Pod Insights Acquired Doug Demuro on Analyzing the Car Industry, Creator-Led Businesses, and Porsche Follow Up (Raw Video) About this episode While preparing for our Porsche episode with Doug DeMuro, we had a lot more than Porsche to discuss… but the episode was already over 3 hours! We decided to save the rest for its own episode, released here on ACQ2. Doug helped us understand what’s going on with the car industry supply chain in 2023, the transition to electric vehicles, the car dealership business model, and how most consumer car purchase decisions really get made.
We also got to talk with Doug about his business empire. In addition to his YouTube channel with ~5 million subscribers, Doug started a car marketplace called “Cars and Bids”. Earlier this year, Doug took a $37 million investment from The Chernin Group, and Doug walked us through that transaction and what it’s been like going from “indie creator” to a large and more professionalized organization. And of course, there’s some discussion on our Porsche episode together.
*Links:*
- Porsche Episode: https://www.youtube.com/watch?v=V_fYfdXpkx4
- Cars and Bids: https://carsandbids.com/
- Doug on YouTube: https://www.youtube.com/@DougDeMuro
- Doug on Twitter: https://twitter.com/dougdemuro
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_Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions._
Transcript 20,885 words · 3 speakers
0:00 Speaker 0 Doug DeMiro,
0:01 Speaker 2 it's great to see your face. It is nice to be here. Thank you for having me. Here virtually this time instead of uh in person in your garage. Instead of
0:09 Speaker 1 us literally taking over your garage in house. Thank you so much.
0:13 Speaker 2 But wasn't that fun? Oh, it was. It was it was awesome. I mean, honestly, is uh it was a year highlight for me. Like it's uh um it's just A, it's fun to travel, B, it's fun to do episodes in person with people, and C, it was very fun to bring you into the fold, like for you to get to see all the weird idiosyncratic stuff that goes into acquired uh and for us to get to learn a little bit from you on like how that is very different than how you have built your business.
0:40 Speaker 0 Yeah. Yeah, no, I agree. It was it was in it just as interesting for me for a lot of the same reasons. You guys are so much more legit in terms of production quality and thinking through that sort of thing.
0:50 Speaker 2 And I'm like, let's just wing it. Come on. Which may or may not matter, right? Like you have built this incredible empire doing your strategy, and we have built our business doing our strategy. I think uh that's part of what we're gonna talk about today. So, listeners, we wanted to do this immediately following the Porsche episode, but like after a seven hour day and sitting at a pretty hot garage with uh uh a lot of like particulate in the air from all these uh Amazon moving blankets that we had just unpacked. We were like, let's get out of here and we can do this another time. Uh so
1:22 Speaker 1 I will say the kindest thing that Doug did for us among the many kind things you have done for us is you offered to keep the you know a hundred plus pounds of moving blankets. Let me tell you, let me tell
1:32 Speaker 0 you, we are gonna use the so we got cars and bids, we got an office, and we're creating our own like studio for me to film in the office. It's like a garage, and we need the blankets, and so my my production people in the end were thrilled and you should see I'm gonna send you guys there's a photo of like three hundred blankets sitting on the floor of the
1:50 Speaker 1 Yes. Uh we were terrified, honestly, like when we were emailing beforehand, we're like, of course, we you know we don't want to disrupt your house, we'll break everything down, we'll get it all out, and we're like, how are we gonna dispose of several hundred pounds of moving blankets in San Diego?
2:05 Speaker 2 And for listeners who uh didn't see our tweet about this, the setup that we did in Doug's garage, like a garage, fortunately yours had the reasonably low ceiling, but that's about the only gift that the space gave us in terms of acoustics. Like garages are notoriously like the absolute worst place that you could record audio, but it is a historic place, it's the place where you do all of your the stuff on your channel, and it's the place where your career GT is. So of course we wanted to do it. And um and so our solution was hanging moving blankets and coding the floor and moving blankets and uh which worked. But it totally was a it was a process. It was a process. So Doug, today uh I wanted to kind of dive into a bunch of stuff that are fun acquired like topics to talk about with you, but just didn't fit into the Porsche narrative, uh, including your business, uh, including now that we've had some time since doing that episode for both of us to reflect on like w what we've seen in our analytics and our anecdotal feedback of like ch changing our format to include a third person, an expert.
3:10 Speaker 2 Um and uh frankly, just a bunch of like car industry stuff that I wanted to ask you about, because the car industry over the last few years has gone through one of the most like unique periods in history. Right. Yeah, totally. So um maybe let's start with uh Porsche episode follow-up stuff. So uh uh listeners, we put that one on YouTube. We put lots of things on YouTube. Sometimes when we have guests, we'll put the full video up. Sometimes when we don't have guests, we'll put just the audio up and the logo because it's uh the logo of the episode because it's a lot of work to uh create a video that you know hides all the scenes well because we don't shoot B-roll and matches all the exact audio that's in our audio episodes and are edited to that caliber, blah blah blah.
3:55 Speaker 2 Um but you know, they never get more than like five or ten thousand views. Long formula. Right. It's it's it's not what we do. We put up this episode with Doug and it's gotten four hundred thousand views and is adding another six thousand a day, which in big YouTuber land doesn't sound like much, but for us, it's multiple orders of magnitude over anything else we've ever done on the platform. Ben
4:18 Speaker 1 has this amazing chart that he creates of like the amalgamated analytics for all of our episodes, and it's just like you know, it's a time series graph, and you see the dots over time, and like it always you know goes up exponentially, which is super cool. But like the Porsche episode, it just breaks the graph. Like you the the scale doesn't accommodate it because of this. It's never happened before.
4:40 Speaker 0 I mean, I there's obviously a lot of potential reasons for it, but you guys think I mean uh me is potentially one of them, but adding a third person is an interesting is an interesting component, huh?
4:50 Speaker 2 Uh
4:50 Speaker 0 sure, but
4:51 Speaker 2 adding the third person being Doug is the driving factor. For YouTube especially. Yeah. It has to be. So what is your you didn't put it on your channel. So w do you have any thoughts on why that happened? I think that I've always
5:06 Speaker 0 found, and unfortunately, some of my haters for lack of a better term have found that using my name has an effect on driving traffic, algorithm traffic, search traffic. There was a long time where I didn't do much. Like I didn't do a lot of interviews, or I was just busy, and I just it I was so busy shooting my own stuff that I just like didn't do a lot. And so like the rare interviews that I would do would really blow up. And I think that sort of still carries through. I I've gotten a huge channel, and people are interested in like what what's this what's this guy really like? What's this guy really doing? And I think any chance they have to like see a little bit more, they it seems like it kind of pushes it out. Uh that's what I've noticed. And and I say my haters because sometimes people who who have negative Doug things will be like, Doug Demiro's wrong about this, and that will give that will drive traffic for them because you know my name has some some search impact.
5:58 Speaker 2 Oh, fascinating. It's it's interesting that it's like literally the name because my thought was uh means my like best hypothesis was you did share a tweet that linked to the video on our channel, and my thought was oh, because you sent a bunch of people to this video, YouTube learned that people who like Doug DeMiro's channel also watch this video, so started surfacing it to people who are watching your channel. Uh but the mere string the uh of characters, Doug DeMiro, the idea that your haters put that in their video titles, and that gets them views is actually a completely different thing.
6:34 Speaker 0 Yeah, it's an interesting thing. But I think that is kind of what happened. I tweeted it and I shared it on Facebook, and I have a pretty large organic Facebook following. And I think those those two things probably helped, maybe drove a little bit more traffic than usual, and then YouTube was like, okay, why is it getting more traffic? Oh, this you know, the name is in it. He's and and they their algorithm is probably sophisticated enough to understand this isn't just dumb content of some dude hating on Doug. This is actually like good thorough content, and so they you know that's a big driver for YouTube too. And so they kind of push it out even more from there. And I think each of those things probably kind of built on each other, and thus it there you go. So you guys had your first foray into uh a large-scale YouTube, and so you must have gotten a lot of comments and uh crazy people.
7:18 Speaker 1 I don't even know what to say on this. It was both like just an incredible, you know, podcast world is so different. This doesn't happen. There's no algorithm in the podcast world. So no episode is ever twice as big
7:30 Speaker 2 as your next best episode.
7:32 Speaker 1 That shit never happens. Um so this is our first experience in eight years of something that just became an outlier.
7:40 Speaker 2 Right. Which actually really uh is annoying to me because we had this like very beautiful uh exponential graph that like just doubled year over year, and like there's no outlier. I mean, like there's a little variance here and there, but like you never have to explain away like uh this number's really high for that reason, and like we won't hit that again for years, and like no, we don't even want to hit that again because our goal isn't going viral on YouTube. No, it's not the right album. Like uh uh I I almost want to like adjust our graph and be like this is the Doug adjusted. I agree
8:08 Speaker 0 very bonds of uh I agree. When when it when I was obsessed with my YouTube analytics for years and years, and there would be certain days where like I did a um like an integration and I got paid way more than that one day the graph spikes and it's like now I gotta I almost wish it you know there was some way I could remove it from the graph because the the the beauty of the consistency of the graph is so important. Oh, there's
8:31 Speaker 1 so much rich stuff to talk about here. Like you mentioned getting paid. So we have we have um monetization turned off for our YouTube channel for us because it's not our preparation. We're not even a YouTube
8:42 Speaker 2 partner. Yeah, we're not we're not
8:43 Speaker 1 we have no relationship with them. There's no but for you, especially in those days, and for most YouTubers, literally views equals money, like one to one. Uh so that must have been just why like because we don't have the incentive in podcast land, like listens don't equate to money directly. Um wow, so when that would happen for you back in the day when you were first starting out, like did you ever have like a life changing at the time amount of money in a single day? Like
9:15 Speaker 0 Um I'll tell you the the thing that the thing that was huge. I really I really started the channel in earnest in 16. In 2016, and I was just kind of screwing around. At the time I was writing more. And I would the YouTube channel was sort of a compliment to my writing. And what really happened was in December of sixteen, um, I posted a couple of big videos without really knowing it. There was a review of the Tesla model X, which was kind of early in that space, not that many people had done that.
9:42 Speaker 1 I watched that video multiple times. It's so it
9:44 Speaker 0 was like like the title is like Here's Why the Tesla Model X is awful. And then I go through all the complaints that people had about it, and I proved that they were actually fine. And that video blew up, and that video by chance I posted that video in December. And what happened that month was I made twenty 1,000 in ad revenue. And I was like, oh my God. Like this was more money than I was getting paid in my job. And I was really like a
10:07 Speaker 1 like a you know, quote unquote struggling blogger, you know, at this point, right?
10:11 Speaker 0 Previous months I had made two to four thousand, maybe some months would be six. It wasn't even enough for me to like really register like that this is something, like, you know, three grand a month, and then you pay taxes on that. It was like a fun little side project. But then that month I made 21,000. And I was like, oh, this could be a career. And then the next the next month was January of 17, and it went it went down back down to like five grand. And I was like, oh, well, I guess that was an anomaly. And of course, what I didn't know at the time and it's since come to learn and sort of master is that December has much higher ad rates. And so that and but it would that was sort of the beginning of me learning like YouTube and how YouTube like would have to, you know, how you have to kind of gain the system and how you have to know how it works and all that.
10:57 Speaker 0 And it was it was that December of 2016, it was like, okay, this is a possibility. Now I gotta figure out how to like make it work.
11:04 Speaker 1 This is super cool for us, like the window into this. We've gotten to know MKBHT's team a little bit, talking to them, uh watching and listening to Colin and Samir who you've been on, they do great, like by the way.
11:15 Speaker 2 Everyone should go listen to that episode.
