This Zoom video call is a discussion between Todd Smith from 360Converge and Steve Greenfield who is the CEO of Automotive.ventures an angel and advisory group focused on automotive companies. We cover the current state of the industry and dive into what is next in regard to services and technology post COVID-19. This was a great conversation with lots of insights so don’t miss out.
Video Transcript
Captions
00:00
hi Tom Smith here a CEO 360 converge
00:04
joined with a steep greenfield CEO
00:08
founder of automotive ventures
00:10
he’s just newly back to Atlanta so I got
00:13
the opportunity to sit and have a good
00:15
conversation today uh Steve how are you
00:18
doing I’m great Todd thanks for having
00:20
me today
00:20
awesome man so let’s jump in man so
00:23
what’s going on with you so I know
00:25
previously you were true car never what
00:28
was your exact position there were you
00:29
so I was a in charge of strategy and
00:32
business development in that case it was
00:34
acquisitions and spent about two years
00:37
out there on the west coast I got a
00:39
little that West Coast did you do much
00:41
surfing or skating like chipper you know
00:44
I hate to admit it you know I live
00:46
literally two blocks from the Santa
00:48
Monica Pier and and did you know take
00:50
the opportunity to jog along the beach
00:51
almost every day yeah I in two years
00:54
you’re gonna hate me I never dipped my
00:56
toe in the water right there look I’m a
00:59
lifelong surfer you’re killing me man oh
01:01
yeah what’s funny because you know
01:03
growing up I grew up in Toronto and I
01:05
got exposed to enough cold but 20 years
01:07
ago I moved down to Atlanta and I had
01:10
enough of the cold man if I never see
01:12
and I don’t see how to flake of snow in
01:13
my life I’ll be happy and cold water and
01:17
I don’t get along and all I ever heard
01:18
from people is like oh the water is
01:20
really cold I’m like well why would I
01:21
want to go out yeah I mean listen just
01:24
throw in a wetsuit man it works there
01:26
you go there you go shame on me not
01:28
there you’re nearly you’re nearly back
01:30
in Atlanta working on your automotive
01:32
ventures what’s the background and what
01:35
what are you thinking about with this
01:36
venture Nelson yeah so I literally left
01:38
true car you know not not two weeks ago
01:40
two weeks ago today actually so I’m back
01:42
in Atlanta happy to be back here I was
01:44
here for 18 years and I originally
01:47
worked for you know division of Cox
01:48
Enterprises and move down from Toronto
01:51
where I’m from originally but glad to be
01:53
back I mean isn’t this feels like home
01:54
to me I mean I just really love this
01:56
city
01:56
and yeah trying really to focus on two
02:00
things right one is I’ve always been
02:02
intrigued and loved the whole automotive
02:04
mode of space and loved going to nad
02:07
every year see the new technologies that
02:09
are out there and spend time with the
02:11
entrepreneurs to understand how they
02:13
the idea is so focused on trying to help
02:16
automotive technology entrepreneurs
02:18
either raise money or when the time’s
02:20
right help them sell their businesses
02:22
okay so these are two great things now
02:26
interesting marketplace for that right
02:28
now right because you’re dealing with
02:30
two difficult sides of that right so
02:32
raising money today I assume is going to
02:35
be very difficult I know I just had my
02:39
you know what I would consider my road
02:42
bump in that I know a lot of other
02:44
people experienced that as well
02:46
and on the other side selling it it’s
02:48
hard to sell businesses with you know
02:50
stagnant revenue or who knows what the
02:53
future is gonna come back to and when so
02:56
that being said and I’d love to talk a
02:59
little bit what do you think’s going on
03:00
in a market with let’s talk about some
03:04
of the existing tech in the space and
03:06
who do you think are gonna be the
03:08
biggest winners out of this time and
03:11
where do you think the impact is going
03:14
to lead us all right I think it’s seven
03:18
questions so I’ll try to start the
03:22
beginning I think and just keep me
03:23
honest here I would say I think well
03:26
obviously you know what it starts with
03:29
the consumer right so consumers right
03:30
now aren’t spending money
03:32
everybody’s holed up at home high
03:34
unemployment and the unemployment
03:36
numbers came out today and you know
03:38
we’ve unprecedented ly high unemployment
03:39
right now and who knows how high that’s
03:42
gonna get before it starts to level off
03:43
so there have been furloughs and you
03:46
know a lot of folks hopefully are
03:47
getting back to work now this week with
03:50
the PPP funding starting to come through
03:52
but despite that there’s gonna be a lot
03:54
of folks who are unemployed and or even
03:57
those of us that are employed are gonna
03:58
be a little bit more cautious with
03:59
spending money and definitely not in the
04:01
mood to buy cars right now or
04:03
necessarily have their car serviced
04:04
because cars aren’t being driven and
04:06
putting miles on them you know having
04:08
service needs so I would say we started
04:10
starting there you know that then there
04:12
are the dealers that are able to be open
04:14
right now are feeling that immediately
04:16
and feeding feeling reduced demand for
04:20
services beat on the variable side or
04:22
the fixed side and a lot of dealers
04:24
aren’t able to be
04:26
right now I was looking at a map that
04:27
came out I think yesterday from JD Power
04:29
in terms of you know heat map of which
04:31
which state which states were allowing
04:34
dealers to be open period and there’s a
04:35
lot of states that aren’t aligned yours
04:36
to be open period so having said that
04:38
now moving to the folks that service the
04:41
dealers and get paid by the dealers and
04:43
OEMs but mostly dealers you know that
04:46
the health of them are challenged and
04:48
very publicly you’ve seen the
