Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. Joining me is someone who’s become George don’t you feel like you’ve become famous because you’re one of the, the Silicon Valley companies that SPAC that went public, that was back.
George: Yeah. I mean, I, when I did a SPAC, literally no one and still come out and you bought specs. I, when I told my board in early may, we’re like, Oh, maybe we should do a spec. And I was like, you’re crazy. And now, like, you know, half a Silicon Valley is talking or doing specs in some way. So it’s been an interesting and fun a few months from that perspective.
Andrew: George, whose voice you just heard is George Arison. He is the co-founder of shift. They make it easy for people to buy and sell used cars. That’s the way you’d sum it up. Right. I want to find out how he built up his company. I want to find out a little bit about the SPAC, why he went to back and then also, did he miss out on all the fun trips of getting to be on a private jet, talking to investors because we didn’t do an IPO.
Uh, we’ll find out that and so much more. Thanks to two phenomenal sponsors. Uh, the first we’ll host your website, right? If you’re not hosting a site, go to hostgator.com/mixergy right now. And the second George was one of the early users of them. It’s Gusto. If you want to pay your people and have them be happy with the whole experience and have you and your team be happy, go to gusto.com/mixergy.
George, how would you describe what a SPAC is?
George: Um, specs are special purpose acquisition companies. These are companies formed by a small group of either financier’s or entrepreneurs or both. Um, they go file an S one, go through an SSE process, then go public by raising capital. That capital is put into a trust and can only be used to merge with another company.
Um, they use their own capital called at risk capital to fund operations. While they’re looking for a company to merge with. Normally the SPAC has a life of about 18 to 24 months. And in that time period, it has to find a company to merge with it will then find a private operating company that has a real business to merge with the bad companies.
Management will take over running over the. Over of a combined company. Um, but through that merger become a public company. Um, so it’s a way for companies to go public outside of a typical kind of regular way IPO process.
Andrew: Are you someone who has a kid wanted to be wanting to go public, be the founder of a publicly traded company.
George: Not as a kid. I mean, I grew up in the former Soviet union and I didn’t even know what a publicly traded company was right until I got to the United States. Um, I, I actually thought I was going to be in politics, uh, as an adult. Uh, you know, that was kinda my career aspiration. Um, business was a means to an end in that I wanted to, uh, you know, have a career before going into politics and that’s probably in some ways.
Still could be true, but, um, you know, I thought I would be an entrepreneur of some kind, but didn’t think I was going to be a tech one and definitely didn’t think I would be running a public company now over time that did become something really interesting to me. And I’m excited about where we are now from that perspective, because it is a kind of great way to measure, Hey, I’ve done something really awesome with a business.
I started. Um, but definitely wasn’t like, Hey, I’m going to be a public company CEO, as, as my dream thing, when I was a young person,
Andrew: Is there anything that you missed out on? I guess you get because of that, because you didn’t go through an IPO and instead you specked, the only thing that I can think of is the fun part of being, explaining your story, being wined and dined, being on a jet and trying to persuade people to buy into your IPO.
What else did you miss?
George: If you are, um, you know, a super massive company and can afford a jet short, like that’s great in that set in 2020, but actually nobody, uh, that went public, uh, did that because all the IPOs were done virtually like ours was as well. Um, I T I w you know, we did meetings from 5:00 AM until 5:00 PM, uh, every day for a while.
Um, in some ways actually that actually makes it way more efficient. Um, so. The way to think of SPACs is they allow you to time the market a lot better, and you are able to move on becoming public, even if you haven’t yet done all the FCC work to get ready to be public. Right? Because usually you do a lot of sec work.
You file on this one, you get it approved, all that stuff, and then you say, Hey, I’m not going to go public. Uh, SPACs allow you to kind of move all that to post announcing a deal rather than prior. Um, and so timing kind of works better from that perspective, but all the work that you do is exactly the same.
As far as the road shows you still do have a fairly intensive road show with investors. But it’s spread out over a longer period of time. So you do a first, what’s called a pipe. That’s a private investment in a public company. When you do a fundraise, once the merger is already announced already planned, um, that to raise additional capital into the deal.
And almost every SPAC merger that happens has a pipe component to it. And so the right thing to do, uh, so that usually takes like one, two, three weeks. And so it’s like a condensed kind of IPO period. You meet with very similar investors to whom you would meet within the IPO. And then once the deal is already publicly announced and you file your sec paperwork, then you do another two to three weeks of road show time where you go back and meet with investors.
Again, a very similar to an IPO process.
Andrew: Because they’re going to be buying the pipe, which is the they’re going to be buying. Hang the shares of the publicly traded company at their own special price.
George: Yeah. So the first time round, when it’s the pipe transaction, they are buying shares in the pipe and that’s done at 10 bucks a share, which is how stock shares are issued. It’s always a 10 bucks a share in the initial price of the 10 bucks a share that’s the first row. The second row you do is not for the pipe.
At that point, the pipes already been raised. It’s more to have people get excited about your business so they can go and buy publicly traded shares in the SPAC from. People who hold them, you know, from the beginning. So normally when SPACs raised money, they raised money from kind of specialty, uh, hedge funds that specialize in these types of transactions.
They are not investors that would want to hold a shares of an operating company longterm. Right. They’re not in that business. So what you want to do is you want to get enough investor interest from long hold investors to actually go out and buy shares at the SPAC, uh, and then keep your shifts for the long time.
Right? So it’s the idea of like, Going from having a hedge fund who is, you know, in a special situation, trading stock shares to getting someone like chiro price, uh, or, you know, fidelity or our kind of long hold investors to be your shareholders for the longterm.
Andrew: Okay, let’s talk about the business itself. I didn’t know this until I started researching you. The used car business is bigger than the new car business in the U S am I right?
George: It’s much bigger than the new car business.
Andrew: The used car business annually is $841 billion. The new car is 636.
George: well, so that’s the dollar amounts, but the actual units is even more stark. Um, there’s 45 million used car units transacted a year. And you know, ed peak the best year was about 18 and a half million. Um, new car units, a steady state. It’s more like 16, 16, 17, a million new car units. So it’s almost two and a half to three times bigger in terms of units versus now.
Andrew: Okay. And then, so groceries, smaller market, right? A home improvement, purse, uh, clothing, smaller. All of these are considerably large online, even groceries, right. Are done more online than. Um, in cars, I think I read that 1% of, of used cars are bought online. Here, here it is versus 9% for groceries. 28% for growth for furniture, 32% of clothing, one out of
George: Yeah. So the vertical of the American retail comment that has not shifted online yet, it’s the one that’s like most kind of in the offline model. Some of this is regulatory, like for new car, new car sales dealers have, you know, an infrastructure that they kind of control. Um, vis-a-vis. Oh yams. And that’s one reason.
I mean, everyone probably has heard, or at least read about the Tesla kind of fights over a cake. Is Tesla allowed to sell cars in the state or not? That’s on the new car side, but that actually helps kind of keep everything else offline as well.
