October 29, 2007
So I’ve taken a very obvious break from blogging and I wanted to get started up again. Evenlevel had a ton of momentum at this beginning of this month. We started showing up in search engine results for a lot of car terms and our daily traffic had almost doubled to nearly 500 visitors. This progress was really fantastic given the short time that we had been in business. Unfortunately we ran into a major roadblock.
It seems that our business was a bit too disruptive for the mainstream car market. Dealers were noticing what we were doing and they started complaining. Eventually the company that we pulled our auction inventory from could no longer ignore their dealer-base and they asked us to stop pulling inventory from their site. As this was our primary source of inventory, this left the Evenlevel team in quite a quandary. The negative dealer feedback was not unexpected. We were taking direct aim at the traditional used car model and it was working. However, we did not expect our supply source to be cut off as we were doing them a service and selling cars. Given that there is no short-term resolution with our supply source in sight, we’ve been forced to regroup and work on relaunching our business with a different business model. We learned a few things the first time around that helped shape our “new” version of Evenlevel.
Used car dealers are not bad, inefficient entities. We realized that they do provide a ton of value to the consumer. They help with trades, arranging financing, and perhaps most importantly, with post-sale servicing. So we were stuck with the task of figuring out how to remain true to Evenlevel’s original core values while incorporating the value that dealers bring to the table in a used car transaction.
During the first round of Evenlevel we were displaying cars that were only available at dealer-only auctions. We found that price savings of $4,000-$5,000 were common. During our research we looked at a ton of price comparisons. During this research we discovered another interesting fact about the car market, cars prices vary wildly depending on the part of the country you live in. Often by $4,000-$5,000…the same relative price difference we were saving our customers in the first version of Evenlevel.
What we now aim to do is to inform consumers of geographic price differences in the used car market and help them locate the best deals in the national marketplace. Once a consumer has found a car that they are interested we match them up with a used car dealer that is local to that consumer and can help negotiate the purchase, help with trade-in and financing, and can assist in the post-sale servicing.
Our business will make it easier to locate the best deals in the marketplace and will remove the pain of buying an out-of-state vehicle from an unknown entity. Bargain car shoppers will no longer have to worry about title work or registration issues with the out of state dealer as they will ultimately buy the vehicle from their local dealer. We intend to add feedback ratings for all of our dealer partners as well so that the consumers can make an informed decision on which dealer partner to work with.
I’ll blog more about our vision and the relaunch of Evenlevel shortly. But I wanted to give everyone an update on where we were business-wise.
October 3, 2007
So our crack team of three founders have a ton of coding, Internet, used car, and entrepreneurial skills but we admittedly lack in one area that is rather critcal to a successful web company….design. To this point, our lead (and when I say lead, I mean only) developer Eric has knocked out the majority of the design, other than the logo that Logoworks cranked out for us based on our other founder’s concept. I think Eric has done a rather admirable job on the site and its very respectable for this stage. That being said, each new design initiative is a major project for our team and takes many more man hours than if one of us had true design skills. We drool over the Internet design by masters like Dan Cederholm, but we just don’t and probably won’t possess those kinds of design chops anytime soon
Our design “problem” creates some interesting discussion within our team as we have to even the balance between what changes are necessary design-wise compared to product development for less design centered ideas. I thought the blog readers might find it interesting to see what we are currently debating in order to get a glimpse into what we are thinking/doing on a daily basis in addition to selling cars.
Every vehicle on our site has a Car Detail Page (CDP) that shows all of the details for each vehicle. I have a personal affinity at the moment for the Range Rover Sport, and its CDP can be seen here: Land Rover Sport. Eric will tell you that Range Rover’s are junk (he’s a Honda guy), but I love their look and would love to upgrade to one once I get rid of my Chevy Avalanche. The CDP is an extremely crucial page on our site, maybe even more so than the homepage, as the majority of our traffic enters our site currently through CDP pages. Many of our cars are listed on Craigslist and these cars link directly to their corresponding CDP’s.