11:17 Speaker 1 Doug, your
11:17 Speaker 2 interview on Colin and Sumir was excellent, telling the whole history of a lot of origin story and cars and bids, and um we'll we'll hit some of that here, but I don't want to be duplicative. People should totally just go listen to that there.
11:28 Speaker 1 But I I naively kind of used to think that oh, you know, over in YouTube land creators there, they just make content, make great content, and then that makes translates to money, they don't have to think about business. And what I've realized is just like you're saying, no, you gotta think about dip business. It's just if you're different, like, yeah.
11:48 Speaker 0 I think it's not that naive to think that because I think a lot of YouTube creators, especially when they're getting started, just do kind of throw random content at the wall and hope for the best. The smart ones don't. The smart ones are paying attention to a lot more stuff than um than their viewers will probably ever realize. Um I was paying attention to not only the content, but the time of day, the day of week, the part of the month, the part of the quarter. All of that had a big effect on ad rates. And if you go back through my videos throughout 18, 19, 2021, my best stuff was always up to uh uploaded like at the last month, the last two weeks of each quarter and the last month of the year. And I never really talked about that, but that was always something I did because advertisers were always trying to spend, you know, get their last spends done through the end of the quarter. It was always clearly a big thing, um, and it always had a big effect.
12:35 Speaker 0 And I paid a lot of attention to that stuff. And then it was the content. You would watch some videos do well, some videos do okay, and then you would think, okay, that video did well because XYZ, I should do more like that. That video didn't do well because of ABC, I should do less like that. And there was like there it was a constant, constant, constant sort of like you know, following it around and and trying to figure out the best.
12:57 Speaker 1 This is so cool. The viewers are like, oh, Doug, he's just like in his shorts, and he you know, uses an iPhone and like he throws up videos, but like behind the scenes, you're putting a lot of thought into this. That's
13:06 Speaker 0 exactly right. I've always felt that one of my biggest reasons for success is because I've been underestimated at almost every turn. And part of that is because I've wore these stupid shorts and a stupid t-shirt, and everybody's like, I could do that. And I think a lot of people said I could do that, I could do that right up until I had three million subscribers, and they would like, damn, he did it, and I didn't. You know, like the cars and car and drivers and the road and tracks, and they never really got on YouTube. And I think obviously they ended up regretting that, and they do regret it now, but like they were watching this idiot with shorts do it, and they were thinking, ah, we'll do it better, and they just never did, and suddenly the idiot with shorts, you know, is driving a career. But it's I think there's a reasonable, there's a reasonable thing to that. Like, I think I wasn't as much of an idiot as
13:48 Speaker 2 maybe some of the space people thought. Well, but to bring forward something that I want to ask you about, your production quality, you have kept it so that you can basically always shoot a video in a single morning and be done with it. Like I've I've really admire the fact that everything fits in a backpack, it's just a lav mic. I I think you shoot on an iPhone, like maybe it's a point and shoot camera, but it's it's definitely not, you know, uh uh canon Mark 5 D hanging from a drone, like you're not doing any of that. And a lot of the people who are looking for like, oh, how do I do you know, how do I compete against Doug DeMira with what do you have, five million, six million subscribers? Uh like they're busting out an insane production pipeline to try to like compete against you, and it's really fascinatingly like counterposition that you can kind of keep a lean mean machine that you can do these videos all on your own and focus elsewhere, not on production.
14:43 Speaker 2 That's
14:44 Speaker 0 exactly right. And I think that is one of the biggest I don't want to call it a mistake because some channels have been very successful doing a lot of great production, but I will tell you, um, and I may have told you this story when you were there, but not on camera. I have a friend who's a YouTuber who's known for his high quality production, and I saw him recently, and he was like, I hate myself, I hate my life, I wish I hadn't done this. And it's funny because when I first started low quality production was kind of the norm on YouTube, so it was no big deal. And there was but there was a three or four year stretch where I was like, I wish I had done nicer quality stuff. Like I wish that I represented my you know, the car reviews more. I wish they were just better quality. And now over the last year, having talked to some YouTubers who committed to high quality stuff early, I actually have no regrets at all. I think I made the right choice in the sense that um it's fairly easy, and I think what people are really looking for is just good content, like simply good.
15:34 Speaker 0 They want to see all the things in the cars, and I do that really well, but like the the drone, the the really expensive DSLRs hanging off of drones, you can do that stuff, but it slows you down and it limits the amount of content and you can do, and then you end up hating your life. Then three, four years down the road, you're kind of married to that, your audience won't let you get away from it, and you're like, Well, I guess I'm firing up the drone again, and it takes you two days to do a car review. Whereas I could, if I wanted to do, do four
16:00 Speaker 2 reviews in two
16:00 Speaker 0 days.
16:01 Speaker 2 It's the drug. Like the right before we released this, we released our Costco episode. And Costco famously uh I the rumor is that they make money on their credit cards rather than it being uh uh an expense that you know they don't have to give the two or three percent that other people do. And it's because they built their whole business only taking cash in check. They never had the crutch of like, sure, I'll accept credit card payments. They only did it when it was like absolutely on their tur their terms, and like you never use the crutch of like I'll make the best looking video in order to pick people's attention.
16:32 Speaker 0 Right, and and I think that the the results speak for themselves. People can make fun of me and they do all the time all they want to, but like I'm closing in on two billion views. Like at the end of the day, like the result, like what can you say? Like, I I get it, it's not the highest quality. And there are some other YouTubers and some other content creators who do not like me, and I think be it part of it is because I seem amateurist. But I think what they really don't like is the fact that the audience doesn't mind that. I think that they wish that the audience was rewarding high quality production more than they do, but the simple truth is, you know, uh they want to see the car, especially in certain parts of YouTube. I think this wouldn't work for everybody, but it has worked for me. People just want to see the damn buttons and switches. They want to see what they all do.
17:19 Speaker 0 And that's just that worked for me.
17:21 Speaker 1 Well, I think there's also a um to this whole uh theme for me of like YouTube is a much more nuanced ecosystem than I gave it credit for. Um it absolutely clearly works for you. And I think part of that might be like it's your style, and it is a style. Um you can't just like not have a style. But I, you know, uh, people might be listening and be like, oh, well, all those other creators, they're so dumb. Why don't they just you know stop doing that? But because of the YouTube algorithm, like the YouTube algorithm does reward the quality of the video too. So it's like if they were to stop doing it. Careful
18:00 Speaker 2 with that word quality, David, quality of production. Right. The the um
18:04 Speaker 0 it's interesting because I think quality can be both. And I think that my videos kind of prove like my my videos are not high production quality, but they are incredibly high quality in the sense that they're factful, right? Like, if you watch any other car review, I love all of my car review competitors, compatriots, whatever, they are simply do not have as much crammed into a video as mine, like period. And so, yes, the other people, I don't want to say they make up for that with high production quality, but in in the their high production quality probably gets people to watch, just like my tons of facts gets people to watch. Either way, they get people there. But to your point, a channel that doesn't have as many like facts that are holding people's attention and starts to kind of slough off on production quality, that's to start to lose out.
18:46 Speaker 1 I mean, you know, it's YouTube, it's Google we're talking about here. Like this algorithm is very smart. Um, you know, some people used to think that it actually is alive, right? Like there was that whole controversy. The um I suspect if you have built your channel and uh on production quality being a big input to the quality that YouTube thinks. So then if you dial that down, now the algorithm, like your creator channel, part of it's you know, the way the YouTube algorithm thinks about it is production quality. You're lucky you don't have this, but like if you
19:18 Speaker 0 have built that
19:18 Speaker 1 up, it's not just the individual people listening, it's like the algorithm, I suspect is for like, oh, probably now we gotta bury this, like
19:25 Speaker 0 probably, and the sense that there would be some people who wouldn't watch. And so that start would probably start your spiral. And of course, that's the thing that everybody YouTuber is like the most afraid of. So if they do back down on production quality a little bit here and there, um, and people fewer people watch, fewer people watch, then suddenly they they start to see all their views declining and all and and that's like the fear
19:46 Speaker 2 basically. So this is a good time to ask you when did you have the like tick that kept you up at night, that splinter in your brain of like, oh my god, this could all go away tomorrow and I need to start a Another business that sits aside the media business.
20:03 Speaker 0 Uh quickly. Um I launched the channel in 13, but I didn't really start pushing it until 16. There was that December of 16 that it really kind of blew up. And then throughout 17 and 18, I refined it like crazy to like really maximize the uh revenue. By 19, I was already like, I gotta do something else, you know, else, something in addition. Like I I'm never someone who just kind of stops. I was always nervous. Um you're just a a slave to this algorithm. And I gotta tell you, I'm thrilled. We'll talk about this more, I'm sure, but I'm thrilled that I did because YouTube in general is not quite what it was in 17, 18, and 19. It is still a place to go for DIY videos and Mr. Beach is great and blah, blah, blah. But like TikTok has shown up. TikTok has really had an effect. There's no doubt. Every YouTube creator will tell you their views are down.
20:51 Speaker 0 And um it's not as monetizable. And so, like, I I I part of me wonders if we will look back at 17, 18, 19, 2021 as like sort of a heyday. And I got lucky, it was like I hit a grand slam in the bottom of the ninth, basically. And so, but early on, it hit me that lucky you hit the grand slam
21:08 Speaker 1 by starting cars and bids then.
21:10 Speaker 0 Well, I think by being a popular content creator, then I think that that like it may we may look back at that era and be like, that was the time to make money on YouTube. And I think there's a possibility that in five or ten years you may not be able to do it that easily. And so I had I just happened to be like in my heyday, just as YouTube was in what is starting to seem like maybe it's heyday, and it really worked perfectly. Um, and so I was always a little bit anxious. Like, you know, what is gonna happen? Is this gonna stick around? And I'm glad I'm really, really glad I had those thoughts because the answer is we're we're not sure. It YouTube may not be as strong in the future as it as it has been.
21:46 Speaker 2 And so as you were considering business models to sort of um uh take those listeners or the I'm so used to saying listeners, those viewers uh on YouTube and turn them into like Doug's customers in some way and have a real relationship with these people. Uh I'm sure you considered a bunch of different businesses in order to sort of like secure the metaphorical bag or secure the uh relationship at least. Like how did you arrive at cars and bids and did you consider other stuff?
22:16 Speaker 0 I definitely considered other stuff, but you know, if you if you go back in my channel in 17, 18, 19 when it was really a huge, huge, huge um I never really did any ad integrations. I never tried to sell people t-shirts. I always knew that I wanted to save all that promo for something. And so um I always kind of knew that when I wanted to do a business, I wanted it to be like something other than so many of my fellow content creators sell merch, but I feel like that's just sort of this hamster wheel. Like you sell merch, you do your videos, you sell merch, you do your videos, but that's not a that's in my mind that's not like a business. Like, yes, it is a component of your YouTube channel, but like if you stop doing your YouTube videos, the merch business would stop tomorrow. It's not it's not a it's not the same.
22:59 Speaker 1 You gotta sell a hell of a lot of t-shirts to like that you're you as a content creator are probably making like a buck from each sale, maybe you know like
23:07 Speaker 0 so. I always want and so to answer your question directly, like I did look at other businesses. The auction sites seemed like a great idea. In retrospect, I had no idea how hard it was to put together a marketplace. And um, if I had known, I don't think I would have done it. I would have done a podcast. It was really hard.
23:24 Speaker 1 Do you think though that there's anything else? I mean, maybe a podcast that that could have created as much value. Well, in
23:30 Speaker 0 retrospect, no, because we happened to launch this thing into the greatest car market, and they honestly in the since World War II. Like, that's I that's what I hear from dealers who have been in business forever that it, you know, their their grandpa was running the dealer back then. This it's the last three years have been like soldiers returning from war, and they you know, everybody was thrilled, everybody had some money, we were buying cars. It feels like that. And so no, is the answer. But the only I only know that in hindsight that I probably couldn't have created a business this good in any other capacity.
