#278 - HIBT w/ Jason Berry

You are listening to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson.

Hello and welcome to the Independent Dealer Podcast brought to you by Buckeye Dealership Consulting. Luke, another great installment of our How I Built this series. This is a friend of mine, Mr. Jason Berry. He's on the Utah Board of directors for me with me, and I'm blown away, man. Jason, thanks for joining us. Give us tell everybody because how old are you, Jason?

I just turned 33 in March.

Oh my, what a baby.

He's got a full head of hair, man. He looks great.

I am losing it though, over here.

Yeah, not like Jeff. Not like Jeff.

Decade in the industry. Jason, so your dealership called Action Auto. You're up in Northern Utah. For the audience listening, give us kind of just the scope of your business model. Like what are your typical cars? How many do you carry? What's your goal for sales employees? Give us kind of an idea of the scope of where you are now. And then I'd like to rewind back to your origins and talk about how you got to where you are now.

Cool. Yeah. So two locations only about 15 minutes apart from each other. I have one in Lehigh, Utah, one in Orem, Utah. And then I have two off site overflow locations. We carry right in between like 550 up to like 600 cars in inventory. Typically about 30% of those is in the reconditioning process. So we hover around like 400 to 450 on the front line at any given time. Yeah, two locations. Yeah. 550 to 600 in inventory. Most the locations are about an acre and a half to two acres per location. And then we want to stock on site about 150 per location and have about, I think we have 46 employees right now at the dealership. Including reconditioning sales F and I. The structure consists of 6F and I agents and then straight to the sales floor where we have 12 agents, six per store. We typically have five to six agents on the sales floor. Three full time F and I guys.

Wow.

And how many cars you sell in a month?

We're anywhere from 200 to 230amonth is typically where we're at. And that's retail units and then we have some wholesale. We do a lot of wholesale just based on our inventory. We have a lot of like late model stuff that will host sell. So yeah.

I want everybody to stop for a second because, Jason, 47 employees doing the volume you're doing that is, I think, incredible. You're getting every Ounce of. Of workmanship out of each employee. I. I mean, I could do a whole podcast on how great that is.

Yeah.

Because I'm sure at some point you've had a lot more employees than that, right?

Yeah. The most we've ever had is I think, like 50. I kind of take a lot of pride in running. Really, really lean and efficient.

Yeah.

Whether that's reconditioning or the sales floor, or not having a desk manager or a sales manager or something like that, but really delegating clear lines of responsibility to each person and then building a process around it.

Yeah. I mean, that's incredible.

So did I miss this part? But did you. I mean, your business model, is it. Is it like subprime CAC or are you doing all prime? Is it like I make $2 on the front end and then like another 2,000 on the points or what's your business model?

Yeah, so we are heavy on the back end. So we do too. We are a volume dealership, obviously. We do. We are pretty heavily focused on back end penetration, ancillary products, stuff. Like our margins are decent actually on the front end. But I think a lot has to contribute to how efficient our reconditioning process. I always say the money's made in the buy and lost in your process. So we're pretty efficient in the reconditioning process and we're pretty controlled, which obviously promotes a higher gross margin on the front end. We do very little subprime. I would actually like to get a little bit more into subprime. I think right now we're seeing a lot of subprime customers. Just I think due to the climate of how the business is trending, a lot of, I think prime credit customers are kind of holding back and not needing to take a move. And there's a subprime presence right now in the market that seems to be pretty consistent. So we're actively working on. We do have CAC, CAP1 ally and stuff like that. So we're actually actively working on maybe a little bit deeper subprime.

And so when you say money's lost in the process, just to touch on this and we'll come back to it. But you have a recon process. Right. What's your connection with Karketta? Because I saw that all over your website and I've heard you talk about it. What's the connection there with you and that?

Yeah, so I am the co founding president of Karketta. So it actually, the product was developed inside of our dealership. The needing to scale. Right. And control processes. So, yeah, that's really what we set out to do, is create a really streamlined, robust recon process to get your cars to the front line in the most controlled manner possible. But time is money, right? Fast. So it was really built out of a necessity. I work a lot on the product side and yeah, it just is a complete suite from appraisal. We have live market data, we have reconditioning, so we help buy, recondition the vehicles and then hand off a sales packet to the sales team is primarily where we live. And yeah, I'm still very active in that company. I spent actually a good majority of my time at Croqueta now.

Wow.

Wow.

That's. I mean, wow. And he's 33 years old, Jeff, what did we do wrong?

