YouSaid · the spoken record

Ernie Garcia

lines on the record: 60
first: 2021-08-05
most recent: 2021-08-05
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“That's a big question. I almost got to be careful, I don't go certain places, but I'll get all emotional on that one. Let me try and tie it back to our conversation. I'll remember the moment for the rest of my life. But the early in COVID, we were on a director's call and we were talking to all the directors in the company. It's around 100 people at the time. And we're giving an update to what we're doing. And one of the people in People Ops started talking about how the emails were coming in and people were contributing to the wellness together fund. And when they first brought up that there were hourly people, we had just cut 80% of their hours. and they were contributing the next 20 to me that was like an absolutely incredible moment because it was just that's a person that we the company was hurting we were hurting them in that moment and then they were standing up for the company and to me that just that speaks to a bigger thing which is people are good and i really believe that too that one that one got me that was a cool thing to see in people and there are others too”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Hold of any conviction. It's just something that you ask for something interesting. You brought up autonomy. And I think that's at least a place where I'm not sure that my personal views at least totally align with consensus views.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“For most people, I think that when you start to do the math on how cars actually appreciate, which includes depreciation and mileage and depreciation in time, and then you start to think about the realities of how humans interact with each other and that being physically next to each other is valuable and that people share schedules and therefore cars are going to sit idle during certain times regardless like it's this ideal of having cars constantly moving is probably to some degree difficult without massive cultural shifts and then you start thinking about the math of how those things unfold and you start to say wait a minute let me even imagine that full autonomy I could snap my fingers and I could arrive at full autonomy instantly is it then obvious that fleet ownership is the right economic solution for people or does it remain the case that personal ownership is the right solution and I think when you do all the math it's way less obvious than people think that fleet ownership is the right solution I think that that'll be like an interesting one to watch unfold as well and that's not a position that I would”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“How the game keeps unfolding in front of you in the future. Because I think that trying to foresee six moves down the field is to some degree pretty hard. But if you can keep saying we know that if we build more of these inspection centers and bigger logistics network and a better transaction platform that does all things customers want more effectively, we can keep getting more and more scale that builds more and more of those assets that generates all kinds of interesting opportunity for us because customers have all disease when they buy a car and regardless of the evolution of all these things there's just going to be opportunity there. I think that's the area that we should spend the most time and energy because we have conviction we can add value and position ourselves well for whatever the future is as it relates to autonomy like the most interesting thought that I would say that I would just think is to some degree counter to the simplest narrative there is I think that autonomy equals fleet ownership is way too quickly made of a logical leap.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Think one, recognizing that the used car market is really just this huge apparatus where customers trade cars. I think that has all kinds of interesting implications. I think the opportunity here is really, really large for all the reasons that we've articulated. And I don't think looking inside the industry at the biggest players is the best way to appreciate what that opportunity is. I think looking at other disruptors and other verticals and seeing what sorts of things they were able to do in other industries is a better way to think about it. There's so many things happening in this industry right now more broadly, whether it's electrification or the move toward autonomy or big interest and cultural things that are happening now because of COVID, people moving to more rural environments and out of urban environments. There's all these interesting things happening. I think there's so many interesting things. I think as a company, what we have to focus on is where do you have the most conviction where you can make the biggest impact the fastest that constantly positions you for?”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“He was so different that I am, and he was effective. And it forced me to recognize places where I was wrong and where I wasn't as effective as I wanted to be. And it forced me to value these other skill sets in a way that I'm not sure I otherwise would have. I think just get exposure to people that see the world different than you is a useful thing. You may walk away and be like, I was right all along, but you're going to have that position with more conviction and with more evidence than you did before. And probably that won't be how you walk away. Probably you're going to learn something from people who see the world differently than you. So he played a big role in shaping who I am and how I see things.