Andrew: Why wait. So what you’re talking about is Tesla can’t own their dealerships. In some States, they have to sell their cars to a dealer that they have a relationship with. And only the dealer can sell it. It’s it’s like a drug deal, right?
George: Each state has dealer laws. And the part of the dealer knows that if you’re an OEM and you have dealerships that are franchisees, you cannot have your own dealerships as well. Tesla actually only has its own dealerships, but in certain States it’s not even allowed to have a dealership, but it can have a showroom, but it cannot sell a car.
And so if you are in one of those States, you go to a showroom to see the car, and then you have to like, Go somewhere else, like a computer and order your carpets just from, from the website. Um, so that.
Andrew: impact you with the youth with used
George: Well, it’s just that, um, you know, that it’s used car sales can move on yeah. Nine more easily, because there’s not the same kind of legal issue.
But since dealers sell cars, both use the new because dealers themselves are not moving online very quickly. Um, that prevents you new cars from use cars from moving online quickly as well. Um, secondly, um, you know, it’s a very, um, Large market and it’s very expensive to build out. So like the operational complexity you have to build to be successful is very significant.
And so the dollar investments necessary to kind of get to success is high. Um, it’s not, you know, and margins are low, right? Like software businesses that kind of. Come from nowhere and become very big, usually have very, very high margins. Um, the automotive industry does not have very high margins just because that’s the nature of the industry.
Uh, and then thirdly, um, you know, the three companies that are kind of out there now doing online car sales, us Carvana and room, we’re all very new, right? We’ve all been formed in the last kind of. Seven eight, nine years. And so we know have been around for very long. Um, and you know, the grocery business, which is kind of of a worst one in the, in the space has had a lot of the traditional players wanting to move online more, um, than the automotive one.
Now this is all pre 2020 data. So I think what you’re going to see in 2020 is groceries probably will be online way more than 9%. I would easily guess, like at least 20% and automotive would have moved a lot more online as well. Not anywhere near. 10%, probably like two or three, maybe at most, but you definitely saw massive shift, uh, in dealer behavior and in, um, consumer behavior, uh, with a pandemic, uh, where now people who previously would totally dismiss the idea of online car shopping are a lot more serious about the possibility that that’s might be the way people buy cars, uh, in the future.
I, which is great, right. Because, uh, we’ve been saying it’s going to happen, right? I think everyone assumed it was going to take like 10 years for it to happen. And then suddenly it’s all happening within a couple of years.
Andrew: All right. So that’s the opportunity you found. This is the business that you’re in your revenue. I think a quarter for 2020 was in the seventies, right?
George: Yeah. I can’t comment on the, yeah, I can’t comment on that Q4 2020 around you. But what I can say is that, you know, our, um, uh, our guidance for the year, uh, is in a kind of 190, 295 range.
Andrew: Great. What I’m curious about is, which is phenomenal. What I’m curious about is this whole thing started because you and your co-founder Toby were sitting around or calling each other, trying to come up with a business idea. What are some of the ideas that you said? Nah, this is not for us.
George: So many and some of them actually, we’re still excited about as ideas. It’s just that the businesses themselves don’t necessarily make sense. I mean, um, for example, one of the ideas Toby really loved and. Loves is helping college students figuring out what they should do with their careers. Right? Like, um, I think oftentimes people think they’re good for one thing, but actually their skillset is better for something else.
Can you build software and machine learning to help people, um, come up with what they should actually do in their
Andrew: Keep asking people questions, keep generating suggestions. And then as you learn, when you hit and fail, what’s working, what’s not, you keep improving. Got it. Okay. So that’s one, where’s the revenue coming from
George: Uh, I think if you could, well, look, if you could figure it out that this type of person is a really good software engineer for Facebook, right? And then if you could go to colleges and, and find those fake potential Facebook engineers, you could charge Facebook a ton of money to send those people to them.
Right. So there is a, there is a revenue model that you could utilize, but yeah. But, but, but it’s just, uh, you know, that was on one idea and like, look, I think the idea of being in the business of like helping people get jobs is actually super exciting, but it seemed like a business that would be, you know, pretty complicated to build and maybe something we do, you know, when we are 50, not when we are in our, in our,
Andrew: What’s another one that that was like a good business that you might’ve gotten into.
George: We, we fought a lot about, um, financial, uh, kind of technology businesses as well. And Toby was at a, at a bank at that point. And, um, that was kind of a lot of different ideas, kind of came out of there where like there’s a lot of different opportunities in FinTech that are happening, whether it’s, you know, millennial focused credit cards or millennials.
Focus, you know, checking and banking counts. Obviously China has done some of that and others have as well, but that’s something we’ve thought about quite a bit, um, about also, um, and, you know, look, we have many businesses, some of them, I won’t even mention because I still am thinking about them as like, uh, things that should be done in the future.
And I want to keep, keep that IP for myself. Um, but, um, at the, at the same time ideas that are like, you know, plentiful executions, what’s really hard, right? The what’s, what’s really complicated as a. Uh, as an entrepreneur is execution, uh, not coming up with a good idea. Um, and frankly like, uh, you know, I always believed that let’s say, but after my seven years of doing shift, I believe that even more because, um, all the challenges we’ve ever had have been around execution, not around, Hey, do we have the right strategy and the right ideas?
Andrew: I talked to, uh, one of your co-founders Minnie Ingersoll was one of the early co-founders right.
George: Yup. Yes.
Andrew: me about how she wanted to sell a car as a woman. It’s like, where are you going to, to a test drive a car who’s coming into your car. She was trying to sell her car, right.
George: Yeah, she, she had a BMW. She was trying to sell and, uh, you know, they, um, she she’s like, I’m not gonna trade it in. It’s kind of stupid to do that. So I’m going to do it myself. And then, you know, the kind of, she lived through the experience that we’re basically trying to solve. Right. Cause like people would show up at our house and be like, Oh, can I take it on a test drive?
And then like, Uh, she was like, well, do I get in the car with them? And then they can kidnap me or do I let them take the car? And they might kidnap the car or like, you know, a guy came and was like, okay, this car is great. I want to buy it. But do you have financing available? And he’s like, no, I’m not a bank.
Like I don’t have
Andrew: they’re trying to make a deal.
George: Well, they’re trying to like, get a loan, right. Because one of the big problems we identified early on, uh, took whether it be trying to solve is the fact that in a, about a third of the car sold, used in the U S has sold peer to peer. It’s like you’re selling Academy, but it’s impossible to obtain financing for those transactions.
So it’s super easy to get a financing offer from a bank if you’re buying a car from a dealership. But if you’re buying a car private party, it’s next to impossible to get financing. And so, um, it’s has to do with the fact that banks have basically outsourced to dealers, um, to. Core things, checking the identity of the consumer, like ensuring that the consumer actually is who they claim they are.