24:00 Speaker 2 I never considered the timing. I mean, I always thought this is the best business model because it's a marketplace. You need supply and demand, and both supply and demand happen to watch your channel, so you can independently bootstrap a marketplace where it's
24:12 Speaker 1 a very high value transaction.
24:14 Speaker 0 You don't have to hold any inventory, and you don't I mean there's there are some real benefits too. In addition to the drawbacks, which are significant. There are some real I complain about marketplaces, but it actually there are some great benefits.
24:24 Speaker 2 Uh but back to the timing. Can you explain what is going on? Like why why is this such an amazing time in the car industry?
24:32 Speaker 0 You know, we launched this business in June of 20, which was not like the height of COVID, but it was close. We were planning to launch April 1st of 20, and we pushed due to COVID. We launched in June. Again, not the height, but like still people were terrified. I thought it was going to fail immediately because no one wanted to like spend money or do anything. You know, like it was like but what ended up happening was the car market absolutely blew up. And this is something that nobody could have predicted. I'd love to take credit for this. I talk about how I'm an idiot in t-shirt and shorts and people underestimate me, but actually I'm smarter than I look. This was not a good example of that. This was pure luck. Like I there was a cloud car that you even drove into the gold mine. That's right. I mean, like in this particular case, it is a good business. We did do it well. I'm thrilled how how my team created the website.
25:19 Speaker 0 I it worked all great, but we never could have engineered the timing like we did. But so, you know, what ended up happening, which now is kind of the famous story of the car industry over the last three years, and I suspect will be a story that dealers and and people are telling for the next gener two generations, like this 2020, 2021, 22 kind of situation. Obviously, with COVID, a lot of car companies had to shut down um production lines, and they also underestimated demand. So you have this issue where you know that the the production lines are shut, automakers are like, we're fine shutting down the production because we don't think people are buying cars anyway. So then supply comes down. Meanwhile, the federal government lowers interest rates to almost historically low levels, so and and and pumps a ton of money into the market. That's a different conversation for a different time, but I think everybody agrees that a lot of money was pumped in.
26:07 Speaker 0 Whether it was used fraudulently or or correctly, there was a lot of money available and there was a lot of cheap borrowing available. And suddenly there were no cars and there were a lot of rich people. And it was like I
26:18 Speaker 1 guess the nature of the pandemic, too, of like, what are you gonna do when you want a road trip? You want to drive, you know.
26:24 Speaker 0 I think people underestimate the the effect that that have. I think that that that was a real factor. My uncle went out and bought one of those crazy sprinter vans to because he didn't know he was incredibly COVID anxious and he didn't want to drive. He has a house in the north and a house in the south and didn't want to drive, you know, so he like did that and and didn't get on a plane for two years. And and a lot of people made decisions like that, or they were just bored at home and they were like, I want to go and get into a new hobby, cars, it's not really something that's risky in terms of COVID. And we also saw a huge uptick in like off-road overland vehicles over the last three or four years blowing up because I think that's another thing. People like it. Which you were still well positioned for giving your own. It worked out,
27:00 Speaker 2 it worked out perfectly.
27:01 Speaker 0 Um
27:02 Speaker 1 it's like you, you know, you the the idiot in shorts, like you were doing that all along with your, you know, your defender and your offer and like turned out actually. It turned out it
27:12 Speaker 0 all came together just masterfully. It really worked out. Um that's basically the story. And so then obviously what has happened since then is the automakers have tried scrambled to try to restart production. It has not happened with any speed. Um finally supply and demand seem like they're starting to equal out. Obviously, we've seen the Fed you know raise the the interest rates more and more and more, which has had the effect of slowing down demand. The automakers are finally starting to catch up with supply. Things are normalizing again. But there was a period that was just I I mean, you'd go buy a Toyota dealer. I I talked to a Toyota dealership in LA who told me they usually have 800 cars on their lot, and during the peak of that they had zero. And in fact, the cars that were coming in were all pre-sold. So like it wasn't even like a situation where they were getting cars. The cars that were coming in, they would call customers, hey, you wanted a croll, or right?
27:58 Speaker 0 We have one arriving tomorrow, it's your only chance. Okay, they come down, they pay sticker or over sticker, and that was how it went. Over sticker for new. People were paying over sticker for Toyota Sienas. In fact, I my understanding is they still are. We're talking about minivans, we're talking about Highlanders, pilots were all going over sticker. I mean, it was a crazy, crazy situation. Sticker is never repeat itself.
28:18 Speaker 2 Famous thing in the car industry where you walk up, you see the sticker, and then you're like, okay, cool. Like, so I get this car for 15% less than that. Great. Yeah. Right. Right. Totally.
28:27 Speaker 0 The dealers had no cars to sell, but they were thrilled because they were making so much money on every on a per car basis. And so most of the-dealer probably kept all of that markup. Absolutely, of course. I mean, the manufacturer sells the car to the dealer for invoice, which didn't change. The dealer sells it to the customer for whatever they can get. And and they try to get close to the sticker price, and on some desirable cars, they're able to do that even in a even in a recession, right? Or a tougher economy. But in this economy, they could do it on a Chevy Cruise. It didn't matter. Did the
28:53 Speaker 2 manufacturers wise up to this and try to raise invoice and say, like, oh, we should split some of this hot margin. They tried,
29:00 Speaker 0 and on some vehicles they were able to, but it was difficult to move that quickly for the automakers. At the end of the day, the automakers have these dealer agreements in place with dealers that have more power than people realize. Um at the the dealers are in large part private businesses that can set their own prices wherever they wish. And so the automakers were kind of, you know, at a at a loss, they kind of just had to do whatever they had kept doing. Plus the other fear the automakers I think had was if we raise the invoice price this year, what happens when we're in an oversupply situation, then the dealers don't want the cars again. It's very hard to dial it back. Tesla's direct sales model makes it easier to kind of screw with pricing throughout the year, but the automakers don't have that luxury quite as much. And so the dealers made all that money. And they were charging over. I mean, say they were selling Broncos for 20, 30,000 over sticker. That was like a common thing. These dealers were have been living incredibly large over the last couple years.
29:48 Speaker 0 And frankly, you know, the people have been very angry about this. Like, all these dealers are making so much money, they're trying to screw everybody. But the truth of the matter is this was their chance. Like dealers in 09. No one was complaining when supply and demand was working in their favor, like when they walked into a dealer and dealers were begging people to take anything at invoice. Well, suddenly supply and demand has suddenly made a little turn and it's not working in the favor of the customer anymore. Now they're all up. In
30:12 Speaker 1 general, being a car dealer doesn't strike me as like a great business to be able to do it. It's a tough business. I think
30:18 Speaker 0 they they make good money, but it's also enormously employee heavy, enormously regulation heavy. Um you need a large space, you have to hold a lot of money in in inventory and your floor planning that they call it that you're they're paying interest on all those cars.
30:32 Speaker 1 Like
30:32 Speaker 0 the opposite of a
30:32 Speaker 1 Costco.
30:33 Speaker 0 Yeah, that's right.
30:35 Speaker 2 It is the opposite of a Costco. It's expensive, difficult, etc. Is it like a lumber yard where uh I remember meeting someone who owned a lumber yard at one point, and I was asking all these questions about uh financial planning for the future when you're a small business owner, like how does that work? And I was like, how do you think about retirement? And he just like looked out at the lumber yard and he was like, that's it. Like all that lumber. Like I got eight million dollars in inventory out there on the lot, and like at some point I'll just sell all that and then I'll retire.
31:02 Speaker 1 These dealers, especially I would assume luxury dealers like a BMW dealer or Mercedes or you know, Porsche might be a little different, but um you've got dozens, maybe hundreds of millions of inventory sitting on the lot.
31:13 Speaker 0 And they don't own it. So they they all they all finance all that. And so it's really a cash flow business, I think, in some senses, like they they're just trying to move stuff. And unlike lumber, I assume you know, cars have model years, so there's there's there's a push, they gotta get these things out the door. They can't have them for all that long. Um so there's it's like a high pressure business. Everybody I know in the car dealership industry is divorced so many times. It's like we're a lot of work on Saturdays and Sundays, a lot of pushing hard to get deals done at the end of the month. I remember um I don't know if I should tell the story. It's probably true of a lot of automakers. I remember when I was working at Porsche and we were uh down to our last couple sales trying to hit a goal at the end of the month. You know, we were in Atlanta, we were headquartered in Atlanta, and we would call the dealer in Hawaii like eight eight PM uh the last day of the month.
31:59 Speaker 0 They were the only ones still open. Can you can you punch can you punch a couple cars? Like you did that stuff. That was just kind of the way it's a high, it's a difficult business. Wow.
32:08 Speaker 1 Wow. So here you come along in the middle of all this with a used car market. Like you can't design this any better. I mean, literally, you I don't think you are a clown in a clown car, but like you drove into a gold mine. Like this is a historic confluence.
32:24 Speaker 2 Well, you can let's let's stop oversimplifying this thing. Like you can be a savvy p business person and also basically no human can time the market. And so like it was a a pretty reasonably good idea, especially given the fact that you had distribution, but you had no idea the tailwind.
32:42 Speaker 0 Right.
32:42 Speaker 2 That's
32:43 Speaker 0 exactly right. I mean, period. I mean, that that there's there's no other way to put it. That's exactly right. We got we got lucky, we didn't know the tailwind. We had we made a great business. You know, it's like that famous saying the harder I work, the luckier I get. We made a great bit. We we set ourselves up for success, and then we got additional help from the car market.
32:59 Speaker 1 Well, and I guess too. I mean other people must have started companies and there were there was bring a trailer, there were existing players out there too. Uh it is a testament to your savvy and hard work and everything that like
33:12 Speaker 0 you
33:14 Speaker 1 I am to my eyes at least, it appears like most of this opportunity that got created, you captured more than your fair share of relative to competitors.
33:23 Speaker 0 That's right. And you know, uh going back again, not that this is like a trope of mine, but it's something that's coming up. The the people underestimated underestimating me. A lot of other people tried to start one of these businesses. You'd be shocked. Like you guys aren't obviously paying as close attention to this as I am and as our team is, but we I would say 30 other auction car auction online car auction sites popped up in the last couple years, and 29 of them have failed, or 27, and the other three are barely hanging out. You know, it's that kind of thing. And they saw Doug and they were like, if this idiot can do it. And so they tried with
33:56 Speaker 2 this with all the distribution to all the people who want to buy and sell
33:59 Speaker 0 all these cars. Some of them were other content creators, honestly. And but they didn't, they weren't willing to spend the money up front to create a great b uh like website, which I think was crucial, or they didn't have as large of a following, or they just thought it would you they'd roll the dice and it would take off because the car market was strong. It wasn't as easy as it seemed. Um, but yes, I you know, we showed up, we had all the people already there. Bring a trailer has been enormously successful because they built their audience over a long period of time and then transitioned into auctions, and that's been great. For us, we launched and then had a built-in audience because I had built my audience over a long period of time. Other people who just want to like try this, it's not quite as easy. Big names have tried it. Porsche has a business right now, um, an auction business called Marked that they're running, and as uh from Porsche Digital, and it's it's fledgling to say the least.
34:48 Speaker 0 And I think that they've they and others have learned that you can't just throw money at trying to get an audience. It's not that it's not that easy. Um having an audience where people love the dude who's at the top and are fans and and want to be a part of his business, that makes it even easier to like convert them to real traffic as opposed to just some business going out and spending a lot of money on advertising and trying to buy audience.