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“There's all the obvious ones. I agree with all the obvious ones. Jeff Bezos may be the greatest business mind, I don't know, in a really long time. Elon Musk may be like our generation's version of Isaac Newton or Benjamin Franklin. There's like these incredible people out there. For me, like in my little experience that I was really lucky to work for a CEO before starting Carvana that saw the world very differently than I do. I do tend to be more conceptual and strategic and kind of bigger picture and then try to kind of reduce down from there. This person was so bottoms up, wanted to go talk to all the operators and learn about their problems every single day and what mattered to them and was so much about culture, which at the time I didn't believe in or didn't think was important. I learned so much from my exposure to him. And I don't know that it was just because he was good, although I think he was good. I think it was more because”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Think both is the answer. We talk a lot about what changes, what the best business model is customer preferences and technology, but then even as the best business model gets built, there's this communication layer of explaining that it's the best. I also think you can think of COVID as being this acceleration of the communication layer because all of a sudden people that would have never ordered groceries online or never would have ordered food from an app, they were doing that. And so habits were broken and ears were open to new ways of doing things. And then once people try things that are actually rationally better, they tend to realize it. But they might not have tried it for 10 years otherwise. Like I don't know that fundamentally persistent customer preferences are going to change that, that much as a result of COVID. I think business models that already were better given pre-existing preferences but hadn't been adopted to the level that they might have been adopted because of difficulty in communicating.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“A question we need to surpass it again. But to me, that's like my favorite COVID story. And obviously there's so many other things that happen from demand perspective, a supply chain perspective, whatever else, but that was like the deepest thing that mattered the most.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Batrio was so awesome, was just hundreds and hundreds and hundreds and hundreds of people across the company poured money into that fund, like sent emails back and said, I'll give up my entire salary through this period. Even people, hourly people, they were in different situations where maybe they still lived with their parents or maybe they had a spouse. Their job wasn't in a tough spot. They poured everything into it. And it was just like such a cool moment of coming together and seeing people become people when it mattered. I thought it was so cool because to me that was a moment where we creatively solved the problem and this cultural ideal that's so easy to pound your chest about when times are good, it got tested and like everyone stood tall everyone showed up. It was just cool. And so to me, like that's the thing I'm proud of inside the business by a long, long way. It's a cool moment. I don't think we'll ever surpass it and I hope we don't ever face.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Over video because we stopped having all hands meetings and we basically said, Hey guys, here's the situation we're in. And this same situation everyone else faces. This sucks pretty bad. This is not a good place to be. So we have to do something. Here's what we think the best answer is in the long run. But this hurts people, right? And this is going to hurt people that are part of our team. So we're going to build this fund and this is what we're going to do. And for all of you out there that can absorb a little bit more strain, but if you're in tech or you're in corporate and so you're still building the machine and so you still got your full paycheck, but we're going to pull back on everyone else if you can and don't do it unless you can. But if you can, please contribute to this fund. And this fund's going to be distributed to the people who need it more than we do as we ride this thing out together. That's a value. So like, are we going to live up to that right now or not? And we really tried to send that message to the company in a way where we didn't want to obligate people to do it. We knew that we could afford it. The board could afford it, the executive team, we can afford it. We were going to be all right.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“We're facing a massive reduction in sales. And so across the economy, you saw layoffs and furloughs and all of these things. And there was very good economic reason for that. And I don't want to in any way, shape, or form, judge anyone that made those choices in those moments because it's like it was hard. And that was reality. That reality was a real bummer, but it was still reality. And so when we were facing that, we knew we had to do something similar. We had to cut costs too to keep the machine spinning and build it. But that meant cutting back on this team that we had built, all of these people. that worked so hard and made Carvana part of who they were and who were relying on us and who in many ways were maybe the least capable of absorbing the shock of an income hit. That's a hard one. We came up with this plan to build the world on this together fund. One of our values is we're on this together. Our entire executive team put our salary through the entire period into this fund. Our board did the same. And then we basically put out video. We started doing probably twice a week company up.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“When you're building a business like ours, a lot of the value in the long run is in the way the system functions. It's in the technology and the processes that you're building. And you need to keep moving forward in that because when COVID hits, there's a world on the other side of it. It's going to be a little different, but there's still a world on the other side of it. You need to have this system operating. Suddenly you have this dramatic reduction in demand and in revenue. And so what that means is all the people that do all the real actual work on the front lines, they don't have as much to do. That's just the truth. And so then as a business, it's trying to say for the long run, health of the sum of all of our constituencies, we have to keep building this machine. But now like the investment community views us differently and like our view of what our runway from a cash perspective looked like before is different, sort of a totally different world. What do you do? We've got all these people inside of our team that were here to produce triple digit growth. And now all of a sudden.