Startups continue to upend traditional auto lending to offer new and innovative car-buying experiences. This session will pull together the executives behind technology startups for a frank conversation about the challenges of navigating partnerships with auto lenders while breaking into — and succeeding in — an established industry. [toggle title="TRANSCRIPT"] <div class="transcript-scroll-box"> 00:00So we are going to shift gears a little bit with this session. It's not about the technologies. Specifically, it's more about the interaction between companies like these up here with me and many of you in the room. And it's about the interplay between the startups and the lenders, and maybe some of the challenges that these folks face and even some of the challenges that you face in considering new technologies, and what direction to go. So we have some questions lined up. But I would definitely encourage you to post your questions in the app, this would be session 669, session five. And we'll try to get to as many of those as we can. So just to kick it off, I'm gonna go down the line just introduce everyone, by name and by company. To my immediate left app check cool. CEO and founder of bassick. Paul Hirsch, CEO of logical ability. Mike Jarman, CEO and founder of turbo paths, Adam Cornish, Chief Operating Officer at driving away. And Sean Subaru, founder of car deals. 01:25 Welcome. 01:28 So, first question, you know, all of you, I think, have had interactions with lenders or, you know, try to kind of get on that radar. And it seems like probably, that's the first step in the process, right? You have spent your time creating the technology and now you want to get in front of the lender. So what steps 01:51 First of all do you take to 01:53 ensure readiness? And then number two, kind of how do you get those meetings lined up? So action 02:01 The first step is that we actually go in and find a really an awesome advisor who understands the space processes. Because when we are talking about something like collections, it's a very complicated process, a lot of steps that lenders do so we wanted to make sure we understand that. And we can really create a test product, not just something that where our goal always is to come into a crisis, if we know what our suffering, we know how this works, let's work together as a partner to it has the product and take it to the next level. So that's typically what we do 02:38 is we go 02:39 get right partnerships and when we go and talk to our clients also we explain them that we are and we take it as a partnership because most clients that some amount of differentiation that is there because of the the region in the product that is how you treat your customers. So we want to make sure that we are able to understand this nuances and be able to give you a tool that works out With this, our product is winning monthly, but depending on the specific client that you're working with, it's like peeling an onion advocate movie. 03:09 Shawn, what about for you even? Maybe even take a step back from that, but you know, kind of figuring out which person at the finance company is the right contact? How do you, you know, get in the door? Sure, it's a typical 03:23 process. 03:25 For us, it's been finding internal champions, people who want to see innovation happen within the organizations that aren't A, B, C, C suite level, they can even before it was a little more personal. It's about making sure that your vision and their vision is aligned in terms of what the company or partnership needs to achieve. And then each organization that we work with from OEMs to finances globally, have different needs and different ones. 03:55 have to be able to take 03:57 for 4000 words 04:01 Mike, did you want to add something? 04:03 I agree internal internal champions and partners are huge for us. 04:11 You know, I think the where we 04:13 move the ball the most is 04:15 when we we make bold requests. I think in our world, we just live in a much tighter time sensitive work, you know, world so we have to figure out whether the fit is is correct. And we have to have really the same level of energy from our partner, otherwise our our time. Not that it's more valuable. It's just we have fewer resources to to make that last and we try to pick those pilot and early users and now customers we actually have dealers who find enough value to pay to pay something That, you know, 05:03 that we're getting 05:04 the same level of energy back that we're putting into the into the effort. Because it's like it's do or die for us, right? 