How auto sales marketplace Autozen 100x’d GMV in less than 5 months
For CEO Olivier Vincent, his company’s mission — and growth — starts and ends with putting power back into the hands of people.
When Olivier Vincent, the CEO of the online auto sales marketplace Autozen, considers the reason he was forced to build his business, he brings up the theory of The Innovator’s Dilemma.
If you’re not familiar with the idea, it basically describes a situation where large incumbents in an industry do not invest in new innovation because they fail to properly value new technologies in their current product and customer frameworks. “Why spend money on the new thing when we’re making money from the current thing?”
15 years ago phonebook publishers found themselves in that situation. So, Vincent started Canpages Inc., the largest online independent local search company in Canada. His goal was to disrupt the established monopoly of the Yellow Pages company, which was still focusing on its print product. Vincent grew Canpages to become Canada’s fastest-growing website in 2008 with applications available on the iPhone and Blackberry — and $100 million in revenue. “We were totally ignored by them,” Vincent recalls. Until they weren’t. Eventually, Yellow Pages realized the dilemma they were in. They had to make a move, so they bought Vincent’s Canpages in 2010 for a cool $225 million.
“They were making so much profit with their current way of doing business, and nobody in the industry wanted to change it,” Vincent explains. “And I think we have something fairly similar in the automobile world.”
An industry being slow to change is not new, and not negative in and of itself. But when there is a consensus around how terrible something is — as is the case with used car buying and selling — the question needs to be asked as to why something is the way it is. These are questions Vincent started asking a few years ago.
“The process of selling your used car is such a brutal, inefficient, medieval process,” he exclaims during a recent Zoom call. He says it's something everyone who owns a car goes through every few years and no one looks forward to it. “‘I'm really looking forward to selling my used car,’ said nobody never,” he jokes, his French accent creeping through.
“In 2021… it could be better, it should be better, and the only way to do that,” he continues, the entrepreneur inside of him now taking over, “is to kick pretty hard into the established ecosystem and come in and revisit it entirely.”
Enter his startup Autozen, which came out of stealth with $4.2 million in seed funding in January 2021. In a nutshell, the startup’s goal is to make it easier for car owners to sell their vehicles. Autozen helps them do this through an incredibly pain-free process: They send someone to your house. They inspect your vehicle, estimate its value, and put it out for bidding to more than 100 potential buyers, including auto dealers. They handle the paperwork, payment and delivery. It’s all done without you, the seller having to leave home.
“The power of changing something that is so wrong is absolutely delightful,” Vincent shares with me, reflecting on the business. Autozen’s 50+ Google Reviews and five-star rating suggest its customers feel the same way. But Autozen’s product quality has manifested itself in more than online ratings. From a business standpoint, the company’s growth metrics suggest they really are on to something.
The startup sold its first car in February and grew rapidly following a beta release and general availability. Then over the next five months, its marketplace GMV grew an astounding 100x, increasing from $50,000 in July to more than $5 million recently. This week, they’ve officially announced an expansion from Vancouver into the Okanagan, starting with the Kelowna, Kamloops and Vernon areas, with national and international growth plans in the works.
Like most startups, Autozen started with a minimum viable product. They built a beta product, then alpha, and the way Vincent remembers things, they tested the system with a number of cars. They engaged a real buyer and a few real sellers just to make sure the technology worked properly. “As it turned out, it's not a trivial environment what we are building here. There is an app for the consumers. There is a series of apps for the dealers. There is an app for the inspectors that go around and check the cars and bring that feedback for the buyers,” Vincent explains. “And of course, all the tools for the staff within orders and customer success and finance and operations in general.”
Most startups are working on just one thing. But early Autozen employees basically built four apps. It’s perhaps one of the reasons why other companies haven’t solved this problem already, Vincent ponders.
Given the amount of work put into the product, it’s no surprise that selling their first car was such a milestone. But with every technical win came new internal problems to solve, Vincent shares. “It was very early on, right? Then we could see in that process that we still had a lot of things to improve,” he says. But his team iterated and iterated and iterated. They turned their beta on for around three months before offering the product fully to the public in late June. Vincent recalls the pressure to launch and feeling like he was late back then — but fully removed from the stress of launching, he doesn’t feel that way anymore. “When I look backward, I think we ended up going relatively fast given all the complexity of the environment,” he reflects.
Autozen may be a digital marketplace, but Vincent sees what he’s building as much more than a website. For him, it’s a movement to put power back in the hands of the individuals and families who are selling their cars. Where does the power rest now? With dealers, he says. In fact, you might say one of Vincent’s core motivators to change the system are companies like AutoTrader, which also bill themselves as an “online automotive marketplace.” But AutoTrader is not a marketplace,” Vincent strongly argues. “It’s a lead generator,” he posits. For who? For dealers.
With AutoTrader, Vincent describes to me, if you see a car you want to buy that’s sold by ‘dealer X,’ you call them and then, of course, you have to go there. “They’re putting you right away in the hands of the dealer,” he says. As well, if you’re selling a car, they have a tool called Instant Cash Offer where you put your car information into a system and it gives you a purchase price. But it turns out that if you want to move forward with this process, you of course need to go see a dealer. “Then you know, they put you in a marketing machine,” Vincent says. “They say, ‘I didn't know the tires were flat. I didn't know you had all these deep scratches, you know, look at that, there is a leak in the engine.’ I mean, they do what dealers do very well, right? They start to haggle with you.
“There is, in general, such a dominance of the dealer to the consumers that even if you deal with a very ethical dealer, which I think the vast majority of them are — I love dealers, and maybe I'll talk more about why they play such an important role in the industry — but when you go to them, they know so much more than you do, that you walk away having the feeling that you've been taken advantage of.”
“Most of the time, it's not true,” he muses, “but still, they know so much.”
With knowledge comes the power that Vincent has been talking about. With that power comes responsibility, and to Vincent’s credit, he did have some nice things to say about dealers, who he called “indispensable.” He said they create a buffer of available cars in the market, perform great service work, and can guarantee quality products and warranties, too. “They have their name online, so they cannot sell you a lemon,” Vincent says. “Dealers also, in terms of security, are adding a great level of importance to the marketplace. Without them, it'd be pretty sketchy out there I think. So we like all of that.”
Autozen’s approach is to take “the best from dealers,” Vincent explains. Dealers have money and they're ready to spend it on vehicles, so Autozen works with them in two ways that benefit the consumer. Firstly, Autozen has dealers bid against each other so its sellers get better prices. Secondly, Autozen keeps dealers at arm’s length. They stay in the middle so they can manage everything, from start to finish. “You can do everything without leaving home, but also without having to get ready to hustle or haggle with anybody — that was really one of the early strong dimensions of Autozen,” Vincent says.
The future of Autozen rests on consumers’ changing habits and their willingness to try out the Autozen approach — and then decide they never want to go back to whatever came before. Vincent thinks a parallel can be found in another realm of the transportation space.
“Before you tried Uber, you're like, ‘No, it's fine to get a taxi. I call them and they're going to come. Why do you need to improve that?’ And then you experience Uber and you go home and say, ‘I had no idea how horrible the experience was before. Waiting in the rain for a cab where you have no idea whether they're really coming or whether they’re five minutes or 20 minutes away, and then you're late at the airport and you need to pay them now. And of course, they don't take credit cards, because they want cash and you don't have cash…”
Vincent believes the automobile world has a lot of these situations; if he has his way, soon, it won’t anymore.
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