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“There's so many different stories that we could discuss about COVID. Most importantly, what it was is it was massively unexpected. And when you face massively unexpected things, all the things you hope are true get tested, your ability to face difficult problems gets tested, your culture gets tested, your adherence to your values gets tested because you face fear and you face uncertainty. And when you face those things, it's easy to get really short-term focused. I just think We felt all those same pressures every other company in the world felt. We all felt it. Like we were all scared. What does this mean? Something I'm very proud of is when we felt those pressures, when those pressures pointed in the direction of solutions that ran afoul of our values, our culture, our principles, we like acknowledge that and we sat in a room and we're like, now what do we do? Try to make that as concrete as possible. Something that's just really unfortunate.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Think it's incredibly similar. Something that I think is important inside the culture of a company is to be a culture of problem solvers and to face a new problem. And when you face it, not answer it the same way that everyone else answered it, but think about it from first principles and try to come up with the best solution you possibly can, that is culturally important. And you want to embed that inside of a company. Once you have that, you don't want to copy things that other companies have done because”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Ways that they build technology so that they don't have as much dependence on others, and so others have less dependence on them, but trying to structure them so that they can be as independent as possible. So once there's an agreed upon direction that you're running, they can run as free of coordination as possible. I think that's the goal. And what that necessarily means that you're giving up power, giving up some decision-making authority, but in my opinion at least, people are smart. And once you have a conversation about the direction you want to go, the value of speed and the value of excitement and the energy that gets built on a team that can build things quickly and move fast without all kinds of boring coordination absolutely overwhelms the value of you being in control or me being in control.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“The biggest word that drives slowness and that drives blow that makes things less fun. And so then you just have to actually look like what's the value of coordination. I think the value of coordination is having a cohesive strategy and its prioritization, right? It's making sure that you're working on the right things. It comes at this massive, massive cost. And so how do you try to generate the most independence you possibly can while still having a cohesive strategy minimizing coordination costs as best you can? And I just think that we've definitely learned over time that we're not in an optional place today. I'm sure we're not. I'm sure we'll keep evolving. But having more independent teams that have a formulaic way of articulating where they want to go that is then signed off on. This is like the strategy and this is where we're all heading and we believe in this and so we make sure that we have cohesion in like this strategic direction that we're going but then trying to organize those teams in all of their processes, in the skill sets that exist on those teams.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“I'll give you an example. For the most part, every engineer, their favorite time of year is when you have like a half fun. It's like every company. And it's like, why is that so fun? And it's fun because there's complete independence. There's no coordination cost. There's no legacy technologies. There's no plug into this team. There's no approval from this person or that person. You just get to run. You just get to build. And that's what a startup is. Like day zero of a startup is a hackathon. And then as a company gets bigger, smart people across time have faced these questions. They've done their best to answer them. But what happens on average is you build bureaucracy and bloat and it becomes less fun and the most productive people don't want to be there. It's not because people are stupid. They make the decisions they make for good reasons and they're smart and they're well intentioned. But generally speaking, I think what happens is it's coordination across many different teams and it's approval, which is another form of coordination. So coordination to me is just kind of like.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Exact same debates, but you get to take more things off the shelf simultaneously. The ability to have that debate to soberly assess where you are and what you realistically can do is really important to prioritize and take the right number of things off the shelf, but then also just building a company that has the capacity to move quickly is really important. And to me, is a totally separate problem, but a very important one.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Of bureaucracy building through approval chains and through interdependency of all these different groups have to coordinate and coordination costs and all these different things. So early on, it's super easy. But as you get bigger, there's many different ways that you can organize all these different functional groups. And they have all these different trade-offs. But to me, it's a really important question. I think I could probably talk on that one for like an hour and a half. And I don't think I know the answer. I think we're starting to learn the answers as we kind of move through this problem and move through different scales and learn about it. But I think that to me the quality with which you approach that question and the way that you're able to learn where your organization is moving slower than you wish and why and how you can kind of evolve that, that's what increases like your overall capacity. And then all of a sudden, the person representing kind of the more negative perspective and the person representing the positive perspective, all of a sudden now you have more speed. You have more capacity inside of your system to take on. If you do a good job answering that question.