Streamline Auto Solution Matt Lasher West Herr Auto Group
Transcript
Reid : Yeah, that’s the perfect segue to tell us about a software you guys developed called Streamline Automotive Solutions by West Herr Auto Group. From what? Yeah, from what I can see, it may be the single most efficient inventory match solution on the planet. How does it work in? What problems does it solve?n
n Matt : At the most macro, we’re addressing consumer affordability issues. So that could be tough credit, it could be somebody with negative equity, it could be somebody buying a third car for their household with a real specific budget constraint, it could be a perfect credit customer getting their first job out of college buried in student loan debt. All of these types of people have very specific budget constraints that they’re trying to stay within or need to stay within to get an approval. n
nSo streamline is a budget calculator, and a vehicle selection tool. That’s it, it makes people at the dealership faster, smarter, and allows the process of selling a car to one of those challenged conditions easier and more understood by both dealership, employees and customers. So it’s been a really effective tool for us over the last couple of years. It really helps prevent, like, at a practical level, it helps prevent selling too much car or selling the wrong car that’s never gonna get approved. n
nAnd that creates a lot of friction and frustration in the sales process, right? So by using a tool like streamline, where you align customer affordability parameters to lender guidelines, it makes everything really smooth and easy. So it’s been great. We built it as an internal tool for us, there was no intention to take it to market. But because we’re just so passionate about the product, we couldn’t help but be like, u201cI think some dealers in the country might like this thingu201d. Why don’t we talk to them about it? Now we have, you know, we have clients all over the country. And it’s really been an interesting process, evolving into, you know, what, what some might say, a technologist or a software, you know, business, but yeah, In
n Reid :nI mean, you lead the way, right? And I think, you know, what was great dude, like I talk all the time, about how sometimes dealerships are beholden to their technology partners. n
n Matt : I think that’s a really interesting point. That’s not always aligned. So technology partners are often trying to minimize R&D, right? Because they have continuous cash flow, whatever, like as long as they’re not disrupted, as long as their products are not getting disrupted. They don’t need to innovate. But a dealership is in constant pressure to like, innovate or keep up with consumer demands or whatever. So sometimes, our technology partners who we spend millions and millions of dollars with a year are not really aligned with what we need to do moving forward. Right so I think some sometimes certain use cases, like even streamlines product while we feel like it monetizes really well, like a big a big business like a, you know, a CDK Cox type big, big business may not see the value of that niche product, because they’re so big worried about, like, you know, other things that they’re that they’re supporting.n
nSean : Yeah, it’s crazy how you know, Coronavirus, we do a lot of consulting and coaching for a lot of tech companies. And, you know, this was before we did that, I wasn’t familiar with the term tech debt. But, you know, it’s crazy how more consumers are. The more dealers a software vendor takes on in automotive, (but this isn’t exclusive to automotive) the harder it is, the more consumers that are taken on, the harder it is to make changes to the software. n
nThat’s right. And, and it’s almost like these things grow and grow and grow and get to the point where now it’s like, okay, it’s stuck the way it is, and forever will be in, you know, so that’s interesting. That’s why you see like a lot of the newer companies that are so well put together (the software), and then some of the older stuff just creeps along. And you think that those big companies, Cox, Vin Solutions, as an example, would be able to adapt and update their stuff faster. But some of the startups are more agile with it. Sounds like your tool is still in that agile stage where you guys are developing as you go. Is that safe to say?n
n Matt : Yeah, man, I mean, you’re spot on. Obviously, when you have $100 million of recurring revenue, you’re pretty conservative with respect to disrupting the applecart. Right. And, you know, and rightfully so probably right. Like, more than half your users probably don’t want the innovation or the, you know, brand new thing. So, you have to be very self aware. I think, you know, my observation is the biggest tech companies in automotive are really more customer service companies. They’re not really investing in product and r&d at this point. They may end up acquiring dealerships, right? n
nThey’re kind of the gravity or the black hole, you know, acquire and all the startups that you know, find a niche and find some success. You know, ACV is an interesting story. ACV Auctions was founded by a West, her salesperson, and a couple other people. But a West Herr salesperson in 2014, broke away to a buffalo incubator called 43 North and they started working on ACV. They ended up winning a business plan competition in Buffalo subsequently went on to raise hundreds of millions of dollars went public at a 3 billion dollar valuation or something? n
nI think last year maybe or the year before, you know a really interesting startup startup story. Now that’s a product that is basically Manheim. slightly revised, right? Like instant auctions. Or, you know, like Manheim had an opportunity, they could have acquired ACV. But they didn’t, they chose not to. Now, maybe they’ll pivot or develop something different or whatever. But now, you know, ACB they’re too probably too big to acquire now, right? ACB went public at a, you know, two or $3 billion valuation. So, you know, it’s really interesting, that whole space to me, I’m not an expert in it, but it’s like, you know, you see a lot of fascinating acquisitions.nn