35:11 Speaker 1 I'm imagining though, and I've heard you talk about this Colin and Smear and elsewhere too. Um that part was certainly easier for you than competitors. However, there are a lot of other elements to this business that you were probably just as hard for you. Like, you know, just okay, you know, listeners, viewers, uh you know, uh think through the logistics of this for a minute. Right. You've got other people that you don't control buying and selling incredibly valuable assets with a lot of money.
35:43 Speaker 0 Known to be you know, use car transactions known to be potentially fraught with complications.
35:48 Speaker 1 How do you make that a smooth experience? Like
35:52 Speaker 0 Yeah, no, and and that was hard. And and I the other really great and lucky thing that happened that I don't talk about a lot on podcasts because it's it's more difficult to discuss, but I I had a business partner who was unbelievable. Um without him, it wouldn't have worked. And and I I say it's more difficult to discuss because I can't like bring them on. Hey, here he is. But but he he he was I I came with the audience and the idea and the top of funnel, the ability to bring people, and he came with the ability with like a knowledge of of how this business needed to operate in order to work, and he kind of saw through what were going to be the challenges and that sort of thing, which was crazy because he had never been in the car space before the auction space or the marketplace space, and he was just able to figure it out. So between the two of us, we had it all. And when
36:35 Speaker 2 you said he had the he had the skill, like what what had he built websites before?
36:40 Speaker 0 Yeah, that's right. He had he had he had had some experience building websites and other like startup type businesses and products.
36:45 Speaker 2 So he kind of knew in a
36:46 Speaker 0 startup world, like what was gonna be the stuff that was gonna be challenging. And I honestly I think my car I had worked at dealerships before and for an automaker before, and so I had an idea in the in the car sense of what was going to be challenging. And we were both car enthusiasts who had done transactions on bring a trailer before. And so we kind of got the I mean, the whole we had the whole concept kind of down. And so it was like a it was like a pretty good, you know, way to start this if you're gonna start it. And so we started hiring employees. And you know, it's funny because one of the things maybe we'll get into this, but one of the things you mentioned was, hey, we maybe we should talk through some like you know, like different things that people don't realize about the business or whatever. One of the biggest is your audience will realize this, but a lot of my audience and general audience doesn't. We launched this business, we had 10 employees or something like that. I mean, and now it's grown considerably.
37:32 Speaker 0 There's still a large contingent of people who believe that every dollar made by the business goes directly into my pocket.
37:38 Speaker 2 And this is incredibly annoying
37:40 Speaker 0 to me. They're like, oh, Doug made 30 grand today, Doug made 50 grand a day, and it's like Doug did like paying all these employees for Christ's sake. But I think a lot of people actually thought I just did this by by myself, but I didn't. They like you said, the But of the magic of why it worked is the perception that you built it. Yeah, maybe. I I that that's probably true. It's like this is Doug's website, which I always kind of grimace at because it there's every every leader of a business lawyer's like, it couldn't have been possible without my team. But in this case, it literally couldn't have been I don't know how to do this. I make YouTube videos as a profession. I don't know how to make a website. Like that's just not
38:15 Speaker 2 Dr. Dre doesn't know how to make headphones, but we
38:17 Speaker 0 better believe people bought those because they were beats by Dre, not beats by Jimmy, and that's a massive team behind Jimmy. That's exactly right. And so Dre looks like he's the brilliant guy doing it, but you know, there's the whole thing there, and that's the case of for for us too. We had a good team, we had support people in place. I think that was one of the biggest things. David, you mentioned like the difficulty of these transactions. Yeah, and we kind of knew that was going to be an issue. And so we we've like really doubled down on like support as part of it, having people direct people to call and deal with if you have issues or whatever, and I think that that makes the transaction a little bit less fraught with like, oh, we're worried this is gonna fail or something like that.
38:50 Speaker 1 Which you know, kind of uniquely as a marketplace, I think you could afford to do because the transaction values are so high. You know, if you're a marketplace for I don't know, make something up. Something not very valid. eBay, right?
39:11 Speaker 1 If you're talking about a $50,000 transaction, you can afford to have something. That's right.
39:16 Speaker 0 And relatively few of them. Whereas, you know, some of these businesses like eBay are selling a zillion things, but the average value is probably 40 dollars or something. We're selling far fewer things, but with a higher value, and so there's there's not as many transactions that need hand holding.
39:30 Speaker 2 What is the take rate look like in an online car? Uh you don't have to be specific to cars and bids, but what uh is it one percent of it's 10% of submission or like the number of cars we accept or the sales
39:42 Speaker 0 rate or the
39:44 Speaker 1 the what percentage cars and bids keeps of the transit?
39:47 Speaker 0 We take four and a half percent of um of the final sale price from the buyer. So the there's no fee for the seller. The buyer pays us four and a half percent, and we cap it at at the hundred thousand dollar car, so forty five hundred dollars. And so if it's a $200,000 car, we still only take $4,500, et cetera, et cetera. And then we make money in some other ways too. We offer financing, we offer um shipping. Um there's there's now like an inspection that you can get with your car, which we make a little on. So there's some other like ways to make money. But that's that's the general gist
40:17 Speaker 2 of it. Which I think is all the evolution of all marketplaces. I remember when Etsy first launched, it was a hundred percent the transaction revenue on the take rate, and then over time, I haven't looked in a few years, but I remember when it surpassed 50% revenue on the services on the things that they were able to upsell to buyers and sellers is became over half of the revenue of the entire company. Interesting. It makes sense.
40:37 Speaker 0 Because you start to you start to realize there are some holes where you could pull in some more money and the stuff people are looking for, frankly.
40:43 Speaker 1 And the financing is huge in this category. Like this market. You're not quite in um in this market this category. Like the um you're not quite at homes yet, but like you know, most uh I don't know what's gonna be a good one. It's the second
40:58 Speaker 2 biggest purchase of any household.
40:59 Speaker 1 Right, but you know, in the home industry, like you know, the mortgage is everything around that, that is like I think as much, if not a you know, a bigger part of you know, where margin dollars are made.
41:12 Speaker 0 We thought financing would be a bigger thing than it is. I think that um it is a big purchase, but since we're selling mostly enthusiast cars, I think that a lot of people uh we found more people are buying with cash than you might expect, even for higher value cars. I think that a lot of the people who are buying cars like this, it's not like a financing your Ford Explorer as your main family car and you're gonna have it five years. It's sort of like enthusiasts who want to screw around with a BMW M3 for a year or six months and then sell it and get something else, and they have eighty grand to play with that they are kind of always it's going up or down depending on what they bought or sold, and and I think that it it would surprise me how many people are making cash deals. Interesting.
41:51 Speaker 2 But it's still it's still a nice
41:53 Speaker 0 chunk of the business, and it will continue to be.
41:56 Speaker 2 I I assume that I mean I've never bought a car on the internet. Uh could I go sell my Mazda CX5 on cars and bids, or is there some like we only accept enthusiast cars?
42:08 Speaker 0 We only
42:08 Speaker 2 accept
42:08 Speaker 0 enthusiast cars. And in fact, we we only accept about 40 to 50% of the cars that are submitted to us. Um actually if you go and look at our like Google reviews, like a large chunk of the negative reviews are from people who just we didn't accept their car, and they're like mad because we didn't like and it's so annoying to us because this person never even like had transact they're not even a customer, and they're like, these jerks didn't think my you know Pontiac Grand Am was cool enough for their site, we'll screw them, and it's like that's not a that's not a negative review that screw the hell. That's like a lot of a lot of our like the the few negative
42:48 Speaker 1 That's so great. Wait, so how did you think about this though? Because like on the one hand, I'm like, oh yeah, of course it's your enthusiast car website, as you say. So often. Um however, your audience actually is kind of two audiences, right? Like you've got your enthusiast audience, and then you've got your audience that wants to buy the Mazda CX5 that's do the reviews of. So how did you think how how and why did you decide to exclude that part, at least for now from cars and bids.
43:16 Speaker 0 I mean, it's an interesting that's an interesting question that no one has ever asked me. That is exactly right. I do have two audiences. I have a a performance enthusiast car audience, and I have audiences for regular cars. And the proof of that is just look at the view numbers on some of the videos I do for regular cars. I always hold up, I've got like a Rav Toyota Rav 4 review that has two million views, and people are like, oh, YouTube's for kids, you know, sometimes sometimes people say that nobody's really watching. Well, go look at my Rev4 review. I mean, I don't think a lot of like 14-year-old boys were like jumping on YouTube to watch Doug review a RAV 4, right? Influenced the purchase of over a million purchases of a RAV4 of in-market buyers. Probably, right? So that's probably legit or something else. They watched the video and they were like, you know what, I think I'm gonna buy a CX5. And so I did kind of turn my back on that audience.
44:02 Speaker 0 But I think what I realized was the simple truth is the enthusiasts were always going to be more likely to engage in a space. I think that the people who are in market for new cars who are watching my videos are watching my videos, and then they that's kind of all the interaction they do with me. The enthusiasts are watching every video, or not the RAV4 videos, but every enthusiast video, and they're like getting excited about me. And I think the real key is if you're gonna start a business like this, you want to do it with people who are excited about you, which is like the churnin groups, which is our investor, it's like their major philosophy is like find creators who people are excited to be in your space because then you don't have to spend as much money on like ads to try to get people. You have people who are retention's probably better. Absolutely. Because wouldn't you rather go to a business of someone that you are a fan of than just like some faceless corporation?
44:49 Speaker 0 And so that's like
44:51 Speaker 1 the positive edge to the double edge sword of the enthusiast market and uh very little, you know, relatively less financing in your corner is people repeat transactions, right? They buy a car, they enjoy it, then they sell it again on cars and bids, then they buy another car on cars and it's interesting
45:07 Speaker 0 that you say that. That's very astute. Yes. We've only been around for three years. And so you'd think, well, okay, so someone probably you haven't had a lot of repeat people. You misunderstand the degenerate car enthusiasts that we are. We we buy and sell. I I've constantly am buying and selling. I've I have nine cars right now, and so do all my friends are doing the same thing. And and it's always the same. That we buy a car, we're very excited about, I'm never selling this. Nine months later, you know. Really? I really think that that other car looks kind of cool. And that repeats itself over and over and over again. And so, yeah, there's more repeat people than you'd think. We've had some cars already sold on the site three times.
45:47 Speaker 1 Amazing. But some people who have a different market though. Like, you know, if you're buying a CX5, like that car is gonna display. Right. But for the cars for this segment enthusiasts, these are not like consumption per se. These are assets. And so, like, yeah, it's like freaking crazy to own nine cars. But if you own nine CX5s, you just blew a lot of money. Right. You own the nine cars you own, right? You know, you're not gonna lose that much money, and you might even make money by owning
46:17 Speaker 0 those cars. That's right. That's right. I I tell everybody to the detriment of my wife that my cars made more money than my wife did in 2021.
46:24 Speaker 2 Which is which is in fact true, but she doesn't like when I say
46:29 Speaker 0 that. But yeah, but but that's right. The enthusiasts kind of know what they're doing a little bit more, or they should. Most a lot of them don't. But the the sophisticated ones do, and so they'll buy cars and they'll get out of them right. They'll sell them after a year and they only lost a couple grand or something, and that's fine and that's fine. And that allows them to continue the hobby.
46:44 Speaker 1 I saw um Jenny and I were on vacation last week, and uh I texted uh I texted Ben. I should have texted you too, although I'm sure you get this all the time. An amazing black 356, just like beautiful parked on the street. It was so prestigious.