Uh, and number two is checking the identity and the quality of the car to make sure that it’s a clean title car within the in good shape. And if dealers don’t do those things and screw up and end up issuing a loan, that’s kind of bad. They’re on the hook for that, not the bank that allows the banks to have extremely low interest rates
Andrew: That’s something. I had no idea the dealer pays. If I don’t pay.
George: If the dealer did not check things properly, then the dealers on the hook. So if you don’t pay, that’s different. Like if you purely like, Hey, you’ve been paying for five months and then you said not to pay the bank can repossess the car and that’s on you. But if like, you know, dealers are required to go through a certain set of steps to make sure that it’s you, the check your ID, you know, pull your credit, check your pay stubs.
If your credit is not as good as it needs to be, et cetera, et cetera. Yeah. If they fail to do one of those things and they’re on the hook and the bank discovers that they failed to do under those things, then they’re on the hook for that. Not, not the bank.
Andrew: What about this? What about this? You mentioned low interest rate you. One of the things that I discovered was I bought a used car. I didn’t even want a loan, but the interest rate was zero. So I thought, all right, I’ll be an idiot. Not to.
George: Yeah interest. So interest rates on, on car purchase are generally very low. Not for everybody, right? Obviously like credit score matters as well, but it’s, um, they’re low because banks, um, it’s viewed as extremely secure debt, uh, because they can repossess the vehicle and resell it. It’s a very liquid market.
Uh, and banks have very low cost of capital, right? Because they basically pay you nothing for the money that you put into your checking and savings account. Now. For dealerships, they also have partners that are the. Finance arms of OEMs, right? So like GM, financial, BMW, financial, et cetera. And those guys will oftentimes make offers for car purchases in terms of loans that are at zero interest rate.
And the goal there is to move inventory. Right? So for new cars or certified pre-owned vehicles that have the dealer, sorry, the, that have the OEM brand on them. Um, oftentimes there is a. Kind of like virtually no interest rate offer because they need to move inventory and they’ll make money on the car.
They will make money on that loan.
Andrew: Got it. So what you’re noticing is number one, huge market. Number two, not going online. Number three, it’s kind of shady for people to sell it the way they’re already selling it. The other thing that I saw was I saw a stat about how much people hate used car dealers. So you either have a bad experience buying from a human being where you can’t get a loan or you have a bad experience.
That’s even worse. From a car dealer and you said, this is our market. We’ve got to go in. And the first step you took was, was it a spreadsheet, a website Craigslist. What’d you
George: So initially the idea it was to build a financing business for private party purchases too. Like you’re buying a car from me and, and I would offer you a loan at the same time when you’re getting a car from me and shift would be the kind of entity helping facilitate that. So that was kind of our first idea.
We started to experiment with that and, you know, discovered very quickly that sellers of cars were really interested in also selling alone. And getting banks to work with us was going to be next to impossible. Um, and so, uh, but what the banks were saying and what the sellers was saying, cause they actually, Hey, can you take the car away from me and sell it for me and thanks for like, Oh, we’d love to work with you if you’re actually owning the transaction.
So it kind of got into the owning the transaction business because we wanted to build a financing business, but we couldn’t do it unless we own the transaction. Um, when we got going, I mean, In the beginning, we actually had nothing. Um, we first probably 20 cars that we sold. We got from finding people on Craigslist by just emailing them and saying, Hey, you’re selling this car.
Would you like shipped to sell it for you instead? Uh, and then if people said, yes, we’d send them a little brochure about what we did. Um, so like there was no website, there was nothing. Um, my whole kind of thesis in the beginning was that testing and learning was really critical. Um, and so you should build as little product as possible.
Um, and then, uh, you know, To test your way into what the product should be, and then build a product once it’s clear that it should be X, why should it be Y um, it, it was actually, you know, uh, I think very effective way to, to build, um, and to learn what the market should be. A lot of that came from our learnings at taxi magic.
That’s a company that Toby and I, and a few us had started earlier in 2007. I taxi magic. We had like a very clear view of what we wanted to build. And we went out and we spend, you know, a million and a half dollars building it and then introduced it to the consumer and the consumers like. I want to use this product very differently from the way you’ve configured it.
And we’re like, okay, that’s great. But we just wasted all this money building something that was not exactly what the consumer wanted. Um, and so, um, that kind of, uh, you know, created
Andrew: me stop
George: toughest situation.
Andrew: Sorry. I want to know a little bit more about, about taxi magic. So look at this. This is your first tech crunch article on taxi magic. Jason Kincaid wrote it up. Right. This was, this was basically everyone calls it Uber before Uber. What you did was you said people should be able to just hit a button on their iPhone.
And this was what, a year after the iPhone launched. They should just hit a button on their phone and have a car show up a taxi show up,
George: Yeah. So what we actually said is people should be able to hit a button on their Blackberry and have a car show
Andrew: Oh, okay.
George: And then the iPhone came out. So we actually had already built the product and we already were doing what you’re describing for Blackberry and for windows, mobile phones that people remember those, um, before, before the iPhone.
And then we put the app on, on the, on the iPhone. Our initial concept was very focused on B2B travel like business travelers. And so the idea was, you know, you’re a business traveler landing in New York. You want to get a cab. You don’t really have an easy way to do that. And then we were partnering with a company called concur, um, to do expense management.
So concur is a massive expense management processing, um, uh, business. And they have a ton of business users. Cart, you know, drunk ground transportation was like huge 10% or so of expenses that they managed, but it was all cash and so huge opportunity for fraud. And so the thinking was, if you could book a taxi and then pay for that taxi through a mobile phone, you can create a receipt which would go into concur and avoid the possibility of fraud.
So that was kind of the initial
Andrew: Book it or book it or not, but
George: book it and book it and pay both
Andrew: that’s when it was called ride charge at the time.
George: Exactly. Uh, and then the iPhone came out and it took a lot of work to convince our shareholders and board that we should go to consumers. So we actually eventually were able to build a consumer product that was taxi magic on the iPhone, and that took off massively.
And so the company kind of refocused itself to be more consumer focused versus business travel focused. Um, and you know, it was a really. Uh, amazing experience and Uber didn’t like Uber and Lyft did not yet even exist at all. Um, at, at this point, um, the gonna fundamental mistake or challenge at taxi magic was that we were relying on cab companies to do the fulfillment, right?
Like they have to do to meet the consumer in a cab, et cetera. And cab companies had no incentive to. Pick serving a taxi magic customer over a customer that, that the driver would see on the road that would flag them or a, um, a customer that called the cab company.
Andrew: In fact that a disincentive, because if there’s someone on the road, why not pull over and get
George: Oh, of course.
Andrew: instead of driving a few extra miles, but you’re not getting paid for.
George: Exactly. And so that was like the fundamental problem where like, you know, we were at one point like 10% of all taxes booked in, in San Francisco, but we would get a ton of like blow back from consumers where like, Hey, the car didn’t show up. And we were being blamed for Carla showing up, not the taxi cab company basically.