05:14 Well, so what? So what are some, you know, some of the strategies that you've implemented in order to do that to kind of to create a dynamic between a lender and your company. We, 05:32 we have a very great tPf advisors who have been a lot of different companies and state companies. And we also have internally before we go out, we do a lot of thinking that what are some of the questions and how was this for engagement with the firm, right, because it's not a one week engagement. It's more than that. It takes two months, three months to really work through a prospect trying to explain the product, understand how you do things internally. And how the product person. So we are able to conduct a lot of workshops. But internally, we make sure that we are able to identify the questions and we are listening to all our vendors very close to your partners very close to being able to understand those questions and come up with a good responses, responses that that works along with IDT networks along with a data science team that goes along with every level of the organization from the current perspective. So it is not a one size fits all. It's about being flexible. It's about being able to understand which kind of vendor you're working with, because somebody asked me DMT, or half a billion dollar portfolio is very different than a captive, I was really big media and internally, that's what we want to make sure that we understand our answer. And then we put together a picture 06:50 with a client and put to the plan that we can work with it. 06:53 What's the typical timeline, let's say for that the time when you kind of set up that proceeding to the time Start talking about some of the details? 07:04 That's a great question. It just, it just depends on the vendor. Some of the smaller vendors who have about $300 million portfolio, it happens in a matter of a couple of weeks with basically two meetings, one with the senior executive one, and then a workshop with their it came under the skin. And we are off to the races from there. When you talk about a really big captives, they have a lot of different processes, the team is very broken, it takes anywhere from three to six months to really work with them to explain them the product, understand how we want to integrate value crops and so on and so forth. 07:36 How what's been your, your, your, the process for you? 07:41 Yeah, I think I think I was given varies quite a bit client to client for us. You know, 07:48 to some extent we've we've benefited from not having a sales team at all. 07:54 In the sense that when people come to us, they come to us looking for things right. And I think it's pretty consistent. We talk to lenders, auto finance companies, they are 08:06 universally interested in shared mobility, 08:07 whether they're ready to take a step and actually put something in the market. That's another question. Right? But for us, it's it's how do we make it easier? Is technology enough? Not? Well, that's why we're offering operations services. How do we get to the market simply is a big project and nationwide rollout too much of that was tied to something small. Let's just figure out how to and how to get learnings and market because that is absolutely the most important success. 08:37 rate you How have you had to maybe evolve the product or the offerings in response to lenders questions or integration issues. 08:51 What we're doing and is untraditional so we need to bridge the gap and events either usually with a certain female that talks to One wonders or it's actually having the build out features or the interfaces that speak to the target audience. And so if I think that's really the message that I've learned is that it's our job to push the boundaries and it's a wonder shot to kind of say now that you enter or something along those lines, so 09:21 we have to keep challenging and keep moving to originally had this 09:28 service 09:29 yet but it's also like everyone said, it's a constantly moving on. from that position. We want to go out products into a market in language he raised in the world and four weeks really fast. However, the flip side of that is be careful of what you wish for. we piloted with a finance partner in a certain region, and it got to the stage after a month into the three month pilot that we were pushing through too many blades. I know it sounds crazy, but then I came to a position where I'm getting The Intel processors couldn't cope with the amount of traffic, we're pushing to them in terms of verified leads. And they just couldn't they just filled out like a house of cards 10:09 in terms of how they want to talk, right? what they wanted to do was 10:15 they started to change. So we had to make a decision in a full way from a particular partnership. But it is a case of from, from a centralization point of view to be careful of, if 10:25 something works, you have to have the ability to be as agile as your partner 10:30 says, yes. 10:33 And I think we should think about this like a two way street is not a one way street. Like in our team, we have a lot of experienced people, we have transformed a lot of this analytics things in the past, we have that understanding of how it would look like how this program looks like from now. 10:50 And then you have minds who have done a lot of analytics. 10:54 So in the reason I say set up a partnership is that it's very essential. What is the first few interactions to understand where both parties are coming from? And what are the objectives? And what are the stakes in the ground and get to a common understanding, and then kind of start walking the path. Because if we are not on the same page, then sooner or later it will show up. And that will be very frustrating on both sides. 