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The Type of Auto Dealer That Will Succeed In 10 Years | NY Auto Forum · Auto Collabs

• 0:00
  We're here with Steve Greenfield in the most colorful vest in this entire room at the New York Auto Forum. Um, I have something actually I want to do. Maybe the o- the only vest. Everyone else is in jackets here. It is.
• 0:10
  It's a very formal affair. There's very few hats as well. Just gonna add that in there. Um, there's a little bit of a ceremonial thing I want to do. So, this microphone stick has all the punk rock stickers on it. Ah.
• 0:19
  And since you just started and launched your own podcast... Right. Oh, look at that. He is now a punk rock content creator. Punk rock. Yep, yep. There you go. Okay. So, you just released your podcast.
• 0:30
  It's been- You were just on stage. Did anyone talk about you being on stage? No. What was that like? It was awesome. Great room. He did a great job, like a really impressive. I did not put him up to this.
• 0:39
  It was a lot of fun. No, no, no, really, no. It, it was definitely a, a, a different type of panel because it's a different crowd.
• 0:44
  You and I were just talking about how probably had the highest concentration of dealers and OEM high-level reps in this square footage area in this event period. Yeah, agreed.
• 0:51
  So, we're talking about things that are gonna affect us for the next two, three, four years, when a lot of times, um, in some of like the practical conversations, we're like looking out, how can we make a change in six months, 12 months in our dealership operations?
• 1:03
  So, a definitely much more broad conversation.
• 1:06
  And, uh, we can't get around it that three years ago from now, I mean, three years ago, four years ago, a lot of decisions were made at high levels that we're, we're living with now when it comes to EVs and adoption and things like that.
• 1:17
  Agreed. But it's been a great place. So, back to you. Back to me. And the vest. Yeah, and the ve- of course, the vest. You finally released your own podcast. You said Justin's been begging you to do it.
• 1:27
  Thanks to you guys. Oh my gosh. Thank you guys. This is a great interview. Can we get Nathan? Come here. Come... Get in the camera. Come on, we can get the camera on the camera. This is all thanks to Nathan, actually.
• 1:35
  Nathan made all the magic happen. So, there we go. Should we get the cameraman on here? Yes. Yeah, there you go. Double camera. [laughs] Yeah. This is Steve's show. We, we, we've broken the fourth wall.
• 1:44
  We've officially- Or the fifth wall or whatever it might be. Yeah, we broke, we broke them all. There you go. There are no walls anymore. There's no walls. But yeah, thank, thanks to you.
• 1:50
  Without you and pestering me- Come here, come here... essentially, it wouldn't have happened. Here, I got, I got this, Paul. So- Okay, there we go. Thanks, Paul. Paul. Thanks for your time. So- Get back on stage.
• 1:58
  So Steve, right, you started this podcast. What's the goal behind it? Uh, well, Justin on my team's been pestering me for two years. Okay. But we want to tell the stories of the entrepreneurs, of our investors.
• 2:09
  And in our journey, we're five years in, 56 investments in. So, I think it gives us the opportunity to do all of the above.
• 2:15
  We're gonna i- interview some really, really great entrepreneurs that we've invested in, hear their stories, why they took money from us, and we're gonna hear from some of our investors, many of whom are dealers, and hear about why they entrust their money with us, what they're trying to get out of the relationship beyond us being good investors, direct access to entrepreneurs, seeing early-stage deal flow, and sometimes directly investing.
• 2:35
  So, I think it'll be great. We've got now a bunch of folks lined up. And so, over the next year or so, we're gonna drip out a lot of these, uh, interviews, which should be a lot of fun. Yeah, I've...
• 2:44
  It's been exciting to be behind the scenes and, like, hearing the conversations live as they're happening. So, thank you for allowing me to be a part of that. You also... You get to have a lot of conversations, right?
• 2:53
  So, whether you're talking to tech companies, right, or you're out speaking, you're all over everywhere. You've been... In the past, like, two weeks, you've been in, like, Great Britain. Yeah. You've been here.
• 3:05
  You've been all over the place. Um, what are you paying attention to right now? Like, there's a lot of things at play. There's FTC. Uh, there is China coming to Canada very fast. There's any sort of other number of...
• 3:20
  There's Iran. What, what sort of the, are, are you looking at? Yeah. So, through the d- dealer lens, I think I'm looking at, what does a dealership look like in five or 10 years? Mm-hmm. Mm-hmm. You know?
• 3:30
  Right now, I mean, uh, dealers live in this very dysfunctional, like, 30-day cycle. Yeah.
• 3:34
  It's very hard, even at a conference like this, to get dealers to think through like, "Oh, what does my business look like in five or 10 years?" So I, I'm challenging things, and I'll, I'll do this on stage at ASOTU CON.
• 3:43
  We'll lead to that, too. There he goes.