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“As possible, but you can be aware of all the things that go wrong. And I just think we've got a really good team that finds that balance. And I know like our COO for me represents that more than anyone else. And what I just love about our relationship is we always disagree when the conversation ends. I always try to think afterwards about why he's right. And he always tries to think about why I'm right. And then we kind of call each other up afterwards and make up and explain why one another was kind of right and where the right answer really is. And I think having that relationship is super important. And then I think that that's like the most important thing that exists at a higher level, I think, than org structure, which we'll get to in a second, which is just you have to evaluate what the opportunities are, where you are, and how much you can take on all the things go wrong. And then what's like the smart number of things to take off the shelf and start to build. And I think that that's really, really important. Then to me, like org structure fits underneath that. And the way you organize people matters so, so much. And early on, it doesn't matter because you're small and you're nimble. There's not this risk.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Aware of all the things that can go wrong and are constantly bringing that up and constantly pushing up on that and are anxious every time they see any sign that something is moving off the rails, bring it up and we push on it. And I think that what's interesting is in a lot of teams, I feel like teams are made up of one or other personality type. And I think entrepreneurs are almost always the optimistic types. But if you only have that type, then you just run. You tackle all that complexity. It's harder than you thought. You didn't appreciate how hard it was going to be. And you get caught in the mud and you don't make progress. If you only have the anxiety around everything go wrong, then you don't take any big swings. And you can't do anything truly exciting. If you can find those different personalities and then the hardest part is binding them with a relationship that is real, that kind of values the other perspective and isn't annoyed by the other perspective because I think oftentimes people on one side of the spectrum are annoyed by people on the other side. I think that's where you can find the speed of reality. You can push to go as fast.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“We all have fixed time. Time is fixed. And so therefore, speed is accomplishment. The amount you accomplish is governed by speed because time runs out. We've all only got so much. So speed matters a lot. And then I think there's this question of how do you actually move the fastest in reality. And reality's hard and it throws all kinds of roadblocks in your way. And it's not clean. So it can't just be sprints all the time. It has to be smarter than that. And I think the way that we've solved that equation, you know, solve this way too strong a word, but the way that we try to manage that is I think we're tremendously lucky. I don't think this was purposeful early on, but I think we're very lucky that inside of our management team, we have really different personalities. I am more on for sure like the aggressive move fast, optimistic. Of course, we can do it side of things. And then we've got others on the team who I think are much more.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Be super clever about grabbing a little bit of attention and then trying to kind of send your messages as effectively as you can. I think we've got a really great creative team. And I think that they've done an unbelievable job. They put out tons of content. We've got basically like an internal agency and they iterate a ton on content. And a lot of our content has not worked. And a lot of the stuff that we're most proud of hasn't worked. But a lot of it has worked. And I think that we've learned lessons along the way and gotten better at it over time.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Solve that equation where you're doing things that get people's attention, but you're doing it in ways that allow you to tell your story so you can kind of build from no awareness whatsoever to awareness, understanding, and trust. That's a really, really hard thing to do. And I think at first, we started by just trying to say, like, of course, people care about us because we care about us. So let's tell our full story. And we didn't pay them for their attention. And I think that that was like a big mistake. And I think that we're over time learning more and more. And I think the right answer to, by the way, changes as a company evolves. And I think in many ways, that's part of what's valuable about a brand is a brand ultimately can capture for a customer. Your logo can start to mean I know what Carbana is. I understand what they do and I trust them as a brand. And once it means that, you have all kinds of new marketing opportunities because now you can just do really awesome things with just your logo at the end and people will get it and you're going to get tons of attention. But early on, your logo doesn't mean anything to anyone. So you don't have that opportunity. So you have to.