A good percentage of my two hours a day that I work, Jason. So now that the listeners have the scope of what you've got going on, locations, employees, the car kettle thing happening. Let me rewind back to the beginning.

Yeah.

And stop me if I'm wrong here, because I've only heard parts of conversations that you said. Did you used to be a lane wrangler at the auctions? Because I vaguely remember your face running around a car at Brazier's Salt Lake. Did you work at Brazier's Salt Lake?

I did, yeah. That's originally where I started. So do you want me to just dive into kind of how I built up?

Yeah, let's do it. Dive in.

Cool. Yeah. So my dad is actually an auctioneer. So my uncle and my dad have been in the business for quite a while. My dad specifically on the wholesale side, he's actually still an auctioneer. Really great one at that. But he sent me to be an auctioneer in between my junior and senior year of high school. So I went up to Montana to go to two week course to become an auctioneer in between my junior and senior year of high school. And I graduated from that the day after I turned 18. My dad got me a job at the auction as. What'd you call it? A lane wrangler.

Yeah. What's the official term?

Yeah, yeah. So I was a ring man. I started out as a ringman. When I was 18. I finally. I kind of worked my way up to being actually an auctioneer from the time I was like maybe 19, 20, 21. So my schedule was I worked at Odessa in Salt Lake on Tuesday. Wednesday I went to Mannheim, Utah, worked there, and then I flew to Phoenix on Thursdays. I worked at Phoenix and Then I would bum a ride from Phoenix to Vegas every week, which. And then I'd work at Manheim Las Vegas on Fridays, and that was kind of my route. And I did that from the time I was 18 till I slowly transitioned out. Starting the dealership when I was 22. Fully transitioned out of the wholesale side of the industry when I was, like, maybe 23. So I was actually running the dealership from very infancy stages alongside with auctioneering from, like, 22 to 23.

That's helpful. He's auctioneering and bidding at, like, the same time. Sold. Action. Sold.

It just happened to sell to this number in the crowd. Yeah, that.

I tell you, I grew up in auctions. Our family's been in business 38 years. And so, I mean, I think the first time I ever went to an auction, I mean, I was probably, like, seven, eight years old, Right. And I probably bought my first car at 12. So I can see how being an auctioneer or being a ring man, I mean, you kind of. You kind of figure it out, right? I mean, is that. Is that how it. Is that how the bug got you?

Yeah, I mean, I. I was. I was blessed to really learn, like, the. The wholesale side of the industry very, very well. Obviously, that's super important and. And running a dealership eventually. But, yeah, I always. So I worked at the auction. Like, the auction only lasts till, like, noon. Right. So I wanted something to do post the auction. So I actually went and got a job at a dealership for two years. Pretty successful dealership up here in Utah, actually. Really successful. I think they're one of the larger dealerships in Utah, But I got a job there doing sales and finance after my auction gig, and I did that for about two years. So I learned the wholesale side of the industry really, really well. And then I also got the opportunity to learn the retail side of the industry from some pretty awesome people in the industry.

What was the catalyst or what sparked the idea to open your own dealership and get your own license and open your own place? Was that something your dad recommended, or was that you just seeing these guys making more money than you were making? Or, like, what.

Ye.

Where did that come from?

So my dad's always been. My dad's a little of all of that. Right. My dad's always been a business owner. A lot of people don't know, but he owns actually a couple of pretty successful flooring stores in Utah as well. But he's always been a business owner. I loved. I always dreamed of being a business owner. An Entrepreneur. I've kind of been that way my whole life. I love, like, when the ball falls on me, I love. I love building businesses. So I knew pretty early on that I kind of wanted an education, which eventually would transition into probably me starting my own dealership. And it was when I was like, 23, I guess 22, 23 is when I leased my first location and started the dealership. Just super humble, really small. Started out with, I always say, like, 10 grand in my pocket, and a line of credit is really kind of what I started the dealership with. Really ghetto cars, you know, like what I could buy, you know, at the time. And I still have pictures back in like, 2013 of, like, five cars on the lot, you know, And I started that. That's where I started. I wanted. I saw these guys living pretty luxurious lives in Vegas as dealers. Yeah, I wanted some of that. And, yeah, that's. That's basically where. Where it started.

Okay, so. So you're 23.

You.