• 3:44
  But I mean, I'd, I'd like to help challenge dealers to think about their business to say, you know, "How, how can I unlock more profitability," because profitability gives them resilience, right? Right.
• 3:54
  Say Chinese or tariffs or affordability issues ar- arise, which they are arising in real time. You know, what, what's the one thing they can do?
• 4:02
  They can figure out, how do I structure my operations in the future to be more profitable?
• 4:06
  Then if I get attacked, like, say my automaker starts to s- get squeezed, and I, I'm permitted to make less front-end gross margin. Then you're like, "Okay, no problem," right?
• 4:15
  There will be other areas of my dealership where I can focus to drive more profitability overall. So, top of mind for everybody here is AI, although I don't think dealers in general know how to think about AI yet. Right.
• 4:28
  They're, they're gonna have to rely on vendors to bring them- Yeah... ways in which they can kind of metabolize AI.
• 4:33
  But I do, I do think AI will give dealers, um, a, a unique opportunity to look at anyone at the dealership that's doing repetitive tasks in front of a computer screen and give them some sort of, uh, equivalent of a co-pilot that makes their lives easier, drives productivity growth, and then over time, according to my calculations, about 47% of a dealer's- Ooh...
• 4:54
  cost structure is labor. Right. Yep. So, that's a big lever for them to like- Mm-hmm...
• 4:58
  say, um, that, that should slowly but surely shrink, which means they are more profitable, which gives them more resiliency depending on what happens with the Chinese entering or whatever it might be, right?
• 5:08
  So, I think that, um, we'll, uh, unveil this in a month or two- Yep... hopefully on stage. I need to- Sure... think, think through this more.
• 5:14
  But I'd love to have something that sticks in the mind to dealers to say, "Okay, very interesting." Not, not only theoretically do I agree that over time there may be an unlock here where I'm actually more profitable.
• 5:25
  But h- what, what are practical steps to do so? Right.
• 5:28
  So, okay, so looking in that direction, looking five, 10 years in the future, thinking about what that looks like, what are some of the signals along that direction that you're seeing now? Right?
• 5:36
  You're saying that dealers, uh, might not quite understand AI, their, themselves, yet. They're relying on vendors.
• 5:43
  But what are some of the signals that you're, that are maybe saying that they're thinking about this sort of stuff five, 10 years in the future?
• 5:49
  Well, we're, we're, we're already seeing at least for, like, the business development center, the BDC- Mm, mm-hmm... like, dealers are bringing in technologies.
• 5:56
  And, uh, maybe most notably is, like, phone call answering AI. Yeah, yeah. There have been a, a bunch of these companies that have launched. So, dealers have a selection of a bunch of different vendors now.
• 6:04
  But any, any of them, you talk to dealers before and after, now every single one of my calls are being answered.
• 6:10
  And, uh, during working hours, I don't miss, like, half of the calls that used to go to an answering machine. But m- maybe more importantly, after hours, all my calls get answered.
• 6:19
  We're conditioning consumers across, you know, every category outside of automotive to now, um, not necessarily expect to have a humanWhen I call a number. Right. Yeah.
• 6:29
  And so if m- the machines can answer most of the questions, and can do so 24/7 relentlessly without any break, then, um, you know, we, we, we see, uh, hear anecdotally, like, CSI goes up, consumers are happier because they're at least getting the call answered.
• 6:44
  When the AI gets confused, when the question's hard, it can get passed off to a human, but increasingly that's gonna be rarer and rarer.
• 6:51
  And then if the consumer's like, "Wow, you know, this thing has empathy for me, it can answer my questions, and I have whatever problem I have remediated immediately," then I think it's a, it's a win-win.
• 7:00
  And then, you know, dealers will make more money because consumers are getting, you know, what, what are the simple questions that consumers are looking for when they call a dealership? Is my car ready?
• 7:08
  Can I bring in my car for service? How do I pay? When can I pick it up? What are your hours of operation? All, all of those should be able to be answered by AI.
• 7:16
  It's the complex questions like, "Hey, um, how do I buy a black-on-black, you know, convertible?" Right. Those questions, like, well, we don't have one in stock. Let me pass you off to a human who can help you with that.
• 7:27
  So I do think that, um, there are very simple, practical applications of AI today that can help dealers immediately. But the, the, the exciting stuff comes later. Right.
• 7:35
  Um, and I think that we, we need to also paint a little bit of a picture around what those solutions might look like that ar- aren't even built yet. And, um, just prep dealers to be open-minded for the future. Okay.
• 7:46
  So you, um, one of the things you talked about in your first episode, uh, that you and Justin, you talked about the type of founder that you're looking for, right?
• 7:56
  Uh, and that's probably the type of founder that's gonna help build that future. Right. Could you recap some of that for maybe people who missed that episode? Yeah, yeah.
• 8:03
  So I mean, beyond the things that you would expect, like real- really smart person, um, you, you like to have, they, they ha- have, them have some unfair advantage. Mm.
