Making Millions off Flipping Cars I Jared Wheeler DSH #359

Probably wouldn't have if I wasn't as young and dumb as I was.

Because it's a lot more difficult than you realize as you start scaling.

Did you need a lot of capital to start one coach?

No, that's what I mean.

Like I was lucky.

I only had, you know, 30,000 to start, and you could go buy 10 good cars with that and flip them.

It worked out pretty well.

If I had to, like, restart now, you'd need a lot more capital probably to do what I did in the beginning.

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All right, guys, we are back.

Digital social hour.

We're going to learn about cars today, aren't we?

I hope so.

We'll see what I know.

Let's do it.

Jared Wheeler, man, how long have you been in the car space?

Since I was 18.

So I guess I should say I started my dealership when I was 18.

I was working in car dealerships when I was 14 detailing.

So a long time.

Starting a dealership at 18.

I mean, that's super young.

Well, yeah.

So it was 2009.

So like it was right after the crash.

So it was kind of an interesting time to get into it.

Honestly, if you think about it, it's like the best time to try and learn.

You could buy some pretty nice cars for a thousand bucks back then.

So I think I got kind of lucky on when I started it.

Maybe if I

probably wouldn't have if I wasn't as young and dumb as I was because it's a lot more difficult than you realize as you start scaling.

Did you need a lot of capital to start one because

no, that's what I mean.

Like I I was lucky.

I only had 30,000 to start and you could go buy 10 good cars with that and flip them.

It worked out pretty well.

If I had to like restart now, you'd need a lot more capital probably to do what I did in the beginning.

It's still kind of easy to get into the flipping space.

I help a lot of people flip cars and learn how to do that.

But back then, yeah, it was...

it was almost more dangerous to be in the normal car industry where you're trying to buy $20,000 to $30,000 cars, right?

Because you could just lose so much more money when the economy is poor right but when you get to like a thousand to three thousand dollars it's hard to like go much lower than that

yeah and you quickly became the largest independent dealer in your area which area was this so i live in southern utah st george utah yep it's uh

it was an interesting market that in particular was an interesting market it was kind of when i got into the scene i would say the normal way to market cars was in the newspaper like you would have ads like with little old school print ads of, hey, this is $16.99 or whatever, you know?

And then no one was doing anything on the internet when I first got into it.

So I kind of started and really did something no one else was doing yet in my market, which is so duh now, right?

Putting cars online or listing them on, you know, Craigslist or KSL in the early days.

really kind of got me ahead in the beginning.

So a mixture of timing and just being early to different marketing platforms.

Yeah, I think that with dealers, you know, they're really keen on, they call them dealer 20 groups, where you'll go meet with other dealers that aren't in your market.

That's what they call it, right?

And you're supposed to share ideas and all this stuff.

I've never gone to a dealer 20 group.

I've never looked at or got any feedback from anybody.

And I think that kind of helped.

I think it was nice to not know anything about how the industry worked.

And it kind of made it so you could be a little more innovative on how you think it should be instead of, hey, this is what everyone does.

So I was kind of the first to pioneer just putting the lowest price up front, which is kind of like a duh thing now.

A lot of people do it.

A lot of dealers that are successful do it now.

But it used to be: you buy a car, it books for 10 grand, you put it up for 10, and you got to go negotiate with the customer.

And it was this whole back and forth thing.

And so I quickly shifted to, well,

everybody else is asking 10.

Let's just find what the lowest price is online and let's place it there and just turn inventory fast.

So that's kind of how it scaled so quickly I guess

in

the grand scheme of things.

I just was able to sell more.

So you played the volume game instead of focusing on margins, you focus on volume, building that customer base.

Right.

And then it shifted.

Like as you do volume, everything starts changing, right?

You start getting better deals when you're buying parts.

You get better deals at the auctions you deal with.

You get all sorts of incentives coming back to you.

And then it kind of started shifting to back-end products became a really big thing for dealers, right?

And now they're a lot more prevalent and people kind of demand them.

Right.

Service contracts or all that stuff.

Yeah.

Curious about the auctions.

Walk me through what goes down there.

Are you allowed to bring your phone to look up pricing or do you have to know everybody?