You were an auctioneer for five years. And that's a. That's a rough life. You got to do it early, right? Because, I mean, that's a lot of traveling. It's auctioneers kind of like to have a big time. I get it. I've hung out with probably too many of them. And so you're 23. You open this lot. Did you have a. An idea of. Of how big you want to grow then, or was it just, you know, what if I can go out and sell 20, 30 cars a month, I'm gonna make a good living. I'm gonna. I'm gonna have fun? Or was it like, you know what? I'm gonna have multiple locations? What was the initial thought process there?

Yeah, initial thought processes. I was like, you know, obviously, it's always scary taking a gamble, starting your own business, you know, but I was. I was pretty confident. I was like, oh, if I can just sell, like, 10, 15 cars a month, like, I'm good, right? So it originally started with, like, that 10, 15 car a month goal, which then just led to, like, as you. As you see the wheel of success, and you're selling and selling and selling and selling, I think it just kind of builds momentum. And, yeah, I just. I. We actually. We won an award four years in a row for fastest growing companies in Utah Valley, and it just kind of steamrolled. I got addicted to selling and success, and everyone's really excited. I ended up buying my first location that I developed and still have my Lehigh store only two years after I started the dealership. So originally it was like, if I can just sell 10, 15 cars. And then just, I guess got addicted to growth and just kept going.

Hey guys, just real quick to interrupt the podcast. Want to make sure you guys know about Buckeye Dealership Consulting. Obviously sponsor the podcast for a long time now and a great place for your reinsurance. All of your CPIs and CFIs and all those acronyms.

Yeah, all the acronyms make you extra money. And, and like we were talking about during the episode, how back end products mean so much to buy here, pay here dealerships, they mean so much to retail dealerships. Jeff. If you're not selling your own backend products, you are losing so much money. And for that matter, if you're not selling back end products, period, you're losing so much money. So get with Buckeye, get your reinsurance company set up, sell these back end products, make more money during the sale and make more money years down the road.

So it gives me so many questions, but the first one is if someone's listening to this and they're in the same situation, they're a 23 year old with a dealership. Like, you remember the one guy that was at convention with us? Like, what, how does, how did. I mean, can you share with us? Like, how do you physically, like, hey, Mr. Bank, I've got two years in existence and I want you to give me a $3 million loan to build my own dealership. Or hey, Mr. Bank, I want you to give me a $5 million line of credit because I want to floor 600 cars like Ferraris, Lamborghinis. Like.

Yeah, funny story about that actually. So I've always been really, really conservative and lived kind of by the principle of it's easier to have too much money than not enough. Where I was very, very frugal, paid myself very little money. Funny story is, is I actually went to my bank to get my first to start my dealership. And essentially what happened is I went to Chase bank, tried to get a loan, couldn't actually get a loan. I actually, funny story is I actually had more money in the bank than what I was actually trying to pull out at the time. And they declined me because I didn't have the two years in business. I wasn't established and yeah, so I got declined. But my dad had actually a connection over. I don't know if you guys are aware, are familiar with Rock Canyon bank, but my dad had a friend over at Rock Canyon bank and said, hey, take a look at his financials. He's doing good. He has money in the bank. And I think because my dad had a little bit of a track record with them, they were willing to take a gamble on me. Obviously, I had to put up my house and everything else to kind of make the deal happen. But, yeah, I was able to purchase my first location that I ended up developing. And in 2015, it was just a ghetto house on an acre that me and my wife stripped it down and basically, like, turned it into a sales office. And then we sold off dirt for six months until we could afford to put asphalt down, basically is how that went.

Our first location was the ghetto house. I mean, exactly the same. And so I. I remember that. And we finally knocked it down about 15 years in business and redid one of our shops. So there's always ways to get ahead. Right. And I love that principle of, you know, pay yourself nothing to get ahead. Right. That's how you build businesses. Yeah.

But then you're also willing to take the risk to put what you have built and set aside. Like, very few of us, I mean. Well, most of us probably have personal guarantees on any lines we have, but everything. Yeah. To go second year home, you know, if you have to, to. To have that kind of faith, to be like, yeah, I'm going to take out a second mortgage on my house to get the money I need to put into the dealership, because I trust myself, because I know I'm going to be successful. I'm going to make this work. That's.

It's.

Sometimes it's easy to just go out there and be like, oh, I'm going to get a bank line of credit or an SBA loan that has no recourse personally past my home. And then if I fail, I fail. Oh, well, you know, like, different mentality.