11:21 We have some interesting questions here. One of which I just want to start with, because I think it fits in but the industry has a lot of players, the lenders, the dealers, the consumers, but when introducing a new technology, we often have this issue of the chicken, the chicken and egg problem. And you know, so how do you go about approaching this problem? 11:47 I'll say only because we have a two sided challenge of chicken and egg and we believe you sort of have to pick your first impression. problem to solve and versus focus on on the product that you're building to have everyone conform to it. And we really just decided what is the first problem we can solve and, and and we thought that that interaction between the dealer that wants to do the right thing and do business the 12:20 right way. 12:22 That problem of paper and sort of being stuck in 1982 when I was visiting my dad at the dealership, 12:35 I don't really tell you how to 12:37 wire Are we back cleanse is taking so long. 12:41 And 12:42 we think 12:44 when we solve there, we can 12:47 solve 12:48 very much other problems downstream. 12:54 Go down. 12:55 I just want to say you have to pick one, one goal and and get traction with it. If you can, please everyone who wants to kangaroo up their customers, the lenders, the dealers in the old infrastructure in one shot, you choose one you can traction, and then you can solve the next one. If I go to a dealer and say that we have lots of customers, because we've solved the customer problem, and I can solve the dealer problem, if I can say we have lots of dealer service table, then I can solve. I can't approach it all at the same time. 13:23 So now, I think to a lender, you know, the answer really is pick the right partners, the people who have done it, right, maybe they've done it inefficiently because they haven't had the lender partner than that makes their 13:38 lives easier, but they've done it. They've proved it out there through the model, and now they're ready to scale. 13:44 So for us, it's always gonna be hitting the market. We test consumers First, we make sure that the target market that matches the market research. 13:53 We tied the consumer, we get 13:55 smashed that happens three times a week smash debates, 13:58 go reveals Then we go pick up the dealers and then once we've established ourselves 14:02 on down the issues from launch, we then go into finance. 14:07 I will just say that some of this technology can really get 14:13 can get accelerated by lender acceptance. So on the one hand of the point is lender acceptance or just having an open invitation to bring sort of on the right, an omni channel approach, bring it all in? No, you can't do everything but that that acceptance at least to to look at it kick the tires will drive some dealer adoption for us in that in that case, where we're sort of tracking with our URL is, you know, snips calm, we don't think stiffs need to necessarily be in our vocabulary anymore in the future. So yeah, acceptance from the old ultimately the lender really changes behavior in the dealership You know, implications of kind of moving their their cheese and how they get paid and how fast and how 15:07 is I think the approach we want to take with with lenders 15:14 is an interesting question here to tell us the story of how you got your first paying customer. 15:22 Yeah, go ahead and 15:24 go down the line. This is interesting story because most startups first with the product and the final customer, it was actually one of my ex customers, he reached out to me and he said, You know, I have a collections problem. Can you solve for it? I'm like, Yeah, I can solve for it. But the question is, what kind of solution you're looking for. As you know, I want to build a next generation collection product and AI driven product would you be interested and I trust you enough and they gave us a check. And so we started. 15:54 For us, it was alluded to this a little earlier. We started where we're at another business life, my co founder and I, running at carshare. We had a couple of OEMs and finance companies that we were working with to source vehicles. And the strategy name of one of those companies took a lot of interest in the business and the model, it fit really well with what they were doing. Fast forward, we left previous companies started the company focused on this platform and focused on rolling out solutions for operators and essentially worked together with a company and showed interest to build the solution that 16:43 essentially 16:46 we built our platform and then their, their mobility, then 16:51 I guess it's ironic. 