Ernie Garcia - Leading Through Crisis - [Invest Like the Best, EP.396]
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My yesterday is ernie Garcia. The third ernie is the cofounder and C. E.

O of carbon. a. ernie. Join me on this show in two thousand and twenty one. And despite all that, the business has gone through sense. That conversation, you'll hear how he has the exact same deana and Crystal clear vision for the business and its Operations today.

Carina is one of the most remarkable business to around stories in recent history and only gives us a raw and candid explanation of navigating through a ninety nine percent stock Price decline and ultimately emerging stronger. On the other side. I don't know many leaders who could survive this.

He credits his team again and again for successfully weather ing the storm and maintaining morale. e. We discuss leading through crisis building for the long term and a focus on ruthless prioritization and efficiency gains.

Please enjoy my conversation with her on negara. Our ney say you've got a nicely fitted business growing forty percent, only one percent market chair. Big road ahead of you must have been a easy last couple years.

That's basically the correct reduction of our story.

And maybe the part cast is over. It's great to see you again. I am so excited to have this conversation. I really do think that carbon a in your story the last three years has been one of the most interesting business and market stories that i've ever seen.

In this case, i'm really lucky because I know a lot of your large investors, I know the story quite well and i'm really excited to pick IT apart. And I think because IT has just been such an insane turnaround from that, the moment and time was, am sure, a very scary or stressful in the company's history. I'd love you to just tell us spring us back to whatever you think of as the most heroes or stressful moment in this whole store. I want to get into all the aspects of the stories. S, I just think it's so rich with interesting detail and how you managed through IT, but maybe you could just bring us back to sort of right in the middle of the battle to get through all the covered induced strangers and the business and then get back on its trajectory.

sure. I'm going to take a step and a half back, just still set context. And then let's get to those moments.

I think we started to us thirteen and we will start about a photo x that could not raise venture capital money in. I think we really had to scrap and claw to get a little bit omentum. And we went public two thousand seventeen.

We were the worst IPO. Two thousand and seventeen, I believe. We went out of fifteen box. We went out to eight a couple of weeks.

And I think that's important because basically for a large part of carbon as life, I think that we were fighting to get by. We are never blessed. We are never accomplish.

Viewed as having easy path and being sure bet when code first hit, that was a scary moment for sure. That was a time when transaction dropped very rapidly and we're transaction business. So all of your expenses are still running in.

Your revenues fall off. But luckily, that only last a couple months. And then I turned into a positive.

And I think for mid twenty twenty to nearly the end of twenty one was the one period in our life when we reviewed as a sure bet and we reviewed as a company that was going to be large and had a huge opportunity and have the right makings of something that could be a very interesting story. And I think that was fun. It's fun of the sudden to be the cool kid at the business party.

So we got to enjoy that for a short. And then I think late twenty one, a lot of things happen. I think supply chains are all breaking postcode and cars are a complicated product to their manufactured around the world where different cover on waves or creating various disruptions.

And so car Prices were going up and he was getting hard to supply cars and supply was tight that make cards less affordable. I think rate started to go up in twenty one as well and in twenty two especially, and that started to make cars less supportable again. I think the combination of all that, along with us in a business that was growing on average triple digit rates basically from inception through that meant that we were massively open extended customers all the sudden were struggling to afford cars.

Demand dropped a little bit. There were a lot of other things happen in the economy that also LED to the industry wide reduction in demand. And we had just completed a big acquisition of a company called the desk, which i'm sure will talk more about later.

But that acquisition include IT taking out three point two billion dollars dead and then investors, I think at that exact same moment as things got tougher across the whole economy and especially in technology, I think they switch from growth is only thing that matters. Anything is valuable to cash as only thing. What is valuable.

And we had just position ourselves very poorly for that moment. And I think that, that put us in a precarious spot where everything the wind started blowing against us. And that was the start of us going from finally being the cool kids of the business party to being reminded of what reality is and maybe who we really work for a second.

And we had a tough time the next year. Year to half was an absolute battle. IT included a stock Price drop of ninety nine percent, which is uh, comical number basically. And I think importantly to try, they feel a little bit more real. Nine nine percent is one thing.

But if you think about what IT takes to like compound yourself down to one percent of your previous highs, it's twenty twenty percent rot downs and every twenty percent right down is just an absolute punched in the face for everyone in the business. So absorb bing, a puncher too, is something a lot of people can do. But absorbing twenty big punches is really hard. So that was undoubted a tough time.

I have a big overarching question about the twenty punches, which is just the literal things you were doing day to day, week to week to keep the team focused and motivated given what was an on slot of not only Price declines but headlines and just fog of war around the business, given what was going on with covet and omicron. And all this exchange is variables that just seemed like some of the punches just came from out of nowhere. And i'm just dying to know what you were saying, how you are running meetings, how you are running the business and how that change like the captain navigating the storm stuff and what stands out most does having been important that you did in hindsight.

let me start with the intellectual part of that, which I think is important, but maybe less important. And then we going to get to the people part of that. And then I luckily your team, where I think there's a lot of cocaine, which I think is very for many reasons in a moment like that.

The intellectual part of that is I think if you look over business history in general, there are very few businesses where they have a linear ride to whatever success is. Rarely is that a linear path to get there. Generally, you want to measure in stock Price terms to that's like such an objective, visible measure.

There are generally many large drawdowns. Amazon think famously went down ninety six percent ever taken, ninety nine or two thousand. Most other companies that people are talk about, a great companies go to do a period like that.

And if you accept that, that's basically part of the path from zero to where you want to go, I think IT also becomes true that whenever that storm comes, that's going to be the most important point in the companies is history because this can be the moment where you're most likely to break for all the obvious reasons, but also the moment where you're going to create the most, are you because if you make IT to that storm, that's where you get to successes on the other side. And I think every company has to go to that. So we try to tell that story.

We try to set that up. I had a time we try to point to other companies that we all have a time of respect forward, say, let's put ourselves a little further back in time and look at their moment where they struggle, and then remember that this is our moment and they fought through theirs. If we fight through, hours will be in a good thought.

So this is an important time to be here. And if what motivate you in life is trying to make a difference in the world, then the moment you have the biggest impact is the moment the most important at artist. And this is our moment.

So that was the way that we tried to articulate what was going on. I do believe that's true. And I do believe for all the companies out there that fight through their moment of difficulty, I think that's an important time.

That refrain is helpful to remind people that other companies have been to the same thing and it's not unique. It's part of just what the journey is. I think they don't think that was extraordinary ily helpful.

And I think IT was circumstantial. And I don't want to take credit for IT because I think IT wasn't something that we knew we were designing for. But I think it's something that we stumbled into the people that we accumulate early on that made up carbon a were basically just a very resilient group of people.

There were people that I would just cried as fighters. There's the saying that I think is really correct, which is confident is preparation. And it's very hard to be confident in a tough moment, less you're prepared and it's hard to find reps for preparation of difficulty.

I'm a parent about three kids. One of the places where it's easier in life to go get prepared for difficult sports. The reason for that is it's the only place you can go and spend forty five minutes and you either winner, you lose.

Every once a while, you have a come back, and every once a while, your head and then the team comes back on you. But you get lots of reps at going through emotional role costers that are hard. And you see all the various outcomes we happen to accumulated number of people that either played a lot of sports or had a sports mentality.

And I think that, that fed back into the entire group of people that we accumulated that part of think we should have a group of fighters very resilient. That was enormously helpful because I think when you're going through that first twenty percent on the intellectual story works and we go to the second one of the third one, maybe IT works again. But when you get to the fourth, fifth, the tenth, it's much more emotional than that.