Right. Like, versus like, if you know, Your book United on Expedia, you don’t blame Expedia, you blame United. Um, and so that was kind of the, the, the challenge. Um, and, uh, you know, we were like almost too early to, uh, take the leap of like, Hey, let’s give drivers the phone. So we kind of build this whole system.
We had integrations with like, you know, 40 or 50 cab companies across the country spent so much money building integrations into their dispatch systems. Cause no one had ever built an API into, into these systems. And so it was all like, Brand custom kind of custom development. So then to like come out in 2009 or something and say, Hey, we’re going to drum dump all that and give drivers a phone directly was really like, no, Rick and people didn’t want to do that, which we should have done.
And that’s sort of, I think like Uber. You know, and more than Uber Lyft, because let’s actually was that real innovator in this space, giving drivers the phone and an app on the phone and then controlling the user experience a lot more than we were controlling was what changed the game. Right. And that’s why Uber and Lyft ultimately ended up winning, um, versus us.
And some of the other players were taxing.
Andrew: And you also started to say that in the beginning, you don’t want to decide what the product is until consumers show you what the product is. I understand that it shift one of the things was, um, you thought it was going to be financing. Consumers told you it was actually buying and selling the car. That was a bigger issue.
What was it? A taxi magic when you were there, what did you think it was? And what a consumers tell you that the
George: Yeah. So we fought that it was all about payment and, and everything else was kind of secondary to payment, but it turned out actually at booking was a really big deal as well. And a lot of people wanted to book a taxi and not have to pay for it. So our entire system was built around book and then pay.
Uh, and like, if you didn’t pay through us, after you booked through us, we would send you this like really nasty email saying like, why did you not pay through us? Like, it was kind of like, Totally crazy. Um, and when I think about it today, I’m like, I think we should have been doing. Um, and so we had all this infrastructure for processing payments, because remember this is 2008, 2007, 2008.
Um, the idea of like Stripe or Braintree does not yet exist, right? So there’s no like simple, Hey, here’s an API from a company is going to process your credit cards. Like we had to go and build our own integrations for credit card processing, with processes, et cetera. And so all this effort had been put into like, Collecting credit cards, processing those credit cards, uh, managing the payments when it turned out that like half our users couldn’t care less about payments at all, but really loved the booking experience.
And so our minimum viable product should have been around booking, not around payment and would have been, we would have been in market much faster and would have been a simpler product to have in market. So I think to me, the learning there is like, you want to get the most simple product possible out there.
Start having users engage on it and then decide what you build next. So Toby, this is Toby’s language, not mine, but it’s a hundred percent, right? Like he’s like the first thing we should have done at, um, taxi magic is built a website that said like book taxi here, and people should have entered their address and then should have generated an email to one of us.
And we should have picked up the phone. Called the cap company and said, Hey, there’s a customer waiting for you at this address go right. That would have been a way to test. Like how do people feel about booking then? So frankly, when it came to shift and we’d like, have this, our kind of aha moment was the test drive delivered to the consumer.
Eventually we did build this website where you could like book a test drive. So you’d have all our cars and there’s a button to book, a test run. So you can look down on the button and you’ll be given a. For him to enter your address. And then we geo locate you, et cetera, but it was no system in the background.
There was no scheduling system on the backend. It would literally send an email to about 20 people on the team and there’d be a scramble on like, okay, let’s get this test prep fulfilled because that was a much easier product to build versus like building a schedule system on the backend for how to manage the Techstars.
And until we were like selling. A hundred plus cars a month. We were just literally using, uh, an Excel spreadsheet, uh, to, uh, to manage the test drives that we had to do in a given day. Um, yeah.
Andrew: you know what, let me take a moment. I want to come back and just ask you one last question about taxi magic, actually two of them, um, about how you felt when you, when you had to leave and what you had to do to stay in the country, and then we’ll continue with the story.
But first I’ve got to tell everyone, this interview is sponsored by HostGator for hosting websites, you know, by the way, George, do you know how big this ride sharing business is? I interviewed a guy who has a whole site called the rideshare guy, making great money. You know, that guy.
George: I don’t know him, but I know he exists.
Andrew: Harry. Yeah, he’s just like his whole thing is that he just helps people who are in the rideshare business make more money.
Bottom line. The reason I’m telling people this story is because if you have a passion, if you have something that you’re curious about, start writing about it, the way that he did and keep on building that business. And if you want to get started, whatever that passion is, even if it’s just helping people who are in the rideshare business, make more money.
Whatever that passion is. Go launch it right now and do it on HostGator. They’re inexpensive, they’re dependable, and they’ll grow with you. And I’m going to give you a really low price for getting started. If you go to hostgator.com/mixergy, they’ll give you the lowest price that they have available right now.
hostgator.com/mixergy. Did I wonder, did you, how did you feel when you had that leave the business and you saw Uber do well. I know people have asked you this. I know you’ve thought about this, but don’t give me the rote answer feeling in your heart. What
George: no, I mean, look, um, there was like two reasons to leave, right? Like I had, my green card was rejected and I had to go figure out how to stay in the country. And it was going to be very hard to do it through taxi magic because the rejection reason was, Hey, you own too much equity in this company. So we don’t regard it to be a real business.
We think it’s like a, you created the business for the purposes of getting a green card, which is like stupid. Um, and, uh, and then secondly, you know, like, There was a kind of difference of opinion among the founding team on what to do. Like I wanted to kind of pursue more of the Uber Lyft front, which is like, just give away the product for free, um, get, give drivers the phone and go that direction and, and see what happens versus, you know, we had, uh, folks on the team who are much more strongly in favor of an enterprise model, where there was like, Some form of charging happening, uh, for the product before we kind of, you know, grew, uh, ultimately like I think giving away for, we made a lot more sense from what we’ve seen, right?
Like, uh, it didn’t make sense to just kind of go after the enterprise consumer, but it is what it is. I look, I, um, I think it was obviously sad for me because I was building a business that I really liked, but I also saw, you know, an incredible opportunity in being able to move to the West coast, because I do think that we would have done better.
Had we been on the West coast, um, that, you know, 10 years ago, That made a difference or 11 years ago, that made a big difference. Um, and so I’m like if I’m going to do another company, I’d rather be on the West coast than not. And so it did present with me with a chance of like, Hey, I’m going to make this really big change.
It’s kind of being forced on me by the need to get my green card, but like, I’ll actually awkward my life and move. It was really tough to move, actually. That was probably the hardest thing to do because being from abroad. You know, moving to the U S then I went to prep school in Maine college in Vermont, eventually moved to DC and spent like 10 years living in Washington that had become kind of my home.
And so like operating yourself again and moving across the country was like a really, really tough, uh, emotionally. And it took me probably like at least. Five or six years to get to the place where I felt like San Francisco is home. Um, and, uh, and so that was like the hardest thing that I, I, uh, kind of went through it during that time.