04:50
third-party marketplaces provide you
04:52
know 50% rate concessions for the next
04:55
month or so de dealers in a lot of cases
04:57
you know I’ve heard anecdotally as I’m
04:59
sure you have from dealer friends
05:00
pausing or just canceling vendors
05:03
outright when they’re non critical and
05:05
if a dealer’s closed right now and
05:06
they’re forced with you know firing or
05:08
furloughing employees they’re not you
05:10
know gonna be paying their vendors
05:11
because they’re not gonna have the
05:12
wherewithal they get other issues to
05:14
worry about so all of that then means
05:17
you know downstream from the dealer’s
05:19
health the dealers are downstream from
05:21
the consumers health the vendors are
05:23
downstream from the dealer self and then
05:24
the vendors are sitting there and
05:26
they’re having problems so I’ve known
05:28
you know a couple of entrepreneurs I
05:30
talked to this week luckily enough got
05:32
PPP funding early in the week have their
05:35
employees now back to work full-time and
05:37
are able to be creative with the
05:39
solutions they’re having them work on
05:41
because there aren’t a lot of dealer
05:42
customers demand right now but I think
05:45
you know in this environment so then
05:46
fast-forwarding to the other part of
05:48
your question you know what was I
05:50
thought going to be a year where we were
05:51
gonna have a healthy you know robust
05:53
economy you know that the funding
05:56
spigots would be open being able to help
05:59
entrepreneurs raise money in a healthy
06:02
market and on the flip side exit either
06:05
to strategic buyers that we’re looking
06:07
to you know pick off certain
06:08
technologies and put them into their
06:09
portfolio or financial players I think
06:12
obviously it’s changed right so I think
06:14
that the conversations I’ve had over the
06:15
last two weeks with entrepreneurs kind
06:17
of fall into two buckets one is you know
06:20
got guys who really need to either raise
06:23
money or sell immediately because there
06:26
are they’re in a crunch they were in a
06:28
crunch before and really right now this
06:30
shortens their runway the fact that they
06:32
aren’t collecting as much revenue from
06:34
from their customers which are typically
06:36
car dealers that means that they have to
06:38
sell it come up with something Korea
06:39
quick and that might mean you know
06:42
trying to figure out if there’s
06:43
well-heeled investors out there the
06:45
pendulum has swung from you know very
06:48
being very entrepreneur friendly to
06:50
being more investor friendly with being
06:52
able ask for it
06:53
yeah additional terms and contingencies
06:55
etc and then you know this is and
06:58
there’s folks that I’ve talked to that
06:59
need to exit and you know they’re just
07:02
like you know the only way out here will
07:04
be an exit and it’ll be a little bit of
07:05
a distressed asset sale what I don’t
07:08
know is if there’s gonna be any appetite
07:10
from all of these larger players in the
07:12
space all the usual suspects that would
07:15
historically be buying assets because
07:17
they’re all under pressure to write so
07:19
somebody who has got a lot of money on
07:21
the balance sheet
07:22
III think a month from now when we get
07:25
more certainty around when if and when
07:28
and how this is gonna play out I think
07:30
you will find some of the big strategic
07:31
players sit back and say okay so how can
07:35
I take this opportunity this year to
07:36
make strategic investments and buy
07:38
assets favorably but I think right now
07:40
everything’s jammed up and closed so I
07:43
think the neck next month is really
07:44
helping these entrepreneurs prepare for
07:47
when things open up and then being ready
07:49
to strike quickly when those things open
07:51
up it’s really good so give me a like
07:54
rundown like how do you prepare an
07:57
entrepreneur like what what are the
07:59
mechanisms right so that he’s gonna need
08:02
to do since this is a good vein of
08:04
questioning I’m sure it’s gonna be very
08:05
interesting to lots of people watching
08:07
so yeah I mean so you’ve been through
08:09
this before a couple times right so you
08:11
know all too well you know it’s getting
08:12
your financials in order and getting
08:14
sort of like your story in order right
08:16
output of those two buckets so typically
08:19
I mean entrepreneurs may be using you
08:21
know some some accounting software
08:22
QuickBooks might it might be more robust
08:24
than QuickBooks but whatever it is
08:25
trying to make sure that you’ve been
08:27
really thoughtful around like how do you
08:29
talk about revenue and costs right now
08:32
and then forecast those out three to
08:34
five years into some kind of credible
08:36
story and really you know fly speck and
08:38
vet those financials and get that so you
08:40
could hand that off to a potential
08:42
investor or acquire and you know you
08:45
have some credibility there and you know
08:47
you’ve been there I’ve been there before
08:48
you I’m sure that your number one
08:51
priority when you wake up every day
08:52
isn’t
08:53
like have a five-year plan that’s been
08:55
well vetted so typically there’s some
08:56
work that goes into that and you’re
08:58
preparing the entrepreneur I’m just
08:59
talking through like reasonable
09:00
assumptions about how the next three or
09:02
five years might play out your covetous
09:04
I’d and then there’s like you know
09:06
building like it kind of like what I
09:07
would call a pitch deck and it doesn’t
09:09
have to be a lot of material but you
09:10
talk about like you know what the
09:12
opportunity size is why you’re a
09:14
uniquely positioned to attack this
09:16
opportunity what what’s what’s your
09:18
secret sauce like what do you have
09:19
uniquely about yourself that can can
09:22
uniquely attack this big problem what’s
09:25
the team looks like how good is a team
09:26
then you layer in the financials right
09:28
then you talk about how much money you