Yeah. I mean, it was definitely, definitely scary. But I fortunately had built, like, a pretty decent team at that time, so I had a lot of confidence in what we could do as a team, which obviously was super helpful. I had my cousin that was working doing f and I there, and yeah, we were doing well at the time. I think we were turning like a hundred. And, you know, obviously, as you're a smaller dealership, you can turn a higher price percentage of your inventory. But at the time, I mean, we were. We were turning like 100%, 110, 120% of our inventory every month because we were small and we could control it, you know, so we had really great momentum. Yeah. In 2015 was my first purchase. We ran that for finally ended up developing and finishing the development with asphalt and everything in about late 2016 and then 2017 it seems like pretty consistently I make a jump about every two years. And then 2016 we finished the construction like fully and then I did. I heard of a dealership that was wanting to sell the orem location in 2017. And essentially what happened is a dealership that was running kind of. It was actually an old Hyundai store. Then there, there was a guy that purchased it and he was kind of running it like a mechanic shop. Not doing super well, didn't have a strong sales present. And it's right on straight State Street. It's a big beautiful location. But essentially he was a little bit in hot water. And I heard of the opportunity through one of my MANNHEIM Reps. And 2017, I actually did like a short term lease on a little location in Orem for like three or four months. Kind of set up shop down there and purchased the second store in 2017, which used to be, I think it was Murdoch Hyundai.

Jason, I want to go back to. I want to go back to. You talked about your team and you mentioned your cousin. That's what I want to. I need help with that. I need you to tell me how as a 23, 24 year old at the time, how did you attract talent that was obviously, I mean you must have some killers, you must have some just absolute, just salesmen to scale that quickly and still be doing the volume you do with such a lean staff. Like, talk to me about that, your staff and how you attracted top talent.

Yeah, yeah. That's interesting because I've always been. It was my cousin that came back. He had just come back from mission. We all know return missionaries, probably good salesman. Right.

But yeah, they'll talk to anybody.

Yeah, yeah, right. And they're just super nice, super polite, you know, good vibe about them. Right. But yeah, I have to give a lot of credit to my team, you know, to my cousin. My wife has always been like a foundation supporter. She did accounting, which then led into the title department and she did, you know, so I have a lot of really great support around me. I think recruiting has always been. I think I've always been able to sell a vision and then be able to, I feel like, execute on the vision. So I think you just kind of build a momentum and a track record around what you are and what you're doing. And social media has always actually been a big part of our recruiting process. We always wanted to promote the people that work within the Dealership, make it a fun environment to work with. Work with unlimited swag at Action Auto. Like just tons of company pride, which I think makes the recruiting process and attracting top talent really easy. Take care of your people. You know, if they're doing well, you're gonna do well. And I always made sure that I focused on making sure that my team was doing really well. You know, whether that's pay plans, fun, happiness, like, was always top of mind for me because I always felt like if they were happy, we were going to perform well.

How do you, I could see how people could see your vision. You're charismatic, you're, you know, people see you're successful and you talk about wanting people to have fun in your, in your dealership. How do you balance, how do you balance people having fun and people doing their jobs? Because sometimes I think some of us end up in an issue there. Have you, have you learned something that, that maybe you can share with audience?

Yeah, I, I think fun is generated by like success as a company, right? Like, you always want to have, you always want to be fun, you always want to, um, you always want to like, but you want to also have like really tight structure. You know, like if there's an expectation of we're here from this time to this time, we do that, you know, make it as fun as possible while being there. But always, I think creating a model and paid plans and everything that sets the long term vision up for success is so important because if you're, if you have clear vision and you have clear goals of where you want to be and you architect a model, model around getting there, you're always successful. Right. And if you're hitting those benchmarks to get there, you're always successful. Which if everyone's hitting their goals, everyone's having a lot of fun, right? Yeah.

Yeah. That's so important. Yes. Hitting goals is fun and, but people have to know they have to do their job in the, in the process of that. Yeah. Yeah, that's cool.

Yeah. Looking at your, looking at your Instagram, it looks like you've got a bunch of like, you know, clean cut chads, you know, and a bunch of like gym bros that are probably just freaking like slinging cars, making ten grand a month, spending it all on protein and fricking pre workout protein.

You know, the basics side by side.

The reason I dig into that so much is I just, I do think that you look at some of these dealerships that have this crazy trajectory, right? We have a bunch of friends in the industry that Just rocket ships. Right. But it's a culture. It's this. Such an interesting, like, lightning in a bottle culture that obviously comes down from the owner, which apparently I have none of that because that's like, I am like snails paste. You're talking about, like, three years ago. Shiz was like, going crazy in your scale. I'm like, I don't. I don't think I've even. I'm not even sure I've changed the carpet here in seven years. I don't know that anything's sharp.