It's much more about whether people can stay level and stay focused on what they're doing and can have more faith on the people around them. Then the signal that they are getting from the outside world that says that you're doing something that's values and that just requires brit resilience and IT requires respect and trust. Among the team, we were very lucky to accumulate group that I think had the critical mass necessary to have that be the feeling eternally.

So when I was hard, people stood up and they were ready to fight, and they look at each other, and they knew that everyone else is ready to fight. And that kept together. And then IT almost turned into more to prove the world wrong instead of or nervous.

The world knows something we don't. And I think that was tremendously helpful. I think that that's a huge part of what helped us write IT out.

Do you have a favorite anecdote involving someone on your team from, let's call IT drow downs, fifteen, three, twenty that stands out in your memory?

Every twenty percent drop down is of that. You have earnings and you get smoked or there's some brutal article out there that makes them one afraid and reduces your story a little bit further to something that's clearly negative. And those are generally events that are big enough to where you want to communicate and you need to pull the team together and talk about, hey, here's going on.

Here's why we still feel okay. Here's why are on a good path and we just got to keep marching. And a lot of times, as we are going to do that, my memory of IT was you'd be pulling up together tension over the country.

So you'd on zoom and you'd be looking at faces and you'd have your materials prepared. But the most important thing that was happening on the zoom calls, or just the faces, you just got to look at the faces and see how it's being received. And you would see on faces, resolve and collective productive frustration that was like an over power this.

And you would see on faces, nervousness, anxiety and wondering if we were off and the rest the world is right. And you just had to hope that the resolve was going to be the winning emotion that was going to come out of those calls. And I think more often than not, that's what happened.

Undoubtedly, there's some hand to hand combat there where you have influential people that you can see there are a little more nervous and you ve got to go address that and talk to women. Welcome through why you feel confident, why you feel like we're a good spot. But the key is just managing that collective feeling of how we're getting through this and trying to ensure that is no point time does IT ever just disintegrate to blame.

Because I think when people get nervous and things aren't going break, you've all been fighting together for a long time. You've made thousands of decisions. Everyone can easily look back on decisions other people made that we're probably wrong with the benefit inside and start to point their finger.

And if that ever happens is a disaster. So I think you have to make sure that you never let that happen and that you stay together and the adversity brings you together instead of forces you've fall apart. Like I said, we worked really hard to try to make sure if that was the case. I would like to think that the team overall that a pretty good job of managing that a huge part of IT, was also just accumulated a team of very resilient people. And that made the job lot easier.

When i've talked to us some of your larger investor, some of whom bought a lot of their staking carbonate during this difficult time, they also said some version of the same thing, which is, if they went on a walk or had dinner with you around, caught november twenty two, that you are extremely on top of IT and calm.

We are joking with neil meta from Green ox that one dinner with you and he said he was team, easy to get this totally under control or is a psychopath and you quickly said, yes. I'm curious where the calm for you came from in, let's call, a fall of twenty two and wear if anywhere you did not feel calm that you felt leadership is about holding the line and navigating through stuff like this. But i'm sure they're most of the times, maybe not when there are aspects of the story or what was going on that felt less in your control and some things that felt more in your control. So where did you get the calm from? Was or anything you weren't calm about just a little bit more about that nature point.

something that's true of the world. We all do IT in every walk of life. And then I think it's very true with investors.

Is the world to complicated place? And there are many data points and a lot of times to find understanding. We're grabby a subset of data points. We're trying to draw lines and those lines that were trying to draw extend our the story of what we think is happening.

And to me, what was hard as in that moment where we were the cool kids of the business party and twenty one, the story, we always got IT, we are genius, everything we touch her to gold. And we had this val walk into some incredible outcome. And the business that we had built was just superior in all these ways, we are going to win.

And IT was inevitable. And then I think that all the sudden in twenty two, the story became, we were zero to straight phenomenon. We are only able to grow because we were giving customers on sustainable deals.

The business model never worked. The variable cost never made any sense. And just like that swing was so violent, and to me, the place where I think hopefuls for most of teen, the calm in form is just that in our minds, neither those stories were true.

I think the story that was true was we took a big, ambitious swing at a cost of problem that that was important. We thought customers wanted a simple way to buy a car. We thought that if we use modern technology to try to match modern customer preferences, we could build something that gave a great experience and have lower variable costs and higher fix costs at scale.

Would be really powerful. But the scale of the ambition of the swing was such that IT was necessarily always going to be very hard. And I think that's the shortest story that I can tell that I think is true in the good times and in the bad times when you felt that story changing all the time.

Now the stories and the news were very different and the stories you felt like you were hearing were late from investors were very different. IT was helpful to to say the story that was true as we're building something that matters the customers love but is hard. And every business that tries to build something is hard goes through tough times and were in that tough time and ask the truth.

And every business wouldn't go through tough times if there weren't this recurring ing thing in the world, that is, people that are on the outside when like the feedback is negative, they can respond violent way, and things can feel very, very negativity, can feel that the wheels are falling off. But the reality is many these companies do right out the other side. So in my life, that was the true story.

IT was like, okay, this was always going to be hard. This are hard moment. We got the right team. We got the right for offering. We've got the right business. We can see how to do IT, and we've got a tone of work to do and the environment is difficult, but all you can do is do the work.

And in a way, there's little bit of piece that comes from just knowing what to do once you feel confident that you're like OK on the path and all there is left. Now we just got to go march. We just got to go shovel.

And if we just do that over, over again, either we're right and we're wrong, but we're going to find out. And I was pretty confident we were right, but I think that's the best way that I could reduce why I felt good. And there were a lot of people on the team that felt the same way.

And I think it's that's important because I do think we have a team of people that i've got a tone of respect for, and I think that we would sit there and have that discussion during those moments like here we are here. It's important to be able to question yourself in wonder if you're wrong when the outside world is pushing against you. And we collectively were like him and we know what the story is, and it's okay that the world doesn't really see at the same way we do right now. But we know the story is we know what to do.

and we've got to keep marching. If I zoom to what from the outside looking in seemed the most voluted point or some combination, lots of debt and animal spirits around demand, just raud demand for the service and for cars, just like get cars that was like in a single digit thousands per month. There are something below the advantages of the the scale me that you earn as you get bigger and bigger.

And that was that combination. Just low demand that's from this weird thing happening in the world. Omicron, I think, was happening in the fall twenty two plus just this company has a bunch of debt from the edesa acquisition. That was the investor narrative. Thinking back on IT, how did you talk about the combination of those two variables, if at all, internally to your team.

just that they would pass? Value creation in the world is about what's gonna right on average. And I think that every path, all of the various quantities that matter to how you performing in the point time, there is going to be variability around the number of cars of people are buying, where interest rates are, what's happening in the world from a macro o perspective, which only access an extreme version of that.

But there is always be very ability. But in the long run, the ever situation is going to be consumer gone to have their average confidence of being buying cars at average amount. T mt.

ork. Is me an average place and you've got a build toward that average. And then I think you just have to be resilient enough to absorb when those sandals go negative on you.

And I think our business, any scale business really, but I think our business, in particular, IT, does have feedback in IT. So when you're growing, IT gets Better, for example, the simply way where IT happens, he says, we grow and get bigger. We buy more cars, we have more selection for our customers.

They more likely define what they want. Their conversion goes up. So we grow again. And that feedback cycle occurs over over again the other areas of feedback in the business as well.

But what is going the wrong way? It's the opposite of the sudden its demand has been reduced. You're a little bit of a worse thought extended the worlds giving up on you a bit.

There's a bunch of of articles out there that are harming your brand and now you're shrinking your mentors and the company. This should have been the site is less like can to find what they want and conversion drops. So you have to be able to absorb that.