• 8:11
  Th- they've learned something in the past that's in their brain that the rest of the world doesn't have. Now, it could be a hypothesis or something they learned from their past job.
• 8:20
  Um, and then you want somebody who is a little bit wrong, right? I mean, um- [laughs]... I think somebody who is going to exhibit that they're never gonna stop. Right.
• 8:29
  Somewhere in their past, they have this relentless, uh, uh, focus on solving this problem, and I'm never gonna stop until I actually figure it out.
• 8:37
  So we like to, um, invest, invest in, like, really smart entrepreneurs that aren't, aren't quite right. [laughs] Um, they have a chip on their shoulder or some reason to go vanquish this big dragon.
• 8:47
  We talked about dragons in that episode. Uh, but also have some unfair advantage that the common person wouldn't have, right? It can be controversial or not.
• 8:56
  It may just be an insight that nobody else has, like, "Oh, yeah, well, you know, on my last job, I learned something that no one else knows, and I, I have a, I, I have a secret that now I'm gonna go exploit," right?
• 9:08
  Yeah. If you, if you marry that with some big technology inflection that's going on, like AI is a good example, then you, you could have the right mixture, ingredients to have a, an, a successful outcome.
• 9:19
  Um, still, still a lot has to go right, but we're learning. We've made 56 investments in five years. Um, we're wa- we're watching the archetypes of our, our inve- our, our entrepreneurs, looking for tr- common traits.
• 9:30
  And, and these are the kind of traits that we're learning de-risk the investments for us. Sure. Sure. Well, you've also had a couple acquired recently. We have. We have. Which is, congratulations. Thank you.
• 9:39
  Um, last question for you though. Uh, a while ago on one of our podcasts, you mentioned that you were in the process of getting a new car. Yes. Did you get that? I did. How's it going? Really good.
• 9:51
  So I, I had the, uh, the opportunity to present in front of, uh, two of the BMW regional, um, um, meetings this year. Okay. Yeah.
• 9:58
  Um, and when I was presenting in front of, uh, I won't mention the dealer name 'cause he hasn't given me permission, but I was presenting in front of the central region in Florida, and at the end I told the dealers to build credibility that, you know, I was on my thr- third BMW, and I, a BMW I was driving currently that I was not particularly excited about.
• 10:15
  And, um, uh, and, and that I had a particular BMW in mind that I wanted to buy, uh, which was much more exciting.
• 10:22
  And at the end of it, this dealer principal comes right up to me and says, "Hey, look, I've been following you for three years, and I'm gonna get you that car." I was like, "Okay, what do you need from me?"
• 10:29
  So literally, the whole thing was done via text back and forth, him- Yep... the new car manager, the sales manager, the F&I manager, four different employees at the dealership.
• 10:38
  Each time they asked me, "Hey, do you wanna get on a call?" I said, "Nope, just let's do it all via text." The whole thing was negotiated via text. Um, I, I knew exactly what I wanted, so that helped.
• 10:47
  They did, did have to, um, ma- UPS me a deal jacket, so I had to sign wet signatures. Okay. Right. Sent it back to them. Yep. And the car was dealer-traded. Okay.
• 10:56
  They prepped the car, they shipped it to me, and within, like, nine days, I had the car in my garage. Very seamless, easy transaction. Because they were, you know, 1,000 miles away, they didn't want my trade. Yeah.
• 11:08
  I, I actually traded in via Carvana. That's a different story. Okay. And within three hours, Carvana had my car. They didn't even test drive it, and they wired me the money to my account.
• 11:17
  So I had a great, pleasing experience. [laughs] I got this awesome car in my garage.
• 11:21
  And, um, um, yeah, it was a good example now, if you've got a consumer that ha- already narrowed down exactly what they want, uh, for those dealers that are willing to facilitate it, it can be- Mm-hmm...
• 11:31
  a very easy- Yep... friction-free process. Uh, now I'm a bit of an outlier because I knew exactly what I wanted. Right.
• 11:38
  But, I mean, uh, the, the capability is there for dealers to provide a, a very delightful experience for consumers. So, uh, now we need to figure out how to build an analog of that that any dealer can do. Sure. Sure.
• 11:49
  How are you liking the manual transmission? I love the manual transmission. [laughs] Yeah. I had missed it. I had missed it. Yes.
• 11:53
  I'd been a, a few years without a manual, and it's like, in Atlanta traffic, it's a little bit of a burden. Sure. But all I ever do is drive back and forth to the airport. There you go, right? Yeah. Yeah.
• 12:00
  Well, Steve, thanks for being here today. You can check out Steve's new podcast, uh, Greenfield, on all podcast platforms. Also, check out the Automotive Ventures YouTube to find it.
• 12:11
  And we'll see you in about a month, in May, at ASOTU Con. Up on, up on stage. Come, come out and see me. Up on stage at ASOTU Con. Yeah, yeah. Yeah. Thanks, Steve. Thank you.