Oh, yeah, yeah, yeah.

So it's it's pretty so I actually do the auction a lot different than most dealers.

I kinda was the first in the beta testing of online auctions.

So they came to me to do that and I've been doing that for a long time.

Kinda forced a lot of dealers to learn how to just buy online.

So I just have all my screens.

It's almost impossible.

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It's possible to buy as many cars as we need to if you're in lane.

So how the auction looks is you literally have 13 lanes of cars that are just driving through with an auctioneer at each one, and there's a floor guy that helps.

Wow.

But if you had to buy as many cars as I do in person, it's impossible to run to each lane.

So it's better to have them up all digitally and you just can click as two.

You literally have 13 screens?

No, I don't have 13 screens.

There's 13 lanes open and I can fit six on each.

So normally it's three screens, and some of them I'll avoid some lanes that I don't like.

If I don't like the sellers, or if they sell bad product, then I avoid those.

But yeah,

it's almost all digital.

But the old school way is exactly how you think.

And it's not, I shouldn't say old school.

People still do it every day.

But you go there and you can have a little app on your phone that scans it and tells you what the values are and stuff.

Interesting.

Wow.

And how many are you buying?

Because you're saying you're buying a ton.

Yeah, so I actually have it

pretty down to a science where I know exactly how many cars we need to buy depending on what the market trend does.

So like I was saying, it's all about velocity for me.

So I like keeping it at a 45-day turn.

A normal dealer tries to be at a 60-day turn, which means you're turning your inventory twice a year, right?

So I'm a little ahead of that.

But if I get too low, if I buy too many cars and we sell too many, then you almost get bottlenecks and all these different things.

Because you have to remember, I got to buy it.

I got to transport it.

I got to get it back to my dealership where we have our service center, service them all.

So depending on your flow, it's better to just know, okay, we sold this many cars last week.

We need to replace this many.

We took this many trade-ins.

Okay, so we need 27 cars this week or whatever.

Interesting.

And how many are you selling online versus in-person?

So

the dealership is basically online, but it's all about setting people up to come in is the normal way, right?

This is how my traditional thing is.

Obviously, I got some online stuff going on that's different now, but I would say everything starts online with a lead or a phone call that they saw it online and then it just sort of converts from there.

I sell a lot of cars out of state so we do a lot of FaceTime and Zoom calls.

Oh, they don't even show up.

We'll just ship them right to them.

I've sold cars to Hawaii all over the place.

Man, I need a test drive personally.

You know what I mean?

Yeah, that's what's nice about this new thing that I'm doing.

That's pretty exciting.

Yeah, I feel that.

Yeah, we'll dive into that.

They say 87% of people want to test drive the car before they buy it so that's what's interesting about how carfana's got so much success yet still you almost see 90 of people would rather test drive before they buy it wait are you not allowed to test drive carvana cars so they have their uh exchange policy right so it's like you buy the car and then it comes and you have so many days to exchange it so you buy it before you even test drive it which is interesting yeah now you said they're successful i was seeing some headlines not so long ago saying they were struggling is it has that changed uh well you got a few of the guys the juggernauts that were next to them that just announced that they went under.

I know Vroom just said that they're no longer doing the online retailing space and a couple other big people that were next to Carvana are kind of walking away from it.

The problem with, and I shouldn't say problem, they're still publicly traded.

They're still a juggernaut in the space, right?

They do a lot of units, but it's hard to be able to source all that inventory and recondition all that inventory, which we say like make it, get ready is what we call that, right?

Paint a bumper or change the tires any of that stuff and there's so much time so much holding cost to that that it costs a lot of money to have that that many cars in flux right and so it's tough it's it's you got to be turning them very quickly to be profitable right which they probably aren't because they have they're so high up there's like hundreds of cars in there yeah so they i think they normally floating between twenty thousand and forty thousand roughly right now i think at their peak during they're listing about 80 000 cars but they had to buy all those cars and so they have all that interest that they're paying on it.

Oh, they're not buying outright, they're no, most dealers utilize whether it's their own flooring line, like they created their own or someone else's money.

Most dealers utilize a flooring line, which is basically a giant credit card.