n Matt : At the most macro, we’re addressing consumer affordability issues. So that could be tough credit, it could be somebody with negative equity, it could be somebody buying a third car for their household with a real specific budget constraint, it could be a perfect credit customer getting their first job out of college buried in student loan debt. All of these types of people have very specific budget constraints that they’re trying to stay within or need to stay within to get an approval. n
nSo streamline is a budget calculator, and a vehicle selection tool. That’s it, it makes people at the dealership faster, smarter, and allows the process of selling a car to one of those challenged conditions easier and more understood by both dealership, employees and customers. So it’s been a really effective tool for us over the last couple of years. It really helps prevent, like, at a practical level, it helps prevent selling too much car or selling the wrong car that’s never gonna get approved. n
nAnd that creates a lot of friction and frustration in the sales process, right? So by using a tool like streamline, where you align customer affordability parameters to lender guidelines, it makes everything really smooth and easy. So it’s been great. We built it as an internal tool for us, there was no intention to take it to market. But because we’re just so passionate about the product, we couldn’t help but be like, u201cI think some dealers in the country might like this thingu201d. Why don’t we talk to them about it? Now we have, you know, we have clients all over the country. And it’s really been an interesting process, evolving into, you know, what, what some might say, a technologist or a software, you know, business, but yeah, In
n Reid :nI mean, you lead the way, right? And I think, you know, what was great dude, like I talk all the time, about how sometimes dealerships are beholden to their technology partners. n
n Matt : I think that’s a really interesting point. That’s not always aligned. So technology partners are often trying to minimize R&D, right? Because they have continuous cash flow, whatever, like as long as they’re not disrupted, as long as their products are not getting disrupted. They don’t need to innovate. But a dealership is in constant pressure to like, innovate or keep up with consumer demands or whatever. So sometimes, our technology partners who we spend millions and millions of dollars with a year are not really aligned with what we need to do moving forward. Right so I think some sometimes certain use cases, like even streamlines product while we feel like it monetizes really well, like a big a big business like a, you know, a CDK Cox type big, big business may not see the value of that niche product, because they’re so big worried about, like, you know, other things that they’re that they’re supporting.n
nSean : Yeah, it’s crazy how you know, Coronavirus, we do a lot of consulting and coaching for a lot of tech companies. And, you know, this was before we did that, I wasn’t familiar with the term tech debt. But, you know, it’s crazy how more consumers are. The more dealers a software vendor takes on in automotive, (but this isn’t exclusive to automotive) the harder it is, the more consumers that are taken on, the harder it is to make changes to the software. n
nThat’s right. And, and it’s almost like these things grow and grow and grow and get to the point where now it’s like, okay, it’s stuck the way it is, and forever will be in, you know, so that’s interesting. That’s why you see like a lot of the newer companies that are so well put together (the software), and then some of the older stuff just creeps along. And you think that those big companies, Cox, Vin Solutions, as an example, would be able to adapt and update their stuff faster. But some of the startups are more agile with it. Sounds like your tool is still in that agile stage where you guys are developing as you go. Is that safe to say?n
n Matt : Yeah, man, I mean, you’re spot on. Obviously, when you have $100 million of recurring revenue, you’re pretty conservative with respect to disrupting the applecart. Right. And, you know, and rightfully so probably right. Like, more than half your users probably don’t want the innovation or the, you know, brand new thing. So, you have to be very self aware. I think, you know, my observation is the biggest tech companies in automotive are really more customer service companies. They’re not really investing in product and r&d at this point. They may end up acquiring dealerships, right? n
nThey’re kind of the gravity or the black hole, you know, acquire and all the startups that you know, find a niche and find some success. You know, ACV is an interesting story. ACV Auctions was founded by a West, her salesperson, and a couple other people. But a West Herr salesperson in 2014, broke away to a buffalo incubator called 43 North and they started working on ACV. They ended up winning a business plan competition in Buffalo subsequently went on to raise hundreds of millions of dollars went public at a 3 billion dollar valuation or something? n
nI think last year maybe or the year before, you know a really interesting startup startup story. Now that’s a product that is basically Manheim. slightly revised, right? Like instant auctions. Or, you know, like Manheim had an opportunity, they could have acquired ACV. But they didn’t, they chose not to. Now, maybe they’ll pivot or develop something different or whatever. But now, you know, ACB they’re too probably too big to acquire now, right? ACB went public at a, you know, two or $3 billion valuation. So, you know, it’s really interesting, that whole space to me, I’m not an expert in it, but it’s like, you know, you see a lot of fascinating acquisitions.nn