We've all seen it.

It's been business as usual. We haven't hit any kind of a milestone. Like, I've sold 40 cars for the last 14 years. Like, and not I'm trying to do more, but I'm just like. It's like this roof that I have, which is of course my problem. And so we don't even talk about this. This is about you. But anyways, that inspires me, hearing that to say, wow. Yeah, having the right team. And I'm guessing you don't have a lot of Karen's laying around your dealership. Like, you seem to have a pretty, like, energetic, like, we're going to go tear the wheels off this thing and sell it type of a crew. So hopefully you guys listen to our episode from last week with the Unfair Advantage Automotive mastermind group. August 3rd, guys, just to remind you, get signed up, be there in the Carolinas, come in the day early and spend the day with Tracy and Troy and just have a great time learning.

Yeah. Unfair advantagemastermind.com and there's a clock ticking there, 54 days, 18 hours. Right. That's what it's saying right now. I'm going to try to be there. I'm going to try to be there. And I've been in one of these masterminds with those two guys, and it's not even just about that meeting. The people you meet during there, during that meeting. Tracy has been just a benefit forever for me. I've probably known him 15 years. He's always there to help me. Troy as well. They're just a good, good bunch of guys. Get there, have fun, stay for the convention as well.

Yeah, yeah. I mean, super passionate about. I have actually hired very little people from other dealerships. I've always brought in new talent fresh into the industry that we can kind of mold around our culture and the way that we do things. So that. That's one thing that I was super passionate about, is making sure that we build the culture within the side, the people. And we don't bring a lot of like, past experience, bad habits. Yeah, yeah. From outside the industry. Right.

Do you prescribe any sales training system or do you have your own?

Yeah, I mean, we listen to a lot of podcasts, we watch a lot of YouTube videos. I've never actually subscribed to like a formal sales training, which got like full.

Size pictures of Grant Cardone in the office.

I've actually I to. I listen to a lot of their stuff, you know, a lot of Grant Cardone, a lot of like the way they do things. And I feel like you can learn something from someone, whether it's what you want to do or what you don't want to do. But I love a lot of his content. I have listened to a lot of it. But there's a lot of really great free content out there on YouTube specifically for sales.

Yeah, there is, yeah. And, and for detailing and for all kinds of stuff. And you can really use a lot of that to train on. I like that when you have a.

Team that's driven, they're driven to do better, they use those tools, right. It's like, sure, you got an old dog that'll sit back and sell 10 cars a month for the rest of his life, but do you have someone who wants to get to 15 or 20 or 30amonth, you know, and they're going to go out and use those tools to get better and better and better. That's, that's the key is you've created the culture. We all know the tools are there. Every, you know, freaking stalled out lot knows that you have somehow got your team to buy in. They're like, hey, we're going to use these tools and we're going to be ruthless. We're going to get better. That's awesome. Jason, let me ask you just to transition off that for a second. The Carquetta thing. So we mentioned in the beginning that that's a large portion of your time and energy. Give us the scale or give us the goal. We know you have a partnership with Niada, right? I think for the CPO program, that's a huge accomplishment. I mean, that's. That's got to be huge. Like what? Obviously I want to know kind of.

How he built that.

Yeah, I mean, that's crazy.

