Cliff Sosin
speaker
323 appearances
1 recordings
1 series
first heard Apr 2025
last heard Apr 2025
Cliff Sosin’s voice in public audio — every appearance, attributed to the second.
Trend
recordings per month · last 12 monthsNo recordings in the last 12 months.Older appearances are listed below; set an alert to hear about the next one.
Appearances
Carvana, if you think about a market like Connecticut, Carvana has, I don't know exactly how big Connecticut's fleet total used vehicle inventory is, but let's say that Carvana has something like three quarters of all the inventory, including Carvana's inventory in the state of Connecticut, just to make up a number. One might ask why we don't have like three-quarters of the sales.
Because they probably have, I don't know, Connecticut sales out of my head with like 100%, something like that. And so, you know, the first thing you might do is throw out, okay, well, there are some cars that are there in California. There are shipping fees. There's delays. Like, let's only look at cars that are nearby. And so you cut that inventory down.
And then you might say, well, let's throw out people who haven't heard of Carvana. It turns out they have like 80% awareness, but we'll throw out some people. Okay, let's reduce some half of people say they don't want to buy a car online right now, although the number is gradually falling.
But like, let's throw out, you know, that half, you're still left with a number that's way higher than where they are. So like, where are the sales? And also weird is, okay, you go into a market, you have all this huge inventory, this great product. Why does it take all, you know, why do sales kind of ramp like this as opposed to just like step function? Like what is delaying people adopting this?
I didn't have a great answer for that for a long time, but I kind of thought it was word of mouth. I was kind of like, you know, I think it just takes time, word of mouth. And my evidence for that was that if you surveyed
people who bought from Carvan asked if they recommended it to people I think it's something like four they would recommend it to four people on average which is an enormous like you know number viral thing yeah and so that's where I'd left it but as you know in the sort of wreckage of trying to figure all this stuff out you know I started thinking harder about this
And it occurred to me that I'd never done two things which seem obvious in retrospect. One was I'd never asked people how important this word of mouth was to their decision to buy from Carvana. So we added to the survey something to the effect of, did you get a recommendation from a friend or family member? How important was it?
And we found that 70% of people said that it was either somewhat or very important in their choice to buy from Carvana. Therefore, only a third of people were buying from Carvana without the recommendation of a friend or family member. And once I saw that, that got me thinking, I wonder what's going on with this third of people who are buying without the recommendation.
So that convinced me there's virality. But what's going on with these people who are buying without the recommendation of a friendly family member? And my theory was, well, they're early adopters. So we survey people who bought from Carvana. We ask them questions like, do you have a Robinhood account? Have you ever owned Bitcoin? You know, do you do online grocery shopping?
And the answer is like, of course I do all these things. Like, you know, all yes, yes, yes. They're way higher than non-carbonavirus. So now I can say, look, many people won't do it unless someone says, okay, some people will just give it a plunge, right? And in general, the more early adopter-ish you are, the less nudging you need from relations to do it. And that's what drives the growth curve.
It also gets us back to 2022. You see, back in 21, Let's say that you were the sort of person who had a Robinhood account. And you might have speculated in some SPACs and some cryptocurrencies. You might have had a windfall. And you might have thought, you know, look, this isn't like billions of dollars. This is thousands of dollars, tens of thousands of dollars maybe.
You might have thought that given your windfall, you were going to go buy a car. And you might have thought to yourself, since you're the sort of person who owns like SPACs and cryptocurrencies and shops online, obviously the place you were going to buy a car was Carvana.
Now, you may or may not have actually bought that car at Carvana because Carvana was sold out and they might not have got what you wanted. You might have gone somewhere else. But here's the deal. you pulled your demand forward. So from Carvana's perspective, even if this is, like Carvana in 2021 had like 1% share.
So even if this 0.3% of the market, this does not have to be a lot of the market for Carvana to feel this enormous demand pull, which they definitely saw. And it also means that you roll forward a year and all these people are in the exact opposite position. They've just had the opposite of a windfall, whatever you call that, sort of unexpected loss. Decimation. Yes.
And the year before, they all just bought a car. So turns out from Carvana's perspective, although none of us sort of realized it at the time, this isn't great. So I think that was the third contributor that was unique to Carvana. So you have these three, you've got the overall market is down more than the great recession. You've got the tightest auto credit spreads ever and you can't match.
And you have this unique thing where you kind of all of your sort of bleeding edge customers bought last year. And you just bought this big asset with a bunch of debt. And you just bought this big asset with a bunch of debt. And it turns out that you're learning that like a bunch of your processes. Like eventually, I always sort of thought that Carvana would have bumps in the road operationally.
But it turns out they're all now.
And none of that was totally obvious at the time. There were bits and pieces. You're kind of learning as you go. The rate stuff was pretty clear. The market stuff was pretty clear. The stuff I described, but all this data comes at a lag. It was all in a cloud of uncertainty. And then you do what Carvana has to do, which is you start cutting.
And one of the things that's glorious about this business is that as it gets bigger, it gets better. And size begets size. It's just a virtuous cycle. But here's the thing. When you cut that a lot because of all this stuff, that all runs against you.
So you slash advertising, you slash inventory, and then external demand gets even worse, and you've reduced things that drive down demand further, and they were like chasing a ball down a hill all year long. And Ernie told you the story on your podcast about kind of how they got better organizationally at focusing on efficiency and how they kind of learned their way into it.
Showing 221–240 of 323 · page 12 of 17
← Previous
Next →