The Exchanges

Q You said you wanted to take as little dilution as possible. I think Blutney, Kazoo and Alex will very openly say that of the cancerous nature of debt and what debt did to the business. How do you reflect on relationship to debt as a business, the cancerous nature of it, maybe the benefits of it? How do you reflect on debt as an instrument?

A I think debt is dangerous, um, in general, and I think it's more dangerous for a company in a phase that we were in, um, where you're, you're not like positively cash flowing. Um, I think those things are definitely true. I also think in this case, it worked out like, had we raised equity in the same dollars at the, at the same time that we took out debt, uh, we would have taken a lot more dilution than let's say that we just like raised equity today and paid it off just to like, you know, allow you to do that math. We would have taken quite a bit more dilution had we done it the other way. So I think it like, it worked out. And then I think, um, yeah, which doesn't necessarily speak to it's whether or not it's good in general, like, you know, you observe one case of the world, but the world is complex. The other thing that I think was like interesting about the debt, it was, it was almost like being super public because it's, um, it created like a way bigger pressure. It was like, um, we were not a positive cash flowing business. And then all of a sudden the market said, we're not giving you money. And not only did you have to get to break even, you had to get to a place where you could cover, you know, the interest and, and that pressure, I would like to believe that we could have created it for ourselves. But I, I don't think we could have. And I think that like, we're a gro…

AI assessment note: “I think debt is dangerous, um, in general, and I think it's more dangerous”

Q When did being stubborn in the Carvana journey help strategically the business in a very significant way?

A I think, um, many, many times. So even if I go back to, you know, six months into the business, we were out trying to raise money. Uh, you know, we went to Silicon Valley. We talked to every fund that you could possibly imagine. And basically it was just like, we were capital intensive. Um, you know, we were operationally intensive. Uh, we had like industrial components to our business and everyone wanted us to be software. And everyone would just ask the question, like, can't you just be a software layer on top of dealerships? And I do think that there's a very good chance we actually would have been successful raising money had we made that, uh, that choice. But I think that we kind of believe that vertical integration was Very important. Honestly, I think every bit as much so for control over the entirety of the customer experience as for the economic benefits and strategic benefits that come from being totally stacked and having access to all the economics. But, but that was just like a core belief that we had. We were like, we don't believe you can give customers the experience that we want to give them unless you do it all. And I think, you know, you face like a really tough choice there. You're like, okay, you have really smart people that are proven that have backed lots of companies that have done well before. That are basically indirectly telling you they don't really…

AI assessment note: “you can, you know, be stubborn, um, and, and you can persist.”

Q You said, like, is it good for you, but hey, it does give you drive, and it does give you, you know, ambition. I know this is incredibly meta, but I actually think about it a lot. Is it actually about happiness for you, or is it about achievement, success, accomplishment? How do you think about that?

A I think happiness is probably the unit that, that we should all be chasing, but I think that There's superficial happiness and there's deep happiness. There's cheap dopamine and there's expensive dopamine. Uh, you know, stock goes up, cheap dopamine, you know, like jump on, jump on Twitter, read that you're smart, you know, uh, you know, cheap dopamine. Then there's like build something, do something, you know, overcome something difficult, uh, put yourself in a fight and lose and put yourself back in a fight and win. And I think that that drives like satisfaction, right? Like contentment, like it's like a deeper happiness. And so. I think maybe that's a story, but, but I think that's, that to me is the pursuit. I think it's like a beautiful thing about, you know, like our, our complex system and economy is that it is, it is probably the case that to find outside success, the results of your actions have to be positive for other people. So you're driving their happiness. But I think to find that outside success, you, you have to, you have to put yourself in battles and you have to seek The expensive dopamine. You have to go try to build something and find that fulfillment and satisfaction. And, and I think that that's, to me, that's like what it's about. But, but I think for different people, it's about different things.

AI assessment note: “I think happiness is probably the unit that, that we should all be chasing”

Q Do you think they got it in that roadshow? Like reflect on that.