47:02 Speaker 1 But like, you know, whatever that person paid for that, or maybe they restored it, or just like d they're not gonna lose money on that
47:09 Speaker 0 ever. That's right. I mean, that that's exactly right. And and so enthusiasts who make those decisions. You know, it's it's actually funny because I hear so many of my enthusiast friends tell me I wanted to buy uh whatever, but my wife won't let me and it's like you know, you're this person the same person's bought a new Ford Explorer. And I'm thinking to myself, you're gonna lose so much more money in that family-approved new Ford Explorer than you would in a Porsche, you know, Porsche 911. Yeah, it's a lot of money to put into it up front. And yes, you would do better in the market, of course. But like it's you know, it's it's a lot of these cars are just doing fine. And then 2020 21, a lot of them were going up going up, and everybody thought they were a genius. And not that that will repeat itself, but you get the point. Like a lot of uh sometimes it is a nice place to park money that you can actually enjoy for a little while. Aaron
47:50 Speaker 2 Powell And if it's a new Ford Explorer, then you're in the first year losing, I don't know, $20,000. So you literally lost the value
47:57 Speaker 0 of two Rolexes. Yeah. Uh on the It would be difficult to buy some of the cars that we sell on cars and bids and lose $20,000. Like it would legitimately be difficult. But it's very easy to do at your local Ford Toyota Honda dealership. Just buy a new SUV. Let's say instantly.
48:14 Speaker 1 It's crazy. What are the parents? So it's fun. After we did our Porsche episode, both from learning about the industry through that and then obviously doing it with you and all I I came away and I was like. I should stop buying, like I should buy awesome cars and use them, but then you have the problem, which I'm sure is the obvious one you run into like, well, a lot of these cars that hold their value in every you can't really use them for family. Like there's
48:39 Speaker 0 a reason why I have like seven expensive cars in my garage, but my daily driver is a Mercedes-Benz station wagon with a third row and all that. It's not they're not. Inside
48:47 Speaker 2 airbags, like and lots of safety features. Absolutely.
48:50 Speaker 0 And a lot of car enthusiasts discount that stuff, but I totally agree. Um I want my kid driving around and and myself, honestly, on long drives and in crowded cities and in like a safe car. And I can screw around with the other stuff on the weekends.
49:02 Speaker 2 Your own life, let's not even make it life, because that's too ridiculous. But like uh you having a functioning ankle for the rest of your life, if some something were to happen in an accident that just crippled your ankle, is far more valuable than all nine cars, even if you lost the full value of all of them. So how do you
49:18 Speaker 1 succeed in a career at GT? Like, you know, they don't have the latch system, I assume.
49:23 Speaker 0 They actually might. Latch is now mandated, but I don't know when it was mandated. But it is funny, I'll get into brand new Ferraris that cost a million dollars and they have latch because they have to buy lost. But um But yeah, no, that's exactly right. And so as a result of that, I try not to to first off, I try not to buy really old stuff. And and actually, Cars and Bids is geared towards more modern cars. We're 80s and up only enthusiasts cars. That's kind of the cars that I'm right, exactly. That's the cars that I'm into anyway. But also, like, yeah, I've never older cars, I hate to say this because I there's a lot of older cars I love, but they are a little bit more scary to drive to use. And certainly you don't want to take any vintage car like somewhere you need to go, because there's never a Guarantee that it will work.
50:01 Speaker 2 What's the what's so I I basically like, with the exception of some uh I don't know if they're 90s or 2000s, but there's some like model of the 9-11 in the middle that I don't like as much. But with that weird exception, as I go back further in time, I like the design more, and I have more of a lust and a desire to own one. Uh what is the like mid like the oldest safe 9-11 for me to get. Porsches have always been
50:27 Speaker 0 safe in terms of like physical safety or
50:30 Speaker 2 like
50:30 Speaker 0 reliability. Oh, um it depends how safe you want to be. Um safe, like you would think of a modern car being safe. I wouldn't go past 2005, which was the 997 that came out in 05. Um the model before that was safe enough, but not amazing. Before that, I really wouldn't screw around with it. Airbags were a safety feature, but car technology has come so far in terms of crumple zones, and also in terms of all these other safety features that are so important. I a lot of car enthusiasts discount all this stuff. Oh, I don't need a blind spot monitor, I don't need a backup camera. Well, actually the statistics say that you do. And they say that they help. And I find that the more safety stuff I can get in my cars, the better. So, you know, get a new 9-11 if you want the safest one. That's the answer.
51:15 Speaker 0 Go drive that puppy off the line.
51:17 Speaker 1 Library wine colors. So great.
51:20 Speaker 2 All
51:20 Speaker 1 right.
51:20 Speaker 2 But that's
51:20 Speaker 1 a good you know. Okay. What is a car these days? I feel like that is, you know, yeah, there was this whole like, you know, thing about that about oh, Tesla, it's an iPhone on wheel, but forget Tesla. It's not, you know, that's obviously a driver of this in big part of it, but like in general. Yeah, it it um it's wild. So we have we have a model three, uh, and we have a 2013 uh Acura TSX sport wagon. Um, you know, which is great, it hauls a lot of stuff, we just leave it on the street and like I don't care about it. It's fully depreciated. It's it's fine. But the difference, like these are two different product categories when I drive them. Like, so what's what's going on here?
52:00 Speaker 0 I mean, it's interesting, right? I think the model three is kind of the preview of where cars are gonna go in the future, and I think car enthusiasts will be dragged kicking and screaming into this world. And I'm not just talking about electric. In fact, I'm not talking about electric mostly. Electric is obviously coming, but maybe kind of slowly. What really is coming though, with the Tesla has really pioneered is the technology in cars. I mean, there's so much self-driving capabilities. Well, I'm not allowed to say that. Driver assist capabilities that is the politically correct term. There's so much uh functionality from the screen, there's so much, et cetera, et cetera. These cars, that's really like the new thing. And so people say, oh, iPhone on wheels is like a disparaging remark. Get used to it. I mean, that's the that is the future of our lives. And actually, I think it's one of the for my job, I think it's great because I I point out all these quirks and features in cars, and the more bizarre things cars are getting in them.
52:49 Speaker 0 Like Tesla has the like a drawing pad and video games. I'm like, bring it on, I can put these in my videos, it's easy. This is another
52:55 Speaker 2 correct bet that you made. Other car viewers like are are caring deeply about this particular feature of the engine that most drivers will never experience. Whereas you're like, if you push this button, it does that. That is
53:07 Speaker 0 exactly right. And that was one of my biggest things. I have told so many potential car reviewers when they ask for advice, I tell them to not drive the car. And they're like, what? But I I actually don't think people care that much about how a car drives. Twenty-five years ago, uh, some cars were really bad. Like, really, like late 90s, early 2000s, the end of the 80s, etc., there were like legitimately bad cars. And you had to go out and read a car review to make sure that it wasn't like loud or rough or crashy or like difficult to hear, whatever. These days, all cars drive well. All electric cars pretty much drive the same. And so nobody really cares that much about the driving experience. They cared, enthusiasts care about sports cars, and in that case I kind of talked more about it. But like for electric cars, they're more focused on the tech, the styling, the functionality, the cargo and interior room. Those are the things that is more interesting to people.
53:55 Speaker 0 And so, yeah, exactly. Look what this button does is actually more important advice for a lot of new car shoppers. That's where the
54:01 Speaker 1 differentiation is.
54:02 Speaker 0 Yeah. Then like then like all these old these old time old school car reviewers sitting there being like the the steering angle and the turn-in feels like this. It's like nobody nobody cares about that. Unless you're a real sports car enthusiast.
54:14 Speaker 2 Which what what percentage of uh people who own a car do you think are in that category? In the category of enthusiast or in the category
54:23 Speaker 0 I don't know. What do you think? 15, maybe 20, 10? Somewhere around there though, for sure, right? I think that's the
54:30 Speaker 1 low end of
54:31 Speaker 0 that. I think probably 30 or 40% of people would say that they're interested, right? That they're maybe even 60% would say like they're when I make a car decision, I think about stuff like styling and the way it steers and all that. Like they think about that, but they're not like really gonna understand some of those driving dynamic concepts in a complicated car review, right? Like if you you know, you people buy Jeeps, oh I like this, this is cool. That's important to people. Um, but do they really care about all the nitty gritty technical details? No. And that there's a big disparity there, right? Like the person who cares what they drive is probably most people. The person who really really gets all the stuff is probably a small sliver of people.
55:08 Speaker 2 And I think if I went and surveyed Americans, do what is the difference between a mid-engine and a rear engine sports car? I think maybe three percent would know the difference. Maybe.
55:20 Speaker 0 I once read that some unbelievable percentage of people, like 70% or 65% were willing to switch the car they were gonna buy based solely on color. So like if they had gone to a mother Mazda dealer and the CX5 was white, but they really wanted like a silver one and the Honda dealer with the CRV was across the street, they'd be like, done. Wow. I'm good. And it's like, wow, that kind of shows you what we're talking about here.
55:41 Speaker 1 Yeah. Which for the you know, for this however big it is, the small segment of enthusiasts. I think probably this does mean that the differentiation on the driving experience is gonna matter more and more and more and more to them as it becomes more commoditized for the rest of the market. Like to get a driving experience that actually is different. I mean, I only I've only driven the model three, but I fully expect that every other electric car drives exactly the same, pretty much. Uh to get something different, you have to go special.
56:17 Speaker 0 Yeah. That's right. Um and and and the big differentiation used to be the power train, frankly. The engine, the way the engine felt, the how smooth it was, how it accelerated. And that's gone. I mean, it all electric cars accelerate basically the same. Now, some are faster than others, but they all accelerate, but the feel of it is basically the same. And so, yeah, there's less differentiation, and maybe enthusiasts will have to sort of get boxed into a corner of just like steering feel and things like that. Um I don't know. It'll be interesting to see where car enthusiasm goes in the next you know 20, 25 years, or maybe um the old school stuff just becomes more and more desirable and more valuable.
56:55 Speaker 2 Can I ask uh going back to the car industry? So you mentioned electric is coming slower than you know, some people want, or that we might think in fact you have Toyota over there saying like we literally don't live in a world that could support everybody having an electric car, and our bet is on fuel cell. Like I think you can maybe only buy it in California because there's only a certain number of places in Northern California where you could even re-fuel the fuel cell however it works. I actually don't know. Um like is that claim reasonable that we that we actually don't live in a world that could support that in the next 10-15 years? I think it it depends on who you ask.
57:34 Speaker 0 Um whenever I talk to conservatives, they're like, there's no way the grid could possibly but then I talk to like people, but then I talk to like EV adopters who are really excited, they're like, no, we got tons of I don't know the answer. And I think a lot of people know less than they think. But I will say to me, the biggest problem is not the grid, the quote unquote all seeing grid. I think the biggest problem is like infrastructure at the end of the day. Um it's it's one thing to install a charger at a single family home, which can be quite expensive and difficult. But it's a whole other thing to install a charger at an apartment complex or in on the street. I mean, a lot of people still park on the street. A lot, a lot, a lot of people, even people with garages in single family homes. And so those days are there's still it's still so infancy. Like I want to install a charger on the street because I park like real cars in the garage, and I don't want to put an electric car in the garage instead.
58:24 Speaker 0 Well, the city of San Diego doesn't have the capability for there's no like regulations about like installing a charger on the sidewalk. Like that's not they're not there yet. So there's a long way to go, I feel like, before there can be like widespread EV adoption.
58:38 Speaker 2 And if you were designing this system from scratch, you could imagine a way to do it would just be hot swappable batteries on cars that like, well, if the issue is we can't have chargers everywhere, then we'll just have these like big centralized chargers, just like we have gas stations, and then people can easily go and get a new battery. That as far as I can tell, with the vast majority of manufacturers is not the route that anyone pursued. Well, you know what
59:00 Speaker 0 I've learned? First off, yeah, that's a that's a great idea. And I remember when Tesla announced they were gonna do that, and then fell by the wayside, and I haven't heard anything about that in like 10 years. But it was a concept they were gonna do. Um but every time I go to a uh car launch, and it's an electric car launch. The automakers always trot out the same statistic, which is something like 92% of EV owners charge at home 92% of the time or something, right? And I think the simple truth is that yes, that would probably be the right thing if you were gonna do road trips. I drive across the country every summer. It's the main thing that stopped me from getting electric car. Um, but for most people, they just need to charge it at their house. And they don't really care that much. Like the fact that there's no quick, you know, swappable. And now these the electric cars are starting to be able to charge pretty quickly, but you have to find the right charging station, etc.