09:30
want to raise and then you talk about
09:32
use of proceeds kind of a flow like that
09:34
it’s kind of a natural story that you
09:36
would be talking to someone you know
09:37
over a cocktail at nata right they gain
09:40
that articulate into a nice crisp story
09:43
and the litmus test is like not really a
09:45
fifth grader but somebody who’s new to
09:46
the industry and isn’t intimate with all
09:49
the different nuances of automotive
09:53
should be able to read the deck and read
09:55
that model and make sense of it without
09:57
somebody giving them a narrative overtop
09:59
of it and you know clearly with all of
10:02
that you want to be sensitive to
10:03
non-disclosure agreements and not giving
10:06
away too much information but if you if
10:08
you have your financials in order and
10:10
you have kind of like the pitch in order
10:11
then most the times then you’re in
10:13
pretty good shape but I got to say that
10:15
you know mostly entrepreneurs are heads
10:17
down running their business and probably
10:19
don’t have you know refined you know
10:22
five-year prep financial projections nor
10:25
pitch decks at the ready so I think a
10:27
lot of the next month will be you know
10:28
for those that are gonna be forced to
10:30
raise money just getting those kinds of
10:32
things in order that’s any investor
10:34
being a strategic investor or financial
10:36
investor is going to ask for and then
10:38
make sure that you’re not reacting to
10:40
that and having to do additional work
10:41
once you actually go to market in a
10:43
month or two it makes a lot of sense so
10:46
on on that vein of what texts are you
10:50
feel are gonna win besides digital
10:51
retailing obviously that’s the that’s
10:54
the gorilla in the room we all got it
10:56
everyone’s going to at least initially
10:58
now flood the digital retailing had a
11:00
good conversation with Annie Moss from
11:02
roadster and talked to a lot of other
11:04
digital retailing guys but what are some
11:07
what do you think are some ancillary
11:09
things that will surround that some tack
11:10
that will be favorable now to dealers or
11:13
maybe needs to be built you have any
11:15
thoughts on that well I’ll preface it by
11:17
saying like you know I think of myself
11:19
as a pragmatist right so I I think
11:23
actually all those folks that are
11:25
opining that this is gonna fundamentally
11:27
change the way consumers are gonna shop
11:29
for cars I don’t agree with I know
11:31
that’s gonna get me a lot of negative
11:33
comments maybe when you post this
11:34
quickly yes like car buying hasn’t
11:37
really changed like 100 years right we
11:40
had the internet and the internet came
11:41
along and provide much more information
11:43
to the consumer but you think about even
11:46
the online experience now typically
11:48
dead-ends in a vehicle detail page where
11:50
you need to submit a lead or you still
11:52
need to pick up the phone but there
11:54
isn’t really other than a couple of edge
11:56
cases like carve honest time a good job
11:57
of actual driveway delivery like
12:00
seamless everything’s online the car
12:02
shows up I signed for either
12:03
electronically or in my driveway and
12:06
then you know it’s a good experience and
12:08
some dealers have replicated that you
12:10
know I think of guys like Brian Ben
12:11
stock who’s using roadster up at Paragon
12:13
right the roaster guys as you mentioned
12:16
are all you know I’ve been on the
12:17
cutting edge of this but there are a
12:18
number of different digital retailing
12:20
tools we could walk through all of them
12:22
but that allow dealers to virtualize
12:24
some or all of the aspects of car buying
12:26
and I think it’s great I don’t think
12:29
that at the end of all this I think
12:31
consumers are gonna be craving to get
12:32
back to like some semblance of normalcy
12:35
right what was life like before all this
12:37
stuff when this does blow over I want to
12:39
go back and I want to go to movie
12:41
theaters I mean I want to go out to
12:43
restaurants at night and I want to go
12:45
and test drive cars and interface with
12:47
dealers so yes I mean this is gonna
12:49
accelerate some segments of consumers to
12:52
think differently like oh wow now maybe
12:54
I don’t have to go into dealerships and
12:56
I will wanted to go online I don’t
12:59
think it’s gonna be like this big
13:00
wholesale change in the market so having
13:03
said that I think that you know however
13:05
and and however I would say that you
13:07
know this is gonna prompt some new
13:08
technologies right out of every great of
13:10
every downturn there are great new
13:12
companies that are built and I think
13:14
that part of that as you know the
13:16
digital retailing sort of experience
13:18
that’s fallen down has largely been
13:20
through
13:20
like electronic contracting title
13:23
exchanged you know presenting the F&I
13:26
products in a way that doesn’t a road
13:27
dealer its margins I expect there’ll be
13:29
a lot of innovation in that space that
13:32
really gets sparked probably companies
13:34
that are already out there but are just
13:35
gonna get this really accelerated as a
13:38
result of all that and I think that you
13:40
know they’re gonna be able to take off
13:42
and we’re gonna get much better
13:43
presentation and that may just manifest
13:45
inside the showroom where consumers are
13:48
just presented much more transparent
13:50
sort of like F&I menus and processes etc
13:53
and you collapse some other historical
13:56
processes of the stores because I can
13:57
tell you one thing what we do know is
13:59
dealers will be looking at anyway to
14:01
take costs out of their piano yeah and
14:04
that’s gonna persist so much more so
14:06
than a consumer experience change I
14:08
think you know this is gonna come up any
14:10
anybody who has innovative solutions
14:11
right now to help dealers take costs out
14:14
of their day-to-day operations that’s
14:16
gonna be something that dealers are