But on average is going to be the average. And so I think that the key to building a businesses just build something that you believe is going to be good on average and then make sure that you are able to absorb the blows that come inevitably when things go against you a little bit. And I think the market probably believe that we weren't to be able to absorb those blows, and we believe that we could. And I think that was the difference.

If I was to pull all of your senior team that was there during that time and asked them something like what was early doing that you think was the most important to keep driving towards progress and towards the other side of the storm, what do you think they well.

I think first of all, I would be the some of that team. But what I would say, and then i'll circle back to exactly what what you're trying to get up company to spit around for a really long time, that is generally doing the same thing in turning the wheel. They basically say no over over again.

And I think that what that would leads to is a slow death. And I think that's the history of business. Eventually, companies get big enough. They commuted up bureaucracy if they say no often enough and really mature ways, and they eventually die often, and I think that up, say yes the time, that's why they are more likely to die of in digestion.

We were a company that was enthusiastic and ambitious and aggressive and creative, and we found tons of things that I think we are right about that made a lot of sense, but we said, yes, a lot. And I think in those moments when I was hard, we had to kind of learn the skill of saying no and saying these are the fewer set of things that are most important to making progress, the absolute. And I think that is really hard to pair a natural inclined toward yes with a recognition that no is very valuable.

And I think that we learn how to do that. And there's other things that are a little bit unnatural to start up type teams as well. Sort of the teams tend to be enthusiastic and they struggle a little bit when things aren't working out as well as you'd like, especially things you know make sense if you you got some projects working on and you know all the economics make sense and you know that the consumer offering makes sense.

The product is great, but it's just not quite performing, having the ability to have that onest conversation that this isn't working and there has to be some where is wise that the way that organized, the way that we're attacking the we not only ourselves accountable enough, is this a project we shall be taking on? What exactly is going on? It's important to have that ability to step back and have the harder conversation.

And one of our relative weaknesses was that we said yes too often, and we provided hold ourselves accountable and off when things worked, working out as well as we wished because of the enthusiasm that I think was a strength in many ways, but I think can also show up as a weakness. Sometimes in those hardest moments, I think we really learned those two lessons, finding about one, yes, I know, is certainly at art. That's not a sign.

It's there is no writing answer there. But I think that we've got Better at IT. And I think IT was super helpful. And then I think once you get Better at saying no, there's a lot of benefits that are very hard to force.

E, I had a time because what ended happening is often you take on projects because you can imagine that they're gonna and IT makes this on a sense, and you imagine them is simple. They are because that's the and that we all make and especially optimistic people make. What you don't appreciate is that when you take on all these projects can be conflict somewhere.

You're not have a team of designers and product people on engineers, and you think it's eight people in a room that you can just have really focused on thing in a march for practical problem will come up somewhere and you're going to have some sort of requirement for some other engineering resource somewhere else. The company and at the same time, seven other projects are going to need those sae resources and all the sun, you're constrained and the momentum gets lost because it's not just people in the room always work on something now and said they'd waiting for someone else to get something done. And I think what we started saying, no, all the sudden, all of those hidden conflicts started to evaporate a little bit and just all these projects without the company started to get done faster.

And I think that that's like a very interesting finding. And maybe it's right, maybe it's not. But my strong gas is most companies out there, the simple thing that you think of is okay. If I can think of enough projects that make sense, we should do them because we're well position to do IT. And then the way that we do IT is we hire more people that are super talented and we give these projects, we get IT all done and IT just like an investment.

And you think that I was going to work in real life, it's not quite like that because these hidden conflicts emerge and momentum gets lost in the whole business, slows down and then you end up accidently creating a bunch of rules. You see like problems merge in the business. And so you start generating rules to avoid those problems and those rules and up effectively becoming bureaux y over time.

You get slower and worse. And I think all the sudden you shrink your priorities. Our team was also shrinking at the time, which was a difficult thing to be going through. But you turn back into the site, all the it's just seven people in a room with far fewer conflicts. And the moment where decision are getting made is always now and you just get Better.

And my guess from that experience that we had in the errors that I think we are making, I think most companies miss on the high side in terms of the number of people that they have got in the number projects they take on because I think an incredibly valuable resource is enthusiastic small groups of people, where the moment they are working on things, the moment they making decisions, is always now. And I just think that the further you get from that, the slow where you get, and I think that, that was extremely helpful for us. When we went to those difficulties, we said no more. The team got smaller. And the moment that we make decisions became now and progress just massively ly accelerated.

I have two follow questions. One is around how and what to say no to. And the second is around what to become. I think the carvings a approached the project management, which from doing my research, sounds like something that is incredibly tactical, aggressive, carefully managed that set, or someone ask about both.

I'll start with what to say no to does an example come to mind of something that seemed maybe of the rosy times, something you would have said yes to as a project that contributes to the mission. But in this new mentality, you said no and what the reasons were that you said no. I want to really understand when you do, they know why and how you're saying no. And the sorts of things are saying .

no to what what we try to do is we try to assess what did we think our air was. Trying to be right all the time is basically an impossible bar clear. But I think trying to recognize what direction your air is, on average, is a much more.

So multiple problem is all speak for myself, my air, without questions to say, yes. My air is, I want to do all the things, and I want to do more. Now I think theyll make sense. So I think try to identify that inside yourself.

An example that i'll give you that is something that interesting ly work on a little bit more right now, but an element to our business is a marketplace component that allows us to work with natural sellers of cars to try more efficient, get cars to their next owner and is very helpful. The supply side, I think, allows us and the salad to do a little bit Better economically if we partner up in intelligent ways and cut waste out of the system. And I think the fact that that project should work was basically obvious from day one of carbon a, we kind of knew that, that was something that as long as we got an momenta hat, success we should take on.

And I think that that's the fundamental truth of that being something that should work and can work. I think IT was true day one. I think it's true now. I think it's been true every day in between.

But I think that are enthusiasm for tackling IT too early when there were still too many other things we had to work on that we're more essentially important to building the foundations of the machine was probably a mistake. So we took IT on to a degree that we probably should not have in late twenty, twenty and twenty one. And I think that once you have taken on, the project is even harder to say no because now you're not just saying no to starting something.

You're saying we need to actually go backwards on something that were working on. And that's an example, just to be totally honest with that. I personally was the one pushing that more than anyone else because I thought then I think now that I made a tone of sense and I didn't appreciate the indirect cost that might have on the rest of the business.

And if you find yourself in that men, or do you have make those hard choices, you make one or two and you see the benefits of IT. Because all the time you see the conflict start to fade away and you see the teams started to get things done more quickly and you appreciate that focuses a valuable thing and it's very, very hard and knows are powerful. And then I think you to keep doing IT, I guess it's really hard to get answers completely, right.

But I think it's easier to get directions right. So when you say no to the first thing and things get Better, say no to something else. And then if things get Better again, keep saying no until all the some things get worse and then you can turn around.

And that's really hard for me. Luckily, there's other people inside the business that I think there are Better at saying no. And as we are going to a tough time.

And that became clear that they were right in that moment. More often than I was IT was easier for me to put more faith in them. And when I saw them making argument, recognize I got a little wrong last time. I might be wrong on this one too. We just got to keep moving in that direction till we ve gone too far.

So now is assume we said yes to some project or something that you're working on, the project management methodology. The frequency with which you check in on projects has started to become a thing ledge. If you ask ground about carvin a, can you talk about how IT works today? I'm a new person in the organization. I come to you, you're teaching me how a project manager vana, what would you tell me?

So I think the goal was to take the extra focus that exist in the company that meant that now you had small rooms that were making decisions right now all the time, and then create maximum accountability to ensure that we were making the hard decisions that we needed to make. We are recognizing when things we're working the way that we wanted them to.

And we are adJusting course rapidly in the moments where we are saying yes to things, the way that we would hold themselves accountable. We've got a great team of strong intelligence c people. They are always working hard.

