This interview is with David Suwinski, founder of Carzell.
David: We provide a free service to consumers to sell their car directly to dealers, who then compete to buy their car for true market value. Typically, consumers dispose of their car in one of two ways. Either they sell their car consumer-to-consumer or they trade in their car when purchasing a new one. Craigslist is the number one source of consumer-to-consumer transactions, with 12.9 million vehicles sold privately year. There are challenges with that; you’re meeting with random strangers, you’re constantly setting up appointments, people are coming to your home, you’re dealing with cash transactions, and sometimes people try to scam you. People aren't comfortable with large transactions like that, and they don’t know if the person is going to handle their title appropriately.
When people trade in their vehicle, they know they are taking a loss on their car for the convenience of walking in, getting rid of their old car, and walking out with something new. That is typically a $2,000 to $2,500 loss for each trade-in. We’re bridging the gap between the convenience of trading a car in, and the high value of selling consumer-to-consumer.
Ben: What was the genesis of this idea? How did you come up with it in the first place?
David: My entire career has been wrapped around automotive auctions and entrepreneurship. In the past couple of years, I've been involved in managing automotive auctions, business development, internal corporate consulting, analytics, and innovation; including development of three internal businesses, two of which were international. Through my experience I realized that there was an opportunity to adapt the way that consumers want to sell their vehicle to a new online auction platform.
Ben: How did you get started? What was the first thing you did?
David: Forecast and plan. It’s really doing the research, looking at the competitors, identifying what the processes would be, and what the hurdles would be in any process, then determine if we can develop a workaround. Next, we forecasted whether there’s an opportunity for profit and scalability.
Ben: What were the major hurdles that you encountered in the process?
David: Marketing is a huge cost based on the fact that people are used to those two different ways of disposing of their vehicle. To educate the average consumer about another opportunity costs a lot of money. It’s not something people organically look for, so it has to be taught to them.
Ben: What is your process for getting the word out? How did you get your first fifty customers?
David: We recently launched and we’re focused right now on digital marketing. We use pay-per-click and remarketing through Facebook, Google, and YouTube advertising. We developed a promotional one minute video, to demonstrate the product and benefits of the product. When you’re doing an in-stream advertisement, you have five seconds to catch someone’s attention before they can say “skip this ad.” We try to make it really engaging in the beginning, yet explain the process to someone who might want a better understanding of what we do. This is our initial launch. Once we further develop our dealer network we will be focusing on digital radio so we can be very targeted with our demographics. We feel that early adopters are more open to trying a different process of selling something that has such high value.
Ben: You have dealerships on one side of your marketplace. How do you get dealerships on board with this idea?
David: Dealers are very busy, so we try not to impede on their busy times. We reach out to them directly by setting appointments, doing in-person face to face visits, and being active in the industry.
Ben: What’s the reception like from the dealerships? Has it been successful so far?
David: We've had a very positive response. Less than 20% of dealers we've spoken to have not been interested, mainly because it doesn't fit with their business model. We’re in the early stages of the launch and we’re trying to do two things at one time; bringing in vehicles to be listed and developing dealer relationships. They have to grow at the same time so you don’t have an imbalance of buyers to sellers.
Ben: How did you begin to actually build out a product?
David: I’m a big proponent of flow charts because I have to visually see everything. You have to determine every possible interaction that a consumer, an admin, or a buyer would have using the interface. The next step was determining the technology. We believe heavily in utilizing our local businesses to work alongside us with our business.
Ben: How do you convey your vision of the product to the people that you’re working with?
David: I believe in building a strong relationship with everyone that I work with, both contractors and employees. We have to understand each other and I have to be able to connect with people to work with them. I believe that the service we’re providing solves a problem. If the people working with me believe that it solves a problem as well, then I feel confident in the relationship that we have.
Ben: Have there been any helpful resources around Chicago that you've utilized in this process?
David: 1871 has been a huge resource. Not just the mentors in the workshops but the people in the shared spaces as well. For example, I sit with the same group of people on a regular basis, who all own their own companies. We started at the same time and have been able to parallel the developments of our businesses. It helps a lot to sit next to someone who understands your business, and you understand theirs, and you can collaborate together.
Ben: What’s next for Carzell?
David: We’re raising a round of seed-funding right now so we can expand rapidly with our marketing and dealer network. We are continually reinvesting in our evolving platform to meet the needs of our users.
Ben: What would you say is your #1 takeaway so far? The most important thing you've learned that you’d like to pass on to other entrepreneurs?
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