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
And if you were to broadly describe the company's history from 2013 to 2021, it was up and to the right. The business grew every year. Its margins improved every year. And it grew really fast. It was doubling often every year. Slid a little bit, but that was kind of roughly the pace. You know, if you'd spoken to me in 2021, I roughly would have expected a continuation of that trend.
And, of course, what happened was the business... It slowed. It lost tons of money. The stock went down 99%, which is more than... Pretty bad. Which is pretty bad. And then, you know, to ruin the story, which I think most people realize, you know, it turns out that was all a mistake. The company's fine. It's right back.
It's a little behind where I sort of thought it would be, but it's actually more profitable and it's back on track and the stock's mostly recovered and all the rest. So that's kind of the broad arc.
I first encountered Carvana in 2018. And they used to have a video up on their site, they might still, that kind of describes the business. It was a pre-IPO video, one of these things you put up or whatever. Yeah. And I remember sort of watching that video, basically realizing this is an amazing business that's going to do great. And it's incredibly underpriced.
And I'm going to own a lot of this, provided everything they just said is true. But obviously, that's not how reality works in the sense that the reason why I felt like that was years and years and years of context. And so to go further back, over the prior years for, you know, like when you're in my business, you're waiting for your stocks to go up.
In the meantime, you're sort of looking at other things. And so I had spent time studying CarMax and I had spent time studying car dealerships. So I was sort of reasonably fluent in kind of how the auto retailing business works. I'd also been involved in the auto lending business. I'd been involved in credit acceptance, which is a one on auto lender.
I'd also, you know, looked obviously who hasn't like studied Amazon and like read the everything store. I'd also studied logistics companies. And I'd also looked at, you know, manufacturing companies and all the rest and software companies. And so it turns out that Carvana is like all of these things. As they were explaining the business, it was clear to me that the
The economic advantages that allow someone to build a successful distribution company or a successful retailer or a successful lender, all of them have economies of scale, skill, and trust. And what Carvana was building was going to involve all of the advantages from all of these different businesses that they're effectively in at the same time. And this is called economies of scope.
And by being great at all of these things, it was going to produce this very – it could produce this very big moat. What I didn't believe necessarily until I saw that video was that anyone would buy a car on the internet because that was just common wisdom. And at the time, this is a while ago. This is before it was obvious. But they just had some cohort curves. And I was like, well –
People clearly love this. And so at that point, it was kind of like love at first sight. Maybe to sort of explain a bit about the business and why I think it's so... The things I identified turned into the tremendous advantages it has today. and are kind of the moat. So let me just spend a few minutes. So at the core, the way the Carvana system works, it will follow a car.
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.
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.
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.
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.
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.
Showing 101–120 of 323 · page 6 of 17
← Previous
Next →