They're holding self accountable. But I think the way we are holding ourselves accountable was more about, are we getting the project done? He was like, designed project.

We imagine the answer would be, are we getting IT done that? The answer is yes. We felt like that was good.

I think that when we went through the more difficult od and we said no to more things, we said, let's take the project. Let's convert the project into milestones from the product perspective. Let's convert that into milestones where we think it's going to impact ops.

From the Operations perspective, we think we can get Operation more efficient. And then let's convert that into financial milestones. We think getting Better Operationally is gonna flow in two dollars and sense, and let's try to break that down those three steps, project Operations in the financial impact.

We try to break about as branding lar as we can. And let's create weekly targets for ourselves. And that exercise is a little burden sum. You got to be carefully. That exercise doesn't become the bureau cracked that you want to avoid so you can get things done.

But the benefit of that is once you have IT and you create these weekly meetings where you having conversations and you're checking in on how are we doing verses, these three measures, product ops and financial, there's no hiding. When you're missing things, you have to say why and maybe your expectation go wrong at the beginning and that's and away. Unfortunate that the easiest one to address.

But more often than not, it's user to realize that a lot of the conversations that you're having are well as because we also are trying to work on this, and this person we need for this is time up on that because they are called the other for whatever reason. And all the sudden, when you dive all the way in to the absolute granular detail, exactly is happening every single day. The cost of those conflicts becomes so much more apparent, and that gets a lot easier than say, okay, that means that across the company, there's still too many cases, and we need to say no to more things.

And that's going to accelerate us or we need to adjust course a bit on this project. This didn't quite work out the way we wanted. We still think the idea is, is good.

And we maybe need to also the product a little bit given whatever learning we just had. But IT creates a very rapid feedback cycle. So we started in twenty two, we started this Operating kids were basically all of our major clusters, which are the various Operating groups in the company. We started to have these weekly meeting generally on mondays, all the summer, different days of the week, but monday's, primarily when we have them.

What we would just say OK, what are the key project is working on? How are we doing against our project milestones or Operational milestones and our financial every single week? And what are we gone to change? And that doesn't sound that innovative, but I think pairing that with focus and an extreme accountability and solve on the part of our in the team to make sure that we hit the numbers with, by the way, pressure from the outside world because we had to get Better, fast IT just created a very productive environment where I think we got a lot more done than we ever had. So I think that's something that we're going to seek to maintain for as long as we possibly can. And we're going to seek to replace the outside pressure, which I do think is a big part of IT internal pressure, which I think is very hard to ever make as powerful as outside pressure.

But that's our goal. Does IT get exhAusting doing that. Just checking in. Assume you personally managing match projects as are many of the senior team at set up. Does he get tiring checking in on people multiple times a day or week? Does that feel sustainable?

So here's anything that I think is different about starting up. First of the companies, hierarch, I think is a disaster. I think there's a big misconception inside of all of corporate amErica that moving up in organization with up generally being defined as climbing the corporate and getting further away from doing things is progress.

And I think that in reality, you want your leaders to be player coaches. The player part of that is tremendously important. And the coaching part of that, the most important part of coaching is basically is leading by example, is what you do everyday. You want your best people to be deep in the weeds of every project idea.

If you're sitting there with engineers and designers and the people that are actually impacting the product on the ground and the Operators that are doing things, so you see reality every day instead of Operating at level of abstraction that are just way less predictive of where things are going. So I think we really try to push people to go deep and all the various levels I want. We tried to push people to go deep.

And you could call that exhAusting if IT starts to feel like it's the boss checking in, but if IT starts to feel like it's a member of the team enthusiastically being involved in the project every day, and you pair that with a bunch of rapid progress, all the sun is fun. It's fun to go check in on this project. My favorite thing, I love IT when it's like sunday night, and i'm excited about my couple of monday morning checklist because I know the stuff that people were kicking off over the weekend.

We're going to get to check in on monday whenever you feel like that. That's because momentum is addictive. It's contagious.

And I think that the more that you can get into the weeds of actually moving the real business forward and in being a part of that every day, it's almost the opposite level labori ous. I think IT becomes really fun and IT created dynamic. Ta.

can we go back all the way to the edesa acquisition and talk through what was going on, what you saw, what you did IT and the role that a big decision like that you think can play in the trajectory of carbon? Well, first.

also, I think one of the areas where we have deep conviction is important to different tie ourselves versus other car retailer s out there is we want to be integrated. The reason is too full. One, if you burt ally integrated, you have access to more economics, the transaction, and that puts you a Better spot financially.

I think that makes you competitive ly more powerfully IT makes you more resilient because you have more ability to absorb difficulty. So I think that that's an important part of vert integration. And the other important part is IT removes decision frictions when you have many horse onto layers in a business and what has different sentiments, and I can get hard to create very simple customer experiences because there is a bunch of companies are people check in with on elements of a transaction to consumers.

The single transaction is we've always view that as vertical integrations, very powerful, enables us to make us experience is simply and that gives us the economic advances that we think is important. And at the end of the day, the entire automotive ecosystem, or at least the retail component ecosystem, the way that IT watches are two hundred, hundred and seven million consumers out their driving cars around and basically everyone's while they decide they want a different car and they're swapping with each other. But there's all these business, twenty, that are touching the car before IT gets to the next oor.

And one of these businesses is wholesale options. And a desk was the second large of the wholesale options and vertically integrating their and acquiring that capability means a bunch of things. But that means that we can be Better buyers for our customers were buying their car, whether we're going to retell IT or we're going to whole sell IT IT, means that we can partner more deeply with natural sellers of cars to have advantages on the supply side.

IT means that a design benefit from some of the assets that carbon a has to make their business Better. So that vertical al aggravate big part of IT. And then I think the other analogy that I would use is, as any commerce business, these big, flat fifty, two hundred acre parts of land that are ideally somewhat close to city centers, where we can recondition the car and put the parts and labor into IT that are necessary to make IT ready for its next one.

Or those are sort of like our manufacturing slash distribution centers for a traditional commerce business. And IT turns out many places in the country is really hard to get zoning to be able to, one, have industrial use, but then two to be to have auto use and to build a business of the scale that we wanted to build. We knew that we need a lot of that, and a desk also has a tremendous amount of that land.

Today, we announce our two, three earnings a little bit ago, and we saw a little lesson, hundred and ten thousand cars around four and forty thousand run rate. Now with the desert, we have real al estate capacity to sell out three million cars per year. And that's certainly inside of our aspirations over time.

So we thought that, that opposition was going to put us in a position to have a very differentiated infrastructure and an even more differentiated business model, be more vertical immigration. So we were tremendously excited about that opposition today. We are tremendous excited about that opposition.

I think it's likely to benefit even more than we imagined at that time. But douteless, I think that, that was the moment that many investors would look at. And pairing that with three billion of debt was maybe the thing that tip things over the wrong direction.

From a story perspective. I want to ask about the required conviction from the leader from you to be a vertically integrated business. I just had this fascine conversation with toby lukie from sharp fy.

And at some point they were beginning to proceed down that direction, building this huge logistics network. And they ve gone back the other direction. And he talked me about IT through the lens of, yeah, that wasn't really a decision. The vertical integration strategy that was aligned with them as a culture and personality and product and IT turned out to be wrong and we've gone the other direction again. And IT seems to vertically integrate, which is a very long game to play and includes moves like the one that you just set out with the desk that you need, the personality of the leader and the company and the culture and the conviction of what the instate looks like to be extreme. Is any advice that you would give on that whole notion to other business builders that are lucky to build the contempt, whether or not they want to vertically in a gravers state, in a horizontal high margin layer in the stack?