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Think the biggest mistake is being too close to it and being too proud of yourself and assuming the customers care. If you look at our first homepage, it was like PhD presentation on why we were a great business bullet points with 13 sub bullets of like why this makes sense for you, Mr. Customer. And that's not effective. You have to give the customer something that caused them to want to give you their attention. And then once you have their attention, you have it for this like fleeting moment. You have to get the best message you possibly can through to them about who you are and what you do and that you exist. And then you have to try to brand it really quick. And I think that to me, like I almost think of marketing existing on that spectrum where like, you can do these unbelievably cool stunts and then put your logo at the end. And you're going to get a lot of attention because like you did something so cool that everyone wants to pay attention. You didn't get an opportunity to explain what you do. And I think that like trying to create a”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Not speak negatively about dealers recently, but the transaction has a reputation that's not super positive and therefore customers are going to be risk averse. They're going to be anxious about making a mistake. You take on an even bigger communication burden. And so we really try to approach the problem is like, let's build the best business model we possibly can for this perfectly rational person, but then let's recognize that we have this huge hill to climb in communication as well. And we need to find a way to build a brand that makes people feel like they know that we exist and they understand what we do and that it's different and why it's better for them. They trust that the experience we deliver is going to be a good one that if they don't like the car, they can return it. But like we have to build this brand too. And that's a really, really important part of what we're doing because you can build the most beautiful business model in the world that no one ever hears about or cares about. And honestly, if you're picking one or the other, communication matters more because you can't succeed without communication. That's a prerequisite. But I think to build a great business, you need both. And so that's something we've tried.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Way that I always think about that, my view, and I'm sure there are many views, like the best way to build a business is to build the thing that's best for a theoretical customer that understands all their options completely, the ideal economic being, the perfectly rational person that understands all of the options they would have, build a business that's better for that person. But then recognize that like that person doesn't exist. There are a lot of businesses that aren't built for that person, but are tremendously successful because they communicate so well. They build a brand that is interesting to customers and they can convey their value proposition in a way that makes customers want to partake in it, even if it's not really better than other options that exist. But I think that when you build something that's truly different, you necessarily are taking on a communication burden. People haven't done that in the past. And I think that when you're doing it in an area where the transaction is as expensive as buying a car and where the transaction”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Think honestly early on it was there because it's always been there. And I think early on it was one of the physical representations that we existed in the universe and that we were making some progress when we were begging investors to see that we were making. At this stage doesn't necessarily belong there. I think that that's a reasonable question, but I think it was very important for us early on. I think it's a very important part of our brand. And it remains important that we keep building them. But it's certainly a different kind of metric than the metrics that surround it.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Accurate description of what it was, and it was like we were on the homepage of Yahoo for like three days after that. That is the power of awesome, right? We started here in a super rational place and then we like discovered the power of this is cool and fun and people like it. And then we decided to double down on that. So we did a bunch of work to try to figure out how can we take this thing from a great label to something that lives up to that label and really is that cool. And we built our first vetting machine. And I do think what's interesting is the math kind of works out pretty rationally. Once you build something awesome, people want to go have that experience and you do save last mile expenses and that kind of works out. Then you also have this symbol that helps you to build your brand. So I think it works out in a number of ways. But to me, it's like that's in our culture. We've got this thing that is hard to put a finger on, which is fun, which I think is tremendously valuable. And in our brand, I think we have this thing that's hard to put a finger on, which is the vending machines. And to me, it's fun and awesome.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Is not totally inexpensive. And if part of our insight here is that we only want to spend money in place where we think it's valuable to customers, do customers want to come pick up from us And so we just tested this idea of having customers come pick up from us. And we did this in Atlanta as our first vending machine. And really all it was was it was a couple of glass garage door bays and we would send a customer a four digit pen and that code caused the garage door to open. But our marketing team was like, oh, let's call this a car vending machine. And we didn't have like a pixie dust pass. We weren't blessed by Silicon Valley. We didn't have like a bunch of investment from big venture capital firms. We didn't have a lot of press coverage early on. And so we would do anything to try to get some press coverage. I mean, it was just like all we wanted was a little bit of free advertising. He was like, please, somebody help us out. And all of a sudden you called this thing a carve vending machine, even if that wasn't the most.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Building a brand is hard and people will talk about you'll hear all kinds of different heuristics a billion dollars to build a brand, a couple billion to build a brand, whatever it is. But building a brand is a hard thing to do. And I think that sometimes having a symbol that reflects what you are and sometimes having that symbol just be cool and fun, sort of awesome. Those are real things. Those aren't a spreadsheet. I care about it. You care about it and customers care about it. And it's one of those intangible, valuable things. And so I think like the rational way that we got to it, I'll start there and then we can kind of get to some of the awesome in a second. But the rational way that we thought about is, okay, we're going to build this business model that benefits from sight unseen transactions so we can have this different supply chain. And then you're going to have these folks, but then you've got to have last mile logistics, which is hard, and that means you have to be inside of every city. So you have to have some infrastructure inside of every city just for the practical reason of that being less expensive than trying to do very long leg last mile. And then once you have that, it's kind of like, okay, you realize that last mile.