Swinging for the Fences

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.

Fund Raising and Car Shopping

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.