Neil Mehta

Carvana was making that a much better experience. Only got to know Ernie when COVID came. The stock was maybe $100 stock. During COVID, it went down to the 30s. I called Ernie. We're like, Ernie, now's the time to take some money from us. He's like, great. Love to do it. We got very close.

Carvana was making that a much better experience. Only got to know Ernie when COVID came. The stock was maybe $100 stock. During COVID, it went down to the 30s. I called Ernie. We're like, Ernie, now's the time to take some money from us. He's like, great. Love to do it. We got very close.

For Green Oak's reasons, we ended up not proceeding and investing, I think it was going to be about $500 million in the business at the time. It would have been a great investment. I would have talked about it as one of our big mistakes. It went from maybe $35, $40 a share up to $300 a share, whatever it was, over 2020 and 2021.

For Green Oak's reasons, we ended up not proceeding and investing, I think it was going to be about $500 million in the business at the time. It would have been a great investment. I would have talked about it as one of our big mistakes. It went from maybe $35, $40 a share up to $300 a share, whatever it was, over 2020 and 2021.

We have these moments at Green Oaks where you're like, ah, now it is well-recognized as this amazing used car experience. It's going to be dominant. People understand it's the Amazon of cars. And it was maybe at 450,000 units being sold each year. And Ernie did this big acquisition, which is Adessa, ramping up. He used quite a bit of debt to do that. I think he financed all of it with debt.

We have these moments at Green Oaks where you're like, ah, now it is well-recognized as this amazing used car experience. It's going to be dominant. People understand it's the Amazon of cars. And it was maybe at 450,000 units being sold each year. And Ernie did this big acquisition, which is Adessa, ramping up. He used quite a bit of debt to do that. I think he financed all of it with debt.

And so added a bunch of debt to the balance sheet. When things started to slow in 22... Everybody's excitement about the fact that he was building infrastructure to go to a million or two million cars. But the other way, people became very nervous about the business surviving. And the stock went from $300 a share, $338 to eventually went down to five.

And so added a bunch of debt to the balance sheet. When things started to slow in 22... Everybody's excitement about the fact that he was building infrastructure to go to a million or two million cars. But the other way, people became very nervous about the business surviving. And the stock went from $300 a share, $338 to eventually went down to five.

How many companies can you name that went from $70 billion market cap to one and weren't like a fraud? Zero. After you and I had this conversation, we actually looked it up. The answer is none. is none. As it started to go from $70 billion or $300 plus a share down to $50 a share, actually, and $100 a share, we started to become very interested in it. And there was two questions.

How many companies can you name that went from $70 billion market cap to one and weren't like a fraud? Zero. After you and I had this conversation, we actually looked it up. The answer is none. is none. As it started to go from $70 billion or $300 plus a share down to $50 a share, actually, and $100 a share, we started to become very interested in it. And there was two questions.

The first question was the market was getting killed. I think it was one of the largest peak to trough drops in used cars in the last 30, 40 years. Was this a one-time thing? Was this going to reverse? The second is his unit economics were terrible. I don't think he'd mind me saying that. He was losing $3,000 a unit on an EBITDA basis.

The first question was the market was getting killed. I think it was one of the largest peak to trough drops in used cars in the last 30, 40 years. Was this a one-time thing? Was this going to reverse? The second is his unit economics were terrible. I don't think he'd mind me saying that. He was losing $3,000 a unit on an EBITDA basis.

If that wasn't enough, he had about $2,000 of interest payments per unit. So he had $5,000 per unit of costs. So the question was not if, but when is this company going to go bankrupt? And so the stock went from 100 to 50. We started to buy around then. Of course, we started to buy all the way down to about five.

If that wasn't enough, he had about $2,000 of interest payments per unit. So he had $5,000 per unit of costs. So the question was not if, but when is this company going to go bankrupt? And so the stock went from 100 to 50. We started to buy around then. Of course, we started to buy all the way down to about five.

My partner, Ben, it doesn't feel great when you start to buy at 50 and then at 30 and then at 20. And then the 20 goes down to five. Ben has a great line, which is, what's the difference between being down 95% and 97.5%? Just halfs. And so that was a tough moment at Greed Oaks. We invested a substantial amount, became one of our largest investments in our fund. And we had a view.

My partner, Ben, it doesn't feel great when you start to buy at 50 and then at 30 and then at 20. And then the 20 goes down to five. Ben has a great line, which is, what's the difference between being down 95% and 97.5%? Just halfs. And so that was a tough moment at Greed Oaks. We invested a substantial amount, became one of our largest investments in our fund. And we had a view.

Our view was that Ernie had a decent amount of runway. There was things he could do operationally to fix the business fairly quickly. And we did what any investor might do at the time. We went line item by line item. We said, here's where he needs to cut. Here's what he needs to change. And much to our chagrin at the time, Ernie didn't do any of those things.

Our view was that Ernie had a decent amount of runway. There was things he could do operationally to fix the business fairly quickly. And we did what any investor might do at the time. We went line item by line item. We said, here's where he needs to cut. Here's what he needs to change. And much to our chagrin at the time, Ernie didn't do any of those things.

And it wasn't until later, I'll come to a couple of stories. It wasn't until later that I realized there's certain CEOs that might react immediately in order to placate the market. What he was doing was doing a bunch of AB tests internally to figure out what were the right things to cut and make sure that he could manage the company through it and grow on the other side.

And it wasn't until later, I'll come to a couple of stories. It wasn't until later that I realized there's certain CEOs that might react immediately in order to placate the market. What he was doing was doing a bunch of AB tests internally to figure out what were the right things to cut and make sure that he could manage the company through it and grow on the other side.