14:17
gonna continue to push on just for the
14:19
health of their businesses overall so I
14:21
would put into two buckets one is
14:22
consumer consumer experience benefits
14:24
yes no doubt but also on the on the flip
14:27
side how do we help the dealer body you
14:29
know run more efficiently going forward
14:31
and any technologies out there that can
14:33
help dealers with that will definitely
14:35
have a good staying power after this is
14:38
through yeah you know I wrote something
14:40
about one of the things I thought was an
14:41
interesting piece that no one really has
14:43
talked about with digital retailing is
14:45
you know if we are home longer or we get
14:48
thrown into home again by you know
14:52
whatever people said like
14:54
august/september it’s like we hit get
14:56
another wave of this we’re back into the
14:58
house we’re remote employees are going
15:01
to need to be a more like stable and
15:04
consistent part of the dealers workforce
15:07
there’s no tech to run them and
15:09
logistically manage them and
15:12
logistically manage the movement of cars
15:15
on let’s say I have to take it to your
15:18
house for a test drive or I’m doing a
15:20
home delivery I mean me as a previous
15:23
dealer and desk manager I constantly
15:25
like where’s Steve he’s been gone how
15:27
long and you have no idea and I’m asking
15:30
my other sales guys he’s like oh he’s
15:32
out on a test drive or he went to
15:33
just we really don’t have besides that
15:37
desk knowing where your team is and when
15:40
you’re in big stores with 3040
15:42
salespeople and they’re all over the
15:44
place and you have a big store it’s hard
15:46
to keep track of them so wonder what
15:47
it’s going to be like in a new world
15:49
where a chunk of your workforce could be
15:52
at home you know how we measure them
15:54
manage them and make them effective
15:57
assets of the organization that’s an
15:59
interesting side so yeah I mean
16:01
virtualizing a BDC for example it could
16:04
be interesting to see if dealers at the
16:05
end of this
16:05
I mean tip the typical dealers that I
16:07
walk into have like a dark room in the
16:09
back where they got folks you know
16:10
binding the leaves and their internet
16:13
leads right in the phone call leads but
16:14
I mean why wouldn’t those people be able
16:16
to sit at home and plug in virtually as
16:18
long as you can you know he said you you
16:20
can you can drive accountability and
16:22
make sure they continue to be productive
16:23
I think the benefit of having them in
16:25
the back room is that you can keep an
16:26
eye on them you’ll have to be able to do
16:28
that virtually but other industries have
16:30
figured this out so yeah I mean
16:31
virtualization of BDCs would be a great
16:33
example and also be a tremendous cost
16:36
savings to dealers so I think it will be
16:38
interesting technologies like that that
16:40
come out of this and and who knows what
16:43
they’ll look like but they’ll definitely
16:44
be new companies that come out of this
16:46
that make dealers stronger and allow
16:48
them to work more efficiently yeah and
16:50
look I’m like you like that
16:51
entrepreneurial mindset that you’re like
16:53
you’re constantly looking like what what
16:56
will be the vein of you know the these
16:59
next new companies what will they need
17:01
to do how are they going to impact
17:03
dealers or consumers to help dealers be
17:06
more successful in this change I’m like
17:09
you I believe digital retailing the one
17:12
thing that did come up and I’d love to
17:13
hear your thoughts on this and this was
17:15
just after talking to Andy I left that
17:18
conversation I said the one thing that I
17:21
think is unique right now is before when
17:25
let’s say you’re a dealer you go to 20
17:27
group and everyone says oh I’m using
17:30
digital retailing and it’s working so
17:32
you as a deal or hop on that bandwagon
17:35
right you’re not really committed to it
17:37
you’re just like everyone in my groups
17:39
doing it I want to do it and you go back
17:42
to the dealership you get your managers
17:44
and you say okay guys we’re gonna do
17:46
this digital reach
17:47
and everyone kick stuff in hymns and
17:50
halls and says oh we’re gonna lose gross
17:52
and like all this these exercises we go
17:55
through right and then digital retailing
17:57
is really just kind of turned over the
17:59
actual salespeople or whoever is going
18:01
to implement right and and then that’s
18:04
usually where it kind of I always said
18:06
it kind of falls down because
18:07
leadership’s not really watching it but
18:10
in this new world and this is where I
18:13
think it’s a little different those
18:15
people though actual people that are the
18:19
doers of digital retailing aren’t there
18:20
it’s the managers who are the doers and
18:24
the implementers you know I’ve talked a
18:26
lot of dealers are on super skeleton
18:28
crews they only kept their managers
18:30
their managers are responding to the
18:31
leads the managers are working the deals
18:34
will this change the psychology that if
18:38
they do get a little success as a
18:40
manager will they be more capable bigger
18:46
believers that they feel confident as
18:49
well to train the salespeople because
18:52
now they’ve actually used it where
18:54
before they just go oh Steve you got to
18:56
go through the training for dealer and
18:58
you know let me know how I guess yeah
19:02
that’s a good point even more
19:04
importantly I mean the the GM’s and the
19:06
owners of the stores are gonna be saying
19:08
guys I don’t care you need to adopt this
19:10
because if this ever happens again I’m
19:12
not gonna be flat-footed we need to be
19:14
prepared next time so I think there will
19:15
be more top-down driving al adoption of
19:19
these things and you know making sure
19:21
there’s more oversight so I agree with
19:22
you 100% yeah I just I don’t know I
19:25
thought it was an interesting thing so
19:26
you spent some time recently in that in