A Some, some did, some did, but, but I, I think it's, I mean, it's hard, right? We're an unknown entity out of, out of Phoenix, Arizona with none of the, the hallmarks of success. We don't have any of the big funds where they can go, yep, that's smart. And I can call this investor that I deal with 50 times and they can tell me about the company. So it's like, we're coming in and they're like, who are you? What's going on? How do I check on you? I don't have any idea. So that was like a lot to ask of investors. And I think that's part of why we, we immediately dropped afterwards. But you go through that period, you, you go out, you imagine like ringing the bell and the stock goes up and everyone hugs and it's a party. And it's like, they can't even open the stock because it's like, it's, it's no one wants to buy it. So it's just plummeting post the IPO, which like the bankers are losing their minds on. Cause that's like, not the way it's supposed to work. And then you, you already set up like four TV interviews and yeah, I had never done one before. And you jump in front of the camera and they're like, why do investors not believe in you? And you're just like, come on. So it's like four years, like I have no idea how to manage this. And then, and then you get You know, you, you get back to the office, and I remember walking in.

AI assessment note: “Some, some did, some did, but, but I, I think it's, I mean, it's hard”

Q You've mentioned problem solvers. You've mentioned the importance and centrality of team. When we spoke before, you said to me about operators and strategists, and I thought it was really interesting, but how do you differentiate between operators and strategists and their importance within a business?

A Like one of the things that I've come to believe is that, is that pairing those two things is exceptionally important. I think that if you can pick one, I think you want operators. Like operators get things done and operators focus on the practical. And they make sure that the wheels turn and they make sure that whatever problems people are facing every single day get resolved. And I think that you, you must have that to succeed. Oftentimes operator mentalities view, you know, more conceptual, uh, thinkers and, and kind of more strategic thinkers as sort of, you know, head in the cloud idealists. And it's hard for them to, to work well together. I think a lot of times, you know, these conceptual thinkers view operators as Solving problems that are less important, right? It's not as interesting. Like I can't sit around a campfire and talk about this for three hours and impress my friends. Uh, and so I think a lot of times the, the, the two, the two don't fit together as well as you would like. But I think that in reality, like the, the more important of the two for any success, like getting from zero to one is the operator. But then I think the, the ceiling of your possible success is a function of the conceptual thinker. And so, to me, like, marrying those things together, I, I think is, is really, really important and really hard, and I think the most productive people in the …

AI assessment note: “operators focus on the practical... the ceiling of your possible success is a function of the conceptual thinker”

Q You said you wanted to take as little dilution as possible. I think Blutney, Kazoo and Alex will very openly say that of the cancerous nature of debt and what debt did to the business. How do you reflect on relationship to debt as a business, the cancerous nature of it, maybe the benefits of it? How do you reflect on debt as an instrument?

A I think debt is dangerous, um, in general, and I think it's more dangerous for a company in a phase that we were in, um, where you're, you're not like positively cash flowing. Um, I think those things are definitely true. I also think in this case, it worked out like, had we raised equity in the same dollars at the, at the same time that we took out debt, uh, we would have taken a lot more dilution than let's say that we just like raised equity today and paid it off just to like, you know, allow you to do that math. We would have taken quite a bit more dilution had we done it the other way. So I think it like, it worked out. And then I think, um, yeah, which doesn't necessarily speak to it's whether or not it's good in general, like, you know, you observe one case of the world, but the world is complex. The other thing that I think was like interesting about the debt, it was, it was almost like being super public because it's, um, it created like a way bigger pressure. It was like, um, we were not a positive cash flowing business. And then all of a sudden the market said, we're not giving you money. And not only did you have to get to break even, you had to get to a place where you could cover, you know, the interest and, and that pressure, I would like to believe that we could have created it for ourselves. But I, I don't think we could have. And I think that like, we're a gro…

AI assessment note: “I think debt is dangerous, um, in general... I also think in this case, it worked out”

Q just like you. I don't really buy that, Ernie. When I meet the greatest entrepreneurs in the world, they are fucking awesome, and they are not like everyone else. That's by definition why they've built these category-defining businesses, and I almost think it's a lie to tell your random person on the street, oh, don't worry, you can do anything. Look at Steve Jobs. It's different. Am I overly cynical?

A If I got to live a thousand lifetimes, I don't think that I would be likely to, to, to be part of something as big as Carvana in very many of those lifetimes. Um, because I think that there is luck in the world. Like I just think that there is, there's prerequisite skills that a group of people has to have to have a chance at success. But I think that that, that opportunity does have to kind of meet like with some luck to, to, to ultimately manifest in success. And so I think what I would say is for every Steve jobs out there, you know, that's out there and has done an amazing thing. There's probably a hundred people of similar quality that, that haven't had anywhere near the same level of success. And so there aren't people nodding their head every time they talk because they don't have that superficial, uh, proof that, that what they do is exceptional. So I do think there's a lot more exceptional people in the world that then there are exceptional outcomes, uh, because I do think that luck plays a part in all this.