But, you know, look, I think a company setting companies is fun. Ultimately by the time I left taxi magic, I was not having fun. Now of course, like when Uber and Lyft executed on a lot of the planning that we had done and we should have pursued, that was really painful, right? Like, um, kind of watching them succeed in ways that we couldn’t, uh, was, was really, really difficult because I love the Uber and Lyft product.
I’m still like until the pandemic. I need to say only heavy user. Um, and the reason tax magic, wasn’t so exciting for me at the beginning was because I didn’t actually drive back then. Like I don’t, I didn’t have a license, so I was like a massive personal need for the product. Uh, and I don’t like driving even to this day.
So, um, it’s um, it, that, that was a, for a while hard, but then, you know, you take that kind of grief, let’s say import into the next company, which, uh, has been, has been an enjoyable process.
Andrew: You do do that. Huh? So when you do that now, how are you channeling that? The TA how has it, how has it becoming determination? How are you challenging channeling that feeling?
George: Oh, I mean, that’s way past that now. Like this is, I’m talking in 2012, 20. Yeah. In 2012, 2013, 2014. I mean now like, look, the reality is like, um, I’ve had an incredible ride and amazing. You know, I’ve done amazing things with shift and, you know, look, let’s put it this way. When I, um, if someone had interviewed me in 2013 or 2014 and said like, what’s your biggest accomplishment in life?
I would say, Oh, I started taxing magic. Right? Like I was my biggest accomplishment. I, that’s not the answer. I’m going to give people today. And so, uh, I’ve done, you know, last half a decade has been. Pretty big for me in terms of like taking a lot of what I had been working on for years and then resulting in outcomes.
And so, um, I kind of don’t think about, Hey, well, we did fail Bayer text magic. So like, how do I feel about that now? I’m way back.
Andrew: You went to Craigslist, basic MVP. You told our producer, you ran two different types of ads to see what people were interested in. What are the two different options that
George: Yeah. So we would, um, in the beginning, we’d have an ad for a car that was just like a normal Craigslist that like, Hey, I’m selling this car, that’s it. And information about the car. And then we’d do like, here’s an ad for a car, same car, but it would have like a loan product included in it. Uh, and or it would have a warranty product included.
So like, Hey, I’m selling this car. And by the way, I have access to this. Financing product. Go read more about it here. Or I have access to this warranty product. Go read about it here. Um, just to see kind of which ones would get more traction. And then we’d like also email, um, Sellers and say, Hey, would you mind adding information about a warranty product to your car now, the warranty product and the loan product, and actually existed was like a pure, like, you know, dummy website that didn’t have anything behind it.
Uh, once we kind of got feedback from users, like, you know, the one way or the other, we actually send them a gift card. So we’d send like a $50 gift card to anybody that engaged as a way to like compensate for their time for, um, kind of for, for running the test.
Andrew: He said, sorry, we don’t have this. Here’s a gift card to show our appreciation or we ran out or something. What did you say? We ran out or what was your,
George: We say, we actually like starting, this has been a test. Like this is a kind of, uh, this is, uh, a test. The, the idea being like, you know, you can do a lot of surveying. Do you wanna try to understand where your consumers are, but that’s not the same as understanding like how people react to an actual product.
And so that, that can be, um, was really, really, really critical and, and really gave me. Frankly confidence that this business made sense, right? Like the testing that we did and the engagement with consumers, um, you know, I can say this particular data point was what got me over the top, but overall kind of what I saw in the market and how consumers were reacting to various things we’re testing made it seem like, yeah, it makes sense to go after this market, even though at that point in 2013, nobody was online.
Like. Literally the idea of buying a Colonel line was total and possibility, which by the way, makes no sense, right? Like there, because everything else was sold online. So lady, you can buy a car. Totally not. Non-obvious.
Andrew: reason is that people want to see that I don’t need to see, I guess some people need to see their produce before they buy it. My parents do, I don’t need to see it with a car they do. And the realization that you could bring the car to them and that wow moment happened when, what somebody somebody’s father
George: Yeah, co-founder Joel Washington’s dad wasn’t um, had a car that was really old and had like a lot of issues. And so Joel really wanted him to, um, get a new car. And literally this went on for months. Like every weekend Joe would call his dad like, okay, dad, this weekend, are you going to go and buy a car?
And he’s like, Oh no, no, no. I have too much to do this weekend. I can’t waste my entire day at a car dealership. And so. Eventually you’ll get so fed up with, it’s like, okay, that you won’t go. Like, he’s like, dad, if I like, could find a task rabbit to go to a dealership and drive the car over to your house, would you then buy the car?
And, and he’s like, Oh, it’d be amazing. Right. And so that’s kind of when, and then he came back to me, he’s like, you know, by this, which is what our wild moment should be. We should bring cards to consumers for a test drive because we were talking to, um, we had spent some time previously talking to one of the co-founders of Airbnb and.
You know, gave him kind of our pitch. Like this is what we’re thinking for the business. And he’s like, a lot of this sounds great, but you are missing the wild moment. What’s your wild moment going to be. And then like that kind of like, Hey, he’s right about that criticism. And then Joel, having this expense with his dad made it feel like, okay, yeah, this pursuing this way makes a ton of sense.
Andrew: People’s homes. All right. And then you did something funky. Let me take a moment. Just talk about my second sponsor. It’s Gusto for paying your people. When you guys use them, what do you remember about using them now? You guys are a publicly traded company. You probably have gotten too big for all these services.
George: Yeah. I mean, we had to do to move on away from Gusto a long time ago, because they are actually more for SMBs versus larger businesses.
Andrew: do you remember?
George: uh, well, look, it’s so easy, right? Like Gusto is, I remember using Gusto, which was then called Zen. I’m like, wow. Like. This is the kind of expense you want to have. Right.
So they had done an amazing job. And, um, I think my, our first insurance, when it was like two of us on health insurance was with the arranged through Gusto. And I think we paid payroll progressive for like, um, the, for the first two years. And obviously Josh is an amazing entrepreneur and, uh, and has done something really, really awesome, uh, with Gusto.
And it’s been what, like 50, 60 years since ADP has been kind of the dominant player here. So, uh, it’s really cool to see what they’re doing.
Andrew: Yeah. As long as we’re mentioning the comp competition, yet everyone remembers ADP, ADP. We all have such weird experiences with them. Can I tell you my worst ADP story? This, let me call it out the app. If you want to go, you’ve heard people talk about Gusto. If you want to go try them out, go to gusto.com/mixergy.
They’ll let you use it for three months for free and you’ll get to see why we’re all raving about it. Here’s the weirdest thing. It was my own company. They would put everybody’s paychecks right at the front door. And I thought, this is such a, this is such a weird thing. Anyone can go and see what everyone else is getting paid, which I guess it’s okay.
But you could see their social security numbers and all that. And,
George: Yeah. So we actually have to use ADP because I, at our scale, you know, we’re like almost 800 people and no one can really do payroll for us and anyone else can do payroll for us. Plus like we have, you know, hourly people and salary people, et cetera. There’s a lot of complexity. Um, I think again, like Gusto is an interesting example of like building a business, uh, in a very targeted way.
