full-time working on RefurbMe, hire and pitch investors.
Beforehand, I set up a goal to rebuild the website and extend the service to more merchants that sell refurbished (Amazon, Target, Gazelle...), so that I can have a working demo to show to investors.

6 months later and with a lot of cash burned (especially being based in SF) I realized that this business cannot scale with VC funds because of its business model: I was competing with big brands on paid advertising with high user acquisition costs, while I had tiny commission per sale.

There were two options:

  • Change the business model, collect directly the payment like Amazon does and control the pricing: that involves taking more risks and operations (support, return, larger team and investments).
  • Scale down and stay as a comparator: that involves having less risk and less revenues, but at least keep the control on the business and free up time.

Reading the 4-hours work week by Tim Ferris helped me realize that the ultimate goal is to separate income and work - so that it can free-up time to work on fulfilling project and ideas without having the stress of ending up homeless. I already had a passive income and could have killed it by involving external investors.

That realization led me to scale down RefurbMe, automate most of its processes – and focus on organic growth.

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