16:53 Our first paying customer ended up being a Toyota dealer, that we when we present it to the finance director. That old old colleague or friend of mine, she, you know, she runs a finance department at a store that sells nine. Well, they used to sell 1200 cars over 1000 cars a month. And she said her red flag risk roll in all around that dealership waiting for faxes waiting for I mean, you know, faxes, scanners, people's desks everywhere but personal information, the implications of what we're talking about just pat her over the moon excited and it really just six months of now the fraudsters focused on on the front, the front moving into auto and it's our customers that are that are the victims first, right? As lenders we don't take as much of the risk the dealer ultimately has it. And this store got popped over the holidays with two straight up identity Saft deals that they left with a car They've just turned out not to be people who they said they weren't. So we, we were, you know, implemented as a first layer of kind of a fraud detection layer. So they built some business rules around, we're going to pull turbo pass anytime there's X or Y, it has to do with 18:19 proof of income and Phyto. And that really identity. 18:25 So, 18:26 that turned out to me, and they 18:28 changed their policy, you know, for for, for having the payment. So 18:33 that was that was a neat story. 18:36 It was somewhat similar and just go along what I was saying before, we addressed one dealer and the pain points he was having with the product, he was using that strictly similarly we saw the issues. We custom made features just for him since he was our final dealer. He was very excited that we were so quick in that and we found customers and then we have customers for me Then by Tuesday, we're having to make the experience smoother and better. until everything was kind of meshing together. 19:07 Yeah, so we have we initially get the server market as a SaaS product. None of that gets I used to assess the subscription though we used to rotate. So we swapped to actually make way too much for the elites want to get back to SAS. So that was, 19:25 but but it certainly lessons by that and there's no 19:28 process only 19:31 you can use it one way of doing something when he when he actually did market tested, studying for bronze on the board. You have to be able to change and shift and 19:42 thank you all for that. How much open source technology Do you use and for what aspects of the deliverable or the operation 19:55 we do use Python SQL, a lot for Data Science 20:00 for data collection or data aggregation, 20:04 secret storage, all of our stuff is in AWS cloud. So let's not open source. Definitely the security aspects of the business is very critical. First of all, we integrate the data or we get the data from third parties or our clients. processes in there. Now, we do use open source whenever we see a good application, and that kind of makes sense from regulatory and compliance perspective. So, identify an application, see the value and the first step is, as our lenders compliance team is working. If we do a check mark on to defense, okay, this is something that we can process really fast. 20:43 For facility. 20:46 We use the automatic type framework, which helps us spread the dead load across both platforms Android and iOS. 20:55 Way to specify 20:58 certain aspects of expiration on security 21:01 We have to do the same thing. And I was gonna say on the front end, there's more open source, we use React Native does the same thing and co develops in Android and iOS. Which is great because you debug at the same time that you build for both platforms, or the back end services. 21:17 And we're with the AWS cloud. And 21:21 you know, we just believe mobile, any kind of mobile engaged. 21:27 Technology is, is 21:28 obviously the future. I think, 21:30 I've heard I'm not a technologist on the team. But you know, we do use some sequel in our sole our cut basically our client management, so our users are managers of SQL. 21:45 And for us, we we segregate between back 21:47 end, front end and integrations and so we're really stingy about what we put in our 21:56 our core back end technology. 22:01 front end, we definitely utilize some libraries 22:03 that are open source. But essentially, 22:08 you know, the way we focus it is we're willing to customize our, our core solution to meet the customer's needs. And if that's helped along by as open source here and there, whereas it's secure to do so. And we'll do it. Same thing with integration and integrate different services to kind of build an ecosystem that that our client needs. 22:30 question here about mobility and future mobility and how that ties in, let's say to Ubers recent IPO. But why do you think the mobility forecasts will be realized? And what does the subtitle of Ubers IPO and of the stock say about the future of mobility? 