Bill Cilluffo sits down with Aidan Rushby, founder and CEO of Carmoola, to discuss coming to terms with failure, the importance of taking care of one's mental health and founding Carmoola to enable cheaper, easier and faster car finance.
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Speaker 1 (00:35):
Thank you.
I'm Bill Salufo, head ofinternational investments at QED
Investors, today on the podcast.
I'm excited to be joined byAidan, international investments
at QED Investors, today on thepodcast.
I'm excited to be joined byAidan Rushby, co-founder and CEO
of Carmoola.
Aidan, welcome to the podcast.
Speaker 2 (00:52):
Thanks, bill, really excited to join and, yeah, it
should be a good episode.
Speaker 1 (00:56):
Definitely, definitely.
Well, look, I'd love to kickoff to see if you can give our
listeners maybe a 60-secondcommercial on who Carm Carmola
is and what you guys do.
Speaker 2 (01:04):
Yeah, no problem at all.
So Carmola is adirect-to-consumer auto finance
company.
We enable cheaper, easier andfaster car finance.
We do this through a mobile appwhere, within 60 seconds of
downloading, a consumer can geta budget or a credit limit of
how much they can buy a car for.
Customer then just enters theregistration number or the VIN
(01:26):
number of the car they want tobuy and then the app generates
them a virtual card where theycan buy instantly online or add
it to their Google or Applewallet, walk into a car
dealership, buy the carinstantly.
Speaker 1 (01:38):
That's awesome.
That's awesome and I know we'lltalk a lot more about that
business later on in the podcast, but I know that's quite
innovative in the UK market andnot something that you can find
elsewhere.
Speaker 2 (01:47):
Yeah, definitely, and consumers seem to really love
it, which is the most importantthing, absolutely.
Speaker 1 (01:54):
Well, look, before we dive into the Carmoola story,
that is not your first startup.
You've been an entrepreneur nowfor quite some time, so I'd
love to really dive into theearly days of entrepreneurship.
Your first company, if I'm notmistaken, is called Movebubble,
so I'd love to hear a little bitabout what was that and what
(02:14):
led you to get that started.
Speaker 2 (02:15):
Yeah, so it feels a very long time ago now, but
Movebubble was a propertyplatform very similar to in the
US apartment list.
There was a rental platformspecifically targeting people
that were looking to rent along-term rental and again, that
was a mobile app,direct-to-consumer business.
It was really trying to helppeople find a place to rent and
(02:39):
doing it more efficiently andeasier.
It was extremely challengingbusiness.
I spent at least seven yearstrying to get that to work and,
yeah, it was just a very, verydifficult space and a massive
challenge.
But I learned so much alongthat journey and, yeah, it was,
in many ways, learning what notto do more than anything else, I
(03:00):
think.
Speaker 1 (03:01):
Well, that's a big part of the journey for sure.
I mean I know how painful it isto rent apartments in the UK.
I mean I know so many peoplethat think they've got a signed
lease but they don't really havea signed lease and then it gets
broken later, so I can seewhere that's a big opportunity,
even if it proved to be hard.
What led you originally todecide to start a business in
that space?
Speaker 2 (03:20):
I love helping consumers.
I think that that was my biggestmotivator and I was working in
the industry very quicklyrealized that it could be
digitalized.
The one thing I didn't realizewas just, I guess when it was
early days, is just howdifficult the market was to
access the revenue pools.
Some of the incumbents and thenetwork effects of the
(03:41):
incumbents were so strong thatit was just extremely difficult
to actually access the revenuepools and the profit pools in
that marketplace.
I think those early classifiedbusinesses, if you like, the
marketplace 2.0s, if you like,which were just so embedded,
especially when you have like onthe supply side of subscription
(04:03):
model, have like on the supplyside of subscription model, I
think it makes extremelydifficult for a you know, new
entrants to come in because youjust have to get to like.
We worked out that you wouldhave to get to something like 98
of supply for it to becompelling enough to keep the
consumers on your platform, andso it's just a huge challenge to
to get to any kind of scale.
