Cliff Sosin

Carvana buy cars mostly from the public. You take a picture of your license plate and you enter a few things and it's like four questions and they'll give you a price. You can exercise it or not, you have seven days. Once you do that, you can arrange for someone to pick up the car for a small fee, or you can drop it off at one of their hubs and get your money. And the transaction takes no time.

Carvana buy cars mostly from the public. You take a picture of your license plate and you enter a few things and it's like four questions and they'll give you a price. You can exercise it or not, you have seven days. Once you do that, you can arrange for someone to pick up the car for a small fee, or you can drop it off at one of their hubs and get your money. And the transaction takes no time.

Everyone gives them five stars. Doing that's hard.

Everyone gives them five stars. Doing that's hard.

What I just said, it sounds so simple, but actually being able to take a license plate, to map it to a VIN, to map all the features of the car's VIN, to then be able to figure out what you think you're going to be able to sell that car for, how much it's going to cost to ship it, how much it's going to cost to recondition it, and be able to work out from all that, therefore, what you think you're going to be able to make on the car, and then to figure out what you want to offer in order to maximize the profits from this lead.

What I just said, it sounds so simple, but actually being able to take a license plate, to map it to a VIN, to map all the features of the car's VIN, to then be able to figure out what you think you're going to be able to sell that car for, how much it's going to cost to ship it, how much it's going to cost to recondition it, and be able to work out from all that, therefore, what you think you're going to be able to make on the car, and then to figure out what you want to offer in order to maximize the profits from this lead.

And to do it all for every car on the road all the time across the country is wild. Then Carvana owns a real estate footprint. That real estate footprint consists of larger inspection reconditioning centers. These are, I think, very big facilities that can recondition up to 40,000 cars a year with 6,000, 7,000, 8,000 cars in the parking lot, which is a lot of cars.

And to do it all for every car on the road all the time across the country is wild. Then Carvana owns a real estate footprint. That real estate footprint consists of larger inspection reconditioning centers. These are, I think, very big facilities that can recondition up to 40,000 cars a year with 6,000, 7,000, 8,000 cars in the parking lot, which is a lot of cars.

Then there's local points of presence that they call hubs. And those hubs would be, there's one in Fairfield, Connecticut. small facilities that originally were sort of purely non-consumer facing. Now they've modified them to be somewhat consumer facing, but they're, you know, they're Not very big. And so the car's at the hub. The hub is connected to the IRC. Let's say you have the car picked up.

Then there's local points of presence that they call hubs. And those hubs would be, there's one in Fairfield, Connecticut. small facilities that originally were sort of purely non-consumer facing. Now they've modified them to be somewhat consumer facing, but they're, you know, they're Not very big. And so the car's at the hub. The hub is connected to the IRC. Let's say you have the car picked up.

One of their nifty little single-car haulers will come out. They'll pick the car up. They'll bring it back to the hub. From there, that hub is connected to the IRC via logistics on a nine-car hauler. Those IRCs are then connected to each other via logistics on nine-car haulers. And what that does... is it's built a hub-and-spoke logistics system. It's like FedEx or something.

One of their nifty little single-car haulers will come out. They'll pick the car up. They'll bring it back to the hub. From there, that hub is connected to the IRC via logistics on a nine-car hauler. Those IRCs are then connected to each other via logistics on nine-car haulers. And what that does... is it's built a hub-and-spoke logistics system. It's like FedEx or something.

The sort of insight there, which Ernie had, was historically, if you wanted to ship cars, it was very slow and expensive. And the reason is that sort of the amount of car shipping happening between... Fairfield, Connecticut and, you know, Alabama and someplace in Alabama, I don't know.

The sort of insight there, which Ernie had, was historically, if you wanted to ship cars, it was very slow and expensive. And the reason is that sort of the amount of car shipping happening between... Fairfield, Connecticut and, you know, Alabama and someplace in Alabama, I don't know.

Mobile, Alabama. It's just no volume. And so the car, your point-to-point system doesn't work. So what they've done in their hub and spoke system is they've collapsed down all this volume onto relatively narrow routes. Most of the shipping is happening between IRCs. There's a relatively small number of them, and they're sort of sparsely connected.

Mobile, Alabama. It's just no volume. And so the car, your point-to-point system doesn't work. So what they've done in their hub and spoke system is they've collapsed down all this volume onto relatively narrow routes. Most of the shipping is happening between IRCs. There's a relatively small number of them, and they're sort of sparsely connected.

And what that allows them to do is to move trucks continuously back and forth, loaded with cars between these IRCs. And you can think about them as train tracks, where the vehicles can move continuously between these spots.

And what that allows them to do is to move trucks continuously back and forth, loaded with cars between these IRCs. And you can think about them as train tracks, where the vehicles can move continuously between these spots.

And what that does is if a truck travels 40 miles an hour on average and costs like $3 a mile to travel, then you can work out what the cost on a nine-car haul or how fast cars can travel and what the cost is. And it's actually not that high. And so... But running a hub-and-spoke network like this, one, it's hard. Building a logistic system requires a lot of density, requires a lot of scale.

And what that does is if a truck travels 40 miles an hour on average and costs like $3 a mile to travel, then you can work out what the cost on a nine-car haul or how fast cars can travel and what the cost is. And it's actually not that high. And so... But running a hub-and-spoke network like this, one, it's hard. Building a logistic system requires a lot of density, requires a lot of scale.