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Going to have payoffs that are two or three years down the road. It's hard. It takes discipline to invest in those things that are going to pay off down the road. And I think it's also hard from a communication with investors' perspective, in my opinion at least, right? And different people can have different views on this. I don't think it's very smart to talk about those things that have the potential to pay off down the road because the further in the future the payoff is, the higher the likelihood is that you ultimately fall on your face and fail. You don't want to make that your story. But if that's not your story and if you have the discipline to keep investing in those things, then it's going to cost you money and you're going to have to manage like investors through all that. But do you have the strength and conviction and things that you're building and the size of the dream that it's worth chasing those things down that you're going to do that even when it's hard and uncomfortable? And I think to me that's what long-term thinking is really about”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Great solutions. And I think that's really important. And I think that there's always pressure. We all feel pressure regardless of how you'd like to think that we are from it. When you're going to report your next quarter, there's some set of expectations that, you know, that the world has for you. And that generates pressure and it influences the decisions that you make internally. But I think being long-term is about being willing to face that pressure and having conviction that what matters most is customers and building a team that can build for your customers first and that kind of the rest will take care of itself as long as you're on a good path and your kind of foundation is well thought through and you have like good economic underpinnings to what you're trying to build so you're not just fantasy land running away from investors but that you're building something that's truly valuable i think that's what it means and then i think the other thing that it means too is there are times you have to be really careful with this but there are times when you're picking between projects and oftentimes many of them are going to have payoffs next week or next month and many of them”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Think it is an overused term, and I think it's like culture. It's a thing that's really important but is overused and doesn't always have a clear meaning. And so I think then you have to try to say like, what does it mean to us? And to me, I think one way to articulate it is there's kind of this traditional list of constituencies. You've got shareholders and you've got your customers and you've got all the people that work at the company. And I think to me, one way to express what long-term thinking is, is to really value customers first. And honestly, I think investors third. I think investors don't always love hearing that, but I think that you even have to think hard about what does putting customers first mean. And oftentimes it also means putting the people inside the company first. Because what matters to build a great customer experience in the long run is you have to have great people who stick around, who care about what they're doing, that have fun doing it, that think about it when they go to bed at night, when they wake up in the morning. And so you need to create an environment where those people can build.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“For shipping to get those cars out to customers. But the benefit of doing that is that conditional on the same amount of selection for customers, I can turn them way faster because I can focus all of this demand nationwide on a single inventory. And so when you have cars that depreciate it around $10 per day, that can start to pay you for a lot of transportation pretty quickly. And so you can generate for customers that selection in a way that doesn't necessarily have an extra cost because it's almost like that's a phantom cost. It's like a contra margin that shows up in dealerships because they have to hold cars for a long period of time. And again, I got to be careful when I say that because today our turn times are not that different from traditional dealerships, but that's because we're choosing to take this advantage that we have and to express it in a very large selection for customers. You could choose to take that same advantage and express it in way faster turn times and therefore higher margins. But today we're expressing it more in kind of selection than we are in economics.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Does it generate for customers? It generates selection because now all of a sudden cars everywhere are available anywhere. That's like a huge, huge thing. And then it generates some price advantages because there are geographic disparities in price. There are geographic disparities in vehicle availability. Oftentimes there's more sedans coming off lease in the northeast than other parts of the country. And so we can move things around that generates a lot of value. So I think that's really important. But then if you want to give customers a fixed amount of selection, imagine that you want to put a hundred cars in front of customers. One way to do that is you can hold 100 cars in a bunch of different locations. But then you need to have sufficient demand to move those 100 cars in all those locations. Or you can hold 100 cars in a single location, you can move them out. And when you kind of think about it like that, you sort of realize like, okay, well, if you've got a fixed amount of demand across the US in this case, let's say, if I hold 100 cars in one location, the cost of doing that is that now I have to pay.