First, I think it's extraordinary, really hard. I think that he gets back to this question of balancing yes. And no. Vertical integration has this in cities, st property, where IT always makes economic sense. So that always makes IT superficially attractive.

And then you got to make sure that you're not tackling a problem that is not worth the complexity of the problem you're tackling. So I think it's a hard, I think for us what makes IT in general, easier. And this is a more a statement of vertical integration across the entire company that about a decent particular, but I think that is true there as well.

I think that vertical integration is necessary to our custom value proposition. When a customer buys a car, they don't think about there's uf function that is going to deliver this to my door. There's a function that's managing the website.

There's a function is managing title registration. There's a function is going to manage my financing for this car. There's a function, this value doing my car when I traded in there is here I got my car.

I want to do one. Here's what I can afford, and they want to go buy. And they want to be confident that the decision they made, IT was a good decision and they wanted to be transparent three, four.

And then they wants to be fast and easy because they are excited about the car. They're not excited about the transaction. They're excited about getting through the transaction to get to the thing they're excited about. And our view is that in order to give customers that very simple experience that was transparent and fast and easy and fun, we need to be vertically integrated.

And then in order to give them an experience that didn't require that, we made money in all kinds of creative ways that maybe can lead to supports having a little bit of summer cake after the process, buying a car and probably ultimately is the root of some of the frustration some customers at least have had with some dealers over time. We needed to have differentiates economics because if you don't have different economics, it's very hard to solve problems in materially different ways. So I think for us, vertical integration was a core part of our customer value prop. IT wasn't a nice to have extra. So I think for us, the choice was a little easier.

If you think about stuff happening in that whole chain of things that the consumer needs, like he said, financing, there was a moment at which a camera, when I was a navy federal credit union, was offering three percent rates on other loans went. The story was four percent. Something was fundamental on.

Sustainable or seem done sustainable, but nonetheless, you could go get a three percent rate on your car or something. How do you deal with exogamous variables like that, that that's not in your control, but maybe that indirectly or directly affect your business and manage around things like that, prevAiling MC, economic conditions, interest strates. How do you think about buffering in the business so that you said you ve got to manage the average of a time? It's going swing around that average. You want to make sure that no swing hurt you. Too bad I do structure things or think about structuring things to deal with those .

kinds of variables. So I think that's really hard ever always sucks about being long term focus. Like what does that mean? And I think one of the things that IT means is building for the average and recognizing there will be variability, a lesson that I just think constantly gets hammered in in my head.

And I think it's a really var lesson for any person to ever learn in the ways that you need to ultimately learn. IT is just the discretion of outcomes is wide. And it's because things like what you just outlined happen in the world, and I think correlations in the world are much higher than people think.

Usually if something goes wrong, many things will go wrong. So in your excel model, you look at your resilience and your like man, look at how much stress we can absorb an X, Y, Y variable and still be in a great spot, but you don't appreciate as if X, Y, Z variable moves that negatively. Twenty other things are removed negatively to.

So you're nowhere nearest resilience as you think you are in your excel model. And I think that just trying to have the simple heroics in your mind that outcomes can always be a little bit wider than you think in moments of stress. So you're not as resilient as you think, and therefore, you need to prepare a little extra resiliency in the business is a very good horse tic.

But I think you got a built for the average because it's like too hard to allow yourself to get distracted by things that ultimately disappear in the average. You only have so much energy. And if all the sudden you're taking energy inside the company and you're pointing IT to solve transitory problems, you're washing energy from a long term. You should just take focus on the average, but you also need to make sure that your machines resilience enough to absorb those inevitable wide distribution of outcomes that are hard to foresee.

Thinking back in the last three years, i'm sure you feel more resilient now than you did three years ago. Is that true? What do you feel similar if you do feel different terms of your personal resilience? How does that feel different to you first .

little micro commercial for the company. The companies way more resilient in a simple economic way, which is just we word growing a tremendous speeds for the vast majority of our life like negative aggregate country level economics. And today, we've got severely positive economics.

And I think you can think of your cushion is being the amount of cushion you have in your unit economics plus your cash. That's of your ability to absorb pain. And we've got more equitable we've ever had as well as our ability to absorb pain as a business is permanent economic.

Speci was tremendously different than IT was heading into twenty two. I know thing that I think is basically true, and I think this is true of individuals, most importantly, tly, but also of like collections of people in general. People are strong.

Is the hardest thing that have ever been through is a reasonable reduction of how that actually works. And I think when you go through hard things and you make IT out the other side, that is up being preparation, that leads to confidence. The next time you face a hard, we were lucky that I think we had accumulated a lot of people psychobabble to have that preparation in their life earlier.

And then I think that as a group of people, we went to a hard thing together, and we all learned that individually. But also IT became part of our story, that we went to hard thing together. I think now at the entity level, at the collection of the people inside carbon a level, I think that there is an additional resilience because it's like, okay ay, when the hard thing comes, we know what we do, we stand up, we rely on each other and we work hard to prove them wrong. And we've done before, we can do IT again. And I think that, that doesn't show up in economics, but I think is very important.

One of the things that i've always struggled the most worth during the hardest st periods is trying to maintain some separation in my personal life with my friends and my family, my two kids, or eight, ten. In the hardest times, I find that almost impossible. I've had to just let IT all blend again and come my lucky stars that the people around me are who they are. How did you manage the personal side of all this during a protracted period of insanely hard work? And any advice that you would give to others that face the same situation?

The advice will give first is, I think you need parts of your life that are as independent as possible. I think trying to be part of a team that building a company is a very, very consuming thing. And I think in the vast majority cases, there are moments that are very hard.

So IT is hard to predict when your hard moment will come. IT is not that hard to predict that hard moments will come. So there will be times when you go through very difficult personal times where you're lying in bed late night, you can fall asleep because too much on your mind and just too many things you you got to get right and you wake up in the morning.

And there's already three problems on your mind that you didn't even understand. You won't thin of last night and they somewhere in the middle night showed up there, there, there when you wake up and that happens over, over again, I think you need an escape from that. That very important.

I think people can find IT in different ways, not one who meditate. You hear people talk about meditating a lot. One of the ways that I think is super replicable that all people lean into, I click pick ball, like all truly tremendous athletes.

Sport is helpful there because when you're competing in something, you're not meditating in the sense sitters absence of thought, but it's super limited thought. You're focused on trying to win case of pickle ball. You're look at your opponents, patti, you're washing the ball.

You're in how it's spinning. Your brain is completely absorbed by what's right in front of you right now. And IT creates a gap where all the sun you're not talking about all the million problems that you've got.

I think that that's helpful. I would say too, this is hard to llama IT advice because different people live different lives with the different experiences. And all these things aren't replicable.

But you talk about family thing that I think very lucky in my life is that I met my wife in high school, and I think when you meet the people that are closest to in your life, there is actually the amount of meaning in that, because the things are important to you in different parts of your life are different and peaceful. All has all of its strength. And witness is these things are good, bad about IT.

But if you meet someone in icehotel, a lot of what IT comes down to is that you enjoy find time together. You have fun basically together. And I think that that's a pretty good relationship foundation later in life.

I think it's easy to unintentionally have relationships, be caught up with things that are maybe a little bit less fundamentally human. IT can be more about your intellectual connections or IT can be about your professional life, which reduces the status in the fact that you both can afford to go on cool trips. And so you get to hang out together, whatever IT is, which reduces to stop.

If your core relationships in your life have elements of them that are connected to status or stuff, it's hard because when things start to go off rails a little bit in your professional life, I can bleed in everything else. But I think if your personal life is as independent as possible, I think that's just very helpful because IT just gives you a break. IT gives you a place.

You can go home and just be dead, and you can just be Normal. And your kids don't care about your problems at work. They're care that the stock is down.

