A Product Market Fit Show | Startup Podcast for Founders
00:06:17 · Andrew Tai
[00:06:17] S1: So we thought we were being tremendously innovative in that. This was a new car focus experience. We thought we were being tremendously innovative in that you don't have to look through a whole bunch of listings. You just configure the exact new car that you wanted. Back in 2011, maybe it would've been a 2012 Honda Civic XE in this color with this options package. You configure that, select the local dealers in your area. You would get offers back, firm, final offers for either the exact car if they had it or similar cars, maybe a different color. You pulled out your credit card. You reserved it online. Whether you had selected a cash finance lease, whatever the terms, those were the terms that you would be getting. You knew pricing transparency. You knew you were getting a fair deal because there was competition. You basically completed the whole process largely online. Now, that's where we actually started learning about dealership and customer behavior. Oftentimes, the customer would go into the dealership, and it's a sign the paperwork and pick up the keys experience. Bulk of it completed online, buy online, pick up in store. That wasn't a really popular concept back then. That's essentially what we saw happening. In some cases, we saw dealers actually delivering cars to customers. You’ve got to remember; this was back in 2011. You see the ads about all of the online car buying experiences now, where this has become much more commonplace. In 2011, it was a fairly pioneering concept.
00:07:43 · Pablo Srugo, Andrew Tai
[00:07:43] S0: And let me ask this. Starting off, you started from the consumer's perspective. You knew your own niche and probably just speaking and knowing a few other people that bought cars. How much did you know about dealerships, and how dealerships work, and how they operated, what they cared about, what they didn't care about? Would you go in blind, or did you do any discovery, or did you have insight into that as well? [00:08:04] S1: Did a ton of discovery. I think we thought we knew the market really well. I think that's the inherent challenge oftentimes where when you go talk to someone about, hey, this is my idea. What do you think? Oftentimes, the answer is naturally just biased towards the positive. When we got really into it operationally is when we learned the nuances of what really works and doesn't work. We spent a ton of time talking to dealers. We spent a ton of time talking to customers. I mean, it's no surprise. You go pick 10 random people in a parking lot. You ask them, hey, do you the car buying experience? Nine out of ten of them will probably have some story about how they don't like the experience. It's just one of those cliches. When we talk to car dealers, naturally the first reaction is hey, anything that helps me sell more cars is a good idea. On the surface, we thought we deeply understood the space, the problem set. That was a lot of learning as we actually built the company and had actually people use the product. That's where the devil's in the details.
00:08:04 · Andrew Tai, Pablo Srugo
[00:08:04] S1: Did a ton of discovery. I think we thought we knew the market really well. I think that's the inherent challenge oftentimes where when you go talk to someone about, hey, this is my idea. What do you think? Oftentimes, the answer is naturally just biased towards the positive. When we got really into it operationally is when we learned the nuances of what really works and doesn't work. We spent a ton of time talking to dealers. We spent a ton of time talking to customers. I mean, it's no surprise. You go pick 10 random people in a parking lot. You ask them, hey, do you the car buying experience? Nine out of ten of them will probably have some story about how they don't like the experience. It's just one of those cliches. When we talk to car dealers, naturally the first reaction is hey, anything that helps me sell more cars is a good idea. On the surface, we thought we deeply understood the space, the problem set. That was a lot of learning as we actually built the company and had actually people use the product. That's where the devil's in the details. [00:09:10] S0: Then let's jump into that. How did you think through building that marketplace? Which side did you – I assume you went after inventory first. How did you try to get that on?
00:09:20 · Andrew Tai
[00:09:20] S1: I think that's the challenge that we learned very quickly of a two-sided marketplace. It's funny where, or poetic in a way where the journey came full circle. After we were acquired by the parent company to Autotrader, I spent a bit of time at Autotrader working on the marketplace. I saw the marketplace at big scale. That was the inherent problem with the marketplace at the beginning was creating this two sides, matching the supply and the demand. There's no easy answer for it. It was just tough. That was one of the biggest challenges for us. I think, on reflection, part of the reason I think we were successful once we pivoted into a different model, a vertical SaaS model, was just knowing what we were built for, knowing what we were good at, and knowing where we could find opening in the market, if you will. One of the challenges with building a two-sided marketplace is creating the brand first and foremost. Getting customers to come to the marketplace, Unhaggle. Listen, it's been well over a decade now. Unhaggle has a pretty nice cult following in the car community now. But that didn't come overnight. And we certainly – we realized very quickly that we were not capitalized to go out and spend the big ad dollars to compete against Autotrader to get mind share of people that were thinking about buying cars, or to compete against the automakers themselves who were advertising to potential car buyers, or the dealers themselves. We weren't capitalized well for it. We realized we weren't built to build a big brand in that way. The dealer side was a little bit easier that they – at the end of day, the dealers just wanted to sell cars. Matching them at the same time was the problem because when there weren't enough customers on there – you could have lots of dealers, but dealers would fall off when they didn't get a lot of immediate value.
00:11:25 · Pablo Srugo, Andrew Tai
[00:11:25] S0: How long between the time that you decided to start Unhaggle until you decided the marketplace isn't the way to go, we're going to sell direct to dealerships? How much time are we talking about? [00:11:35] S1: Yeah it's probably, I'd say maybe almost three years where we really focused hard on it. The problem sometimes is it wasn't going terrible in the sense that we were growing revenues. We were growing month over month, and year over year. It's just not exceptionally quickly. [00:11:56] S0: That's what I want – that's what I want to dive into. I think when we look back retrospectively, and we summarize the history, it's easy to gloss over a three-year period. Three years, first of all is a serious amount of time, but also not uncommon, especially when you had the reception you're talking about, which is not black or white. It's easy if you put it out and you just two months in, three months in, there's nothing happening. Nobody wants to sign on. You kill the thing. Through the roof, you're the next Uber, amazing. Most of these startups fall in between. I want to dig into that a little bit more. What was that looking like? Which parts, as you go back and you think through those three years, were some of the things that were working and kept you going towards it, kept you in the marketplace frame of mind?
00:11:56 · Pablo Srugo, Andrew Tai
[00:11:56] S0: That's what I want – that's what I want to dive into. I think when we look back retrospectively, and we summarize the history, it's easy to gloss over a three-year period. Three years, first of all is a serious amount of time, but also not uncommon, especially when you had the reception you're talking about, which is not black or white. It's easy if you put it out and you just two months in, three months in, there's nothing happening. Nobody wants to sign on. You kill the thing. Through the roof, you're the next Uber, amazing. Most of these startups fall in between. I want to dig into that a little bit more. What was that looking like? Which parts, as you go back and you think through those three years, were some of the things that were working and kept you going towards it, kept you in the marketplace frame of mind? [00:12:40] S1: Yeah, I think, listen, at the end of the day we were making money. We were generating revenue. We were adding customers. We were even getting decent press. Those were encouraging signs that kept us going. I think the realization was we – and we tried all kinds of levers to accelerate growth. [00:13:02] S0: What were some of those?