Like. They like, okay, we’re going to service SMBs that have like five people on it. And then we’re going to go to like, okay, we have SMEs that are like 30 people in it or something. So I remember talking to Josh about this one. So I’m like, you know, we kinda are thinking about moving away from you guys because, uh, our team saying that they need more features and he’s like, that’s okay.
We are meant for. For like business. This is, you know, back in 2015, I think like we meant for businesses, I have like 50 consumers or 50 employees or less, you guys are way too big. You should go with somebody else. And so that’s a, that’s a tough thing to do for an entrepreneur to be like that focused. But I think it’s a really big winning kind of strategy and how you build when you’re like, I’m going to identify who my consumer is and I’m going to build for them and make their experience really good.
And it’s okay if I don’t get the consumer who is not a kind of part of my bucket.
Andrew: Who was it at Airbnb who was acting kind of like a mentor from what I understand.
George: Uh, yeah. And Nate, their CTO, um, was awesome. And I think he gave us like three or four meetings over time. And like, you know, at that point, Airbnb was just like amazing company. And so they had the fact that you would do that. It was incredible, but I think that’s pun. Uh, I mean now today, like, um, um, I think a lot of entrepreneurs come to me and I try to kind of do the same thing.
Right. Because we. You benefit so much from the mentorship that you get from people who’ve been there and done that before.
Andrew: And that’s one of the benefits by the way of living in San Francisco, that you could just go and see him. The other benefit is you say to somebody, sorry, I was just testing a business idea. I actually don’t have the insurance that I do and they go, Hey, great story. About another funky startup. That’s doing this new thing, right?
George: Or when, I mean, when we finally did have a business and we’d come to them and like, we’re going to now take your car away, sign this contract. We’re not going to pay you anything. And money will come in 60 days when the car sells, people will be like, okay. But they would do it because like, look up, look me up or look me up and look like these guys have like real backgrounds, real jobs that they’ve done before.
It’s like safe. Let’s go kind of do that. So San Francisco is like a great testing ground for that. I mean, of course like the, the challenge with emphasis was that the costs are out of control. Like. Uh, to start a business today, you would have to raise twice the money that you have raised as a seed stage.
Um, when, when we started shift, uh, given where salaries are and where cost of living in the Bay area has gone to over the last
Andrew: You, uh, you self-funded a lot of it yourself. You told our producer. We did. Okay. From taxi magic sale. So you sold your taxi magic, shares, your equity. You did. How much did you use to fund this business to fund?
George: We lent, um, shift money. We didn’t actually give shift money. So we lend shift money for the, like, I think the first like 350, $400,000 that we kind of spend to do a lot of the testing and kind of product conception. I was with the money that Toby and I spent, uh, and then we raised. The seed capital. And so we actually were really, really fortunate and raised nearly $4 million of seed capital.
And back then $4 million was like, this is like this massive seed round. And then like now of course, like their companies are announcing like $15 million, $20 million seed round. So it’s a different world from where it was back then. But, uh, we did raise a seed round and then eventually raise a series a and then the way our kind of money that we personally spend was structured.
Is that right? All the money we spent was meant to be paid back at series a, which we did.
Andrew: Why did you do it that way?
George: Um, I mean, look like, uh, I think if I, um, if I had more cash, I would have been able to do to, to go more aggressively, but, uh, throughout the time that I’ve been at shift, you know, um, until it became public, like my salary has always been substantially below market.
And so I’ve been deeply dipping into savings the entire time, uh, in terms of, uh, kind of, uh, living. Um, and so I wanted to be able to do that. I think that’s. Uh, having a low salary, I think is important for an early stage entrepreneur. Um, partly because it allows you to have a really strong argument for keeping salaries low across the business in general, frankly.
And you need to do that because otherwise you’re spending too much money. Right. So, um, I mean, I think, uh, I think if I was doing this today, I could do it differently because I’m in a different financial situation, but you know, back then, um, that’s the best I could do.
Andrew: You were talking about raising money and it sounded so easy, but you had some difficulty. In fact, apparently you were raising money around the 2016 election Clinton lost Trump won. How did that impact your ability to raise money?
George: Yeah, look, I, we actually had, you know, fairly good and easy rounds in the beginning in 2014 and 2015. And then we had this, you know, we had some hiccups in the business just to be super direct about it. So there wasn’t just a, the market dynamic, but the business performance had some issues as well. And then we actually had a.
A term sheet that we were aiming to, uh, kind of close in November. Um, and, uh, and then Trump got elected, which obviously like no one fought that was going to happen. Um, and the, the investor pulled the term sheet because of the election. Um, and a bunch of other people we had been kind of aiming to bring into the term sheet, also pulled out, uh, some of us was like foreign capital and they were concerned about, you know, some of the rhetoric and what Trump was planning on doing, because no one really knew what he was going to do.
Andrew: it was the not knowing. And also because you said it was foreign capital, I started imagine that it was probably someone from a Muslim based country who was wondering, yeah, got it. You’re nodding. Got it. And so they weren’t sure where this was going to go and if they’re investing their money, what got it, what’s going to happen to it.
Okay. So they, did you get spooked out
George: Well, I mean, we, we only had like six months of capital left and this is like November. So we’re like, okay, we had to really scramble and figure out what to do. It was really terrible. And I actually, I mean the worst part of it for me, like the 24 hours was I was flying to Lisbon, uh, for web summit, uh, glad to speak at web summit that Tuesday.
So the, I was on this British airways flight and I think the flight was leaving at like, Eight or 9:00 PM Pacific. And so we went to my husband, came to the airport with me and, and, uh, um, uh, when my boyfriend, at that point, we weren’t yet married and he’s like, and he’s checking, like Trump’s gonna win. And I’m like, there’s no way Trump can win.
And then of course, like I’m, you know, getting on the plane and like the last message I’m getting from, he was like, Trump won. Um, and there’s no internet on, on British air. So like, um, I can’t get any news for like the next, you know, 12 or 13 hours, whatever it is. So I’m like, Couldn’t sleep on all the entire ride on the plane, like totally horrified.
Like whether it’s going to mean the stuff market doesn’t collapse, et cetera. Of course like things developed in a very different way. Right? Like it was, um, yes, scary for certain people, et cetera. But like the market actually went massively, went up, et cetera. So it was a very weird and unusual time. And you know, who would have thought things would develop the way it would.
I mean, like, look, if we got to this point, like, Given what happened, you know, uh, in, in early January here and, uh, uh, on, on capital. I mean that’s beyond depressing. Yeah. It’s like, I don’t know, to me, this has been some of the most difficult and sad, uh, days I’ve had in my life, actually,
Andrew: Well, you personally, why.
