Choose Industry. Build Product. Grow. Exit. Repeat.
It was reported this week that CarGurus, the online car shopping platform, has selected banks in preparation for an IPO at some point in 2017.
CarGurus is one of Boston’s most successful private consumer internet companies, and yet, it fails to garner the same attention as some of the area’s very early-stage startups. One reason for that may be that it never took funding from a venture firm, and therefore doesn’t have a need to send signals to the “market” about how much it is “crushing” it.
Nevertheless, CarGurus should have everyone’s full attention now. In searching for a takeaway, startup founders and executive teams shouldn’t be asking “How the hell did they bootstrap and pull this off,” when it comes to CarGurus, but “How can WE do this too.”
Well, there is a playbook, and it’s not that hard to find.
CarGurus has never had to deal with pressure from VCs. That’s due to the plan of founder and CEO Langley Steinert and his leadership team who emphasized a focus on…wait for it…profitability, above all else.
But that isn’t what ultimately led to the success of the business.
No, the key to CarGurus ten-year march to an IPO is that all-along, the company just mimicked TripAdvisor.
A couple of years ago I interviewed Sam Zales, CarGurus’ president of international and dealer operations, and he was very explicit about how Steinert, who was a co-founder of TripAdvisor (one of the highest-valued Internet companies in the US), was specifically trying to follow what he called the “TripAdvisor model” with CarGurus.
TripAdvisor, you see, not only figured out how to best mix business-generated content with consumer voices, but they created a trustworthy brand on an international scale at the same time.
As Zales explained at the time, “The foundation of [CarGurus] was replicating an incredibly successful model for the consumer around creating transparency, relevancy, and quality…doing the same thing done with travel search to the car buying experience.”
If you think that this is simple, it is not. The execution thus far for CarGurus has been impeccable.
Also, if you are wondering why more companies don’t just apply an existing business model to a different industry, know that they have, and, for the most part, they too have been successful.
Take for example David Blundin, of Link Ventures/Cogo Labs. Blundin, you see had a few VERY successful startup exits before founding CourseAdvisor, which was acquired by The Washington Post in 2007. The thing about CourseAdvisor is that, beyond just its name, the company owed an enormous debt to TripAdvisor. With Cogo Labs, Blundin took what he learned about TripAdvisor’s search engine optimization mastery and spun into businesses in an array of different industries.
That plan worked masterfully with CourseAdvisor, so then Blundin and a cohort of executives figured out the process and replicated the same model again and again, including in the car shopping space with Autotegrity, which sold to ADP. Since, they’ve applied their model and learning to companies like EverQuote, which just raised $17 million.
Blundin and Steinert aren’t alone, mind you. Finding a model that has worked, making a small tweak, and replicating, has been done to great effect by folks like Chris Lynch, Rodney Brooks, Walt Doyle, Paul English, Helen Greiner, and many others.
So, the lesson for anyone looking to build a startup — or to do anything creative or innovative for that matter — is a truth known by everyone from Shakespeare to Quentin Tarantino: Copy from the greats that came before you, but make it your own.
For CarGurus, following that strategy is about to pay off handsomely.
Under-the-radar
Ash Egan, Principal at Converge Venture Partners, couldn’t pick just one company in his firm’s portfolio that isn’t getting the attention that it should, he mentioned three: Nift, RocketVisor, and Samrtvid.io.
RocketVisor seems like a company out of the Drift/InsightSquared mold that could become an integral service to a specific niche of the business world. In RocketVisor’s case, it has a chance to evolve the sales process by integrating machine learning capabilities.
But there is something truly intriguing about Smartvid.io. Mainly, the company is looking to make headway in the very underserved construction technology space. Smartvid.io combines photo and video with machine learning to assess for “industrial-grade problems” to do everything from making sure a worksite is safe to evaluating the progress of a project.
Founder and CEO Josh Kanner has an excellent construction tech track record, having led Vela Systems to an acquisition by Autodesk in 2012. Something that also bodes well for Smartvid.io.
What went down this week…
AI Maven- A few weeks ago, we talked about Talla’s tourney add-on for Slack. It was a cool feature that aligned perfectly with the company founder’s love for hoops. Since, both Talla and CEO Rob May have been on fire. First and foremost, Talla has expanded beyond being primarily an AI solution for Slack with its new integration for Microsoft Teams. Beyond his own company, May is stepping into a role as the leading voice on everything artificial intelligence related.
- May is a tour-de-force in Boston, as an AI thought leader as well as an investor. But take note of how much more prominent May is becoming in the national discussion of AI. First, May is quoted at length in a recent Xconomy story about DataRobot’s recent $54 million fundraise…a company with which he has no affiliation. Second, May’s weekly AI newsletter, Technically Sentient — which was picked up as part of Jason Calacanis’s constellation of Inside newsletters — is truly a must-read. This week, May’s commentary in Technically Sentient is fantastic: “One of the big arguments in A.I. is whether or not we need to understand the brain to build intelligent, self-aware machines,” he begins as he delves into what the endgame for autonomous vehicles might be. His closing point is great: “…if humans and our environment, at least, the part of the environment that requires intelligence, have co-evolved – if the environment is largely designed by us – then the right way to build an intelligent machine for that environment may be to copy humans. Otherwise, by providing an open-ended highly flexible intelligence to run in that environment, we may never be able to test all the possible edge cases to our level of satisfaction. Getting that last 2% of autonomous vehicles could be harder than we think.”
TV Future – This week, Clypd‘s VP of strategic development Jason Burke published an entertaining outlook for what he believes the next ten year’s or so will look like in the television/Internet media industry. Before diving into that, I need to do a major Utterly Biased statement of biases on this one here: So, I’ve known Jason for a loooong time…like baby pictures together, crushing Miller Lite’s at age 13, getting kicked out of Fenway as adults type of history. So, I’m going to break down the good and the bad of this prognostication while being as fair as possible.
- Overall, this is a cool what-if examination of the media landscape, both as it exists and where it will be. Clypd (pictured above) is in a good position to make some of these assessments as their insights. As a leader in bringing Internet-style, on-demand targeted marketing to TV, they know what is happening at the crossroads of the Internet and television better than anyone. However, some of these predictions are hopeful and don’t do enough to dig into some of the more important questions, like whether or not we will have TVs strapped to our faces in a few years. And while no one knows what might happen with Netflix, which Jason says will be part of the Verizon stable soon, I would imagine that the company aspires to be acquired by someone bigger (and with a greater legacy) than Verizon.
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