AI assessment note: “for every Steve jobs out there... There's probably a hundred people of similar quality”

Q You said, like, is it good for you, but hey, it does give you drive, and it does give you, you know, ambition. I know this is incredibly meta, but I actually think about it a lot. Is it actually about happiness for you, or is it about achievement, success, accomplishment? How do you think about that?

A I think happiness is probably the unit that, that we should all be chasing, but I think that There's superficial happiness and there's deep happiness. There's cheap dopamine and there's expensive dopamine. Uh, you know, stock goes up, cheap dopamine, you know, like jump on, jump on Twitter, read that you're smart, you know, uh, you know, cheap dopamine. Then there's like build something, do something, you know, overcome something difficult, uh, put yourself in a fight and lose and put yourself back in a fight and win. And I think that that drives like satisfaction, right? Like contentment, like it's like a deeper happiness. And so. I think maybe that's a story, but, but I think that's, that to me is the pursuit. I think it's like a beautiful thing about, you know, like our, our complex system and economy is that it is, it is probably the case that to find outside success, the results of your actions have to be positive for other people. So you're driving their happiness. But I think to find that outside success, you, you have to, you have to put yourself in battles and you have to seek The expensive dopamine. You have to go try to build something and find that fulfillment and satisfaction. And, and I think that that's, to me, that's like what it's about. But, but I think for different people, it's about different things.

AI assessment note: “I think happiness is probably the unit that, that we should all be chasing”

Q speak to many incredibly successful billionaires, entrepreneurs, you name it, and the unifying thing that we talk about, sometimes off mic, sometimes on mic, is bringing up children in an affluent environment, and having that same level of ambition and hunger that they had, and then infusing that in their kids. How do you think about that, given, you know, the financial background that your kids are brought up in?

A I think it's brutally hard. I think, um, I think, you know, your palpable story is laying in bed wondering if, you know, you were gonna lose everything. Like, humans are impacted by those moments, so I think that when those moments aren't happening, it's gonna be a little different. As a parent, you know, I heard a quote the other day that I thought was a good one, that was something like, you know, for as long as, as, you know, time has been going, children have not listened to their parents, but they've never failed to observe what they do. I, I think that that's pretty true. I, I think that like, ah, the actions you take every day matter. I think that your kids are watching and I think that what you value, they will value. And so I think, um, having stuff and being around stuff, um, yeah, is, is one thing, but modeling for them that that's important, I think is, is, is a, is a much more dangerous thing, uh, than being around it. But, but both are probably not perfect for, for, uh, kids coming up in the world. That's hard. I think that the best answer in my opinion is sport. Um, Not everyone loves sports, but the thing about sports is someone wins and someone loses every single time. And it doesn't matter where you started. It doesn't matter, uh, you know, where you woke up this morning or where you go to bed tonight. It's like, they want to win and you want to win. And only …

AI assessment note: “I think that the best answer in my opinion is sport.”

Q Do you think they got it in that roadshow? Like reflect on that.

A Some, some did, some did, but, but I, I think it's, I mean, it's hard, right? We're an unknown entity out of, out of Phoenix, Arizona with none of the, the hallmarks of success. We don't have any of the big funds where they can go, yep, that's smart. And I can call this investor that I deal with 50 times and they can tell me about the company. So it's like, we're coming in and they're like, who are you? What's going on? How do I check on you? I don't have any idea. So that was like a lot to ask of investors. And I think that's part of why we, we immediately dropped afterwards. But you go through that period, you, you go out, you imagine like ringing the bell and the stock goes up and everyone hugs and it's a party. And it's like, they can't even open the stock because it's like, it's, it's no one wants to buy it. So it's just plummeting post the IPO, which like the bankers are losing their minds on. Cause that's like, not the way it's supposed to work. And then you, you already set up like four TV interviews and yeah, I had never done one before. And you jump in front of the camera and they're like, why do investors not believe in you? And you're just like, come on. So it's like four years, like I have no idea how to manage this. And then, and then you get You know, you, you get back to the office, and I remember walking in.

AI assessment note: “Some, some did, some did, but, but I, I think it's”

Q When you look back now, you went public, I think five years into the journey, um, and four. Four. Okay. Unbelievably sharp or curse amount of time. Do you regret going public so early? Do you wish you'd gone public earlier? How do you reflect on that?