So, so how that happened is, you know how I talk about like every two years. Right. It's kind of when I make my. Make another leap. So after 2017, I obviously, I had opened the other store and I was really struggling with like, maintaining a process around delivering that many cars to the front line. So. And we struggled along, kind of limped along, but we were kind of capped out at we couldn't do more than like 120,130ish cars a month between both locations. And we were really tapped out there. And a big majority of our problem was the amount of cars that we could deliver to the first frontline in a quality manner. We could deliver them to the front line, but they may have bald tires or they may have a chipped windshield or whatever, right? So it was 17, and then we started actually developing, which it was actually one of my finance managers at my Orem store that I was like, hey, man, we need to come up with some sort of process to solve this. And we're like, well, should we start a business? And we did. So literally that was like, what we did. We went and hired. He had a contact over to a guy that developed websites for him, you know. So in 2019, we kind of started like, chipping away at building this process around delivering recon, reconditioned units to the front line, right? And then we also wanted to present, like, some sort of, like, presentation. If I'm going to invest in the reconditioning process of my vehicle, I want something to show the customer that says, hey, we did tires, we did a windshield, we did an oil change. Like, this is why it makes sense to do business with action, because we follow this process, right? So we started out with a reconditioning process and a digital cr. And yeah, me and him, you know, he did F and I and we kind of developed alongside where he eventually moved out full time to over. Over to running Karketta. And we were. And then I would buy in the morning and then leave right after buying and go work on Karketta. And that started in 2019. And I actually have another F and I guy in my finance office at my arm store that his dad was connected to, like venture capital. And we were just having a conversation about what we were building. He was a really successful guy. And we were like, what do you think about this idea and what we're doing? He's like, he's like, you guys need to go. He's like, if you're going to do this, you need a raise. Raise a round of funding and you need to go with it. And we did. I mean, and so in 20, it was 2020, actually, like, right when Covid happened, we pitched pre 2020 and then 20, like right after. You remember when everything fell apart in March. It was like, it was like April when we were like seeking this round of funding and we had already pitched these investors in San Francisco, connected through one of my good friend's dad actually and we were able to land our first round of funding which was a pre seed in 2020 was like April, April of 2020 after we had flew out to San Francisco and yeah, it was just off to the races from there. Crosslink Capital was actually our first investor out of the Bay Area and yeah, I mean we just have been chipping away at it. Software is definitely not an overnight success type thing. It's cash intensive. You oftentimes have to upfront commissions for sales reps, you know, out of like the hope that the customer is going to retain on the platform and they're going to see value. But yeah, and we've been going at that since 2020 and have since raised another round of funding. It was 2021 I believe, which I think was actually one of the larger rounds of funding for a seed round company in Utah. And we just, yeah, we just scaled, I think we at the time we got up to around. We've fully onboarded about 700 dealerships onto the platform. Obviously you have churn and not a good fit for people, that type of thing, but right, right around like 3, 400 dealerships a month or run their dealership processes on Karketta.

Where, where do you see this going, Jason? I mean it's I, it's. That's pretty big. I mean it's, I mean what is your, you know, what's your end game with this? Is it a, is it just a big software company just for automobiles or. I mean what do you think?

Yeah, I think so. Once you start down the VC path, like I think that's kind of like the route of the company is you either IPO or you sell off to a big company eventually. But right now I'm just heads down. We actually rebuilt the product as of we started about November. We hired a really great team, brought on CEO, brought on a new CTO and just kind of built a team for the kind of the next level evolution of Karketta which they've done a really great job. And we rebuilt the product starting in November and we're going to hard launch our new product in Niada this month, later this month, which we're really excited about. And yeah, I think right now it's just build a company, you know like build a company, don't focus on selling anything like that, just build a really successful company and I think naturally people want to come along and probably buy or you carry it up to ipo, but right now it's just build a company onboard as many dealerships as possible. We feel like there's a pretty underserved market specifically in independence where we can bring a tremendous amount of value from a appraisal to reconditioning to everything we can. We can serve those independent dealerships on a wide scale is our focus right now.

So I want to know about the. I want to know about the. So it's public knowledge, so I'm going to bring this up. You haven't said it, but it's online. So it looks like you were like maybe 1.4 in your pre, your first one and then 6 million in this most recent seed round.

Yep.

Total of 7.4 million raised since this was put out. How many did you, were you able to at some point? Did you get a cat? Do you get a cash out in a pre seed? Like did you retain ownership? Did you get diluted? Like what were you able to keep your hands on?

Yeah, so anytime you raise a round of funding, you do suffer dilution. So that's why you kind of try and get it as far and as high as you can before you raise the next round of funding. So yeah, I mean we definitely suffer dilution. I'm actually still on a vesting schedule. Those are worked in the terms of the round of the funding. Typically you don't take chips off the table till maybe like a later A round or B round or something like that. I fortunately don't. I'm not interested in taking any chips off the table. I'm very confident in what we're building and the team that we have built. Over here at Karketta we have some really, really great people, senior engineers, devs, CX marketing. We've built a really stacked team that I'm fully invested.

But the real win, I mean as a car dealer and like straight to straight, like the real win from a SaaS company is, you know, an IPO or an a round or something. Right. Where that's where you're going to say, okay, this is because those are life changing valuations. You know, you build up a dealership and you have really good cash flow and you could build it to a good lifestyle business. But there is no exit, you know, there's no multiple on our dealerships when we exit. But a SaaS company and you retain, you know, 20% ownership or something and that thing, IPOs, that's life.