So you can go just have a Normal day. And I think that's super helpful because sometimes desperate is just something that you have to have or will be driven insane. Like I said, that's hard advice to give, but I do think it's very helpful. IT was very helpful for me to have family and key relationships that I think we're really unrelated to carbon us.

So I had a break. What is the turning point? When did you feel for the first time again, you had ball controller had your mojo back, or people had stop saying me things about you and as many ways they can must I think a deep reality.

the world is that negativity can to temper fy more than positivity. So you just got a big piece of the fact that people are going to not say great things about you. There is there be two steps in the process of digging of a whole.

I think one is fine, the path and make sense of what do you think is possible in all these different areas, the business in terms of how much you can improve results and improve how you are Operating. And then I think step two is start to collapse the distance from where you are to that goal. Step one is very helpful because that's a step where you have resolved and you have visibility what the plan is and you get to that place where you like OK from here.

We just march, we know or doing, we got to march. I think once you start to see the gap between where you are and where you want to be collapse, and then the reality of what happens there is that creates momentum and excitement. So IT oftimes accelerates.

Once you start to see that, I think you're in a really good place. So like I said, I think we started in a more resilient place than most because our story was that I was always going to be hard and we are at least somewhat prepared for the negativity. And then I think we pretty quickly realized, okay, the market just came up on us.

So we can't rely on them for capital. So we need to build a plane that allows us to be totally capital independent. And that plan you took a little time to puts together, but not that long.

And I think that gave us the confidence that we knew where the march. And then we started to say no to things and we started to see the feedback there. And we started to see that I was enabling us to collapse to where we were, where we wanted to be more quickly than we ever had.

Honestly, pretty quickly, amid twenty two, certainly late twenty two, IT was like, okay, we're on a good path here and we know we had work to do, but my personal elling at least, was this is going to be fun internally. We were talking about this is going to be a comeback, and we're going to have fun telling the story in the other side, because you could see that I was going to happen, and you could see that the rest of the world didn't think IT. So yeah, I think that happened a lot earlier internally than IT did externally.

in very literal sense. If you just think about the whole machine that you ve built that is carved ana, in what ways are you most more efficient today than you were in late 2？ One of the literal things that you've been working on, and maybe this shows up in your unit cost, I don't know what the right metric is. Maybe you can pick one. But what has literally happened to the efficiency of the business from that point toll?

So it's everywhere in the system. We're much more efficient moving cars from one place to another. We're much Better with our schedule or to make sure that we have higher utilization of any given out on our network.

We're much smarter about where we move cars. So we as the total miles that are moved, we're much Better at determining which cars to buy to ensure that we can turn those cars more quickly. We're much Better reconditioning cars were much Better at spending less money to build a higher quality car.

That takes many forms. It's about the process flow through the inspection center, being Better at inspecting a car, a car, a very complicated machine, and being right about what things you do need to fix and what things you do need to fix is actually very complicated problem. It's about building systems to make sure that when we have a part for car we to buy, that we intelligently source that part, which has a couple dimensions to IT.

But one is, what do you pay for and what is how good they can you get IT? Because cars are appreciating a time and the time matters. So you need to build systems that are aware of that. We're Better answering customer questions and automated ways.

And I think we're Better at building systems that help our advocates who answer customer questions when they call in answer customer questions in ways that are more complete and that get in front of questions that are going to come later. So I think throughout the entire business, cars move less, people move less and everything moves faster with less cost, I think, gets throughout the entire machine. People imagine that building a business about having good ideas, the ideas are really the easy part.

It's really not that hard to think of machines that should be more efficient than existing machines. But collapsing the distance from nothing to a machine that Operates close to as efficient as the theoretical machine trying to build to Operate is really, really hard. And I just think throughout the entire business, we've really collapse the distance to that theoretical machine.

And I think the the exciting thing is we have a turn more distance to collapse, which is fun. That's why you get up every day to try to get little Better. So I think we save a lot of work to do, but our machine is much more efficient than it's ever been. I think at the risk of being over optimistic, Better own situation, it's a more efficient machine than anything else is in the industry by probably a pretty long way. So I think that's fun.

If a hundred points of a hundred was the perfectly efficient, no mile wasted, no hour wasted carbon a machine, what score would you give yourself now? How much room is there are? Laugh in that efficiency? Build out.

I'm GTA pick the biggest cop out here ever, but i'm going to say fifteen, discuss in the middle. And what i'll say to is something that I think is exciting. We talked a bit before about these various types of companies.

When your collection of people is creative and ambitious, I think one of the cool things about the company like that is you uncovered new opportunities faster than you solve previous problems. So I think that you're always at fifty, every time you solve a problem, you see two new opportunities. And then I think that's the part where learning how and when to say no is a tremendous y valuable skill.

But I think it's fun because there's no finish line. You're always marching. You're always see more opportunity, and we still see a ton of opportunity in front of us. And I think we'll probably see more opportunity in a week than we see today. We managing what we do .

that there's two really interesting charges that I saw, one that goes down and one that goes up in some of the recent numbers around carbon. A one is the S G N. A cost per unit is going down quite nearly.

And then just like the profit per cars going up in the direction that you'd hope you would go, can you talk about those two things, the financial side of all this. And maybe this is just a un. Economics discussion, but really like how you think about economics and the major drivers of IT.

The term that we use to try to cap for both of those things is at least major components of both those things is fundamental gains. And the way that we defind a fundamental gain internally is basic.

How can we get more efficient such that our customer offering says the same and there's lower costs and or higher modernization? And then what that means is either we get to make more money or we get to make our custom offering that and we get to decide how we invest that fundamental gain. But we want to try to make a fundamental gain.

And I think, in general, that is about making the machine more efficient. So we talk a bit on the expense side to move cars less and more efficiently and faster and on the people side, do the same. And then I think on the revenue side, often times is about making Better decisions.

Let's talk Price for a second. I think a lot of, I feel think OK you buy a good at cost x and you said that why in your margin is why in sex? So in that simple mental order, which is correct, if you want to make more money, you need to need to pay less for the car.

You need to charge more for the car. There is only ways to make more money. But in reality, when the way that your machine looks is you've got twenty thirty locations around the country where storing and reconditioning cars, and there are hundreds of cities around the country where customers are selling cars, that is where your sourcing them.

And then you've got customers distributed all around the country who are buying cars. And that demand is variable in terms of what cars they want and is also variable in terms of the implied transport costs that any given cars going to have depending where the cars station. You now have these very interesting questions about which card do you buy, where, which is kind of like independent of how much do you pay.

And it's a very complex problem. It's very, very hard to be good at that problem. And then that problem gets more complex when there starts to be feedback in that problem with the way that IT impacts financing, certain cars appreciate less certain cars, even if you give me to the same customer, maybe because they have lower mainland costs, are less likely to.

So the feedback into the ultimate economics you'll get on a finance receivable for any given be able that you buy. And the more intelligence you build into the system that helps you to figure out which car you buy, where at what Price, such that IT creates a very valuable transaction and IT turns quickly. There's just more gain to be had trying to thought fully, think through that machine and recognize that there's a hundred problems you have to solve to do that really well and trying to do your best to size and sort of m from most important to least important is, I think, a huge part of what success is.

And then just left, left, right for attack them one at a time. I think we've been tackling many those problems. And if LED to reductions in costs that are very significant and it's LED to increases in G, P, U that are very significant.

And generally speaking, those games have been fundamental in the sense that our company offering has been very similar across the entire period where you're seeing cost go down and economics go up. And that's the ultimate win win. If you've been do Better without imposing worse on someone else, then it's a true in win.

What are just the average numbers? What is the average dollar spent on a car from a consumer in the U. S?