Thus, we want the CDP to convert our traffic into qualified buyer leads. We feel that our current CDP design is somewhat confusing for a few reasons. The spacing below the pictures of the vehicle and the condition and option reports below it are way off and we’ve found that a lot of our visitors don’t ever realize that all of those juicy car facts are waiting for them if they scroll down the page. Moreover, there is no sort of education about Evenlevel and someone unfamiliar with our site gets dropped into a CDP page and has no idea about how our process works or even where our used cars come from. Additionally, if a customer gets to a CDP page for an expired vehicle, we’re not doing a sufficient job in telling them that the vehicle is in fact expired and then taking the next step and directing them to active vehicles that fit their search criteria.
All of the three founders have taken a crack at some form of the redesign and I started mine yesterday afternoon. I spent about 4 hours on it and I think that another 3 or 4 hours of work today and I’ll have a version that I like…pending approval from the other two founders. The worry is that we spend too much time on this and not enough time on other critical features. But for the time being the CDP redesign is at the top of our list. I’ll let everyone know once we’ve rolled out the latest version. With all of the creative energy going into the CDP, it is starting to feel like the car design page more than the car detail page.
September 29, 2007
One of the other founders and I had a really fun time on Friday as we headed down to the San Antonio Auto Auction (SAAA). This trip was particularly exciting for me, as I had never been to an auto auction. We sold a 2006 Chevy Equinox to a customer named Marie last week and the vehicle was located at the SAAA. Instead of having the vehicle shipped to us, we thought we’d make the short trip and pick it up for her ourselves.
Dealer-only auto auctions are essentially comprised of massive parking lots filled with cars, an administration building that houses most of the auction employees that take care of payments, transportation, inspections etc., and the actual physical auction lanes themselves. Cars come down through these lanes and are unsold when they start and then get bid on and are sold by the time they come through the other end of the auction lane. Here I am standing in one of the auction lanes after the auctions had finished. Sorry girls, I’m not currently for sale.
The physical space that the full auction occupies is astounding. Furthermore, the activity going on at these auctions is really overwhelming to a newbie like me. This auction was run by Manheim and they employ over 35,000 people at there auctions worldwide and I can now see why.
We also took the opportunity to test drive a BMW 325 that a customer had expressed interest in earlier in the day that happened to be at the SAAA as well. We ended up selling him a different BMW located in New Jersey that he should be receiving next week.
I drove the Equinox back to Austin and Marie took possession of the car today. Marie seemed really ecstatic about the condition of the vehicle and I really hope she enjoys her new ride. We’ll post some pictures of Marie and her vehicle soon on the site.
September 25, 2007
Evenlevel is an Internet company and we’re constantly being reminded in the media of the recent wave of social networking online and its impact on the Internet and e-commerce. We all have our Facebook, LinkedIn, and Twitter accounts (to name a few). The Evenlevel founders have been throwing around ideas for how to build a really dynamic community around some aspect of the car business. One idea that has stuck has been to build a community around car flipping.
Car flipping is akin to house flipping. House flippers look for cheap properties and either resell them immediately because their original purchase price was so far below market or they rehab them and then sell them for a profit. I flipped a property a little over a year ago and had great success doing so and actually just bought another property a little more than a month ago and intend to do some extensive rehab and resell this property as well. House flipping is not easy, my business partner is an architect and I could not do this business well without her. However, with a little knowledge and a lot of hard work there is a ton of money to be made in that business, which now brings us to car flipping.
The concept is basically the same. Find cars at below market value and resell them at market value for a profit. I did some research online and found virtually zero resources for an aspiring car flipper, while you get inundated with books, seminars, and infomercials for people “specializing” in house flipping. I did fine one poignant blog post about car flipping at Get Rich Slowly. This article generated a ton of discussion comments. The comments seemed to go back and forth between some seasoned “car flippers” and those that seemed somewhat uninformed and skeptical of the whole practice and were calling car flippers “curbstoners”.
Curbstoning is essentially the practice of conducting business without a licence and often refers to the buying and selling of automobiles without a license. Here in the state of Texas, common citizens can sell up to four cars a year without a dealer’s license. You’ll need to check on the laws of the state you live in, but a Texas citizen can “flip” up to 4 cars a year. If you sell 5 or more cars a year and you’re not a licensed dealer, you’re breaking the law and are essentially committing curbstoning…not something you want to do.