19:29
that third-party space what do you think
19:31
happens to the third-party providers
19:33
right now I mean I always know that look
19:35
they’re the like any downturn everyone
19:38
cuts them first and then it’s like you
19:40
you know you cut advertising back you
19:42
cut your digital sped back it’s like in
19:44
a progressive like layers of onion I
19:46
mean what’s gonna happen coming out I
19:48
mean I saw the discounts but yeah what
19:52
do you think happens in that space well
19:53
for the dealers in the two buckets as I
19:56
said are the dealers that can’t be open
19:58
right now and can’t be selling why do
20:00
they need to be
20:01
that goes across all the marketing
20:03
channels whether it’s cable TV or radio
20:05
or in their digital marketing right now
20:07
I mean why market unless you really want
20:09
to keep brand awareness while people are
20:11
at home watching TV that might be a
20:14
strategy more like broad brand you know
20:16
maybe talk more about what you’re doing
20:18
in the local community right now but I
20:20
don’t know deal I’m gonna talk a lot of
20:22
dealers that are spending on that kind
20:23
of broad brand awareness right now so
20:26
yeah I mean I think the dealer’s
20:27
probably did scrutinize their entire
20:29
marketing demand gen budgets and have
20:31
dial dial that way back or dot down to
20:34
zero and that’s only prudent from the
20:36
dealers that are open it’s a little bit
20:37
more of a conundrum right I mean they
20:38
you need to be cautious and surgical
20:43
around what your message is so you don’t
20:45
seem like tone-deaf and just like hey
20:47
buy a car from me I think you want to
20:49
have a message that more resonates with
20:50
consumers who are cautious who might
20:52
need to buy a car because maybe they are
20:54
working in critical industries and need
20:56
transportation right now but I think you
20:59
know be being cautious we’ve seen so
21:01
many big brands get their fingers burned
21:02
because you know they are a little tone
21:05
deaf right now
21:05
I think that’s challenging but I think
21:08
that the flip side is when when consumer
21:10
confidence starts coming back
21:11
I mean dealer’s gonna be like I need to
21:13
get that foot traffic now back into my
21:15
showroom because you know they’re gonna
21:17
have inventory that they need to move
21:19
they’re gonna have like you know maybe
21:20
it’s just the first hopefully just the
21:22
first half of the year that’s off and
21:24
try to make up for some of that a lot or
21:25
half of the year so I think the third
21:27
party will continue to play a vital role
21:29
the dealers to generate foot traffic
21:31
that they can convert into sales but I
21:33
mean I I don’t begrudge the dealers
21:36
right now for dialing it way down
21:37
sometimes to nothing because right now
21:40
wide generate demand when you can’t sell
21:43
it’s good point you know that brings up
21:46
you know another question the vehicles
21:49
themselves with auctions being now like
21:51
shut for a while there’s no price demand
21:55
for these products there’s no
21:56
marketplace right normally have every
21:59
week you know I don’t know how many cars
22:01
are sold an auction every week I assume
22:03
it’s a ton which sets the pricing we
22:08
don’t have that what will happen to used
22:10
car pricing buildup of leased returns
22:12
build-up of the rental
22:14
our fleets wonder what that will look
22:16
like impacting the used car market in a
22:19
short period of time once we kind of
22:22
come back online yeah so I cut my teeth
22:24
at Mannheim you know my first job was a
22:26
man I’m in the automotive space and
22:28
spent 10 years at Mannheim so you’ll put
22:31
that in perspective doesn’t look 10
22:32
million cars a year that are sold
22:34
through like the wholesale auctions and
22:36
you can kind of think rough math is like
22:38
close to a million a month typically and
22:40
that’s all dried up
22:41
right I mean Edessa was literally closed
22:43
here for a couple of weeks Mannheim
22:45
stayed open just select you know
22:46
electronically and was able to offer
22:48
cars through kind of simulcast and
22:50
online but I mean the operations have
22:52
been will way scaled back dealers
22:54
obviously aren’t travelling to physical
22:56
auctions or buying everything they buy
22:57
online and the volume is not there again
22:59
starting with the consumers if consumers
23:01
aren’t buying cars the others don’t need
23:03
to replenish the cars on their Lots
23:04
right and you know to compound that
23:06
you’ve got all these leased cars coming
23:08
back I rented ironically enough like two
23:11
weeks ago I drove across country from LA
23:13
to Atlanta when I came home and and
23:15
rented a one-way Hertz car I went to LAX
23:18
Airport on a Thursday night two weeks
23:20
ago literally two weeks ago and and I
23:24
got in their car and a minivan wasn’t in
23:28
my spot every spot was filled the cars
23:30
were overflowing that you can imagine
23:32
nobody’s renting cars so I went back
23:34
into the woman this this is what nine
23:35
o’clock at night and said my car isn’t
23:38
in my spot and she says oh just take
23:40
anything and I was like I’m dry I’m
23:44
driving to Atlanta and she’s like yeah
23:47
just take anything you want I was like
23:49
oh interesting but I think that they’re
23:50
there and then the other four the
23:52
flipside and I hate to beat up on hurts
23:53
because I know they’re under a lot of
23:54
duress right now so I turn my car in at
23:57
Atlanta Airport Sunday night the fifth
24:00
right today isn’t what’s the date today
24:02
the 14 17 every day every day since you
24:06
love us every day since they hit my
24:08
credit card for three hundred and forty
24:10
five dollars from says I’ve had to call
24:14
cents and both times they were there the
24:16
person on the phone was very apologetic
24:17
they said listen we don’t have anybody
24:19
working right now so there’s no one to
24:21
check in your car so I’ll send it a
24:23
