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Power of Markets in Decision-Making

by Eric Rothman
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This week Jack Ryan, CEO and Co-Founder of REX, spoke to a crowd of start-up and technology industry professionals in Playa Vista, CA.

Jack discussed his perspective on how he uses the data he finds in markets to base his decision-making.


“… So there was one person, one individual at the U.S. government, who set the price in the 1980s for trading securities. That price was 12 1/2 cents. Once the regulations came off, the price for trading securities went down to a penny.

So the one person who is in charge of setting prices was off by 1000%! One penny to $.12 is over 1000% — they were off by 1000%. Once the market told us that securities should trade at about a penny per share it reinforced the idea that markets are smarter than one individual person. So that was also one of the ideas I had when starting a company like REX.

Because we know, for the residential real estate space, these fees are way too high relative to the services provided.”


Jack had some recommendations for entrepreneurs thinking about starting new businesses:

“So one thought I have for you today, if you’re on the investing side- don’t try to be smarter than the market. Look at what the market is valuing highly today and create that asset.

Second thought is, if you’re thinking about starting a business- where should you go to start the business? One is look for a big market. The second thing is identify a very inefficient market. So what do I mean by inefficient? Find one with a very high cost and very low quality of product and services.

If those two things exist, it’s a great place to start a business.

Market intelligence helped Jack and Co-Founders, Lynley Sides and Charles Tseng, figure out where they could make the biggest impact and most value for consumers.

“Within a large market you can tell [where the opportunity is] based upon the quality of service provided and the pricing. Is the current paradigm too highly priced relative to anything else out there (whether it’s investment banking fees or legal fees or take your pick)?

So that’s how we started Rex. We set out looking for that kind of opportunity. You have to ask yourself, ‘why is there an inefficient market?’ Because the free markets don’t let inefficient markets last for too long.”

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