If you think about it, like that, that you buy the car as soon as you sell it, you get funded on the car, and then you pay off your line and you go buy more.

Oh, interesting.

So, you don't have to front your own money.

No, no, although some dealers do, some dealers don't.

It's kind of a preference, but anybody that's doing it at scale

utilizes some kind of flooring.

Like I said, even if it's their own money, they probably have set up a flooring company to lend it to itself.

This space is so fascinating to me because I wasn't into cars, but having on some podcast guests, I got pretty into cars recently.

And, you know, we were talking about Nick Dosa.

He's doing nine figures a year out there, and that's just one city.

Oh, it's crazy.

Especially when you get into those ultra-lux or exotics.

You make so much money, but the risk is so much higher, too.

And I don't know if you touched on this.

I like being transparent, telling vulnerable stuff, but you look at, I mean, I was telling you about that Lamborghini before we jumped on, but.

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Depending on the market conditions, a car like that, say you're spending $300,000 on a car and all of a sudden sudden everything changes in the economy, you can lose $40,000, $50,000, even $100,000 on a car like that.

And all of a sudden, they're not selling because it costs so much to hold that as inventory.

People have to liquidate it and keep the ball going or else you get stuck with it.

So

he's a very sharp guy.

He knows how to move cars fast.

It's nice when you're in that space if you have the right connections.

Say, yo, I have this.

I'll let it go for that.

Trade me something that you're sitting on, whatever.

It's kind of nice when you have those relationships for sure.

Yeah, he told me some days he's selling five, ten cars, and these are expensive cars, they're like six figures each.

I'm like, geez, a million in a day.

That sounds nice to me.

Yeah, that's crazy.

I get a lot of text of some of the cars in the showroom, and it's like, ah, nah, dude, I'm not jumping on that $3 million car right now.

Sorry.

Yeah, but like you said, because like a year or two ago, those Ursus were what, almost half a mill?

Oh, yeah, they were insane.

They were getting 100K over stickers sometimes, depending on their options, at least 40 or 50.

It was dangerous.

Same with like the G-Wagons when they were that new body came out during

stuff.

Yeah.

And they were getting crazy numbers over sticker.

And then all of a sudden, it flipped like crazy.

And you never know.

It's the cloth could be pulled from you at any moment.

And all of a sudden, you're stuck holding the bag.

Did you get caught holding any big bags?

Oh, yeah, so many times.

I've lost a lot of money.

And the problem is when you start liking cars, I've been

luckily enough, I've driven a lot of cars where it doesn't get me as excited as it once did, but still I love cars.

I mean, that's what I do.

So I'll still buy things that I like personally that end up costing my company money.

Everyone gets mad at me.

I have an affinity for Range Rovers for some reason, and my whole company hates them, but I just like them.

I don't know why.

They are polarizing.

I've heard bad things about them going to the shop early and stuff.

Yeah.

I guess it doesn't matter if you don't have to keep them that long.

Luckily, I just sell them.

Yeah, that makes sense.

Is there any car brands you won't touch just because the quality is so off the rocks or whatever?

Actually, there's a lot of cars.

What's kind of cool with how much volume I do, and I sell a lot of back-end products that help protect customers, but it gives us a lot of data in the sense of like, hey, the cost on this service contract on this particular car is three times more than the average.

So I actually have like a real list of I do not buy these cars because they have so many potential problems.

And it's not only the problems that come up, sometimes it's an issue like, hey, here's a very simple problem, but the fix is three months out or it's backordered.

We don't know when we're getting it.

Like Audi has,

I have a Q8 situation right now that's a good friend of mine that I sold it to him.

And so I'm personally involved in this story.

But it's just a little 12-volt battery that does the auto-start stop, right?

You know, when you stop at a light, and it'll stop if you don't turn it off.

The battery that controls that has some defects in it.

And now everyone's having the same problem.

It all hits about the same time.

Now you can't get them anywhere.

You know, it's three to six months out.

That's what the OEMs are telling you.

And you don't even know if you're really going to get it.

The car literally can't drive without this little 12-volt battery that should be a $100 battery.

And the car is just dead in the water.

So he can't even drive it?

No, yeah.