59:50 Speaker 0 etc. And there are a lot of problems with that stuff. But it will all get solved. It feels like the early days of something that will become a big thing, common thing in 20 years.
1:00:01 Speaker 1 Yeah. It's also like just give it the nature of the car industry, the replacement cycles on these things. Again, not for the enthusiast segment, but for family cars are so long that it just feels to me like it's all gonna naturally feather in and the solutions will get solved along the way. And the average car ownership life cycle is 11 years, I think, something like that. So like, you know.
1:00:22 Speaker 0 Yeah. Yeah, that's exactly right. So I the problem will solve itself. It's just it is going a little slower than I expect. You know, you live in California, it's kind of a bubble. There's electric cars everywhere. All my neighbors have neighbors have Teslas and EV6s and all that. But um you come out here, I'm on the East Coast this summer, and there's even here in Massachusetts, there's not as many as I expected or thought. And it's still a thing where your neighbor gets a Tesla and everybody's like, whoa. And I'm like, really? But I think that we're we're and then in the middle of the country, forget about it. I mean, they're they're they're they're not there. So it'll it'll be a while.
1:00:54 Speaker 2 Which is so funny because the model three is like the new Prius. Like it's that's how I feel. This notion of like, ooh, you got a Tesla. It's not like ooh, you got a Porsche. I
1:01:03 Speaker 1 don't feel like I have anything special.
1:01:04 Speaker 2 Totally.
1:01:05 Speaker 0 That's so that's I totally agree with that. But there are still people who are like, oh, every kid I meet at a car show like 12, it's like I want a Tesla someday. I'm like, it's like a Honda
1:01:12 Speaker 2 Cord.
1:01:14 Speaker 0 Like the Model Y outsold the Honda Accord last year, the year before. That's insane. Like that is insane. If you had told me 20 years ago when I was a kid that I start up electric car would outsell the Honda Accord, the mainstay of the car business, like that's crazy to think about. But they are everywhere, right? They are very, very, very common, but not in some places, and it's gonna be a slow adoption. You get in any new taxi in the last two years, and it's a model three. I will never forget last year we went to Copenhagen, and um we were taken to the airport from co we were in Copenhagen, we were we had to take a taxi to get to the airport to go on to the next city in a Ford Mustang Mach E. And we had the baby and all of his stuff, and it was enormously difficult to deal with it all. Oh but I remember getting out of the car and just looking at it for a second before cramming all the stuff into the packages and everything, the luggage, and thinking to myself, I just got driven in Western Europe in an American electric Ford Mustang taxi.
1:02:13 Speaker 0 Like, what is
1:02:14 Speaker 2 this world?
1:02:15 Speaker 0 So bizarre. But that's that it I love it. That is the future in some places, and some of those countries have crazy high adoption rates, like most of um uh you know, Copenhagen, Denmark and and uh the but some places are really far behind.
1:02:28 Speaker 1 I love yeah, you do have those little like uh moments of clarity when you have a you know new when you're a new parent with the little baby where most of your life you're just like
1:02:37 Speaker 0 Right.
1:02:37 Speaker 1 I literally am like, you know, this is the wild, and then you have these moments where you you have like an out-of-body experience, and you're like, whoa.
1:02:47 Speaker 0 Right,
1:02:47 Speaker 1 right. Look at what's happening. There's
1:02:49 Speaker 0 something that's happened when I wasn't paying attention because I was picking attention to baby.
1:02:52 Speaker 1 Uh okay, so I don't think you've done this because I think I watch your channel pretty religiously, or maybe you've done it recorded and haven't um released it yet. Have you come up to San Francisco and done the cruise or the and the Waymo here in the city and review those?
1:03:07 Speaker 0 No, I haven't yet. Um, but that would be interesting for sure. Dude,
1:03:10 Speaker 1 you totally gotta do it. I haven't been in them yet, but they are uh ruling just happened. They're now it's now fully commercial all over the city. Um it feels it's obviously not, but it feels to me like you know, 20, 30% of the cars I see driving around on the streets these days are you know, there's nobody in the driver's seat.
1:03:30 Speaker 2 Yeah. And I'm very familiar with tech people's take on autonomous driving. What do the car guys think of all of this?
1:03:40 Speaker 0 I mean, it's gonna be a fight with the enthusiast to get them to, you know, they they they're not supportive. Um I love it. I think it's one of the greatest things that's ever happened. Um, I love driving my fun cars. I love it. It's so much fun on the weekends to you know, go on a fun road with my friends or go off roading or whatever. But like when I'm driving up to LA on a Thursday and it's you know, traffic. I don't want I'm happy to let the car handle all that, you know. Um and so I think that enthusiasts need to realize that there's a place for both. Um and I really, really, really strongly believe that. Like I'm totally cool with the fact that I I just want to sit and like send emails and browse Instagram while it's driving me up the highway. But I and then and then go on the weekends with my Porsche or my 4G T or whatever, and like have real fun. I I there are still enthusiasts who are like, no, it's fun sitting in traffic too.
1:04:28 Speaker 0 We have to stay in drivered cars. It's like that's I just
1:04:31 Speaker 1 find that to
1:04:31 Speaker 0 be
1:04:32 Speaker 1 insane and contrarian. Well, what's interesting here I I haven't yeah, I just have so little use for it in the city personally, with because I don't commute to an office, but um the current product in San Francisco is such a different product than a car. Yes. It's a it's not even fully like an Uber Lyft replacement. It's it's a replacement for like part of
1:04:56 Speaker 0 that.
1:04:57 Speaker 1 Uh it's like a um you know, it's almost like closer, uh you know, I I think about it to like the scooters than it is, you know, like it's certainly not a car you own.
1:05:08 Speaker 0 I think that we're further away from like full autonomous vehicles doing a lot of stuff though than people think. Um I it works in in limited situations very well. It works in good weather. Um but I you know you heard a lot about autonomous cars like four or five years ago, like really the the industry was going in that direction. You haven't heard as much in the last year or two, like in terms of big developments, and I think they're kind of getting stuck on some smaller stuff that's actually more difficult to overcome than people think. Weather is a big factor. I mean, moral decisions have been discussed a lot. That's a big thing that they have to figure out. But weather is a bigger factor than people realize. There's a reason they're testing all these things in Phoenix in LA in the bay. Uh it's not as you know, I I can drive just fine in dry, sunny. Like what I I would actually where I really want the autonomous car is when it's like sleeting and there's ice on the road.
1:05:56 Speaker 0 Like, that's where I would like some help, please.
1:05:59 Speaker 1 That's that well, and also the just the geographical area, too. I mean, that's the thing here in San Francisco, at least with this, is it only operates in very specific neighborhoods and parts of the city. You can't, it's like geofenced, it can't go out. So that's why it's not even a real replacement for Uber and Lyft. It's like right. Oh, I want to go to Marin, I need to go to the peninsula, like you can't take a Waymo for that. Do they need to go
1:06:21 Speaker 2 get like you know, millions of more training hours on those roads? They must
1:06:25 Speaker 0 be they must be teaching them individual roads, which has which would eventually work, I guess, but has it obviously enormous limitations, including when they start doing road construction and suddenly those roads are different, and then they gotta do it. I mean, it's it would be like a never-ending thing. But that's what Cadillac is doing. Cadillacs self-drive driver assist technology is called Super Cruise, and it's the best in the business, no question. Um but they mapped the highways, they like literally individually mapped the freeways in order to get it done. And that took a lot of time, you know. Like, it's amazing. It works incredibly well. You can be totally hands-off in a new Cadillac. You could drive from LA to San Francisco completely 100% hands-off, except you have to go and refuel. Um, but like they had to map the freeways for that to happen. And so good luck.
1:07:08 Speaker 1 You totally should come up here to San Francisco and do both Waymo and cruise and uh just fully review the actual cars. One of them, one
1:07:15 Speaker 0 of them is down in LA that I see it fairly frequently. I just don't remember which one. They're like using Jaguar eye paces, which is a horrible electric car. Oh, I think that's
1:07:22 Speaker 1 Waymo. That's what uh that's what they use here. The only people willing to buy that vehicle. But
1:07:26 Speaker 2 yeah, that uh they're around.
1:07:32 Speaker 0 More or less apparently. But yeah, it's an interesting, it's it will be the future someday, and I'm ready for it. I'm ready to just sit in traffic and let the car drive me. Because
1:07:41 Speaker 1 you drive in a lot of traffic, because you're going around to these cars, right? Like,
1:07:46 Speaker 0 yeah, I mean, I end up driving up to LA a lot and Orange County a lot, and it's just it's such a slug, it's so difficult to do. I uh the 405 is just the worst thing that's ever existed. And so it's a lot. And and so I've based my my last car purchase I bought a Mercedes station wagon pretty much brand new, and um I based my decision almost entirely on the quality and efficacy of its uh driver assist technology, and it's really good.
1:08:07 Speaker 2 By the way, I feel bad for throwing shade on Enclave uh owners. What I actually meet is the encore. Neither were that's not good. The Enclave is
1:08:17 Speaker 0 better, but the Encore is there's also one called the Envision, which is made in China. There are not a lot of Chinese-made cars in America, but the Envision is.
1:08:26 Speaker 1 Alright, oh, this is fun. Okay. What um what is the worst car on the market right now? Like, what should you absolutely not buy? And what is like and what should you uh what is like the best for each kind of category of purchase here.
1:08:38 Speaker 0 That's a that's a good worst car on the market right now. Um I really for a long time would have said that it was the Mercedes Benz Metris. Mercedes Benz makes a large van, but I think they took that off the market because no one was buying it. Um that's a terrible car. A lot of the cheap little stuff is pretty bad. The Mitsubishi Mirage is a horrible car. Um they
1:09:00 Speaker 1 still make theirs.
1:09:01 Speaker 0 They might not. They might have just recently stopped. There's the thing is there's not a lot of bad cars anymore. There was the Dodge Journey. That was a horrible vehicle, but I think that's off the market too. Um not in Mexico, though. You can still go south of the border and grab one. There's not a lot of like really bad cars, though. There's like most cars are now like good. Like that's just the situation. Every automaker has realized information is too readily available to people to just make a bad car anymore. People aren't gonna stand for that. They just won't buy it. Yeah, truly. Uh the especially the the big three, Ford GM and Chrysler would just make trash, and a certain subset of people would buy it because it was either either because it was domestic or because they didn't know any better. And now, like you there's YouTube. You people are thinking
1:09:46 Speaker 2 that Doug will save you. Just go watch it. Right. I will save you from watching a crappy from buying a crappy car.