However, you can have a lot of fun and make a decent profit by flipping the allowable number of cars in your state each year. In fact, it appears that many people are doing just that. I was mentioning our business to one of our local Wells Fargo bankers last week and he told me that he and a friend had been flipping cars for years. They were finding cars on Craigslist, buying them, and then reselling them on eBay or Craigslist . They were very tuned in to what was in demand in the local market and knew a good deal when it came across. They searched through hundreds of cars to find these deals, but had made more than $4,000 in profit on several occassions for vehicles that they resold for less than $15,000. A pretty good profit margin if you ask me. Once I told him about our business, he was immediatley interested in using our site to source vehicles as well.
The founders of Evenlevel think that our site could be a great resource for the car flipping hobbyist. First off, you can sort vehicles on our site by their absolute value under the market average for similar makes and models. Secondly, we just rolled out a new Email Alerts tool that will send our customers an email whenever a new vehicle is added to our site that matches their particular search criteria. And we’re working on some other goodies that will definitely help refine these searches even further to deliver only the choicest cars to the consumer that is either looking to buy a used car for personal use or buy a car to flip it.
I’m interested in hearing some feedback from any car flippers out there to see if they would be interested in a section of our site dedicated to flipping cars. We’ve talked about user submitted articles on best practices, what to watch for and avoid, and how to profitably flip cars while minimizing your exposure to risk, and how to conduct your car flipping business legally. Additionally, we’d love to start posting success stories and pictures of flipped cars. If we get some positive responses we’ll definitely push this up the chain on our priority list.
September 24, 2007
One of the other founders and myself made a trip over to the Houston Technology Center for the first part of their Educational Seminar Series “Raising Capital in Texas Today”. The first part of the series was a panel disucssion comprised of local companies that had recently completed successful fundings. Their was a lot of great Q&A generated out of the session and the meeting was definitely a worthwhile event for us to attend as we’ve started actively seeking capital. We’ll be back on October 25th to attend the next part in the series, “Current Active Capital Sources in Texas”.
While these events are always informative, the networking opportunities are always a key reason that we feel the need to attend. We met many entrepreneurs at the event and its always invigorating to see other people with the start-up spirit and to reconfirm that there are a ton of other people like us, moving and shaking, to get our start-ups off of the ground. We were able to meet a fellow entrepreneur that served on the discussion panel, Stephen Straus.
Stephen, was unique to the discussion because he used to work as a venture capitalist for Austin Ventures, and now is on the other side of the table having just raised money for his new start-up BarFly Interactive Networks. Stephen has found some provisions in liquor advertising laws that are allowing his company to bring a completely new type of advertising to the bar industry. They’ve made a ton of traction with some of the major producers/distributors in the alcohol world and seem like they are ready to explode.
I took the opportunity to approach Stephen, as he is Austin-based as well, and he went out of his way to talk to me at the conference and then graciously offered to lend an ear to one of the other founders and I this morning over breakfast in Austin. Stephen had a lot of advice for us that we’ll take to heart and hopefully we can build some type of mutually beneficial relationship with him going forward.
We’ve started to realize just how small the start-up community is in Texas and how building relationships with key contacts will be critical to our success. Additionally, we’re really learning how to multi-task. While we’re attending these events, we still need to keep the business going and sell cars. Friday was a great day for us as we were able to close on two separate vehicles on that day. We actually sold a vehicle while we were at the conference and then another truck later that afternoon. Our sales are really starting to pick up, as has the general traffic and interested leads to the site. It should be interesting to see how this week plays out.
Also, we added a new email alert product, you can view the news release for it here Email Alerts.
September 20, 2007
As a very new start-up it can often be very hard to figure out exactly where you want your business to go. When we first started talking about Evenlevel, we had a long discussion about what we envisioned the business becoming. With today’s quick-flip mentality around us, its become increasingly less common to see Internet start-ups survive and mature to robust companies that are candidates for a proper IPO. Venture capitalists don’t want to invest a few million in a company and watch that business mature over the next ten years while they twiddle their thumbs. They too have investors to please and returns to publish so that they can keep themselves and their investors fat and happy. There’s a really interesting article in today’s Seattle Post-Intelligencer that discusses a startup that’s certainly become a bit of a household name the past couple of years, Zillow.
