The Exchanges

Q So if I'm an early stage founder, what should I learn from that? Don't allow for siloification or fragmentation of teams. What's the takeaway?

A I think that's exactly right. I think it is to be incredibly disciplined and rigorous about your prioritization. There's such a temptation to want to do all of the things at once. Um, but the, probably the product advice I give more than any other piece of advice is if you can only change one thing and you have to hold all other things exactly as they are right now, what is the one thing that you want to change? And what I mean by that is you have to understand the complex system and we can all look at any product or any piece of technology and think of so many things that could be better. But you have to say, if I take this one thing that I want to change and I make it perfect, what do I think is going to happen? How much lift am I going to get in conversion or ultimately in the unit economics of that business? Um, because you can't change everything. All at once. Um, you, you're too diffuse with your energy and your effort, and so you have to force yourself to say, if I make this thing that I want to change absolutely the best I can possibly imagine it being, what's going to happen inside of this complex system? And then really focus your energy on the one that you have the most conviction will have the largest impact, and you've got to serialize more, um, as opposed to trying to parallel process.

AI assessment note: “to be incredibly disciplined and rigorous about your prioritization”

Q How do you test horsepower in a hiring process?

A I will often ask what their favorite piece of technology is. And, um, I want to know if you're going to say what your favorite app is or favorite piece of hardware or whatever, You better have gone into the advanced settings and know what's buried under there and be able to compare and contrast it relative to competitors. And why do you use that? And what did you think when you used the competitive product and what are the differences and why did they make those decisions? And if the CEO handed you the keys to the product, what would you do differently? Those sorts of things you can really assess horsepower. Forgive a shit. Um, my favorite question is to ask, uh, what is the hardest you've ever worked in your life? And I'm not necessarily asking, you know, at work in your job. I'm asking anything. It could be that in high school you had a sick parent and you were trying to be on the track team and you were trying to get into school and it doesn't matter. It's just demonstrating that you have gone through something incredibly difficult and you've pushed through. Um, and, and I want to hear that you have that intrinsic drive.

AI assessment note: “I will often ask what their favorite piece of technology is.”

Q Can I ask you, how do you think about the challenge of whether to get them to work on Carvana, where you have a huge amount of knowledge, asymmetric information, and you'll probably just think that everything's not great because it's not at the level that you are having spent years there, versus a neutral product where you start on a level playing field?

A It is an asymmetric advantage, but we always have them do Carvana problems and we'll try and make it something that is relevant to us. So we'll stand up, uh, you know, a dummy SQL database and say, query this and, and tell us what you would do in this strategy to increase attach of warranty products on a sale or, you know, and what's that going to do to the unit economics of the transaction. Um, and we'll give them a bunch of historical data and, and it'll be non-intuitive. So that, um, you have to sort of ferret out those non-intuitive, uh, uh, realities that are buried inside of the data and then come to a conclusion on what you would change in the interface to make it better. And you're right that it's, um, an asymmetric advantage that we understand it quite well, but you get to see level of effort and critical thought and, and, you know, the versatility there. And so we aren't hesitant. We also don't hire, um, Super, super senior people. We like to grow our talent from within, and so I would not have the issue of, boy, this person's such a big deal, I can't possibly ask them to do homework. Um, that's less of a problem.

AI assessment note: “It is an asymmetric advantage, but we always have them do Carvana problems”

Q Is everyone, is everyone not customer led? I mean, like ultimately.

A I certainly hope so, but there is, I think the, the, this notion of being engineering led can sometimes be trying to romanticize and, and give too much control, um, or a perception of control of it's really all about the technology, the, you know, if you build it, they will come. And I think that that is not singularly true. I think you need to have a go to market muscle and you need to have tight feedback loops and analytical rigor and obsession. And There are emotional aspects to using any product that really matter and psychographics and, and all of these things. Um, and so I think you do have to actually be, you know, customer obsessed, and I don't think that, that every organization evangelizes it in the same way.

AI assessment note: “I certainly hope so, but there is, I think... this notion of being engineering led”

Q What are your biggest lessons or pieces of advice when it comes to effective product storytelling today and product marketing for founders listening?

A I think that people like to conflate storytelling with sales. And they like to shit on sales and is like, I don't want to be in sales. And the truth of the matter is you're in sales and you better be in sales. You better be in sales to attract incredible talent, but you also should be storytelling because it's motivating and inspiring for your teams to know what they're chasing after. And so let's contrast it to not having a more fulsome story when, you know, if you look at A particular product. And you say, all right, um, you know, we've got to make, um, this, this product massively better. An engineering mindset may say like, well, I see the thing that's broken and I'm going to fix the thing that's broken because nothing else matters until we get better at this immediate next step. But you're actually trying to get many, many people to collaborate and work on this thing and telling them, no, we're trying to get way over there. And when we get all the way there, This is how much better the unit economics are going to be, and we can give a better customer experience and a totally differentiated offering, which is going to help us carry, you know, more share of market, et cetera. Um, people are more motivated and, and more excited to go chase after that. And so you need to be able to paint a high resolution picture of what that future looks like so that people, when they get com…

AI assessment note: “you need to be able to paint a high resolution picture of what that future looks like”

Q How will AI impact your customer service? Like specifically support teams?

