CarLotz is a consignment store for used cars that I co-founded with my partners Michael Bor and Aaron Montgomery in Richmond in early 2011. The company was born out of an unmet need in the marketplace. Buying and selling cars is an activity nearly every adult goes through, yet most consumers genuinely dislike the process.
Why? As a seller, you either settle for a low trade-in offer or face the hassles of selling it yourself-keeping it clean, taking photos, posting online, dealing with missed appointments, and negotiating with strangers. As a buyer, you face pricing obscurity, uncomfortable negotiations, and meetings with strangers. In other words, the consumer has to experience pain…a lot of it.
CarLotz was started to alleviate that pain. Our goal, of course, is to sell cars. In the beginning, it was quite a hassle to find buyers for these used cars. A friend of mine suggested that we may need to make it look as new as possible to attract potential customers. The first and foremost step to achieving this was making sure that the car is clean. In order to accomplish this, we had to hire a reputable car wash service like those offered by Soap Opera Mobile Detail. That’s how we make our sellers happy and how the company makes money. But, our mission is to fundamentally change the way people think about buying and selling used cars. CarLotz empowers sellers to get the most money for their cars without the traditional hassles of the do-it-yourself market. Typically, we create between $2,000 and $7,000 worth of value for our sellers. Buyers get a comfortable, safe place to shop for sale-by-owner cars, convenient financing and service contract options, and prices 10 to 25 percent below retail. With CarLotz, everyone wins, which is the way it should be.
Like other startups, CarLotz has faced growing pains. We still have a long way to go, but a few key factors have contributed to our success so far.
Greater Richmond, for example, has been hugely supportive of CarLotz. I grew up in Richmond, and Michael has been here for almost 10 years, so we had personal networks that helped us get off the ground. We lured Aaron from Chicago, but he’s taken well to the area, even landing an extra role in the Lincoln movie (well, his shadow at least). None of us had started a business before, but we were fortunate to find local investors willing to support us and our passion for CarLotz. Richmond has also provided remarkable employees, talented interns through terrific local schools, partnerships with excellent service providers, and a supportive startup environment, all of which have helped us grow faster than we ever expected.
I can’t imagine establishing CarLotz without either of my two co-founders. I love problem solving with them because no matter the challenge, and no matter our differences, we always end up with a better solution than any of us could’ve developed alone. We have also been fortunate to hire some remarkably talented people who are making CarLotz far better than we imagined.
Before opening our first store, we believed we had a sound concept and had carefully scripted various customer service scenarios. The reality is that we had no idea if people would even show up. The quote from Field of Dreams should really be, “If you build it, he might come.” The best thing we ever did, however, was open our doors. There is absolutely nothing like real world feedback to tell you what you’re doing wrong. We are grateful to the early adopters willing to be test cases for CarLotz as we honed our service.
The used car market is massive, with nearly 40 million transactions per year. Try as we might to execute flawlessly, we make our share of mistakes, and operating in a large market gives us some room for error. Michael, Aaron, and I want to work on something that has potential to make an impact on the world. With conservative market share assumptions, CarLotz could create value for millions of consumers. That potential excites us.
We are currently focused on running our three stores-two in Richmond and one in Hampton Roads-but down the road, we hope CarLotz will be nationwide.