1:09:53 Speaker 0 No, that it's really it's actually interesting. I think this is one of the unsaid things about car reviews. I've always made this big holier than now standard. That I don't uh accept anything from the automakers, including plane trips and hotels. If I'm invited to a press event, I pay my own way and stay in a hotel at my own cost. And I've always been like, I do this to remain impartial, and you know, and it's a nice position to take, and and it does go far. But I end up coming to the same conclusion as the people who the automakers paid to bring there. Because the truth is the cars aren't really bad anymore. There probably was a day when the automakers would whine and dine these journalists and say, you're gonna say nice things, right? But they don't have to do that anymore. Like cars are actually
1:10:34 Speaker 1 practice too, right? I believe, especially at the big three, you know, American automakers to um four models that executives were gonna drive and test and reviewers that they would be like for those specific cars, they would be different than the cars you bought at the dealership. And that that
1:10:50 Speaker 0 still happens. There's no question that still happens. Um I would say it probably happens across the entire industry. The press department orders cars. Um there is an option code that most automakers have but hide from their window stickers called Press Finish. And there is dispute about what that is. Some automakers, there is absolutely no question that Press Finish adds power. Absolutely no doubt. Like they've been tested. Other
1:11:16 Speaker 1 automakers
1:11:17 Speaker 0 claim it's just like some ex just a little extra attention to detail on the line to make sure that there's no glaring issues or anything like that. And I and I buy that in some cases, but there is no doubt that the press card. Now, you're thinking to yourself, well, I want to buy a former press vehicle then. No, you don't. Because then the then the journalists get into these cars and abuse the hell out of them. Journalists making sixty-three thousand dollars a year getting into a Ferrari is like, this is amazing. And you know, so you don't want those cars, but they they definitely get a little extra something something at the factory.
1:11:47 Speaker 2 Wow. All right. I want to make sure that we there's a couple things about cars and bids I'm very curious about. So you you opened talking about this with sort of why uh it kept you up at night and what the goal of starting a business was in addition to just the the media side of the house. And I'm curious after the last what four years, has and bids become a bigger business for you. And you can talk about whatever numbers make sense, that whatever gross margin or net margin or maybe top line revenue. Compare the media business to the marketplace business. Aaron Powell
1:12:19 Speaker 0 Um Yes, Cars and Bids is bigger than the marketplace business, but I think the real crucial thing is even when it wasn't bigger than the marketplace business, it had more bigger than the media business. Bigger than media business. I'm sorry. Cars and Bids is clearly bigger than the the YouTube side now. But even when it wasn't, um the real key was, and we knew this from day one, it had more potential to be. You can only get a YouTube channel to be a certain size, right? I mean, you you can Mr. Beast it and go crazy and whatever, but that's very rare and very lucky, and my channel clearly was not at that trajectory reviewing cars. But the cars and bids clearly has more like upside and and growth potential, and so it is bigger, and I suspect that that divide will only continue to grow, grow, grow. And I have to imagine
1:13:00 Speaker 2 the the margin profile uh uh tell me uh if I'm wrong on this on the YouTube channel is basically a hundred percent gross margin, basically a hundred percent net margin, because for the longest time it was just you and so you don't know
1:13:14 Speaker 1 drones and you know red cameras and
1:13:16 Speaker 0 except for travel. There were a few things. I I was paying an editor, uh, my best friend like read reads my emails, and so I pay her. Um and there was some travel, but the it was the expenses were yeah, I mean, I was we were probably 90% net. I mean, it was it was an amazing, it was a great business, honestly. Yeah, we're familiar. So
1:13:32 Speaker 2 that's right. The the then the other side of the house, you probably have five or six percent uh gross margins on cars and bids, because you've got the four and a half percent take rate plus a little bit more. So you you're starting at, you know, it could be a much bigger um sort of volume business, but then your sort of net revenue that that five, six percent. How does that compare with the revenue from the media side? Aaron Ross Powell,
1:13:57 Speaker 0 it's a lot lower, especially now because we took this huge investment, and so we are kind of investing in growth. And so it's one of those classic situations where we're kind of knowingly giving up net revenue for the next however many months in order to get the tools in place to like grow the business to a place where we need it to be. Um,
1:14:13 Speaker 2 I guess what if you just added up all the the five percent of all the car sales and compared to the city. I mean it would be
1:14:18 Speaker 0 it would be much much higher, yeah. But there's uh than the media business. Much higher, you can sell we're selling basically 30 cars a day, or all we're auctioning 30 cars a day. We have about an 85% sale rate. And so and the average transaction value, I don't know, but you could figure it out very easily just from looking at the site. It's somewhere in the 30 to 40,000 dollar range. So you can kind of do the math. Is there's real money being made. It's just that uh there's a lot of employees. Yeah, yeah. The you know, sort of
1:14:43 Speaker 1 net revenue growth, whatever you could, but then like the everything between that and profits, there's a lot more on the carbon side. Right. Exactly.
1:14:50 Speaker 0 Exactly.
1:14:52 Speaker 2 Yeah, that's fascinating. Two very different businesses that that share a top of funnel, but
1:14:57 Speaker 0 right. That's exactly it. They share a top of funnel and other and and they're obviously both in the same field. You could see someone watching videos and then buying or selling cars, but they are very different businesses the way they are run and the way they exist, and it's kind of an interesting thing to be part of both.
1:15:11 Speaker 1 Now, one topic that I think will be really interesting for our our audience, Ben, you're probably gonna go this way. Um before the turning group investment. You guys didn't raise any venture capital, right?
1:15:23 Speaker 0 We had a but the my partner, my business partner, his company kind of was the one who gave us like our seed money essentially to get started. I didn't put up any of my own uh cash.
1:15:33 Speaker 1 But it wasn't like you know, it if no, not in the Z Founders. We're gonna go do this. Like this is the type of business that you would go, you would do like Combinator, you'd raise a seed round, you'd raise a series A, you'd be to get to the point where you guys are now, you'd be to get to the point where the turning group investment happened. So, like pre-that, a normal startup would probably be 20 million plus of capital into the business to get there. Uh you guys didn't do that.
1:15:59 Speaker 0 Yeah, we did it, we did it with a we did it with uh uh a lot a lot less, you know, but the result was we kind of had to be scrappy and we sort of had to do this, you know, make it work sort of thing, and we were profitable pretty quickly. I think the car market helped us out a lot. We also stayed lean, we stayed really lean. And I but I think the drawback of that was we probably didn't grow as fast as we could when the car market was blowing blowing up so much. I think that if we had had more money, we probably would have made some more strategic hiring decisions, and that probably would have grown us a little faster. But you know, we did what we did the best we could with what we had, and now we don't have to make those distinctions anymore.
1:16:36 Speaker 1 Which, you know, I feel like obviously this is a special case because you're duck to miro, you know. Uh and you had the built-in audience and all that, but um it is it's just really interesting to me to something I've been uh observing from many different vantage points over my career, is like the amount of money that startups raise and like the the correlation between that and success, you know. And I as best as I can kind of come to, I'm not sure that there's really any correlation.
1:17:13 Speaker 2 I think most of the time it is negatively correlated, except for the most extreme outlier successful outcomes, it is required.
1:17:21 Speaker 0 That's an interesting thing. If you
1:17:23 Speaker 2 get
1:17:23 Speaker 1 to a point where like when you took this investment at a certain point, yeah, you need capital. Like you took this investment from the turning group, like if you're gonna really but you need capital, but to get to that point, like whether you raise zero dollars or you raise thirty million dollars, like I it Ben, you're right, it might be negatively correlated to raise more. I I actually right now I kind of think it there's no correlation. Like
1:17:44 Speaker 0 Ben's point is interesting though. It's it's negatively correlated unless unless it becomes essential. And then it's like so that's the problem with these with these VCs and PEs, right? They like have to make a decision. Is this gonna be one of the negative correlations or is this gonna be one of the essential? I don't know. It's a it's an interesting point. Yes, a lot of I don't know a lot about this world, but I uh we've gone through this round, obviously, with with the churning group, and uh of course during that I learned a lot about this process. And I'm the type of guy who spends a lot of time learning about this sort of thing when I'm in it. And one thing I have noticed is that a lot of the people who are in these firms have only been in them since the last recession. And are kind of these young guys who sort of think that they're gonna like do it, you know, and and frankly, they've probably had a great track record so far because the economy has generally been strong over the last 15 years, and that's where all their investments have happened.
1:18:36 Speaker 0 And I think in a lot of cases, a lot of these people have thrown a ton of money at stuff and it's worked. Whether or not the money helped, right? Or was the reason that it worked? Or
1:18:45 Speaker 2 that they were just surfing market beta. Like they didn't even need to look for outperformance. It was just like, oh, I'm in a
1:18:50 Speaker 0 market
1:18:51 Speaker 2 that's like. I want to put money in the market,
1:18:52 Speaker 0 yeah. Right. And so I some of me wonders if maybe things are gonna change a little bit. Um I have a suspicion that we we uh uh our event was a was well timed. Um not that I don't think we're gonna continue to grow, but I do think that for the car market especially, there was some unprecedented growth. Um but it'll be interesting kind of to see how these things evolve over the next you know years. Aaron Powell
1:19:15 Speaker 2 And I'm sure people could stop and Google it and look. Can you give us the details on uh when was the investment? Describe the transaction just so people know what we're talking about. Yeah,
1:19:22 Speaker 0 yeah. The we got we the the Chernin Group, which is like a private equity firm in LA that primarily specializes in these businesses like ours, which is like a business that creators lead. There's other ones like Meat Eater, which is a hunting YouTube channel that turned into a business, and Barstool Sports was another one they invested in a long time ago. Um they made a they bought the majority of our business um a year ago, basically. And um and so they installed a CEO who I they installed. I mean, I went through the whole hiring process and it was quite something, and we I love him. And and and obviously put money on our balance sheet so that we could grow the business even further, which we have since the investment, so it's gone well for everybody.
1:20:00 Speaker 2 And what was the total amount of capital there?
1:20:02 Speaker 0 Um they threw in the like thirty seven million or something like that. And some of that was secondary, and then there was additional that they kind of threw on our balance sheet to help us grow.
1:20:11 Speaker 2 And this is for the combined entity, right? That's right.
1:20:16 Speaker 0 One interesting interesting aspect of this whole thing is that yes, the two businesses were merged into one business, which I think was a really good thing for the business because in the past I was kind of serving two masters. The the media business was where I was actually getting my paycheck from, right? And but the the marketplace business was the one we thought we would, you know, would grow. But at the same time, if I got a great offer to go review something in the media business, I was gone for a few days and I had to do it because that was that was my business. Right. Um and now they're all under one umbrella, and so the money is made by everybody and everybody's happy, and the growth of the media business means the growth of the marketplace business, and presumably vice versa. So it's a good it's a good thing to combine them.
1:20:49 Speaker 2 And the incentives are aligned. Like it's not uh, you know, it's like this classic thing when you have like a uh conglomerate and two division presidents that they're like are are each trying to you know make their own PL look better, and now everyone's on one PL. Right.
1:21:03 Speaker 1 Interesting, right? Like the Doug, you obviously know this, and um listeners may or may not be familiar with this. It's maybe it's more just like our whole sort of quote unquote creator world that Doug Ben and I are all in. But the hot topic du jour is what turning group does and like creators starting these businesses themselves, you know, it's feastables and Mr. Beast and all that stuff. Everybody wants to do it. And this is a key aspect of it that I think a lot of people don't really think about and understand of like, well, the media business is that part of the other thing, or is it separate? Because as you say, once you start building a company, you know, you need employees, you have a separate set of stakeholders, but then you could get a million dollar opportunity in the media business that takes your eye off the ball.
1:21:48 Speaker 1 Like, how do you know? So um you are as far as I know, and I don't know that you know cap tables of uh certainly many, if not all of these other you know, media creator businesses, but you're the first person I know that I I know for sure. You actually merged the businesses.
1:22:04 Speaker 0 Yeah. But it made sense. I I could see no real drawback to it. Um, frankly, and I still feel that way a year after it happened. I still think it was the right thing to do. And it is a great investment philosophy. It's an interesting thing. I I've said this on some stuff before, but like it's a great investment philosophy in some senses because you're investing in these businesses that are um creator led, where like I said earlier, like people love the person, and so they like want they physically want to give you money, like they want to support you as opposed to like a regular business where you got advertise and all that, and it's like a faceless corporation. But the drawback and the weird thing about the way the turn group operates, these these businesses are thus kind of propped up by individuals who could turn out to be problematic, right? Like that's the thing that I'm always like, really? Are you sure you want to invest in this?