A I don't. Um, but, but again, like, you know, subject to like, you know, retrospective rationalization and my own storytelling, but I think it created pressure. Um, and I think it made us more resilient. Like I remember, you know, we went public at 15 and we came, you know, we were down to eight within a couple days. And I remember walking into the office, you know, you go on this Roadshow. And it's like, you know, it's like you have 45 minute meetings, you know, where you have smart people just asking you everything about the business. And then you jump in an elevator, you run downstairs, you get in a car, you drive for five, you know, you, you go to the next meeting, you're trying to find two seconds in between to, to go to the bathroom. And it's like, you have 10 of them a day and you do it for a week straight. I lost like 10 pounds. And so that's like the pre IPO process. And then you go public.

AI assessment note: “I don't. Um, but, but again, like, you know, subject to”

Q Not worth it. That one, not worth it. What is the secret, though, to a happy marriage in your eyes? You're a CEO of a public company that's freight demanding, and you're also a happily married man. What's the secret?

A I think that comes down to people, too. I think, like, uh, you know, I'll try to make this quick, but my, my wife is someone who, she's probably the most present person that I know. She's probably the person who is most likely to be 100% engaged with the people around her that I have in my life, at least. Um, she's, I think she had the benefit, um, growing up of, she clearly has a family that unconditionally loves her. Um, and so I think she's a confident and happy person. And I think she defaults to positivity, uh, which I think, you know, different people default in different ways there. Um, and I think that that, that makes it, that makes it all, I think pretty easy. In my mind, I think that like the, the foundations of, of people are unconditional love, um, the confidence that emerges from that and the ability to be happy that emerges from that confidence, I think is like kind of the building blocks. And I think if you have that, I think you're in a good spot.

AI assessment note: “I think that comes down to people, too. I think, like, my wife is”

Q just like you. I don't really buy that, Ernie. When I meet the greatest entrepreneurs in the world, they are fucking awesome, and they are not like everyone else. That's by definition why they've built these category-defining businesses, and I almost think it's a lie to tell your random person on the street, oh, don't worry, you can do anything. Look at Steve Jobs. It's different. Am I overly cynical?

A If I got to live a thousand lifetimes, I don't think that I would be likely to, to, to be part of something as big as Carvana in very many of those lifetimes. Um, because I think that there is luck in the world. Like I just think that there is, there's prerequisite skills that a group of people has to have to have a chance at success. But I think that that, that opportunity does have to kind of meet like with some luck to, to, to ultimately manifest in success. And so I think what I would say is for every Steve jobs out there, you know, that's out there and has done an amazing thing. There's probably a hundred people of similar quality that, that haven't had anywhere near the same level of success. And so there aren't people nodding their head every time they talk because they don't have that superficial, uh, proof that, that what they do is exceptional. So I do think there's a lot more exceptional people in the world that then there are exceptional outcomes, uh, because I do think that luck plays a part in all this.

AI assessment note: “there's a lot more exceptional people in the world that then there are exceptional outcomes”

Q I do just want to stay on the fundraising element. It would suggest a broken nature to funding and funding environments that Carvana cannot get funding in the way that you couldn't in the early days. Do you think that venture funding is broken in its mindset towards some of the businesses that we fund?

A You know, when you're looking at what other people are doing and you see patterns that are emerging that are successful over and over again, It takes real conviction, um, in some dimension to, to choose to kind of run against that. And I think at the time that we were trying to do our early fundraisers, I, I think, you know, capital intensity, operational intensity were not popular. Marketplaces were very popular. That was kind of like the pattern people saw. Phoenix was not viewed as a market where you could build a company. And so I think we didn't fit the patterns. And I think that we didn't have the relationships that gave investors the opportunity, I think, to have Deep enough conviction in some other way that would allow them to overpower the fact that we weren't fitting those patterns. So to me, like, you know, that would be my like PC answer today at the time when you're, when you're like pissed off and you can't get money and you're like, isn't the way this is supposed to work is that like venture capital is supposed to be risk takers. They're supposed to be the ones that fund risk in the economy.

AI assessment note: “venture capital is supposed to be risk takers. They're supposed to be the ones”

Q When you look back now, you went public, I think five years into the journey, um, and four. Four. Okay. Unbelievably sharp or curse amount of time. Do you regret going public so early? Do you wish you'd gone public earlier? How do you reflect on that?