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So, I mean, the facilities are, we've now got 13 of them. We're probably on our seventh or eighth iteration. The first couple were very circumstance we bought, locations that we thought we could wedge and inspection center into. And then it's constantly been evolving. And the most recent ones are really cool machines. I actually went and visited one recently in Haines City, Florida. It was just beautified. I couldn't believe how cool an enormous life-size machine it was, 50 to 100 acres with thousands of cars on the ground, producing thousand plus cars per week. And there's just like all of these stations and there's clocks and the cars are moving from station to station as the clock's kind of expiring. It's really a cool facility. Now, in terms of the cost difference, what's hard is we generally speaking hold ourselves to a different certification standard than many dealerships do. So like an apples to apples comparison is hard there. And we do in general just sell a car at a higher quality. I wouldn't want to put a”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Down all of these tasks. And so inside of these assembly line facilities, you can have people that are kind of moving through the different stations and learning different skills and becoming the valuable specialists, which is attractive to bring people in. You can do things differently, but again, it all stems from this first premise, which is if we think that we can get rid of the test drive and we think that we can sell the car site unseen and think that some customers are going to prefer that, then all of a sudden an entirely new supply chain makes itself available. And then you connect that up with logistics. That unlocks all kinds of other interesting things like taking advantage of geographic price differences and taking advantage of geographic differences and availability of certain types of inventory. I do think our entire supply chain is different, but it all stems from that initial insight, which is we don't need to have the customer physically adjacent to the car to sell it.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“But when you move to a world where you say, okay, now the customer's no longer going to be physically in front of the car when they buy it, I can have this separation between the customer and the car. I can now move to way less expensive real estate. And I can also, because I'm going to have customers in many markets, can be served out in a single spot, I can move to more of a production level facility that's much larger. And then once I move to a production level facility, I can start to decompose all the tasks that might be necessary to take a car from the state that a customer sells it to the state that a customer wants when they buy it. And I can break that down to a bunch of little steps. And now because of that, I can have more specialized people that don't necessarily know how to do everything, but they know how to do some steps along the way. And then that all of a sudden puts you in a spot where some of these tasks that many, many people can do that it doesn't cost as much to hire someone who can do that as someone who can do like the very complicated things you can actually do that the lower cost because you don't need the very expensive person who can do everything to do those same tasks and then you also can build career pathing that's really interesting because you've broken”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“And so if the whole used market exists to allow customers to trade with each other, how do you change the asset from the thing that was acceptable to me when I owned it for five years to the thing that I need to see now that I'm buying a new one? How do you do that as efficiently as possible? We built these inspections letters because we think it's a better way to do it than the way that dealerships have traditionally done it. Dealerships have done the way they've traditionally done it for good reason, but some don't really recondition cars very much. do maybe superficial work and sell the car and they hope that customers don't have as high a standard for the car as we like to believe our customers have for the car many dealerships though they use kind of their retail footprint to do that same work so they're paying a bunch for their retail footprint to be able to service the car and transition it from the thing that i was willing to get rid of to the thing that i want and then because they have this limited footprint they also generally have very capable technicians that can do everything that is necessary to fix a car and so you have to have this specialist that has this very broad skill set”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Used cars are a very interesting market because most markets are defined by production and consumption. Like most products are consumed. Used cars aren't really consumed. They sort of are over a very long time scale, but generally speaking, miles are consumed. And then really what's happening is just customers are swapping cars between themselves. Like customers have to decide, I want a new car every four or five years, so I'm tired of this one. And really all that's happening is there's this huge apparatus in the background that enables me to swap my car out with you. And that's what the used car market is. As a car buyer, I suddenly have a different standard for the new car that I'm taking in. Then I had for the car that I've been driving for the last five years. I'm going to go through this like binary moment of taking this new car in. It needs to be in better shape than my car was. My car might have had bald tires and it kind of made a weird knocking sound and the AC didn't work that well, but I had made peace all those things because it happened over a long period of time. When I'm buying a new car, those same things can't be true anymore. I need to feel different about this new one.