How much money do you make an average for a car? What does the Normal transaction look like? How much do you spend movie around refurbishing at?

There's a lot there, but let's say these days, the average is probably around to twenty five thousand. And our car that customers are fine, that was more like twenty thousand precoe. And today, that cars a little bit older and more expensive, inflated like everything else in the economy on average, to around a thousand dollars a parts and labor that goes into recondition that car and getting get ready for the next customer.

On average in our industry, the profits that have been achieved by many of the best class Operators in the past are around two thousand dollars. Get over, take maybe more like a thousand to two thousand dollars per transaction is the economics that have been available to generally the deal or machine for lack of a Better description. And then I think in the finance machine, there's often times a thousand dollars.

I would say maybe also one thousand and two thousand depending on time and what part else they are available to that machine. I think there are many hundreds of dollars able to the whole sale machine. So I think we've tried to do to stack those machines and then have the decisions that connect them be as thought as possible.

And last quarter, we were extremely ly excited to be continuing to give our customers and offering that is very competitive compared to our competitor. Peer set out there and still have last quote, we get around thirty nine hundred dollars of eb upper unit, which is an incredible number that I think IT comes from building that machine in a way that is more efficient and then stacking what historically has been many different businesses. In the automotive of industry that all making a little bit of money but stacking those up so that we're doing more of the work overall, which results in more economics but also simple or customer experience because there's less decision make frictions.

If you were imaging yourself in a seminar room at stanford t or something, and you were teaching a class, and the class was full of other CEO that were public, companies are about to be public. And the topic of the class was what investors are like, the good, the bad and the ugly. What would you talk about face on your experience? I think you probably saw the very best in the very worst of investors through this journey.

I think investors are very smart. I think there's a massive selection effect for intelligence and not just intelligence, but outcome. I think convincing people you're right and being right are actually reasonably separable things.

And I think given enough time, being right is identified and investors. And so I think that they end up being the kind of smart that is real as opposed to like the articulate sound right kind of smart. I think that investors have patent matching to use A C E term where you as not for neural, you're never going to be able to be inside of fifty companies.

You're never going to have enough time to really deeply study fifty companies. But every investor necessarily is going to study at least many companies over their career. So I think that they have a perspective that you often times don't have.

I also think that investors, they are inherently handcuff. They don't have access to the levels of the machine and the distance from those levels we talked earlier about. Knowing the plan creates a con confidence because I know what I have to do. You have a marching plan. Investors don't get to do that.

Investors come sit the room and talk to you and they try to figure out what your margin plan is, and then they go away and they threat that distance from levers, I think, creates a little bit of anxiety that I think is one of the skills that investors have to create. Some are good at, at some art, which is they have to manage that anxiety version of peace has to be i'm accepting that this management team has a plan and that they're gonna march and trying to get that done. And i'm putting my face in that and i'm going to go walk away and think about something else a while now because I think that that distance from those levels create anxiety.

And I think anxiety is a very ineffective and unproductive emotion that causes you to start generating alternative stories that fit whatever is that you're observing. And I think it's very easy to make bad decisions when your anxious brain is generating new stories to fit the data. And I think I would tell, unless you can't blame them for that, the way that you learn from the world around you is you try to find what the worlds right about.

There's a version of smart that I think is very unhelpful, which is the version that always listens for other people are wrong and then and we correct them, that's not helpful. The version of smart that is helpful is listening to people and try to figure out where they're right. What is the thing that they are saying that you may not have known before where they're right? And who cares of ninety five percent? What they said is wrong if there's five percent of what they said, that's right.

You just grew. You just got Better. And I think the investors, they are very smart and they do have power matching and they have a history that you don't have, so try to learn from.

But also, this would be the last piece advice. I think people that have ever had exposure to investors, investors can feel like this master the universe class of individuals that know things that no one else knows. So IT can be easy on days when your stock Price goes down.

For all the people that are sitting in the office in phoenix, arizona, to think investors, no stuff that we don't know, they're smarter than us, and that can cause you to question things you shouldn't question. And I think that you need to set up the company to know, hey, the history of success is that at some point, investors thread, at some point they're gona pan. And in the examples from history that are successful, often times that threading is proven wrong. So when that inevitably happens, don't worry about IT, make sure you pay attention and try to learn from IT, but don't let IT control your emotional state. Don't outsource your emotions to people that you don't know who know less about this than you do.

What a great line. This may be another sign that we take up. But I just genuine i'm curious, what have you learned from your dad about business and building things? And obviously has been a huge part of carbon on. I worked my dad for a long time, fifteen years. What have you learned from or from working with your dad?

So here's that. I think there's a lot there. He is our initial investor and he is today remains our biggest investor.

So his role is big investor, which is actually a relatively limited role from the actual company Operating perspective. But then for me, he's dad, which is so obvious, ly, enormous role. So what would I say? I think there are so many directions to go there.

Here's one thing. I had a very capable person. I think he's got a broad skill set. And I think I was lucky to observe that in an action you are my life. But then what I would also say is, my dad, like everyone else on this planet, is a human.

And one of the lessons that I think is most valuable, and that I think is most transformer, and one, listen to this, because everyone else isn't going to have a dad that short. Sorry, my family is pretty successful. They will know that when I was a little kid, went to personal bank psy, when I was eight, ten through middle school and early in high school, was doing fine and coming back.

And then by the time I was late, high school was very successful. But I think for most that I didn't realize any. I was just a kid.

I had no idea. They did a great job sheltering me, I think, from even caring about those things or him knowing that I was going on. But then by the time I was later high school, I was obviously aware of that.

My family had done pretty well and my dad was very successful. And I think something that I think is a lesson that is enormous ly variability is just seeing him as a human everyday and knowing that heep is a person. He makes mistakes.

He says things that are wrong. He's right a lot, but he's wrong a lot. And he's just a human being, being able to see someone that close and personal everyday that has a level of success where you see other people look at him and imagine that he's something different.

You see them laugh too hard at his jokes that are funny but not that funny, and you see them not too hard when he says something. It's right, but not that right. And you see that they imagine that he's something superhuman, but you know he's just a human that gives you confidence that you can do that too because we all know if that were just human, right?

I know that I just a human. I know make mistakes all time, you know, if everyone knows that, but we imagine sometimes that people are really successful different than us. And I think being able to live a whole life with someone who is very successful and see that is obtainable, I think is enormously confidence inspiring.

That's something that I wish the whole world could get, a very small subset the world is going to get to get that kind of a lesson. But I think in moments for you, doubt yourself is very helpful to know that other people who have been successful are just human too. So I think that fly the most important one that I would take away.

I think i've ever heard you tell the literal origin in your own brain of carbonic story, where the idea and the motivation to start the thing the first moment that is part into your mind, and what was happening around that moment.

So I always wanted to do something I always like, imagine myself as entrepreneurs. I always, to be honest, I wanted to have distance from my dad. I wanted to do something on my own.

I wanted to do something totally separate because we've all heard stories of families that multi generation in the business or whatever, always a little bit ana strix next to what anyone accomplishes when you hear that is part of their family. I knew that happened to my online. And you don't want that to happen with me because whatever, I guess, my fragile illegal.

So I imagining that I would do something different. And I did start a different business with actually a subset of the team that is still at carbon IT today. And we flamed out tremendously.

But one of the lessons that we learned from that was it's really hard to start a business in area that you don't know deeply because there are many things that would take people that are close to the industry two minutes, they take you two months. And giving up that speed to try to learn everything from scratch is basically, I don't want to color instrumentals, but it's very, very hard. And luckily, I grown up in around the auto business when I was sixteen years old.

I felt back for myself because I was make A G, L. Entries in an accounting department in out of finance business. While my friends were going to movies and hegg ing out over the summer, I was always getting exposed to the auto business.