A I don't. Um, but, but again, like, you know, subject to like, you know, retrospective rationalization and my own storytelling, but I think it created pressure. Um, and I think it made us more resilient. Like I remember, you know, we went public at 15 and we came, you know, we were down to eight within a couple days. And I remember walking into the office, you know, you go on this Roadshow. And it's like, you know, it's like you have 45 minute meetings, you know, where you have smart people just asking you everything about the business. And then you jump in an elevator, you run downstairs, you get in a car, you drive for five, you know, you, you go to the next meeting, you're trying to find two seconds in between to, to go to the bathroom. And it's like, you have 10 of them a day and you do it for a week straight. I lost like 10 pounds. And so that's like the pre IPO process. And then you go public.

AI assessment note: “I don't. Um, but, but again... I think it created pressure.”

Q You said nothing else matters, but results. There's a famous saying, I can't remember who said it, so I'm not going to try, but they said that, you know, the market in the short term is a voting machine and in the long term is a weighing machine. Would you agree with that? And now a hundred percent.

A I think that's Benjamin Graham. And I think a hundred percent, I just think it's like, um, you know, like, like that whole analogy through that book is like Mr. Market, which is this crazy thing that you get to trade with every day that I think that there's like a recognition that, that the sum of investors is a, is a volatile thing. And I think that when you're evaluating something that is necessarily true under high potential, I think is high volatility because. High potential means high upside, but it also means probability of downside is, is greater than, than in many other cases. And so, like, you, if you, if you have something that is high potential, you're probably going to have high volatility. Like, sorry, I think that's just part of what it's going to be and you just got to deal with it. But in the long run, it's, it's like, it works. You know what I mean? Like, um, you know, like, like, you know, we, we went public at 15 bucks and like, you know, The vast majority of the time, the stock has looked pretty good compared to that. Like if you're just connecting dots that are very far away, yes, it looks pretty good. We've had moments where it didn't look great, right? Uh, which is actually hard to do from some of the places that we were just mathematically, but we did, we found a way to do it. Um, but I think on average, it's like, you know, the, the market will weigh yo…

AI assessment note: “I think that's Benjamin Graham. And I think a hundred percent”

Q What's the most palpable near-death experience that you remember? And what did you learn from it?

A In, in, in, in, in, in, in, in, in, our stock went down nine to nine percent. Our bonds were trading at like 40 cents on the dollar. And I think to the world that looks like a near-death experience. Honestly, from, from my perspective, I, I didn't ever think it was that, but I think it, it very clearly looked like that. And I think it was very public. And I think that kind of thing is rarely public. And so I think, Um, that's probably the one that would be in most people's minds. But I think in, in my mind, like there were real near death experiences, uh, early on where, you know, you're just kind of like, you're, you're struggling to get things built. You don't have the whole machine and you're struggling to get capital. And at the end of the day, like, As a company taking a big swing, you're not going to make money for a while. And so, you know, you, you need capital. That's the lifeblood of, of, of the business and of kind of having the option to even keep building. And I think we were really struggled, uh, to, to kind of, you know, get that capital. So I think early on, we had several times where we got very, very tight on capital, um, that were several, maybe two or three, but, um, but that were tough. And so those to me were like the real near-death experiences that were, that were hard to manage through. What do you learn? I think you learn, like, how many stories have w…

AI assessment note: “those to me were like the real near-death experiences that were hard to manage”

Q You said nothing else matters, but results. There's a famous saying, I can't remember who said it, so I'm not going to try, but they said that, you know, the market in the short term is a voting machine and in the long term is a weighing machine. Would you agree with that? And now a hundred percent.

A I think that's Benjamin Graham. And I think a hundred percent, I just think it's like, um, you know, like, like that whole analogy through that book is like Mr. Market, which is this crazy thing that you get to trade with every day that I think that there's like a recognition that, that the sum of investors is a, is a volatile thing. And I think that when you're evaluating something that is necessarily true under high potential, I think is high volatility because. High potential means high upside, but it also means probability of downside is, is greater than, than in many other cases. And so, like, you, if you, if you have something that is high potential, you're probably going to have high volatility. Like, sorry, I think that's just part of what it's going to be and you just got to deal with it. But in the long run, it's, it's like, it works. You know what I mean? Like, um, you know, like, like, you know, we, we went public at 15 bucks and like, you know, The vast majority of the time, the stock has looked pretty good compared to that. Like if you're just connecting dots that are very far away, yes, it looks pretty good. We've had moments where it didn't look great, right? Uh, which is actually hard to do from some of the places that we were just mathematically, but we did, we found a way to do it. Um, but I think on average, it's like, you know, the, the market will weigh yo…

AI assessment note: “I think that's Benjamin Graham. And I think a hundred percent”

Q Which public company CEO do you most respect and admire, and why them?