message down to Atlanta Airport and
24:25
we’ll try to get your car checked in but
24:27
it still
24:27
it hasn’t even been checked in yet so
24:29
even who got my bill yet and I’m gonna
24:31
have to dispute like basically daily
24:33
daily fees for like the last like 12
24:35
days and this is what I got to go on for
24:37
another week so it’s like you know it’s
24:38
just like this is a state of affairs
24:40
right now so all those cars as they come
24:42
off
24:42
you know Hertz fleet they’re gonna have
24:44
to go to physical actions um with no
24:47
demand for these cars there’s all these
24:49
off lease cars coming back this year the
24:51
auctions are gonna be stuffed full
24:53
these poor auction companies are gonna
24:54
have to buy sat or rent satellite
24:56
locations just to park the cars yeah
24:59
right and we’re not gonna have demand
25:00
from consumers and thus we won’t have
25:02
demand from dealers so I mean the
25:04
auctions are gonna be overflowing with
25:05
cars if they can’t sell because it’s
25:07
going to be no demand so I mean this is
25:09
all backing up in the supply chain which
25:11
means for the consumer that wants to buy
25:13
a car they’re gonna be screaming good
25:15
deals either on new cars or used cars we
25:17
know I mean I’ve seen JD Power talking
25:19
about like you know they expect a 7%
25:21
decrease in used car prices this year I
25:23
can’t imagine that’s the extent of it I
25:25
mean there’s gonna be streaming deals
25:26
for people who want to buy
25:27
opportunistically cars and I think that
25:29
we’re gonna hear stories you know light
25:31
like back in the 2008 downturn dealers
25:33
that make up make a mint because they
25:36
time the market right they’re able to
25:37
buy cheap cars and sell them into a
25:38
strong market but problem right now is
25:40
like who knows when the markets gonna
25:42
turn right we don’t know when consumer
25:43
demands gonna start pulling through
25:45
these cars which will energize the the
25:47
average dealer and energize the auction
25:49
channel so coming back to where we
25:50
started the conversation in terms of new
25:53
technologies I mean there are these kind
25:55
of like companies out there like I think
25:57
of ACV auctions for example who are you
25:59
know in a quote unquote georgia was
26:02
quote unquote disrupting the wholesale
26:03
auction channel well I mean he’s ideally
26:06
positioned to like go out there and you
26:09
know photograph the car wherever it is
26:11
it could be on a lot somewhere it could
26:13
be a dealer lot or a consumers driveway
26:15
and you know get get bids for those cars
26:17
but even he I imagine I would caught up
26:19
with them for a while but they’ve got to
26:21
be jammed up because they’re suffering
26:23
from the same thing you can only sell a
26:24
car when you’ve got the man for cars
26:26
right now and the fear will be that the
26:28
longer dealer set with no consumer
26:29
demand the others gonna say no I’m all
26:31
good
26:32
I don’t need cars right now and then
26:33
who’s behind the auction car so I think
26:35
some of these technologies will come out
26:37
stronger than ever being able to kind of
26:39
virtualize the sale it’s
26:41
cars on on a line take photographs very
26:44
creatively you know wherever the car
26:47
actually sits and merchandize those
26:49
vehicles and try to find buyers in the
26:52
nooks and crannies of America where
26:53
there is actually demand but you know
26:56
it’s gonna be interesting to see how
26:57
this all plays out cuz it’s all
26:58
predicated again it all flows from when
27:01
consumers will start feeling confident
27:02
enough to getting back to either buying
27:04
cars or servicing their cars yeah
27:06
whenever someone’s gonna write this
27:08
would probably be that time you really
27:11
triple down and write a like marketplace
27:18
Prada to look for anomalies in price to
27:24
market right so look for those spots
27:27
where wow the cars are super cheap and
27:30
Orlando yet there’s still a strong
27:33
market place in Iowa for this particular
27:36
that market disparity it would be
27:39
interesting I know a lot I’ve seen
27:41
inside that space but that might become
27:44
even more apparent as you know as we go
27:49
through this and you have this flood of
27:51
cars coming back into the market i I’ve
27:53
talked to Todd Caputo you know he’s just
27:55
kind of selling down as inventory a lot
27:57
of guys are just like hey you know we’re
27:59
just waiting and I’m gonna sell through
28:01
what I have at the prices that I thought
28:04
they should be but the question is you
28:07
know how many of these dealers will turn
28:08
around open their door back and realize
28:11
they’re you know half a million dollars
28:13
underwater right right or the flipside
28:16
they use can’t you know don’t have
28:18
enough inventory to satisfy demand
28:20
yeah I’ve talked to two of my buddies
28:22
who have dealerships in Florida here
28:24
this week and they’re still open for
28:26
business
28:26
volume volume czar down but they’re
28:28
still selling so to your point I mean as
28:31
opposed to a dealer in some state that
28:33
can’t sell could they be creatively
28:35
moving inventory down in the Florida
28:37
market collaborating with other dealers
28:38
etc to get some of those this inventory
28:40
that would be hot you know as it gets
28:43
warmer down in Florida I’m assuming
28:44
you’re convertibles are starting to get
28:46
interesting beans right okay so so maybe
28:50
you know there could be some creative
28:52
solutions to be shunting existing
28:54
inventory around the you
28:55
to start to help deal alleviate dealers
28:57
to dispose of some of those things but
28:58
surely people smarter than me already
29:00
trying to figure that out
29:01
yeah I listen you and me both at least
29:03
like I you just get those thoughts
29:06
though like hmm wonder what you know
29:08
where it comes out like as you said you
29:10
know if we go back to the 2008 downturn
29:13
some of the biggest technologies came