1:22:49 Speaker 0 Like, what if what if I go on some Twitter rant and you know then I'm canceled, right? Like that that's a real possibility. And and and but I think their argument would be it's worth the risk because this is like how people I think they think this is how a lot of businesses will evolve over the next 20 years. You see the Kardashians going out starting businesses, you see Mr. Beast, like businesses on the back of these followings, and that's like a that's a real thing. There's like real money to be made there in real businesses there, and maybe people are gonna gravitate more towards businesses like this as opposed to just I think they absolutely gap well this
1:23:21 Speaker 1 is where the the keeping it all under one roof of merging the media business and the operating
1:23:27 Speaker 0 business businesses, whatever
1:23:28 Speaker 1 you want to say, I think makes a lot more sense and can kind of start to solve it because at least the incentives are all aligned,
1:23:33 Speaker 2 right? It'd be pretty crazy to imagine a world where like big swaths of the economy are or have a leading player that's a human brand. Like imagine gas stations. Like, what if there was a like we all preferred to go to the gas station from our favorite? Exactly. Well, that's that's actually where my thought process was. It was like I don't think in the time period most consumers knew the name John Rockefeller, but they knew Standard Oil. And so could we eventually get all the way to a world where like I get my gas from you know, I don't know if it's Doug's gas station, but like that that has a personality associated with that.
1:24:10 Speaker 1 I think this is what Mr. Beast wants to do with Visa. Like I think he wants feastables to be like, you know, Proctor and Gamble or something like that. Like
1:24:19 Speaker 0 Yeah. It's an interesting thing. And I really do think it kind of clearly is becoming sort of the future of how these things work. And and with when I launched Cars and Bids, I wasn't I didn't do it intentionally, like knowing that this was a thing that and honestly, at that time, three and a half years ago, it wasn't as much. It wasn't, right? No. Um and I think that the the success of that and several other things has kind of shown like hey, this is like a real thing, and let's let's go do more of these. And I think and and the advice I give to all my creator friends is you need to do something.
1:24:49 Speaker 1 You need
1:24:49 Speaker 0 to do something. YouTube is not enough, TikTok is not enough, you need to take your audience and go do something.
1:24:54 Speaker 1 Oh man, I would say starting starting maybe six months, I would say before you did the churn in group transaction. Ben and I start, you know, you know, friends and other people in the business who started coming to us and be like, what's your cars and bids? Like you you guys need a cars and bids. And you know, we've always been like, I think that the dynamics are a little different in podcasting, and we're kind of a unique animal, but uh so we haven't done it for various reasons. But but yeah, no, like you know, you pioneered this, like literally pee you know, you became a verb of like what is your cars and bids or I mean
1:25:25 Speaker 0 to
1:25:25 Speaker 1 an
1:25:26 Speaker 0 extent. I I I'm so glad it worked out, and I'm so glad I did it. It would have been the worst mistake of my life not doing it. And I'm telling that to creators, and you know, one of the problems with these the these creators have when I tell them this, I've like become sort of the elder forefather of the car YouTube space. Every time I like go to wherever these guys are whatever bizarre town these guys are located in, I have dinner with them and then they're always asking advice, and I always tell them to start their own business, and they always say the same thing, which is how the hell can I start my own business? I'm so consumed with YouTube, like I'm so busy with doing content. And the answer is I don't know, but you better figure it out because there may be a day when you're not as consumed with doing content and when your audience isn't as engaged that you wish you had had that you would use that opportunity.
1:26:07 Speaker 2 I felt this way, having a full-time job for the last eight years while we were doing acquired. It's like, is it an enormous sacrifice and I basically have to give up all my hobbies in order to create a media thing that people actually care about? Yeah, it is. And at the same time, like uh I don't know, you you have to make trade-offs in life. So you do? I do it sort of the
1:26:28 Speaker 0 opposite direction, but that's that's exactly right. And you can make a jump or not. I hate to say this because I don't want to get people discouraged. I never feel like that, and this isn't true for everybody, but I think the earlier in life you can do it the better. I I started YouTube when I was first off when I was too young to know any better, which I think is legitimately important. It's funny, like it's a joke, but like it's true. If if if I had been 37, I think I would have been like, that's just stupid. But as a 22-year-old, I was like, I can do this, because 22-year-olds think they can do anything. And also, I just didn't have that many obligations. I just simply didn't have that many obligations. And I think that when you're 22, it's hard to realize how few obligations you have compared to someone who's 35. Um I got two mortgages now, I got a kid, I got another kid on the way, I got nine cars apparently.
1:27:16 Speaker 0 Congratulations
1:27:17 Speaker 1 not on the cars on the kid. 10 by the time this actually releases. Yeah.
1:27:21 Speaker 0 Um actually it's eight right now, it'll be nine when this release. But anyway, um I I you you can't. You just can't as easily do it. And you don't want to. You can't afford to take the risk. You you it's just too difficult. And so
1:27:34 Speaker 1 you were planning cars and bids and working on it. Were you did you already have your kid at that point? Were you were you guys pranking? We're trying. No, we were trying. Um in fact, we had a miscarriage the week the site launched, which was
1:27:44 Speaker 0 like bizarre. Oh,
1:27:46 Speaker 1 I'm so sorry.
1:27:47 Speaker 0 Yeah. I mean, it was you know, it worked out. We got our little guy and we got another one, and it's gonna be fine, but it was like, holy crap, what a like bittersweet, bizarre situation to be in. Um, but no, we didn't
1:27:58 Speaker 2 have the kid yet.
1:27:58 Speaker 0 And but the thing is, because I had a partner and because I we had employees and we had some money behind it, I it wasn't quite as big of like a time suck for me, but that first year was like really, really hard. And honestly, I missed a lot of early stuff with my son. Um, and I'm so happy now that I'm able to like take a little bit of a step back and get some breathing room and like be able to spend like real time with him. Um Frankly, I like this two-year-old stage a lot better than the
1:28:22 Speaker 1 infant
1:28:22 Speaker 0 stage anyway.
1:28:23 Speaker 1 Agreed. Strong agree, having a kid about the same age as you. Yeah, definitely.
1:28:29 Speaker 2 All right, Doug, before we wrap here, um knowing the acquired audience, you know, it's people in tech, it's investors, uh, it's CEOs of startup companies, lots of founders. Um I'm curious, any anything that you want to leave folks with uh before we head out here. Um
1:28:54 Speaker 0 in this uh no, not really, other than kind of what I just said, which is a more of a message to creators, like go do something with your audience to people who are starting up and founding and and like running businesses like creators are god use creators though, like creators are more useful than you think um than and a lot better investment than digital advertising. If you can partner with creators, I think that's like a a very, very useful way to like run a business and start a business
1:29:22 Speaker 1 and
1:29:23 Speaker 0 try to find
1:29:24 Speaker 2 on the cap table. Like instead of like media buys, like you know, what if someone had come to you and said I'll give you a big chunk of my company and you get to be the co-founder and you don't have to do any work except talk about it all the time.
1:29:32 Speaker 0 I will tell you this though. The creators, so since we launched, we've been trying to do a lot of collabs. Since we launched, like since we combine the businesses, we've tried to do a lot of collabs so that we can get past just my audience, and I've done a bunch with a lot of great people. We've tried to do a lot more. Creators what a group. What an interesting and bizarre group of people. Like people can't come to meetings that are scheduled on Zoom. Like they just, oh, I forgot, can we do it tomorrow? And I'm like sitting there, and I'm like, forgot. And it's So I think that yes, try to the cap table is a total total opportunity to get people. But some a lot of creators are less sophisticated than you think and are like difficult to deal with. And so like I think the goal would be try to find the seven percent of creators who can keep a schedule, who understand how Excel works, who can like go on a Zoom call.
1:30:20 Speaker 0 Like it's hard. Like it's legitimately hard, but like they're out there. I would
1:30:24 Speaker 1 imagine not to disparage anybody else in your category, but I'm just like, I can't imagine anybody else in your category that would be like you. It's it's some
1:30:33 Speaker 0 are better than you'd think, and honestly, some are much worse. And I've talked to some people, and I'm like, I hear their like story, and I'm like, I can't believe you've even made it this far. Like it's difficult work to get this far, but like I these I it's it's the traditional story. I read a great Vanity Fair piece from years ago about Johnny Depp and his crazy finances and how he's blew all his money, and it gets into this. Like he was spending uh $300,000 a month on employees. He had 14 homes. It's that kind of thing. Like creators and the creative types like need people to rein them in. And I think where you strike gold is if you can find a creator who's kind of also like me, which is like gets the business side and what you actually have to do in order to be like a reasonable person. That's so great. And that's harder than it looks, I think. Oh,
1:31:18 Speaker 1 one more last thing before we let you go. Uh if anybody in your audience is looking to get into cars as an asset class, wants to do something on cars and bids, maybe like what what would your advice be for somebody that's interested in? Oh, I might want to buy a 9-11 from 2005 or you know, a 350 or you know, whatever.
1:31:39 Speaker 0 Um there are some cars that I think are undervalued. Um I think the the main key that I would say is buy um analog gas powered cars. Cars with manual transmissions, big engines, and old school feel, old school look. As cars start to become more electric, more sort of the all electric cars sort of have a similar shape because of aerodynamics and and fuel range. Um gas-powered old school, wedge-shaped, exotic V12s are gonna be like the cars that continue to go up. And over the last three years, a lot of cars have enjoyed a high rise in value, and I think there are still cars that have a high rise to continue going as the market starts to get more and more and more dominated by like EVs and sort of look alike vehicles. I think there's gonna be more and more people who with newfound money are gonna want to go back to their childhood of like fun old schools.
1:32:33 Speaker 1 Huge.
1:32:34 Speaker 0 And and that's already happened, and I think it's I think people I think it's gonna happen a lot more, I suspect.
1:32:39 Speaker 2 How do I back your intuition here? Like, can you start a fund that I can invest in that's like done? We need an ETF for Lamborghini Countashes.
1:32:46 Speaker 0 You know what's funny? I actually um have started to develop this thing. I gotta do a video on it, but I've started to develop this thing about market cap for exotic cars. If you multiply the number they made by the number they're selling for, you can start to see which ones are maybe looking a little undervalued, and you got the total market, and maybe which ones are looking a little overvalued. And I've I haven't I've maybe have I I recently bought a car that plays into that, and I I'm um I think that people should maybe look at that a little bit more. A lot of cars actually fall right into the same right in the same area. Career GT, 4 GT, uh a lot of like very special cars fall into about the same market cap. And stuff that's wildly high and wildly low, you start to think either there's a reason for it or
1:33:31 Speaker 2 maybe there isn't, and either it's over or undervalued. That's that's a thought that I'm having. If you ever make a spreadsheet and want a second set of eyes, send it over to us. I do have an
1:33:38 Speaker 1 XL running. Seriously, you should this should be part of cars and bids. Uh it probably should. You could attract a whole nother investor class.
1:33:48 Speaker 0 Part of the problem is for very special exotic cars, there are production numbers printed. For like lesser cars like M3s and stuff, it's more difficult to find production numbers. But I have a whole exotic car market cap spreadsheet, and there are some cars on here that I would definitely be putting some money into, and maybe I just did. I'll announce that soon. I'm
1:34:08 Speaker 1 dead knowing you right after this call. Subscribe to Doug Debiro on YouTube for your instant alpha. There you go.
1:34:13 Speaker 2 Awesome. Uh listeners, thanks so much. We'll see you next time. We'll see you next time.
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