A Ultimately, we believe that people don't want Loans and they don't want trade in values and they don't want loan underwriting. They want their car. They came to get a car and we need to remove as much friction as humanly possible while also giving the customer confidence along the way that they're making a good decision. And so what we want is to automate everything and make everything self-service and intuitive. And if we can hit an API to get data on you to help our underwriting decision, instead of you having to provide a document to us, we're going to do that. But if at any moment you're not feeling confident or you're nervous, we want you to be able to pick up the phone and talk to someone who's knowledgeable and confident and competent and give you that option.

AI assessment note: “what we want is to automate everything and make everything self-service and intuitive”

Q in London. They are everywhere. Now I'm a believer in Adam Smith's invisible hand, minimal market intervention. And then I saw the other day how the unit economics of these Chinese cars are being subsidized so heavily. It is not a fair game when the Chinese government pays for 30, 40% of the cost. To what extent is Chinese cars a net negative for your business, and do you worry?

A On one hand, for any new brand to want to enter the United States, think about what it takes to get cars in the hands of customers. How much capital and how much time to get land and get zoned and get staffed and, and start to fulfill, um, and get those cars in the hands of consumers, versus today, Carvana first party logistics touches 90% of US driveways. So if you can get any car to either coast of the United States, we will get it to 90% of Americans within a week. Uh, so I actually think our infrastructure is unbelievably well set up to facilitate, um, you know, OEMs and brands to get cars into the United States and to distribute them.

AI assessment note: “our infrastructure is unbelievably well set up to facilitate, um, you know, OEMs and brands”

Q How will AI impact your customer service? Like specifically support teams?

A Ultimately, we believe that people don't want Loans and they don't want trade in values and they don't want loan underwriting. They want their car. They came to get a car and we need to remove as much friction as humanly possible while also giving the customer confidence along the way that they're making a good decision. And so what we want is to automate everything and make everything self-service and intuitive. And if we can hit an API to get data on you to help our underwriting decision, instead of you having to provide a document to us, we're going to do that. But if at any moment you're not feeling confident or you're nervous, we want you to be able to pick up the phone and talk to someone who's knowledgeable and confident and competent and give you that option.

AI assessment note: “what we want is to automate everything and make everything self-service and intuitive.”

Q How much does it cost to ship a car?

A It depends, but we were shipping cars upwards of 1500 miles, right? And so, if you're gonna move a car from Philadelphia to Fort Worth, Texas, And while it's in route, the customer says, oh, sorry, I bought another one while I use the free option you gave me for the one that you were sending. I bought a different car. That's very expensive to us. And now we've got to basically restock that car. We've got to find another customer. Meanwhile, these are depreciating assets, right? They're losing value with every passing day. So what we then came to over time is that we can't allow for that. And we need to charge for shipping when you're moving a car from a long distance. We want to offer free shipping. If we have a car that's close to you, it's still a wonderful value proposition to say, this is free delivery to your door. And we want to offer that. But if we're going to move a car a long way, we actually added in a non-refundable shipping fee to just create a little bit of friction at that moment to say, we're going to start moving this thing, but it's going to cost you money. Um, and it's non-refundable. And what ended up happening Is as a result, we unclogged our network, um, from sort of wasted excess transport that brought delivery times down for everyone. We have fewer late deliveries from this sort of excess clogging of the network and we sell more cars. Um, so by taking aw…

AI assessment note: “It depends, but we were shipping cars upwards of 1500 miles, right?”

Q Well, my friend, flattery will get you everywhere, but I, I, I do agree. It's been a fun journey. Now, I heard from a mutual friend that you were a US gymnast. That's a rarity on the show. So can you actually just start with how did your time as an athlete impact your approach to growing companies first?

A Gymnastics influenced me in, in every way. Um, I'm incredibly fortunate that I found it. Uh, I'm not a large human. Um, and so I probably would have been pretty mediocre at almost any other sport. Um, but I am a very intense person and a, and a hardwired competitor. And so at least I had an outlet in, in gymnastics. Um, the, the, the shortest version is I did it my whole life. I did it through college. I got to compete for the U S as you mentioned. And, and I took a shot, um, at the Olympics in 2004. And, um, and, and so leading up to the Olympics, I completely shredded both of my shoulders, like ruined them. And so I decided to stop seeing doctors so that I could take my crack at the Olympic games. Um, and so I go to try and make the Olympics in, in 2004. I finally get to the trials and, and I'm, you know, an underdog to make the team. Um, but on day one, I have like the competition of my life. Uh, and you know, I, I did high school in, in Northern Virginia. And so the Washington post is like, local kid might make the Olympics. And it was like this big thing. And then on day two, I fell on my best event, which you cannot do. Uh, and, uh, my Olympic dreams were over. So I go back home and the doctors say, You can't do gymnastics anymore. You've done, you know, irreparable damage and, and, uh, you just would never be able to do it again. So it was just sort of like taken from me…

AI assessment note: “Gymnastics influenced me in, in every way. Um, I'm incredibly fortunate that I found it.”