22:55 Is my question I flew 3000 miles this question 23:03 Yo is Shaun Moscato. He unfortunately wasn't able to make it in December. Yeah, he had a speaking engagement in Europe. That was the same week as this. And there seem so devastated to miss an event such as this is really, really unhappy. So I'm here in London for from there, right? Yeah. So. So anyways, his forecasts basically saying that dealerships are the lowest cost providers and shared mobility, they have an infrastructure, they have the ground Ops, they have everything in place that if Uber or Lyft happened to implode, dealers could actually do that. I come from the taxi world that's how I met Jonathan. So I agreed with him That's why we joined forces but basically the software is common you can recreate the product it's Can you recreate the network's and it's all localized? continents, whether it's car sharing, ride sharing, what happens in Dallas has nowhere That's what's happened in New York in the country, you can build local markets that will all be supported by dealerships. And dealers will, again be the ones to be servicing vehicles will be the ones to deal with any customer relations or, you know, training or what have you. Uber in every city, they have their their hubs, you don't need them, dealers can do that. So that was what's so compelling about Johnson essence was that dealers could really, truly replace Uber or Lyft. And what we're seeing in the IPO is, now they have to actually make money, and they don't know how to do it. And it's going to be unfair to drum up. So get ready. You know, next time you open your Uber app, the deals not going to be there. So theoretically, if you were to just allow a dealer off of that app, if you had the technology, you need to get these customers, he doesn't need to make 20% he can just do it for free just to be a nice guy, but Hoover does their public company. And so again, that was what was so compelling about John's mission and how driveaway can be 25:00 Look, we don't think dealers are going anywhere. That's actually just all my chips in the middle of the table that dealers are, you know, maybe it's 110 year old distribution model, but but it works. And because we have a distributed, distributed country, and 25:22 you know, I do think there's, there's a ton of potential in in mobility, the dealers 25:30 are going to be engaging consumers with express consent, you know, share your data so we can figure out whether you can pay for this car, right? Who are you? Can you pay for the car, then that's the bottom line that the dealer tried to decide and if he's satisfied with that, if he wants partners in their lender community to 25:59 us The tools they've used to ascertain that, of course, we have to validate it on on the lender side. But that's why we kind of, I think we have to standardize some of that. What is this tip? You know, what is poi? How much 26:11 money to make last year? Well, you know, 26:13 Forbes says that 50% of the population by 2020 next year, we'll be we'll have a form of freelance income, or they have assets. You know, I pull, I pulled my some of my social media and I'm starting to publish our funny little animal names, you know, the blue zebra or whatever. And that's getting all this conversation going. Like I had a million dollar house that was paid for. I had a $700,000 in inventory and I had 300,000 in cash in my in my account, and all I qualified for the dealership was 40,000 on the truck. And I'm 26:53 like, 26:56 maybe we can help put in a good word for you, but we got a break. In more information than what we currently have, and customers are willing to share that if it benefits them. 27:06 I don't know if anyone saw the last report from students that he, when surveyed a whole bunch of us deals and also the market, and the summation the outcomes like that 72% of people are willing to share cars, but only 2% with complete strangers. 88% of new cars are foreign buyers, which is about 27:29 as much as 78% of us Ross explicitly expressed a fear 27:34 of running for the vehicles. 27:36 So there's certainly some challenges ahead for the mobility plan. 27:39 And there's a silver bullet that's being created right now that that's going to change the game. But 27:45 it's nice to say that it was thinking about what the next steps in the 27:50 path to gender. So again, I was backing taxi companies and they went under because Silicon Valley funded goober and Lyft. So lesson learned that I I had to Oregonians you've grown up money at a problem you can get something done even if it's artificial. So they killed it industry by by depressing prices, the pre 1930s rates like they did things that run Argos. And that's the lesson I learned is you can go into this is what's not underestimate the these the startups that are destructive, disrupting all of us and probably more conservative 28:27 that they're going to succeed in some capacity. 28:30 Well, I think the the success 28:32 of Uber and the market penetration that they have succeeded as well as lift as well as you know, you could walk outside and see 20 scooter companies out there. It speaks for itself, right. There is some demand for stuff and when you start stacking these solutions on top of each other, 28:51 that's when I think 28:53 it causes some positive economy finance industry because in a very urban area, Like this. 29:02 There's now a legitimate alternative for some people to car ownership. And that's where kind of around the edges I think we'll start to see some movement is Uber has recovered, you know, Wonderland rat by underpricing. Absolutely. Are they now wanting to absolutely understand drivers? Yes. Do they want to put the drivers out of the process? Yes. But there's market there. There are people I have. I have apps on my phone, I use them. There's opportunity there. And I think I put some data out there on on the screen earlier about the management being a huge, huge part of the shared and eventually autonomous future. And I really think that that's a core part of where Growth and Opportunity is for people in this room are dealers. 