A I mean, God, I, I hate to, to, to say such expected things, but I, I will say like, I think we've studied Amazon like forever as just kind of like, it's an incredibly analogous business to our business. There's a lot of like moving things. Uh, there's a lot of very similar problems that you face. And so I think we've always, um, you know, paid a ton of attention, uh, to that business. I think, uh, You know, someone who I was lucky enough to meet, so I'll bring up someone that I, I met. I, I was lucky enough to meet Brian Nickel at, um, a couple times in my life. He's, he's now the CEO of Starbucks and was previously the CEO of, of Chipotle. I think that like to meet Chipotle is one of the most amazing operational machines I've ever seen. Like you walk in there and you have, you know, like you have an unbelievable burrito bowl in 30 seconds and it's like, you know, there's no wasted movement in, in that entire place. It's, it's unbelievable. I think that that's like incredible. And I think that that's, um, you know, you try to learn from, because I think it's, it's, it's like an area that that's like the practical area where I think is my relative weakness. And then I, I think like, you know, every time you, you find like a clip on, you know, Twitter or whatever with like little nuggets of wisdom from, from Steve jobs, I just think that like the depth, uh, there is, is. Like unb…

AI assessment note: “I was lucky enough to meet Brian Nickel at, um, a couple times”

Q You said about being a reaction to who people think you are, maybe who people want you to be. Do you like being a public company CEO? And how do you reflect on what the world thinks about Ernie and who you actually are?

A The superficial answer to that is no. Um, I, I, I think it's a, I think it's a cost of, of the, The goal basically. Um, like, you know, my advice to any, any person out there considering like going public would be like, what's more important to you? Uh, well, first of all, it depends on who you are. Cause some people love it. Uh, I don't, I don't love it, but I think what's more important to you is, is it important to succeed or is it important to have the best personal life that you can have? If success is the, is more important to you? Um, I think you want to be public. I think that the things that people say about being Public are true. Like there are bad things, right? People are short-sighted and they focus on things that don't matter that much. But on average, I think it's very, very helpful because it creates pressure that I don't think you can create otherwise.

AI assessment note: “The superficial answer to that is no. I think it's a cost”

Q Mr. Market's wild. When you have shit, and sorry for being blunt, shit like Hindenburg, do you worry that Mr. Market's also irrational?

A I think one of the things that I have grown to believe is that the market can be more volatile than you, than I ever thought. And so I think you want to build in resilience in whatever ways you can. I think the most important resilience is people. It's people that have had hard days. It's ideally teams who have had hard days together and made it through. And so I think when those things happen in the market, you know, tells you that you're wrong. Uh, those people have like reps that they can go back to the, the, that they know. They've made it through before and they can probably make it through again. So I think that's important. I think resilience also, ideally, especially in build phases before you are generating cash means like a little bit stronger balance sheet than you think you need, because. Like if you find yourself in a moment where. Results are a little worse than you thought, and the market's a little worse than you thought, and you face another bump that you didn't foresee. Like that can be, that can be a problem. Um, so you want to like minimize the odds of, of like those existential moments. Uh, which I think honestly is like a lesson that I'll never fully internalize. And I, I think it was one that I had to learn the hard way, uh, for sure. Uh, well, not a natural one for me. Like I want to take as little dilution as possible the entire time. Yeah. Then those t…

AI assessment note: “the market can be more volatile than you, than I ever thought.”

Q You said about Mr. Market there. I, I often think about Adam Smith and the Adam Smith's invisible hand theory and kind of markets kind of self-regulate and correct in a very natural and authentic way. Do you agree with Adam Smith's invisible hand belief, or do you think sometimes interventions in, in many other ways are much more necessary?

A I, I do believe in his belief. I, I think the market, um, and you know, capitalism and like, I don't mean to, I don't know, like fall into like the, the expected trope of all the things that I would have to believe, but, but I, I do think they're true. I, I just think that, that they're like beautiful organizing functions for people. And I think as long as you believe people are smart, um, I think markets will make all kinds of mistakes, but I think that they progress. Um, On average, like I think on average they weigh. Um, and so I, I, yeah, I'm a huge believer in that. And I, I think it's, I think it's like a, a wonderful, I don't know if it's a coincidence. I would need to think through it more carefully, but I think it's a wonderful coincidence that like people pursuing their own goals in like a free market necessarily serve the interest of others. I think that that's like wonderful. It's like a beautiful truth.