So I'm like, dude, let's just trade you out of it.

Let's put you into something else and I'll figure it out.

That is crazy.

Yeah, I get recalls on my Tesla.

I don't know if it's worth sending it back, but all the time.

Yeah, Tesla is a whole nother thing.

how they run their market and their industry, it's so unique.

Even when I buy them, I have to send them to Tesla.

Like, they don't let me work on them.

Really?

Yeah, and they don't let you buy any of their computer programs or anything to program them yourself.

Interesting.

Yeah, it's super cool.

They keep it all in-house, huh?

Yeah, like every other OEM, Audi, Ford, Chevy, whatever you can think of, as a dealer, you can buy all these programs so you can recalibrate stuff if you put a new part on.

But yeah, Tesla does not let you do it for

you.

Buy any cybertrucks yet?

No, I haven't.

I haven't even even seen one in person

there's a couple in vegas actually

yeah yeah they look wild in person i haven't seen in person my friend dylan vanosted it seems pretty wild yeah i i still can't believe that's a real thing like i look at it i'll see some instagram posts or whatever and i'm like i can't believe that we live in a world where that crazy little Mars rover is just roaming around the streets.

It seems like every brand's getting into electric now too.

Have you noticed that?

Yeah, I have.

It's going to be an interesting thing.

I was just talking talking earlier about this, but the electric space has really, really shifted.

I mean, you can buy electric cars so much cheaper now than you could a year ago.

It's wild.

I mean, like half value on something.

Yeah.

Well, Tesla's dropped their prices like crazy.

Well, that's another thing.

He does some wild stuff.

No other OEM or franchisee has to deal with just all of a sudden a giant price drop on new stuff.

So now all the used pre-owned inventory is all

devalued, right?

So

it's a weird thing you have to navigate in my space.

Yeah, you never know with Elon, man.

He's a wild one.

I want to talk about Keezy.

You've been working on this the past few years as a tech company.

Tell us more about that.

Yeah, so I was kind of mentioning this earlier too, but I wanted to

find a way to scale my businesses vertically instead of horizontally, right?

And what I mean by that is every dealer that I looked up to when I was 18 growing in a space, it was all about

brick and mortar, buy another location, doesn't matter how much money, you just keep buying, buying, buying, and you end up having this giant network of dealerships that you own.

And I've worked with a lot of these dealer groups now with the auto mall that I've been building, and I see their processes.

And it's hard to control your processes and what you care about in business when you get to that scale.

And it's just so difficult.

And then I was looking at companies like Amazon or VRBO or Uber even, right?

You look at a company like that where they empower people to make money and it scales so much faster.

The scalability is so much different.

And so with Keezy, what I wanted to do was be able to create a marketplace similar to Amazon where I could take all the dealers that are in my network and then and list all their inventory and be able to sell it online similar to how Carvana does.

But you could still have in-person touch points, just like you said, you wanted to be able to test drive a car.

So you could still shop locally, but buy 100% online where you're not being,

for lack of a better word, harassed by the dealer, getting stuck in their CRM.

So I created something that kind of puts a shield between you and the dealer, and we facilitate the transaction.

So you're not stuck having to go give your information to six different dealerships because you found six cars you like where they're going to run your credit at each one.

Or you have to get harassed on your trade-in on each one.

And I love dealers.

You know, there are some dealers that are a little more harassy than others.

But

I think for some buyers, that's necessary.

You know, it proves it with Caravana, where people are willing to buy without even test driving the car.

They just hate that experience so much.

So that's been a really fun project to be a part of, and I'm excited for it.

We just launched on Friday of last week.

That's exciting, man.

That's going to change the car shopping game for sure.

I think it really will.

The nice thing about it is because it's completely online like that, you get to eliminate some of the biggest expenses dealers dealers have, whether it's commissions, you know, sales commissions or finance commissions or these different manager type roles that really are really expensive, but they're needed.

But it lets you be able to turn your inventory a little quicker.

If you could sell an extra 20% of your cars 100% online without having to pay anybody to sell them, so I don't charge the dealer to list and I don't charge the customer to buy.

Wow.

We just facilitate it 100% online and I make money arranging your financing or taking in your trade or something back in.