George: because. Well, for two reasons, one is like, I believe it, America is the most amazing experiment, uh, in the history of mankind. I believe our constitution is the greatest, uh, thing that men kind of have produced. And so to watch. Person who swore to defend the constitution like directly and personally violated in this like massively public way is despicable and disgusting and is really, really sad.
And then secondly, because I was born in a country where it does not have that, right. Like what freedom is actually not fully there. And George has made a lot of strides and is in a much better place versus the way it was 10 years ago or 20 years ago. But still. Developing as a democracy and in Georgia, like in most other countries, like this people look up to the U S constitution and our transitions of government, et cetera.
It’s like, okay, that’s what we aspire to do. And so then when we can’t actually get our, our things together to do it right, because of one man, like the message that it sends to, you know, millions and millions and hundreds of millions of people around the world, like that’s a really, really sad, right.
Because it’s basically telling them like, Oh, If they can do it, then it can’t be done anywhere else. So there’s not a better way to embolden, you know, tyrants in China or Russia and elsewhere than what happened. Uh, you know, with this, I mean, it was like a civil rebellion, basically. Like we had people who were rebuilding as the constitution and try to stop a lawful transition of government that hasn’t happened in America since 18.
Um, 1860, right? Like when South Carolina seceded from the union on, on December 20th, I think 1860. It hasn’t happened since it’s kind of insane where we lived.
Andrew: I want to come back and ask you about Joe. Actually, can I take this detour with you for a moment? Tell me if it’s uncomfortable. What was it like being gay, growing up in Georgia?
George: Yeah, I, at that point, I didn’t really know that it was gay, frankly. Like, I don’t think I
Andrew: You didn’t.
George: No, I mean, I left Georgia when I was 14. I think, uh, I didn’t fully have a realization of what it meant to even be gay or not at that point. I mean, this is like, um, you know, very early days. Uh, but you know, I did, um, Then I was much more sure that I was gay when I went back to Georgia in 2003, 2004 to run a political campaign.
Um, and you know, still not fully, like I was not out to everybody. I was only out to my gay friends, not to anybody else. And, uh, still had to kind of come to terms with how I’m going to live as a gay man. And I think that that fact actually was one of the big reasons I decided to stop working on, on Georgia and in Jordan politics, because it became very clear to me that unfortunately, You could not be gay and open about it and be successful in
Andrew: Legally legally, you could
Andrew: protections for LGBTQ in, in Georgia, but you’re saying socially it’s not working.
George: Well, it’s, this is 2004, 2005. Now we’re in 2021, things are changing. So like, let’s
Andrew: in the U S true
George: and everywhere. I mean like the speed by which gay rights have become the norm is incredible. And I’m not saying Georgia is anywhere near the U S but like it’s more moving in that direction. But in 20, in 2004, like totally socially, not Bible.
I mean, look, the Georgian Orthodox church, which is very conservative and that. This is going to be very controversial thing to say, but which has done amazing things for the country over, you know, 2000 years, and Georgia probably wouldn’t exist without the kind of very strong religious, uh, flavor in the population.
And the church has got to moral fiber, um, is extremely on Thai, you know, homosexuality, right? Like as any, as any. Kind of Christian conservative entities are. Um, and so that I think has a massive impact. And then also, um, just the, the cultural biases of people do as well. Now, the funny thing is that a ton of Georgian politician actually are gay.
They just closeted and gay.
Andrew: And you know it, you
George: Yeah. And I noticed, and everyone else knows. It’s like, it’s like, it’s a very known phenomenon, but no one public. And everyone was like married and gay at the same time. Like I would never lead my life. That way. Kind of, I was fortunate enough to, you know, grow up as an adult here and there was not something I would do.
So for me, it was very clear that like, I couldn’t do that. And, uh, and I needed to. Then I give up like any dream of like, Hey, I’m going to do something with, or continue helping Georgia. And it kind of eats democratic transition, right? Because like, for me, that was overly important. Now look, it created other opportunities and I probably wouldn’t have done, I transitioned into business as quickly as I did had a, you know, that not been an issue.
Um, and frankly, like I was terrified about telling my dad that I was gay. Um, and we waited or I waited for a very, very long time. Um, I’ll be honest, like he has been amazing about the whole thing. Um, and you know, not just that, Hey, my son is gay, which in Georgia is like super not okay. And it’s still in many ways, but like, my son is.
Be married and C has two children. Like it’s a lot to swallow for, you know, for, from given from the society that he lived, lived in and, and comes from. And I think he’s been really, really amazing, uh, about that. And, and, and, and I think it’s really powerful second point, like, um, you know, before my husband and I got married, we actually went to Georgia in 2000.
Um, Uh, and 18, uh, for a week mainly to like, you know, meet my dad for him to meet my dad, et cetera. Um, and so I had a chance to spend a lot of time with younger people in, in Georgia, uh, then because at this point, like everyone wants to talk to him about, Hey, you are an entrepreneur. Like how do I do the semi, et cetera.
Um, and I I’m, at this point, I’m very open, right? Because I’m, well, my husband’s around. So like, what am I going to do? I’m not going to hide that. And so people were. From the young population, like no one cares. Uh, and then lastly, you know, when my babies were born, I was again in Georgia, very, for a conference, they asked me to speak at this startup grind conference.
Uh, they did a press story about me and like, um, the reporters were. Fairly direct about babies because they didn’t say George is gay and his gay husband and George have children, but like the reality is my husband’s Asian. So one of our children is half Asian and she looks at Asian and then B, they talked about the fact that we went through surrogacy and had an egg donor.
So the fact that you
Andrew: about it at the stage
George: No on television,
Andrew: on television. Okay. Sorry. So the fact that.
George: Yeah. So this was in this, this, the TV story that they did about me. So the fact that like a reporter felt comfortable doing that and like, there was no crazy reaction to it, et cetera, when you take all that and compare it to, you know, 2004 and how I think people would have reacted to that in 2004.
It’s a totally different story. So as much as like Georgia still has a long way to go for people to feel comfortable being gay in Georgia. Um, I think the transition is very much on its way there. Um,
Andrew: Was it easy for you considering your background considering the way the world was all over then? Was it easy for you to accept that you were gay or did you
George: No, no, it definitely wasn’t. And I think it took me a very long time to come to terms with it. Probably at least probably active thinking about it at least 10 years.
Andrew: Actively thinking how to am I, it was it. Am I also,
George: but like, how am I going to deal with it? Right. Like how is this all gonna work?
Andrew: you clearly know. And how am I going to, am I going to be the person who hides? Am I going to be the person who’s open? Am I going to be the person who got it?
George: Yeah. I mean, I T I told Toby that I was gay in. Uh, February of 2000 and, um, Six or five or six. I forget now. Like that was the first time I ever told anybody who was not a gay friend of mine. Right. Like, you know, how, like kind of, you have like this, the kind of cohort of gay friends, uh, that I was gay.