29:15
out of that time frame right Airbnb uber
29:19
lyft take your pick
29:20
okay companies had exploded when they in
29:24
growth so the question you know as
29:26
entrepreneurs you you have to say well
29:29
what what it’s what’s it gonna be now
29:31
and I don’t believe it’s digital retail
29:33
I think that’s already has been in the
29:35
motion for a longer period of time I
29:37
think there’s other things that surround
29:39
that that are going to become highly
29:42
useful tools that maybe we just haven’t
29:44
seen yet I don’t know so I wanted your
29:45
thoughts on them so yeah yeah no I agree
29:48
you know also just helping virtualize
29:50
the service experience right I mean many
29:53
dealers are very very vocal that they
29:55
come to your driveway to pick up your
29:56
car come to your place of work pick up
29:58
your car service it bring it back make
30:00
it super convenient for consumers but I
30:02
think they’ll definitely be more of that
30:04
right I mean there’ll be investments in
30:05
technologies there that help dealers
30:07
unlock either service and/or parts and
30:12
I’m quite sure that there’ll be new
30:14
companies next year at any da we see
30:16
we’re like oh interesting so the those
30:17
companies got a foothold during this
30:19
downturn yeah right you know I’m
30:21
laughing I think like are we gonna see a
30:24
whole row of like Clorox 3 companies
30:30
maybe maybe I mean that’s a good point
30:34
yeah I mean sanitize the inside and
30:36
outside of your car right and with one
30:38
push of a button or something
30:39
yeah like well that auto nation is done
30:41
that for a while they had this thing
30:43
called the Clorox 360 machine I don’t
30:45
know if you’ve ever seen it if you go to
30:46
a web site AutoNation click on service
30:49
they actually have a whole thing called
30:51
like it’s called I think Clorox 360 and
30:55
it’s a mister atomizer they they just
30:58
hit everything and it uses like electro
31:01
something to stick and kill everything
31:04
yeah I mean there’s a couple things like
31:07
that you gotta wonder like
31:08
what will happen like is that new
31:11
protocol because I also you have to
31:14
think you know there’s two sides we go
31:17
back to stores and we have lots
31:20
employees around again
31:22
that’s a breeding ground for stuff so
31:24
what are the new rules around how we
31:28
interact with our co-workers how we
31:30
interact with customers what needs to
31:33
happen to put like safety in place where
31:37
they’re never wasn’t yeah yeah I agreed
31:40
it’s gonna be a new normal for a while
31:42
at least while the memory still is
31:44
emblazoned on our brains of this that
31:46
the pain that people are suffering right
31:47
now yeah cuz you think about like okay
31:50
my last company I mean we had you know a
31:52
couple under people in literally on two
31:55
floors right like you get one with
31:57
Corona like it would spread like yes
32:01
yeah any impact that would have on the
32:05
like a business like my previous on
32:06
that’s it it’s not good yeah I think
32:09
that that’s something like how do we I
32:11
don’t know how we navigate that that’s
32:13
gonna be really interesting do we go
32:14
back to big businesses or will the
32:17
remote and work from home grab hold a
32:21
little bit more I mean I think you’ll be
32:23
it’ll decimate commercial real estate
32:24
but on the other side is it will it be
32:27
safer for us
32:28
I don’t know right right well definitely
32:30
safer but yeah do you have collaboration
32:32
to like virtual collaboration tools to
32:34
your point earlier one you can drive
32:36
accountability make sure your employees
32:38
are actually checking in or productive
32:41
but also it’s like I mean I don’t know
32:43
how you’re feeling right now but I mean
32:44
this lack of with all due respect to you
32:47
I mean this interaction but lack of like
32:49
sitting across a table from someone
32:50
having coffee having dinner which brand
32:52
etc it’s it’s weird what it does to your
32:55
psyche after a while right I mean and if
32:57
we’re forced to be in our homes for
32:58
another like three or four months I do
33:01
think like telling out of those people
33:03
gonna be craving like social interaction
33:05
with folks I even saw did this is I will
33:08
go a little off topic because I think it
33:10
was just funny I read a story how zoom
33:12
now is like writing code to watch the
33:18
videos because people are having new
33:21
pardonez Oh on the zoom platform and
33:25
they’re like we can’t have that so
33:28
they’re having to write code to look I
33:31
guess for nudity so it then stops the
33:34
zoom coming on because like my wife she
33:38
has friends like all over so they’ll do
33:40
their social happy and sit and laugh and
33:43
drink and do whatever and he you know
33:46
everyone’s doing that but I read that
33:48
article and it just I said it always
33:50
there’s always one person that takes it
33:52
way too far what you could do is zoom so
33:56
that’s a new business for us how about
33:58
strip poker via zoom yeah there you go
34:00
now you’re on yeah yeah any start
34:03
thinking like all the other stuff like I
34:04
always think like what impacts like
34:06
concerts sporting events you know travel
34:10
are we going to want to see like even in
34:13
Auto are you going to get those people
34:15
that come to the dealership now to do
34:17
training right that are put on planes I
34:20
mean those risks are all that risk
34:23
profile is going to change I think what
34:24
business owners do and never mind the
34:27
conventions I mean these conventions be
34:29
other na da or digital dealer or
34:31
whatever it might be well you know that
34:35
was a primary way for vendors to
34:36
interact with dealers and dealers to
34:38
find new technologies and discover new
34:40
technologies how is that gonna play out
34:42
because you know heaven forbid that by
34:44
you know next January we can’t all fly
34:46
down in New Orleans and go to na da but
34:48
