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Scott Painter on how listening to customers and learning from missteps can strengthen a company
In one of the most candid speeches presented at a Splash event, Scott Painter, founder and CEO of TrueCar, explained why the last six months have been a painful and stressful time, but how the company is on the rebound and recovering.
"The last six months sucked ass," Painter said, during his keynote speech at Splash LA late Thursday, in front of an audience of some 400 attendees. It was one of the lines that caught the attention of the audience. "While the last few months were unimaginable, it was also a right of passage for us. Now we really can say that we own this product -- because, really, no one wants to walk into the fire that we just did."
As the Founder and CEO of TrueCar, Inc., Painter has created an online automotive information and communications platform focused on creating a better car buying experience for dealers and consumers. And Painter is no stranger to building a business, he has started 28 companies – the majority of which brings innovation to the automotive industry.
More importantly, great CEOs are those who can make hard choices in the face of adversity to ensure the survival of their companies.
When Painter built a truly disruptive company in the world of online auto retail, seven years ago, he had no idea just how much pushback he would feel once his company was gearing up for its IPO and chose to run some TV spots to raise brand awareness. That is what changed everything and sent his very lucrative company into a tailspin and a nearly-complete business overhaul.
Here are some of the key points Painter expressed in his keynote:
-- When you are a young entrepreneur you have to be persistent and deal with a lot of adversity. So when I speak at colleges I and young business people I stress just how important it is to be literate about financial reports, legal provisions and other elements that come into the weight of raising money.
-- I have raised $1.7 billion in debt and equity which makes me a great fundraiser but is not a good stat when you look at how much money you are getting everyone back.
-- Its been a long time coming, but even as a young adult I knew that I was not going to be the son that saves his way to wealth, I will bet it all every time.
-- Much like no one gets married with the idea that 50% will end in divorce, you can't enter a business with the fact that only 10% will reach financial freedom.
-- The last four years for me have been a great transformation. I have evolved from a great promoter that can read a balance sheet and talk at the front of the room, to really becoming a stronger operator. I am an operator now, but I can admit that I am a reluctant operator that has had to work at it a lot.
-- Of the companies I have started, more than half of them are in automotive and it can be said that it has been an evolution to get to where we are today.
-- The last six months for us has sucked ass. It is not an early-stage entrepreneur story at all. It is a story about the later-stage pains. We have been around for seven years with a righteous mission but there are a lot of vested players in this area that don't want to change. It is a $4.7 trillion industry that give us a lot of pushback.
-- The idea that you go to a car dealership to buy a mass-produced thing and everyone is paying something different is the essence of the problem.
-- Big data and a great brand that stands for truth and transparency is what we wanted to get to a first-time car buyer.
-- Kelly Blue Book, Edmunds and others have long been printing data that isn't accurate to what people were actually paying, it was information that all the dealers were working off of. And we came into the company thinking: We only want to get paid when someone actually buys a car.
-- Before we ran a TV spot, we had been doubling in size every two years. We even hit $75 million in revenue in 2011. Things were amazing.
-- We were always fighting for relevance in car dealerships and always thought if we made up 10% of the people going to car dealerships then we would have something that the industry had to recognize and lately we are seeing 10-50% of prospective buyers were coming in through our service.
-- Once we were no longer incremental and were now core, we started getting pushback from the car industry.
-- We went from 6,000 dealers to 3,000 dealers in just 30 days because they rallied against us as a data company. Prior to us going on television to market our services, dealers were going on our site an average of once every 30 days and then after they were logging on 6-7 a day and the environment changed from helping dealers that gave quality cars at reasonable rates to dealers willing to low-ball any car just to undercut the guy next door.
-- Even though our service initially made the dealer the "bad guy" it turned out that they were an integral part of our ecosystem. You can't work against them because they would slam us to customers, find ways to increase the price to the buyer or cut out our slice because they didn't want us in their industry.
-- We lost almost $10 million in January and I lost 38 Ibs since then - it's not a diet I would recommend.
-- TrueCar was suffering a genuine "attempted" boycott and it was something we couldn't change or predict it has changed a lot of what the company is.
-- We had to change how we bill dealers, how we run the site, how we manage the team, all because of a reaction to our system that happened overnight.
-- We have completely reinvented the business, it cost us about $30 million and it forced me to be an operator that looks at those 10% improvements in many different parts of the company.
-- Being on the brink of an IPO and turning the company upside down in 60 days is a challenge in the truest sense but it really means that people are betting on an entrepreneur and a commitment that makes a big difference.
-- While the last few months were unimaginable, it was also a right of passage for us. Now we really can say that own this product -- because, really, no one wants to walk into the fire that we just did.
-- I don't think we are any less disruptive in the industry even though we had to do a lot of changing. A lot of what we changed was our approach, our educating of users and dealers and really becoming more of the community rather than a painful outsider.
-- In our world we believe that fear is a bigger marketing tool than greed so it is more powerful to talk about not being taken advantage of than to have a race to the bottom.
-- All of the dealers that were succeeding on TrueCar a year ago were already great, competitive dealers and we learned a lot when we saw that shift to dealers scrambling beat the next lowest dealer price.
-- If I could go back to before the television advertising spots I would have done everything different and implemented the educating and model that we have put in place now.
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TrueCar, Inc. is an online automotive information and communications platform focused on creating a better car buying experience for dealers and consumers. Consumers want a hassle-free car buying experience and dealers want high-quality sales velocity. TrueCar helps achieve these goals by providing unbiased market information on new car transactions and by supplying an online communications platform through which dealers and consumers can communicate with each other. TrueCar’s market-based information provides both consumers and dealers with an accurate and comprehensive understanding of what others actually paid recently for similar vehicles, both locally and nationally. TrueCar’s communications platform then allows informed, ready-to-buy consumers to communicate directly with participating dealers. Some of the nation’s largest and most well respected membership and service organizations rely on websites powered by TrueCar to help educate their members and customers who are in the automotive market. TrueCar is headquartered in Santa Monica, CA, and has offices in San Francisco, CA, and Austin, TX. After experiencing dramatic growth since 2006, TrueCar is developing a suite of products and services centered on radical clarity through the comprehensive analysis of market data and information. TrueCar’s participating dealer partners have sold over 500,000 new vehicles to TrueCar users nationwide.
Joined Vator onScott Painter has started nearly 40 companies – the majority in the automotive industry and has raised over one billion dollars from investors for his numerous entrepreneurial ventures.