29:53 And we should be really thinking about how we take advantage of that. 29:58 I think that It's all really depends on the consumer experience. 30:05 And there's a great TED talk from Guy Kawasaki. And it's a very good one. Basically what he says he gives three examples. Like, you know, in the olden days, people used to go to the lake and look at the eyes and bring it back. And you fast forward another 1015 years, people started an ice factory and they started selling ice in the summertime, so that you are, so you get ice in the summertime, you fast for another 20 year, you have got a refrigerator at home. And the first refrigerator came out, people said, You're crazy. So today also you have ice factories, you have refrigerators, and you have so many other variety of it. And if you think about the mobility problem, we have fears of the world car owners of the Googles of the world, and it will continue to evolve. It's all about what consumers want. And the question is that who is able to understand that and being able to cater to it And fortunately, you don't need 10 million customers today sell a product, all you need is couple of million customers and you can really be another car, or even less than a million customers. If you can really satisfy your consumers, you can really be a company. So the it's all about I think from our perspectives about making sure that you understand them, you're able to bring a solution, you take it to the market and show the world that this can be possible. There's a space for creative and category entrepreneurs, who 31:30 many of you guys also continue 31:35 along this theme question, what's the current fundraising environment today? Overall, FinTech dollars are declining by the number of deals is not so is that the same case in auto finance and in auto. 31:55 This way, if you're trying to raise money as a FinTech lending companies very, very hard. Because you want to have you want to be a very experienced operator somebody like, upgrade who have a lot of experiences, when you are a very experienced operators investors tend to offer money because they, they know that there's a high probability of success. But apart from that, what are personal experiences, investors are willing to invest when you are when they know that this product is working. And this is a new category, and you have some Customer Success behind it. And I think as long as that happens, investors come around and they try to take 32:36 care. My sense is there's money out there for companies that are worthy of raising the money. 32:44 The speed and the preponderance of the IPOs right now are suggesting that maybe that will be changing in my mind, the next 12 months. So So that's an interesting, you know, observe observation and I don't know what to make of it. It's not my profession, I think when, when you're looking at it as a lender or a finance company, you know, some of the really interesting stuff is like the crazier larger scale investments that are being made by this author. 33:19 And what does that mean? What real diligence is going into those and how are they planning to use massive amounts of cash? 33:31 Yeah, I 33:33 got mixed feelings because, 33:36 you know, basically, Jeff Bezos sold a big enough story. And the market 33:42 fed on him 33:43 over to for over 20 years that he was going to create a new category. And he ended up winning, but I think there are some companies out there that have decided to just go for the massive story, and they have created enough Have a 34:02 tsunami of capital that's looking 34:05 to you know, 34:07 it's it's another it's just a game that gets played. So, I've, I've I've started to learn the game that we're playing. And you know we we have had our head down trying to solve problems and and thankfully we we come up and and as we hone our model and some of the the startup of the software startup best practices we find that there is no lack of capital 34:39 that 34:41 that's out there and 34:43 we just we want we want more than just Capital One and one partners that can be strategic and and can help us move move the adoption 34:53 along. I feel like we've got the backward 34:55 deco green is good speech. I think all the investors whoever invested in it Book still, 35:02 they still have in the back of my head. So I think you'll always find investors who are willing to partake so long as you tell them your story. And it's the entire picture. It's your team, your product, traction 35:12 revenues, it's the entire thing 35:14 bundled together. And I've heard the best as compared to riding a wave as an Ironman. Exactly right. And the same investor told me and when I started with xe startup, I swim into tsunami. So 35:27 yeah, I think there's definitely someone out there. And just really quickly is 35:31 there's tons of cash out there. It's just strategic money versus dumb money. 35:37 Alright, right. Well, thank you very much to all of our panelists. Please join me in giving them </div> [/toggle]