imagine trying to conduct na da
34:50
virtually that would be tough yeah and I
34:52
mean let’s be honest New Orleans is like
34:54
the hotbed it’s like going in the war
35:02
zone yeah I don’t know I I feel like
35:09
there’s so many interesting things to
35:12
learn right now out of this that you
35:14
know if we keep our minds open like
35:16
what’s possible you know from a
35:18
entrepreneur perspective you know
35:20
business owners from dealer perspective
35:23
from the consumer side you know I guess
35:26
this level of uncertainty is
35:27
uncomfortable but inside there I hope we
35:30
find you know at you know I don’t know
35:32
if it’s a shifted nor
35:35
Moeller what comes out of it but I think
35:37
it’ll be interesting yeah I mean what we
35:39
do know is that this won’t last forever
35:41
right I think what we do know is the
35:43
strong will get stronger those with
35:45
strong balance sheets will as things
35:47
turn around be able to make investments
35:50
in either you know buying cool
35:51
technologies and or like for a dealer
35:53
stocking up on you know clever inventory
35:56
right at the right time to be selling
35:58
back into a strong market so those
36:01
dealers that are better able to weather
36:04
this financially are gonna be able to be
36:06
more opportunistic like all things in
36:08
life you know we know there’s mean new
36:10
technologies that spawn out of this
36:12
downturn and you know we’ll look back
36:14
you know five years and say wow there
36:15
was some really really good innovative
36:17
companies that came out of this and I
36:19
think we all just need to like hunker
36:21
down and prepare for some pain in the
36:23
short term but just also be prepared
36:25
that you know life will get back to
36:27
normal it may be slightly different
36:29
nuance but I mean get ready for that and
36:31
I’ll prepare for that inevitability and
36:33
be prepared to like be aggressive right
36:35
those that one are in good financial
36:37
shape right now but also are prepared to
36:38
be aggressive when the timings right are
36:40
the ones that are gonna like you know
36:42
take the predominance of the benefit as
36:44
we come back to normal yeah there was a
36:46
article I think it was at Harvard
36:49
Business Review I’d mentioned it was
36:51
someone I had talked with where they
36:53
profile the ton of companies after the
36:56
downturn and the companies that fired
36:59
people did not return nearly as fast as
37:04
the companies that either did pay
37:06
reductions or just furloughed blame they
37:09
after the core staff there because that
37:13
whole having to rehire loss of tribal
37:16
knowledge all that stuff just impacted
37:19
them so you know I know dealers are in
37:21
all sorts of situations right now some
37:24
have had to you know term the majority
37:26
of their staff some of you know some
37:28
dealers I know they’re paying all their
37:30
employees still to be home so you get
37:33
that whole thing I feel though that was
37:35
an interesting thing it really
37:36
highlighted that you know you’ll come
37:39
out of it faster as you keep you hold on
37:41
your people right that asset so yeah
37:43
yeah I mean you you you’ve built a great
37:47
company in the past I mean I’ve always
37:49
but you know basically what you’re doing
37:50
is you’re building a tribe right
37:52
especially when you’re a startup you get
37:53
to pick and choose every member of the
37:55
tribe and I always keep raising the bar
37:57
on the quality but you know when a
38:00
company that under a certain size you
38:02
get that sort of also I don’t that
38:04
allegiance to the tribe to the fellow
38:06
member of the tribe to the tribal tribe
38:08
leaders etc I think once you get to a
38:10
certain size with big companies
38:11
typically you lose this I think this is
38:13
a great opportunity also for leaders be
38:16
it at small companies or large companies
38:18
to re-instill that kind of sense of like
38:21
you know
38:23
trust high levels of trust and caring
38:26
for other members of the tribe at the
38:28
company and I think probably that’s one
38:30
of the benefits that may come out of
38:31
this right is like you know we’ll look
38:33
at you know our our interactions with
38:35
other humans as being less transactional
38:37
and being were more invested in like
38:39
understanding them and are you alright
38:41
your family okay you know I really care
38:44
for you especially as we come back out
38:46
of you know get it getting more people
38:47
back on the payroll I think people are
38:49
going to be very very appreciative of
38:50
having a job and being part of that kind
38:53
of community with companies and you know
38:56
so we’ll see how that plays out too but
38:58
hopefully that’s like you will have some
39:00
kind of return to people really
39:02
appreciating being part of the culture
39:04
more called cultural fiber of companies
39:06
that’s awesome man that’s very well said
39:09
I love it so well hey I really
39:12
appreciate taking the time today it’s
39:13
always great to catch up and glad you’re
39:16
back on the East Coast now so still I
39:20
know still gonna have to get you surf
39:22
and oh man I can’t believe you spent all
39:24
that time in Cali and didn’t surf I just
39:26
look I’m all for the warmer water down
39:28
in Florida we’ll go to the Gulf Coast
39:30
and you can teach me
39:31
yeah well get you into the Atlantic
39:33
we’ll get you into Savannah or Sebastian
39:35
or up here New Smyrna Beach which is
39:39
shark bite capital of the world by the
39:41
way but don’t worry about that it’s not
39:42
a bad thing
39:43
if I can get you on a racing bike on the
39:45
racetrack I will definitely take surfing
39:48
lessons session I’ll do anything and say
39:51
just make sure you don’t get me killed
39:53
I’m okay just
39:54
oh well we’ll get you rocked up in
39:56
leather and helmets
39:57
snores yeah well cool I really
40:02
appreciate it in here I’m going to stop
40:04
this and
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