That's life.

Yeah.

That's generational wealth.

Hey, y', all, real quick. Want to make sure you know about Primal End, great sponsor of the podcast. And, you know, we talk about scaling with this episode, and Jason, it does take money. You know, you. You can slow grow, and it's important to have some slow growth. But when you need to scale or when you need to step it up, you want to make sure you have a lender in place so that you can take advantage of those opportunities. Right.

You can't do anything without cash. He was, you know, talking about building this other business. You got to have cash to grow. Primalin is a just a partner with the car industry. It's people like that that can help you get ahead. They can help you with questions, they can help you with money, they can help you buy locations. Like, Jason said he couldn't get a loan on his first building that he wanted to buy. Right. Well, that's. That's where somebody like, prominent comes along. What's more fun selling cars are doing this.

Making widgets. Yeah. Sometimes I feel like that's what I'm doing is making a bunch of widgets. Widgets. But no. So that's. That's. That's a great question. I. I really, really love the car business. I love being able to buy fun cars, sell fun cars. I mean, every day we get to buy a new car that, like, potentially it was like our dream car, you know, like. Yeah, so. So I love that.

That 2013 Ford Fusion that I bought yesterday. I'm in the wrong industry, bro. Come on, give me a break.

That's also culture building. I didn't hit on that. But I've always had a collection of really fun cars that I let the sales team and everyone experience. So that's been part of the culture building. But, yeah, to answer your question, what's funner? I don't know. I really love. I've been able to, fortunately live a lot on the product side of the software building. So I'm actually creating a lot of solutions and new project or products that will help both me and dealerships across. So I really like both. I'm really having a lot of fun. Obviously, the more successful you have and the people you surround yourself with oftentimes determine how fun things are. And fortunately, we have a great team, and I'm really excited about it.

Whenever I get into a new software, I can always tell if it was developed by a car dealer or developed by some computer guy.

Right.

You can just tell by user experience, by Flow by features. Like, yeah, the best stuff is developed by car dealers. Yeah. And then the fire, the. The fire is fueled by venture capital. Right. It's like. And a lot of car dealers build good stuff. They just don't have the money to make it big. And then there's other guys who are programmers and venture capitalists and they build stuff and it's big, but it's not really that user friendly.

Yeah, yeah. That's what's actually been really sweet. I was actually, before this, I was actually transitioning from our legacy product over to the new products. So I'm taking our 500 cars in inventory. I'm updating all the statuses of where they are, and I'm making the transition actually over this weekend so I can run it really hard and perfect everything for the ongoing future. But it's so critical to have power users and people that are really invested in using the new platform because I would like to think I have really great ideas, but I don't have all the ice. Right.

Personally, do you feel like you're taking your eye off the ball? Like, I look at other projects and sometimes I see shiny objects and I'm like, oh, it'd be really fun to develop a. Maybe something close. Like, maybe I should own a repo company in an impound yard. Maybe I should own a separate repair shop that does retail work. Or maybe I should get into raising, like, exotic llamas or something. Like, do you feel like you're taking your eye off the ball? Do you worry about the dealership when you're over here playing with Carquetta?

Yeah, I've definitely had to get really, really great at running the dealership remote. Like, but not only running the dealership remote, I have some pretty key players in the dealership that are really good. So I've been able to fortunately offload a lot of my daily. Daily, like, stress to. And kind of you. You kind of have to just, like, take your hands off and say, here, guys, here's the process. Here's what you need to do. And then. And then always be there to support them, obviously, if they need help. But yeah, I mean, definitely. I definitely do. I think the dealership, I could have it at three locations and, you know, maybe four. Four locations at this point. Maybe, maybe. But I'm also having a lot of fun running the software company. But I definitely don't think the dealership is struggling just because I think I do have really good people in place and really good levers to pull. Right. Like, you need to Know where your points or your KPIs are and what levers you need to have in place.

Do those people at the dealership, do any of them have equity ownership or are they all salaried? Those kind of key guys that keep the ball rolling for you?

Yeah, so they're all salary but they all like our pay plans have always been pretty rich. So I mean they definitely have the opportunity to make really good money which obviously I think keeps and retains good people. And I also, like, I also may, you know, we've entertained the ideas of like co investing and forward thinking things and I probably with some of the key people will co invest in rental properties or something like that with them.

That's interesting.

And do you find more joy buying a car or buying a horse? Because I know you bought some horses as well, right?