AI assessment note: “I do believe in his belief. I, I think the market”

Q You said about Mr. Market there. I, I often think about Adam Smith and the Adam Smith's invisible hand theory and kind of markets kind of self-regulate and correct in a very natural and authentic way. Do you agree with Adam Smith's invisible hand belief, or do you think sometimes interventions in, in many other ways are much more necessary?

A I, I do believe in his belief. I, I think the market, um, and you know, capitalism and like, I don't mean to, I don't know, like fall into like the, the expected trope of all the things that I would have to believe, but, but I, I do think they're true. I, I just think that, that they're like beautiful organizing functions for people. And I think as long as you believe people are smart, um, I think markets will make all kinds of mistakes, but I think that they progress. Um, On average, like I think on average they weigh. Um, and so I, I, yeah, I'm a huge believer in that. And I, I think it's, I think it's like a, a wonderful, I don't know if it's a coincidence. I would need to think through it more carefully, but I think it's a wonderful coincidence that like people pursuing their own goals in like a free market necessarily serve the interest of others. I think that that's like wonderful. It's like a beautiful truth.

AI assessment note: “I, I do believe in his belief. I, I think the market”

Q What have you changed your mind on in the last 12 months?

A Two things I'll say there. I think that what I've come to believe over the last three years is that focus is very important and that for an ambitious company, it basically requires constant tending. Like every three months, you have to uncomfortably take things off of your, you know, board that you're working on because I think that it's very, very hard to stay focused. I think the companies naturally drift away from focus. So I think, um, trying to continually manage that is, is, uh, it takes, I think a lot of effort. We as a company, not to like dive too deeply into the specifics of us, but I, I think we faced a two year period where we focused on nothing but profitability. And I think, I think that we've, you know, more recently been trying to find the right balance between profitability growth and, and continuing to, to build a machine that is, uh, even more differentiated than the machine that we had before. And I think that we're, we're at a place where it makes sense for us to be shifting some of our finite focus toward growth and toward foundation laying. Um, but I think, uh, that's hard.

AI assessment note: “shifting some of our finite focus toward growth and toward foundation laying”

Q You mentioned the different layers of value there or layers of defensibility. What layer do you not have today that you would most like to have?

A So I think in like that highly conceptual framework, I think that we, We designed the business from scratch to basically try to deliver a customer experience that we thought was enabled by different physical infrastructure that supported a simpler, more direct customer experience were there in complete control. And I think that that required that we build, you know, logistics and reconditioning centers and, uh, business processes where, you know, like finance connects directly into trade-ins and all the decision-making is continuous. So it all fits together. And then software layers sit on top that enable customers to Interact with those choices on their own. Our entire customer experience design required all three layers. Um, so I, I think we have all three, but I also think that if you zoom into any of those layers in any part of our business, and we have many parts of our business, it's very obvious, like any smart person sitting in a room for half an hour would come up with five things they want to improve. And then I think what's fun about it is if you have smart people in a room that are motivated, you fix those five things. By the time you're done fixing those five things, you're going to think of seven more things. And so I just think that it's a continual process always. So I think there's a million things that we wish we had that we don't have, but I think, um, I thin…

AI assessment note: “Our entire customer experience design required all three layers. Um, so I, I think we have all three”

Q Now, when I was stalking the shit out of you, you once said that entrepreneurs are stubborn egomaniacs. Can I ask you, when you reflect on that, do you think you're a stubborn egomaniac?

A Can we jump to the next question, please? Here's what I say. I think, um, truth is oftentimes, um, like you, you can, you can find a positive word or a negative word to describe almost anything. And I think it comes down to like, you know, what are you trying to get across? And I think sometimes it's more impactful to communicate with the surprising choice. And so I think that there's a lot of good that comes out of being stubborn. I think there's a lot of good that comes out of self belief, uh, which could also be, you know, restated as being an egomaniac. Um, but I do think that's what entrepreneurs are. I think it's really hard to sit in a room with a bunch of people who tell you you can't and to believe that you can if you're not stubborn and if you don't have maybe a touch too much self-belief. So I think that is, uh, that is a characteristic of entrepreneurs in my opinion.

AI assessment note: “Can we jump to the next question, please? Here's what I say.”

Q speak to many incredibly successful billionaires, entrepreneurs, you name it, and the unifying thing that we talk about, sometimes off mic, sometimes on mic, is bringing up children in an affluent environment, and having that same level of ambition and hunger that they had, and then infusing that in their kids. How do you think about that, given, you know, the financial background that your kids are brought up in?