And I was like, really terrified. Now he obviously accepted it way more easily than I thought he would. And actually he was mad at me for not telling him earlier. Um, cause we we’ve been friends since 1996 when we first met each other first day of college. So, uh, for a really long time. Um, but like, yeah, You know that entire, basically my entire college period, and then the kind of five years, um, after college at least was like an active kind of process of thinking about how do you deal with that?
Andrew: And you didn’t want to tell him not because you thought he would dislike you for it, right. Or,
George: Uh, well, no, I mean, yeah, look, I have no idea in how I would, like it’s such a long time ago, but like for any number of reasons that you feel very uncomfortable and there’s also. Yeah. And there’s also like my, my family issues and who knows where I’m going to be living and like what my future holds. Like there’s a ton of complexity to deal with.
I think it’s, you know, today it’s a totally different world. And I think, you know, people can be like, Oh, well, we don’t have all the rights that we want right. In America. But like the reality is, um, the transition on gay rights and acceptance of gay people in America and the last 20. 25 years is completely incredible.
I mean, I remember when I was in prep school, um, Helen on the, on her, the comedy show, right? Like, no, not the current coming, like the comedy show that she was in Kista and I have a woman and it was like this brouhaha that went on for like weeks. Like I’ve got to cancel the show and like whichever network we added had to pay, blah, blah, blah.
This is like 1994, 1995. Right. To go from there to like where we are today. Um, it’s a pretty incredible thing. And, uh, that speaks wonders about how amazing America is.
Andrew: Let me come back to shift with this question that I’ve been wondering. I read this article about you guys on seeking alpha. It actually came out to a couple of days ago, January 5th. It said that one of your biggest challenges is that are third place in an online market of used cars. That depends a lot on data from sales.
And if you don’t have as many sales as your competition, you don’t have enough data about what you should be paying for used cars as your competition, which then becomes this downward spiral.
George: Yeah, no, I don’t actually buy that. Um, mini data’s important. I don’t buy that argument. So there’s a couple of things. One is, um, there’s a ton of public data that’s available. Um, uh, that’s already out there about where cars are priced at, um, which is, you know, you can buy in, everyone buys the data. Um, and so there’s, I guess, Sorry, let me step back.
You even need so much data. No one has that much data, not even CarMax that cell phones, you know, close to a million cars a year, or you need like data that, and, and so to the Elitch that level, you have to buy publicly available data because you’re talking like tens of millions of transactions or you need data.
That’s a unique to you. And, and, and so we need any really, you need both, um, you know, we are in because we are market by market based. We’re actually very large players in the market in our mature, more mature markets. And we probably sell more cars here than anybody else does in San Francisco, for example.
And so, uh, since the car market is actually local, having a ton of national data is a good guy point, but it will never be determined it to what we pay for a car in the Bay area. For example, there are certain makes and models pretty well known. So it’s not a secret information Prius. Subaru sell weight better as a percentage of sales overall, not for shift, but for anybody.
Um, then in the rest of the country, totally understandable for why, right? Like this is kind of the population you’re dealing with here.
Andrew: I actually don’t understand why, but I agree
George: Oh, because, uh, well, because people commute are very environmentally conscious, um, are outdoorsy. Yes, it is a very affordable in my middle conscious car. Um, people have to drive for a long time.
It’s very inexpensive from the driving point of view. And Subaru is regarded as like the best outdoors car, which holds value extremely well. Right. So like in the, in the barrier, there’s a very high percentage of St. Louis, no national data would kind of tell you that the fact that when we buy a Prius in San Francisco, we’re willing to pay more for it versus when we buy a Prius somewhere else, because we’re not going to ship a Prius from, uh, you know, I don’t know Dallas to San Francisco necessarily because that shipping cost is way too high and it doesn’t make any sense.
Um, but you’re willing to pay 200, $300 more for that car, that car in. The barrier, but you’re going to be able to sell that car faster and you’re going to come at a high price for it versus somewhere else. So the, what really matters is local data. And we have plenty of that and we actually have more of that than our peers, because they are not local at all.
They are, they are on a more national kind of push. Um, and then, so I am the data issues like. Not an issue at all. This market is massive. Um, I don’t view Carvana and room as competition. They’re awesome analog companies that do things somewhat differently and somewhat similar to us on the operational side, you know, Carvana and rumor started Carvana and shipped that more similar to each other.
We are full stack and they’re full stack in terms of how we operate, um, on the consumer experience side room and Carmen are more similar to each other. They only offer. Car bought online and then sent it to you for delivery on a truck. We offer that product as well, but we also have the test drive, which they don’t offer.
So on the consumer side, there’s actually differences on the operational side. Carvana and rumors are similar. So Carvana and shift a similar room is quite different, but there’s plenty of room for all three of us to just succeed and we’ll succeed in each, in our own ways, right? Like shift team is a tech heavy team and we’ve been building operational and automotive capabilities around us.
Room’s team is super strong in marketing and, and their leader. Who’s awesome is, uh, is a marketer at heart. Um, Carvana comes out of the automotive space. These are different kind of organizations and all three of them can succeed really well.
Andrew: And the model right now is essentially what we described, what you figured out in the early days, when it was you buying these cars, parking them in front of your place. You here in San Francisco, you’d have 10 cars from what I understand out there, and then selling it to people who would have this test drive experience of some bloody concierge coming and dropping it over.
That’s still the model. And then after a sale, it’s still financed.
George: That’s exactly right.
Andrew: Okay. All right. For anyone who wants to FA you know, what they all know to go to shift.com, how much did you guys pay for shift.com?
George: I don’t think I can say that, but we did have to buy it kind of as a, as a separate purchase. We were lucky that there was an agency that owned it. It was like a quasi tech marketing agency, and then they were bought by somebody else. And so it was no longer used. So we
Andrew: domain. So shift.com, but if they want to follow up with you yourself, George Harrison, where are you? What are you? A social person? You don’t
George: Oh, um, I don’t very much, I do post on LinkedIn a lot. And so I’m pretty active on LinkedIn. I have a Twitter account, but I almost never post. Um, and I don’t have many followers or follow many people just cause I don’t have time for Twitter. Um, LinkedIn is more kind of my cup of tea and I frankly say like, I don’t know how I do my job without LinkedIn.
Cause I think I’d go into LinkedIn like 20 times a day. Um,
Andrew: To read the posts.
George: To, to look people up and to kind of understand people like, look, half my job is recruiting, right? Like, and so understanding people’s relationships are really critical and we all have superpowers. Um, I mean we all entrepreneurs have some, some superpower.
I think people say about me that one of mine is recruiting. And so it’s not surprising when I stand point that LinkedIn is a really big part of my everyday job.
Andrew: All right. So find them on LinkedIn, George Garrison of shift. And I want to thank the two sponsors who made this interview happen. The first, if you are hosting a website or thinking about starting one, go, go to hostgator.com/mixergy. And the second y’all heard about how great Gusto is go to gusto.com/mixergy.
George. Thanks for spending the extra time with me today. Bye everyone.