So I started to talking about, okay, what can I do in automotive? And I think that forced me this place that I was going to have to have a little more proximately my dad, because that's the business that he was involved in. So I was going to have to sacrifice that little piece of my ego.

But IT gave us a chance to succeed. He was nearing that we were more familiar with, at least I was more familiar. And then I think this is just the truth.

I don't mean to vilify anyone in the industry, but is just the truth that you like. Look at surveys. Buying a car is one of the consumer experiences that is the most slowly rated experiences out there. And I think there's a lot of reasons for that, that we take us too long talk about to dive into an a deep way right now.

But then I also have asked questions to people, why does this part of this Operate this way? Why does this part of identify things that I thought we were frictions that I would ask me, why does this work the way that does? And they would always give answers that I either didn't find compelling or I found a little bit, for lack of a Better description, lazy, like it's too hard to build that bridge to make that easier or they are basically like things that reduced to because I always worked that way.

And I think that when you see a customer experience where there's room for improvement and what you feel like you're discovering over long period time, is that a lot of the rationalizations for why that exists, the way that exist, are because it's too hard or cause is always been that way. That's the best case scenario. You're never gona start a business where people are going to go.

Yeah, you're right. That's just Better and smarter. And that's how I should work if that's how people responded that they would already be done.

So I think that's the best case scenario. So I just accumulating that knowledge over many years of my life and feeling like map the answers to these questions aren't that satisfying. And this is a really big market. I think IT created a huge opportunity. And so IT became like the next basis that we tried to start that was luckily much more successful than our first.

How did you know early on, given that you are gonna SE money on a unique to build something that's vertically integrated and scale, did you know? And how do you know when to work on what parts of the business around you economics, how long to tolerate a loss for or when to take year twenty three where there's less unique route but tons of efficiency game? And then when to go back into growth model like you've in in twenty four, like IT looks so smooth when you look at a time series chart now looking back to early twenty tens or something. But i'm sure there's growing hard decisions of what mode to be in, how much lost to tolerate, how to know when you ve hit key milestones for scale. Is there anything from that whole body of thinking that you could share that you think interesting?

I think you want to identify what are the key areas of uncertainty in the business that a reasonable person, hopeless ly yourself included, would be uncertain about whether not it's going to ultimately work.

So the simplest st example for us early on was will people buy a car of antithesis? And then a follow one question for that is, are you going to have to coax them in with an offering that is so economically entity so that they skip the test drive that you can ever make mine? And there's many other questions that exist.

They fall off there. But I think you need to identify where the areas uncertainty, and then you have to try to resolve those biggest areas of uncertainty as inexpensive as possible. Another area of uncertainty, people say, say you'll never real by car side, you'll be at such a massive disadventure to people buy cars.

You have these car experts that put a car up on a lift. The evaluation thing is wrong with the car, and they get the value of the actually right. If you want to build in the commerce business, you have to value trade ins and you have to value cars. You life just were seen and the commercialism consumers are gonna e the uniview the value car side and seeing and do you a job. So there are all these questions, and you ve got to sort them and say what these uncertainties and then come up with the clever as patch you can to resolve that uncertainty as inexpensive as possible.

Because if you can resolve the ultimate uncertainty in a way that is compelling to investors, often times, they will finance the negative spread that you have as you're building the business that is going to ultimately benefit from whatever uncertainty you just resolve. So I think that's like the story telling part of the business. You have to try to find ways to figure out what are the key uncertain G, G, F to figure out, and then how do you figure them out inexpensively, because your first couple rounds are going to be small? And then when is going to want to finance huge dollars to hope that in the end, that totally works out? And then you need to be able to put that into a model that they can follow.

And they can say, I believe that this works, whether the mental model or physical model, whatever is. But I think you to walk on through that and then you have to raise around one at a time and then you have to take your Marks before the next and just keep doing that over over again. And I think the bigger swing you're taking, the higher your odds are a failure and the harder it's going to be because you're gonna hate your Marks many, many times in a row because you're going need a lot of capital along the way.

We needed a tonto capital to build this out. But I think luckily, we did a pretty good job nearly, in many cases, like hiding our Marks before we need more money every start. Because you talk to anyone, have like an honest conversation.

They are not putting lipsticks on the story. Everyone goes to near death experiences. I think we went through several difficulties early in our life as we are trying to resolve that uncertainty. But I think the key is just try to inexpensively resolve the biggest uncertainty and then you can finance the rest as long as you can tell a good story.

Does he feel to you like you went through something single? I know you said amazon, I went down ninety six percent and there's the electuary reason for the first couple twenty percent drawdowns. But I could not find another company that went down ninety nine percent from the market cap peek to where you were down that much and out so much of the way back up with a business that's looking pretty good.

Does IT feel as singular as a objectively seems to be in market history to you? Because one of the things out married in this conversation, you seem just like very calm about at all and very rational. I know that I was hard to help and I try to does IT feel singular .

god as such an interesting question. I'll say this just actually i'm also not aware of similar circumstances. I hope it's singular. I think that that's fun in a crazy way.

Going back to the competitive thing, it's like, I don't know, this is maybe a little sick, but it's playing a big game. It's part of what life is. Get up every day and go try to figure something out.

I think we never would have put ourselves in the spot that we found ourselves on purpose. But once you're there, that's your game. And then once you're here, you hope IT was the biggest gay, you hope that was the biggest chAllenge.

So there is so many different forms of chAllenge in life and and business and whatever else, that who knows how to compare all these things. But I think as defined in certain ways, stock Price up and down in the outside world in general, giving up on you. I do think that we're at least in a short list of chAllenges that we face.

And I think it's cool. The team that we had here was able to stand up to that pressure and play at the level that was necessary to play at to get us to, despite that, something where when there's more time, I think we surprise, take pride in. But I think it's a very unhelpful feeling.

So I think in a funny way way, we always try to find a baLance internally. When you find a success, you have to celebrate and be proud of IT because of the human inside you and the human inside of what else around the table. But it's celebrating success to breed satisfaction and complacency.

There's no separating those things. So I think we try to just make sure always looking down the field because that competitive hole inside of us that will never fill up demands that, that's what we do. So I think that's what we try to keep doing.

Well, just to say again what I said at the beginning, which is so cool to thinking now about the future, you're at one percent market chair, twice the profitability of the next relevant competitor, lots for ambition to make your business more efficient. It's going to be a really cool story to watch, and I hope you get to do this again, another three years and another three after that. Just to continue to track.

The story stems of our interview of you. I asked my traditional posing questions. So i'm going to remind pose at this time, what is the kindliest thing that someone has done for you in the last three years during this incredible story.

the team not given up. I think when you on those zoom calls and IT feels like the worlds against you and you've had all these twenty percent of downs and you're looking at faces and you're wondering if people are going to stand up and you believe that we can succeed as long as we'll stand together, but you worry that if you don't stand together, you might fall down.

You don't know why everyone decides to buy and you never know exactly what drove that. But when people do, I don't want make a personal, but it's basically a vote of confidence in the collective that I think is cool. And I think we call that kindness, or we can call IT belief.

But I think believing in people win, they're down, is the kinds thing you can do. So I think the team coming together and choosing to fight when the world thought we were fighting, losing battle, is something that is unbelievable. Cool down, extremely grateful foreign.

But I am so thankful for the couple hours together today. What a great, incredible story to have on the record. And to your point, your strength is defined by the hardest thing that you've bent through.

I know there's no substitute for the experience itself, but I do think stories like this can keep people permission or make people expand their mind in terms of what's possible. So that is so cool that you told IT with us today. Thank you so much. time?

No, thank you. This was fine. Really appreciate you.

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