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“I was much more concerned with can we build a great customer experience than I was with can we ultimately get to the uneconomics it makes sense and then i think obviously getting there with speed is important”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“I personally wasn't super worried about being able to get to reasonable GPUs in the law. I'm running the reason is because there's this huge infrastructure of 40,000, 50,000 dealers nationwide that all make pretty similar GPUs. To me, the question was, okay, they make pretty similar GPUs and it just is logically clear that if you can build an experience that has kind of a centralized supply chain that puts the customer in control and allows them to kind of manage their own customer experience, you can save money so you can have lower variable costs. There's a question of how long that takes you and what scale it happens at. But I wasn't worried about that ultimately happening. And then to me, the big question was just, do people want to do this? And how big does the price inducement have to be to get people to do this? But the good thing about that was you could answer that question without having to build the whole machine because you could just look at how big is our discount to market and how many sales are we getting? And then do we think that that can be made up in the rest of the economics of the business? And to me, that all seemed like it was going to happen.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's going to work next time. And I think early on, we were able to get the wheel spinning. It's fun really slow at first. It took us months to sell our first car. And then we sold one and then to maybe eight a month or nine a month. I remember having conversations with our COO and being all excited and saying it won't be long now until we're selling one a day. You're building from there and you kind of just need that momentum early on that allows you to explain to your partners, investors who are going to fund the rest of your dream, then like we can build this to a big and great thing. That early part's hard because it's all about just getting enough momentum to make the next step.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“More interested in that digital transaction and someone who was maybe most concerned about walking out of a dealership with a stomach ache. And so we kind of knew that in its early iteration, this is going to appeal to a smaller subset of people than it will appeal to in its later iterations where selection is very large and prices are low and experiences great because we've perfected all of these things. But we thought that there was variation in what customers want and there was not variations or at least meaningful variation in the offerings that customers could get when they were buying a car, going to dealerships was pretty similar. We hoped that by building something different that we thought put us on a path to building something that was long-term better for a large group of people, that it would also be different enough for a small group of people to kick us off and make it work early on. And then I think we were lucky enough to kind of get enough momentum. I do think luck plays a part in these things because you just need the kind of wheel to spin at all the right times when you're trying to raise capital and tell your next story and explain why.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“We have these pillars of a great experience, great price, and a broad selection. And I think that once you move to national infrastructure with our own logistics network, you can provide all of those things. When you move to a digital or more of a transaction and you start to move traditionally variable costs into fixed costs, you have like this huge upfront investment. But what you generate is you generate economies of scale. So you generate benefits that come with getting bigger. And that's very valuable. But when you start, you don't start at the end. You start with the need to invest all this money and you start without those benefits of scale. So when we launched, we had like 40 cars on the website, right? It was no different than going to your local dealer. We were able to offer lower prices because especially at volume of 40, it doesn't really matter what your price is. You're going to lose a ton of money anyway for trying to build a digital platform. So it was just purely about experience. And I think it was also appealing early on, or we at least believed it would appeal early on to a buyer who's”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, to me, it was just like you got a huge market, it's complex, which means there's opportunity. It hasn't changed a lot, which means there's opportunity. Some customers love the way that it currently works, but many walk out with a stomach ache. And all that just felt like opportunity. And then it's like, okay, well, how do you address that? It felt like going back to this idea that what changes the best business model is changing technology and changing customer preferences, it was just like, what's happening to customer preferences and what's happening to technology and can we build something different? And I think trying to build something simple, scalable, and that kind of alleviated the stomach ache. That was basically the set of goals we started.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“I was lucky enough to, one, try another company before and fail at that and learn some lessons. And I was also lucky enough to grow up in and around the automotive retail and automotive finance business. And so to get like a lot of exposure to it and understand how it worked, I think it's one of these businesses that very, very large. It's the largest retail vertical in the U.S. And then it's one of these businesses that hasn't changed very much in a very long time. And I think that then begs all these questions of why, which I felt like I was always asking inside the industry, like why.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source
“Problem, but no one's tackling it because it's not sexy. We can make an even bigger impact here. And I think that's really, really important too is just as kind of a way to manage that complexity is just to try to generate inside of a company, inside of a culture appreciation and excitement around solving hard things regardless of where those hard things are.”
2021-08-05 · Invest Like the Best · Ernie Garcia - Disrupting the Auto Buying Experience - [Founder’s Field Guide, EP. 45] · IDENTIFIED FROM THE TRANSCRIPT · source