So it makes it so I can sell products cheaper than anyone else can because I don't have to pay someone to sell it to you.

And ironically,

the penetration is a lot better

when you're not being asked to buy something by someone.

You get to discern the information a lot differently and really digest it and see if it's right for you.

That's cool.

So the goal is to onboard a ton of big dealerships, basically.

Yeah, so right now in the beta, I have six dealerships that I work with pretty closely in my market area that's launched on the beta.

And then from there, I'll go Utah-wide as my intention, and then just

east coast to East Coast.

This could be big, man.

Yeah, I hope so.

I think

it's one of those things, you know, you put yourself out there to be vulnerable.

You're either going to do really well and you're a genius, or you're an idiot, and it all grew up, you know?

Which, hey, I'm okay with that.

I've always been all in on all of you.

All in, baby.

That's entrepreneurship, right?

Yeah, that's for sure.

Have you sold a car out to Post Malone yet?

No, I haven't.

I see him driving out there.

I know, and I'm really good friends with the Lamborghini Guinea-Bentley dealer up north.

So I live in southern Utah.

He's in northern Utah.

But yeah, man, I'd love to do that.

So post is for you.

Let me hook you up.

Let's get it done.

What's the most expensive car you've sold?

Most expensive car I've sold.

It was a Hurrican Perfermonte, actually.

So I sold it for $350.

I really

get more into the high-turning space.

Like, that's where the money is.

Like, Nick Dosev will sell some really expensive stuff.

Yeah.

You're holding it.

His turn time is a lot different than mine.

My bread and butter is just following the market.

Like the last year, with interest rates going up, gas prices, expenses, everyone was kind of concerned about money.

I shifted my entire focus over to more affordable cars and kept selling throughout the story.

It's nice when you're riding that wave on cars because if you get stuck holding, say, like I average 2 to 220 in inventory, right?

That's like my perfect little nugget to stay at a 45-day turn.

But if I hold those 200 cars for, say three months because the market shifts, now all of a sudden all 200 of those cars are worth a lot less than what I could replace them for today.

So my whole philosophy is just keep liquidating them all the way through a downturn and then you buy on the upturn.

Whereas a lot of people will see values dropping.

They're like, oh, I'm not going to sell this at a loss.

And they'll just...

you know, diamond-handed if you want to say that.

You're DCAing.

Yeah, until the bottom, and then they wait till it comes back up, which is fine.

They end up not losing maybe as much money if you want to say it like that.

But the difference is, if I can turn the car three more times in the time that you're holding it for 90 days, then I've made money on the replacements, right?

Wow.

So you take the bite up front and it becomes a lot more profitable if you can stomach it.

Yeah, that's what's really interesting because it's hard to stomach a loss.

So you're actually willing to sell hundreds of cars at a loss?

Yeah, so the crazy thing is, I only average in between $650 and $900 per car I sell

on the front.

That's it.

Yeah, that's it.

That's like the lowest margin I've ever heard.

Yeah, I know.

It's kind of wild.

But we turn them pretty quick.

And like I said, we take trade-ins, we sell back-end products.

So the cool thing about my business model is you can buy a car from my dealerships and buy it so far back of what the market is, and have a full service contract or gap insurance, whatever protections you want, and still be less than what the market is.

So it's like, okay, I'm buying this car, it's this far back, and now I can add a service contract and it's still cheaper than what I'd go buy it for from someone someone else.

Yeah, it makes sense.

So, it kind of has worked in a nice way for me that way.

That's cool.

Have you heard of those people making an LLC in, is it Wyoming?

I forget what

Montana.

Have you heard of that method?

Yeah, so I actually just went through a whole thing with one of my really good friends who I love to death, but he knows that he's a pain sometimes.

And he made me go through this with him.

He started a Montana LLC so he could register it there and pay the sales tax and stuff.

And it's pretty common on expensive cars.

You know, I'll buy a lot of Lamborghinis or anything in excess of $150,000.

Yeah, it makes sense because you're not paying the sales tax, but there's just a lot that goes into it.

Yeah, that makes sense.

I know my buddy, I don't know if you know Mo Capital.