Yeah. So horses, it's a big problem right now. I have way too many. No, I'm really passionate about it. My dad is. My dad like really loves racehorses which obviously that trickled down to me and yeah, now we have a lot of racehorses and mares and babies and that's really fun hobby. Don't count on it to make a living, that's for sure. But it's a great hobby and we have a lot of fun with it and it's a really good time. Family is really important to me and I get to spend a lot of time with my dad and my kids love it and they come see. See the, see the horse all the time. My wife, questionable, don't know if she loves it too much, but she likes the babies, I guess.

Yeah. Sounds like one of those tax deduction hobbies. Right? Like I've always, like I've always been.

Very confused with that one too. Like is that justification, is it really a good tax write off? Like yeah, struggle with that one.

But yeah, that's awesome. Jason, real quick before we wrap this up, give us advice for dealers that are in your, you know, maybe they're 10 years ago in your story, you know, they're 23, 25, maybe they're 55 and they're just starting their dealership out. Any advice or like input or words of wisdom that you would share with guys that are either building or stagnated, you know, like me that need to go to that then maybe want to take it to the next level.

So yeah, I've always been really, really, really passionate about, like I said, being super frugal and being super strategic on spend. I see. I've seen a lot of dealerships that like, that will like build a business up and they're getting going good and then they got a ton of a big flooring line and they floor a lot of cars and always keep that ratio of forward cars, cash in the bank and equity in vehicles very in line because this is a very cash intensive business. Building a really solid foundation of equity in the building business I think is really, really super important. That was something I was super passionate about is making sure that we built a ton of equity into what we were doing. So we never. I always kind of ran things like if I ever had to pay off or write a check for the flooring line like I always could, you know. And I kind of scaled cash and flooring line up together. That was just. And I don't know if that's right or wrong, but that was something I was passionate about. I just, I never wanted to me be personally worried about ever going out of business or my people. Like I never wanted them to ever worry about that, that day coming. Right. I always want to be really, really financially stable, get really good at marketing. Marketing is a huge part of. If you take sales and marketing out of a dealership that's pretty, pretty devastating. And also really closely monitor frontline ready units and your percentage of sell through on frontline units and control reconditioning versus frontline units. And watch that very close. Yeah.

What would you say give us your worst mistake? What do you feel like was a misstep? Because I want to hear that too because sometimes it's like yeah, great. I would like to scale my cash and flooring at the same time. Like give me a break. Of course. Like I don't know how I'm going to freaking do that, you know. But maybe share with us a mistake that you made and maybe something where you feel like you misstep.

Yeah. Buying a Fisker Karma. I still have it actually. No, I actually, actually that is a real life scenario. I'm losing like 10 grand on it.

Yeah, I can say that about every Tesla I've bought.

Yeah, all of us, right. We all went through that this last. I still have an X that I'm losing about 10 on. So I mean that's the thing is like you're always, there's always going to be wins and there's always going to be losses. You're going to win. You just got to win more than you lose. Missteps. I'm trying to think of missteps. I think early on thinking that I thinking that I could do everything and I had to see through everything, and I had to be involved in every process. I think, like, early on was, like, it didn't set me up for a skill quite as good as we possibly could have. Slipping up on H units. I think I sometimes get way too comfortable with holding cars for way too long because I maybe don't have a flooring pressure that's forcing me to pay cars off, which is definitely a mistake. I mean, you could always. I think volume and turn of units is so important now that gross in my model. I know it's different when you're doing, like, buy here, pay here, but, yeah, that's. That's. Oftentimes, I think a mistake of mine is not controlling age of units as aggressively as I could. Maybe getting lazy there. Yeah, I don't know. I definitely make mistakes every day. You know, I buy crappy cars all the time, but that just means I have to buy two, right? I have to average out that bad buy with a good one.

You know, there's so much good advice, Jason, that you've given our listeners, and it's the same thing that all of us have done, but to kind of get it out there so that new dealers maybe don't have those type of missteps, that's a good thing. We really appreciate you being here and talking to us today.

I could ask you questions for hours and hours. We won't keep you any longer. I know you got a lot to do, and we look forward to seeing you down at Niada with the launch of Karketta. Right? We'll all be in Vegas, what, in a week or two. So.

Awesome. Yeah, I look forward to it. Thank you guys for. Thank you guys for having me on here. I'm typically pretty introverted, so it's good to get out and talk obligation.

I'll come find you.

All right, bud?

Thanks, Jason.

Thanks.

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