For those of you that don’t know, Zillow was started by and is led by Rich Barton, the same Rich Barton that developed Expedia into the massive entity that it is today. One would think that Rich has the experience and previous success that would afford him the opportunity to grow Zillow into any type of business that he would see fit. In fact, Zillow just completed another $30M round and there is seemingly plenty of money in their coffers to take the company in any direction they please. However, John Cook, the reporter on the story does question whether Zillow’s investors will eventually allow Barton to fulfill his grand visions for the company or if they’ll be forced to sell before he reaches the zenith that he envisions.
As a founder, the article brings so many questions and emotions to mind as we’ve just set out to build a great business. What control do we give up for the necessity of capital? How much final control will we have on the direction that the company eventually takes? How can I raise $30M? (okay that last one is a little bit of tongue in cheek) But hopefully you get the point that there are so many unknowns at this point and so much uncertainty that one can really feel the roller-coaster ride of highs and lows that is trying to build a start-up.
Jumping back a bit to the article. The Evenlevel founders have often discussed a lot of parallels between some of the more recent housing start-ups, Zillow, Trulia, Redfin and iNest (to name a few) and ourselves. Many of the unbelievable technological Internet advances that have come to the housing market in recent years, we plan on bringing to the used car market. Much like the housing market, the used car industry is massive. There were over $380 billion in used car sales in the US last year. People are increasingly using the Internet to buy, sell, and research their used vehicles. No company has truly built a suite of research and analysis tools that separates it from anybody else…think about it. When you shop for a car online, you enter 1.Year 2.Make 3. Model 4. Mileage 5. Zip code….and voila!….here are the 250 closest cars to your zip code. Where’s the value add in that?
Just imagine if you could enter in all of that information, but additionally sort through cars based on their value compared to the Kelley Blue Book Value, sort by Autocheck score based on the vehicle history report of each used car in your criteria range, search by country of manufacturer, figure out which cars depreciate least or most in your particular region of the country or even be notified when a vehicle that fits all of your criteria becomes available in the marketplace. These are all tools that we’ve built or are building currently at Evenlevel. And we’ve got a ton more in the pipeline and up our sleeves that we’re working on getting out to the marketplace. In addition to selling cars that are significantly below market prices, we think we can bring real insight to the marketplace with an enhanced suite of research and analysis tools that have yet to be developed anywhere else. Much like the Zillow approach, we can build value and products around this knowledge and really think about swinging for the fences ourselves.
September 20, 2007
The Evenlevel team set out recently to raise capital so that we can properly grow our business. To some the need for capital is obvious, to others not so much. So why do we need more capital? We’re ambitiously setting out to really change the way the used car industry works. This blog’s title and the tag-line for our business is “Driving The Revolution”. We’re talking about literally revolutionizing this industry. In order to do that, its going to take some money to properly scale our business and to really get it off of the ground.
We want money to:
1. Advertise: We’re creative folks and have been able to drive a lot of “free” traffic to our site, but there’s something to be said for money to drive paid traffic our way. We need to get the word out about our great service and let people know what we do and how we do it.
2. Pay for Operational Expenses: We’ve got a great team of founders, which I’m sure would love to get even a meager salary, but more importantly we need to hire some additional sales force to help sell our cars, developers to help create all of the cool products and features we’ve thought of and have in the pipeline, and a web designer or two to put some spit and polish on our site and really make it shine.
As I mentioned earlier, we’ve just begun to reach out to the venture capital (vc) & angel communities both locally here in Austin and throughout the country, so we’re complete newbies to the process. All of the founders have worked at venture backed startups in the past, so we’re familiar with how interactions with vc’s work in general but we’re just getting our feet wet with telling the Evenlevel story and creating a compelling investment for an investor. As we’ve immersed ourselves into this aspect of our business, I ran across a really great video posted on Venture Hacks last week that parallels buying a car and raising money from a vc, Venture Hacks Video.
We know we’re going to be running into a lot of skilled negotiators as we settle on terms with our eventual financing. The tactics shown in the video are the exact same practices that we’re striving to eliminate with our business. We pride ourselves on giving as much information as possible about each and every car we have on our site and we always display the actual auction price and our flat fee for every car on the site. Since our fee is the same for each vehicle on our site, its in our best interest to get our customers into the best used car for them on each and every purchase so that they’re happy and will be repeat customers and send more “free” referral traffic our way.
I’ll keep everyone updated on the financing. We’ve got a couple of networking functions the next few days that should make for some quality blog reading.