He owns a luxury car rental.

That's a whole nother space.

Oh, yeah, that's not in my wheelhouse at all.

But since he has like 30 luxury cars, he did it in Montana.

Yeah, that makes sense.

So with someone like that, like, I don't know if he's a dealer, like where he's putting dealer plates on all those cars when he rents them, but I'm assuming for his insurance and bond purposes, he had to have them registered.

So, that's perfect for someone like that.

Like, for me, like, I don't personally buy anything and register it or ever pay sales tax on it, right?

With a dealer, you can you basically have insurance that covers all your cars.

You're bonded for all your cars, and you have a dealer plate that's good for any car.

So, it's basically your registration for anything that sits in your inventory.

Wow, so you have one plate just yeah, so I can you go buy a Urus and drive it and not pay anything different on my insurance or don't have to pay something.

Yeah.

That is sick.

It's got some good benefits for sure.

I just did my plates for my G-Wagon.

It's like $1,200 a year.

I was like, damn.

Yeah, that's what I mean.

No one talks about that part of the thing.

No.

So a lot of my friends that are finally getting into that space where they're willing to buy something exotic or luxury, it's kind of fun because I can help them through that, buy it super cheap, and then they can drive it for six months, flip it, make a couple of grand and buy something else.

That's the whole man i'll buy my next car three yeah i'll hook you end of this year when i need a little tax start off there we go i'll text you in like december for sure i'd be happy to help how much of your investments are in cars do you invest in anything else yeah i

so i'm pretty all in in this uh keysy thing i've spent a lot of time and energy and money into that tech right and that's a weird thing to invest in for me personally right uh

where you're putting so much money into something that's intangible at first, right?

It's not like a piece of land.

Like I got some real estate deals that I I really like.

That auto mall is a really fun one that I've done and been a part of and watched that grow.

But when you're talking about tech and you're spending all this money on something that you don't even know if it's real, it's some ones and zeros in some Git space, you know, on some repository.

When you're looking at stuff like that, I always go back.

Ever since I started scaling my business, I always went back to kind of the blockbuster analogy and model.

Are you familiar with blockbuster?

Yeah, they went out of business.

They denied Netflix, right?

Yeah, yeah.

So, how old are you?

I'm 26.

Okay, so I'm 33.

So, I literally remember going to Blockbuster on the weekends with my family and renting movies.

I actually went to one.

I caught the tail end of it.

Okay, cool.

So, at their peak, I mean, they were worth $3 billion.

They had 65 million users actively in their CRM that they could have marketed to.

One year, I remember hearing that they made $800 million in just late fees alone.

So, just pure gravy off the top.

I mean almost a billion dollars in late fees.

And when you look at them and they weren't the first to, and even taking it back from Netflix, I mean Redbox came out.

I remember Redbox.

Redbox was sick.

You could go get a movie for a dollar and they were just at a gas station.

So you didn't have to deal with the line or the minutiae of all that stuff.

But for Blockbuster not to come up with Redbox and then even worse, not to come up with Netflix.

I mean, it is crazy how fast that if you don't innovate, you can become obsolete.

And if you look at their business model, it was annoying to customers to some degree, but it's all they had.

They had to go in there and it was all fee and penalty-based.

That's how they made their money.

So you make a mistake, they make more money.

Whereas with Netflix, when they first started, you couldn't even really stream anything.

They would literally mail you discs in the mail.

You'd have to wait over a week to get them.

And if that could catch on and become the juggernaut I became now, it's like, dude, I never wanted to be the dealer or in my industry.

And I hope this goes for whatever industry you're in don't ever be looking so so tunnel vision that you're not seeing some bigger picture that can let you change the entire way the industry is ran like this is something that no one has ever done because dealers in their essence want to hold on to every little secret they have you know they don't want to share information besides those little dealer 20 groups I was talking about but to be able to open it up and say hey I want you to make more money and I'll take a little piece of it I want everyone to do better right

It's such an interesting way of thinking where my industry's never thought that way.

It's always, oh, yeah, yeah, it's brick and mortar, brick by brick.

You just win by buying up everybody else and controlling the market.