A I think it's brutally hard. I think, um, I think, you know, your palpable story is laying in bed wondering if, you know, you were gonna lose everything. Like, humans are impacted by those moments, so I think that when those moments aren't happening, it's gonna be a little different. As a parent, you know, I heard a quote the other day that I thought was a good one, that was something like, you know, for as long as, as, you know, time has been going, children have not listened to their parents, but they've never failed to observe what they do. I, I think that that's pretty true. I, I think that like, ah, the actions you take every day matter. I think that your kids are watching and I think that what you value, they will value. And so I think, um, having stuff and being around stuff, um, yeah, is, is one thing, but modeling for them that that's important, I think is, is, is a, is a much more dangerous thing, uh, than being around it. But, but both are probably not perfect for, for, uh, kids coming up in the world. That's hard. I think that the best answer in my opinion is sport. Um, Not everyone loves sports, but the thing about sports is someone wins and someone loses every single time. And it doesn't matter where you started. It doesn't matter, uh, you know, where you woke up this morning or where you go to bed tonight. It's like, they want to win and you want to win. And only …

AI assessment note: “I think that the best answer in my opinion is sport.”

Q What did you say to that? Like, I mean, I don't know.

A Like, I was a deer in the headlights trying to make stuff up and talk fast. Like I, you know, as, as is my, my habit. So I don't know. Try to do the best you could. But, but you get back to the office where it actually matters, because it's the people that are gonna build the thing for a long time, and it's the people that believe in what they were building, and it's the people who bought into that it matters, and it's the people who aren't close to investors, and they think that the fact that investors are rejecting us means that we're not good. And so now they have a moment of questioning it. And you walk in and you feel the energy, right? You feel that the energy is like, this was supposed to be a party and it's not. And that's like, that's tough. And so I got a text message from someone who was like, Hey, listen, I think we have to address this. Like we have to pull everyone into the room. And I remember I saw the text message and I was just like, Cause I, cause I knew it was right. And I just, I was like, I just lost like 10 pounds on the road for last week. I just, you know, I had like the worst, you know, like, like day ever trial you with the socks doing the opposite thing of, of what you're hoping. And I gotta, you know, try to jump in a room and like have energy and have this conversation. But, but then you jump in there and you know, you, you do it and it was the rig…

AI assessment note: “I was a deer in the headlights trying to make stuff up and talk fast.”

Q Are you worried about a knee jerk reaction?

A I'm worried about, um, Allowing a shift in the thing that you're focusing on to lead to diffuse focus everywhere, because what I think can happen is when you say, you know, we're going from just focusing on this one thing to, Hey, we're gonna, we're gonna, you know, work on this, but we also have this other goal and this other goal, it gets really easy for everyone to say, and right. Okay. So we're gonna do this and this and this, and this, and this, and this, and this, and they just keep adding more things. I think when you shift the thing that you're focusing on, you have to make sure that you're Taking things off the board that were, that were pointed at that focus and replace them with things that are, you know, pointed at the new focus, just to make sure that you just, you don't just and yourself to a million projects and get nothing done. And I think that that's, that's the hardest thing about managing a change in like the, the area of that you're focused on.

AI assessment note: “I'm worried about, um, Allowing a shift in the thing that you're focusing on”

Q What did you say to that? Like, I mean, I don't know.

A Like, I was a deer in the headlights trying to make stuff up and talk fast. Like I, you know, as, as is my, my habit. So I don't know. Try to do the best you could. But, but you get back to the office where it actually matters, because it's the people that are gonna build the thing for a long time, and it's the people that believe in what they were building, and it's the people who bought into that it matters, and it's the people who aren't close to investors, and they think that the fact that investors are rejecting us means that we're not good. And so now they have a moment of questioning it. And you walk in and you feel the energy, right? You feel that the energy is like, this was supposed to be a party and it's not. And that's like, that's tough. And so I got a text message from someone who was like, Hey, listen, I think we have to address this. Like we have to pull everyone into the room. And I remember I saw the text message and I was just like, Cause I, cause I knew it was right. And I just, I was like, I just lost like 10 pounds on the road for last week. I just, you know, I had like the worst, you know, like, like day ever trial you with the socks doing the opposite thing of, of what you're hoping. And I gotta, you know, try to jump in a room and like have energy and have this conversation. But, but then you jump in there and you know, you, you do it and it was the rig…

AI assessment note: “I was a deer in the headlights trying to make stuff up and talk fast”