The cool thing about a product like Keesy or like what I'm creating is you protect both sides.

So the consumer now has an unbiased shopping experience where say with Carvana, Carvana owns all those cars.

They have incentive for you to buy their car, right?

They have incentive for you to do their financing, all this stuff.

For me with Keezy, I don't care which car you end up buying because it doesn't matter if it's this dealership, my own dealerships, or someone else's.

I'm just facilitating this transaction for you.

And the same with the financing.

I created a marketplace for the financing where banks and credit unions compete for your loans.

Small cars.

Yeah, so like you look at a business model like that, it's going to be hard not to have the best deal because who could ever, you're going to let the capitalism be conducted inside your marketplace let dealers compete with each other and have better processes and you just facilitate the story dude i love that i just paid 10 interest on my car so imagine if i had other banks that would lower that right right

for my business and and man there's there's so many

there's so many nuances in the auto industry that's that i wish i could talk more about all the transparency stuff that should be brought to light but this this fixes all those things from my perspective and empowers both sides the dealers because we're the problem is like everyone can blame dealers, but man, we're squeezed just as hard as the consumer is.

I mean, all these different subscriptions we have to pay to be relevant with, you know, all the different third-party sites.

I'm not going to try and like name any and get in trouble on any stuff because I do business with a lot of them.

But I mean, we're just nickeled and dimed every turn, you know, like from buying it at the auction and using the flooring that I was talking about and having to list it and be competitive and marketing and then all of your expenses that you have just as a dealer and then your employees.

it's tough.

Yeah, you were saying the margins are thin.

I never realized how thin they were, to be honest.

I assumed in my head they were 10 to 20%.

Yeah.

But maybe that's too high.

You got to think like

you look at a car dealer, it's interesting because you could sell a $50,000 car and I might only make $2,000 on that.

So like the revenue that moves through is a lot of money, like on paper, but your actual profit could be very small.

So percentage-wise,

I think it's one of those interesting industries that people always think that you're making more than you really are.

Yeah, because what do the sales guys get?

They're all commission-based, right?

Yeah, so my dealerships are a little different.

I don't pay, a lot of dealerships pay like a percentage of gross, right?

So it's like, hey, you sell something that we make more money on, you make more money.

So when I changed my business model almost a decade ago now, it didn't matter which car that my salespeople sold.

them because it was one price you didn't negotiate you weren't going to be able to make more money i was the one that built the algorithm that dictated what the price would be so i knew the velocity of the car would sell in x days right so i went to just a flat-based system so instead of a percent got it they just get a flat each time right doesn't matter the price no it doesn't matter it doesn't matter if it's a 200 000 car or if it's a five thousand dollar car that we took it on trade and selling it to someone else so from an employee point of view do you think that hurts their morale a little bit

Another common practice in dealerships, which I hate, and this is why people have such bad experiences going to dealerships normally, is they'll flood the sales floor.

So like where

they say the average for a salesman, they'll sell eight cars a month, where the average of my salesman will sell 18, more than double, right?

Because I have such a small footprint on the sales force, it totally changes the dynamic of how they interact with the customer, right?

If you're like only going to see one up a day, which we call a lead up, like someone comes to the dealership, you're going to do whatever it takes to sell that person.

But if you have 30 leads sitting in your CRM, you're just so much more relaxed.

You don't have to feel this high pressure to feed your family.

And it's nice because we'll have five or six leads on a car that we just got yesterday, right?

So it's like, hey, you don't have to have any weird pressure to put on the customer to buy.

It's really the only pressure is you're fighting against other people, other customers that want the same car.

So I think it created a better environment.

Interesting.

That's cool, man.

Jared, it's been fun getting to know the car space, man.

Anything you want to close off with or leave the audience with?

No, I'd just say do your research.

You know, there's so much stuff online these days.

You can find a good deal.

You can look at reviews.

Just make sure you're dealing with the right type of dealer.

And there's some good guys out there.

Absolutely.

Thanks for putting the car space in a good light, man, because some people get a bad taste in their mouth from car dealerships.

Yeah, it happens, but I appreciate you having me on.

Absolutely.

Thanks for watching, guys.

Thanks for coming on.

See you tomorrow.