(04:25):
We managed to get to about 4million customers on that
platform or downloads of the app, and we got to some fairly
decent revenue numbers, but itwas extremely difficult, to say
the least, I think Karl Muellerdwarfed the revenue that we
managed to generate in thatbusiness within the first six,
(04:45):
seven months.
So yeah, it was a hugechallenge.
Speaker 1 (04:49):
I mean that is fascinating, right.
I mean you've talked about howmuch of a challenge it is and I
want to dive into some of thelearnings here in a minute, but
4 million customers is stillimpressive.
So maybe the business modeldidn't work, but pretty
impressive to get 4 millionpeople.
You probably give away freemoney and not necessarily get 4
million people to do it.
Speaker 2 (05:09):
Yeah, it was like in the supply side was was
relatively.
You know, we built a reallygreat brand.
We focused on the city by cityrollout, that kind of really
kind of leverage, some of thosenetwork effects, of really kind
of leverage, some of thosenetwork effects.
But even so, like I think wedid a lot of things right.
But I think one thing you can'treally kind of understand is
(05:30):
that you know how do you accessthose revenues and what is the
competition going to do to blockyou.
It was, it was really reallyquite challenging to do anything
of any meaningful sort of scale.
Yeah, no, that makes sense.
Speaker 1 (05:43):
So I know you've shared in the past that you know
you feel like while you wererunning this, you got in the
cycle of failing.
I mean, I know you talked abouthow challenging it is.
What do you mean by that andwhat were some of the steps you
took to pull yourself out of it?
Because clearly you're on avery different cycle of that
today.
Speaker 2 (05:59):
Yeah, so we first started out that business move
bubble, which was more of anonline rental agency, is
probably the best way to thinkabout it.
That's quite a common thing now, but back in the early days,
that's what the kind of initialpremise was that you could
digitalize the letting agencyand become more scalable as a
result.
We pivoted and pivoted, andbecause you couldn't necessarily
(06:22):
access the revenue very easilyin this market and it was very,
very difficult to monetize, Ihad to keep pivoting the
business model and this kind ofled to learning to fail quite a
lot and it was extremelydifficult to actually get it to
work.
It was just really, reallydifficult.
It was very easy to grow thedemand side.
(06:43):
It was extremely difficult togrow the supply side and
monetize.
That's where we were trying tomonetize and it was just
extremely difficult to get thatto work.
And, yeah, it failed, failedmany, many times.
And I kind of got into this loopwhere, as an entrepreneur, I
didn't want to give up.
There were times when Idefinitely should have given up
because I tried and tried andtried and I kind of knew it
(07:06):
wasn't working, but I justdidn't want to let the
shareholders and the investorsdown At this point they'd
invested quite a bit of moneyand I didn't want to give up and
I was fortunate enough to berelatively good at raising money
and so managed to keep through.
Pure absolute determinationwould kind of drive through and
(07:27):
be able to keep it going.
And I, from a very young age, Ididn't want to look as a
failure.
I think if to the outside world, I think, like by stopping and
saying like it's just not worked, I would have, it would have
felt quite bad and I just wasn'tin like an emotional point
where I was able to at thatstage, kind of just say look,
(07:48):
I'm not going to do this anymore.
And so I kept kept trying andtrying and trying and managed to
get to, you know, reasonablescale and the final failure
point was that we kind of wereraising about a 20 million pound
round and it was going throughthe final stages of due
diligence and the deal fellapart in the summer of 2022.
(08:12):
I kind of, at this stage, knewthat it needed a significant
check to kind of make it reallywork.
And I just was got to a pointwhere I had to stop because I
just the board wanted me to goback to the existing
shareholders to go and ask formore money, and I knew that they
wouldn't be able to provideenough money for it to be a
(08:34):
meaningful step forward.
And so, yeah, I decided to stopat that point, but yeah, it was
quite a challenge.
Speaker 1 (08:41):
Yeah, I mean, that's certainly never easy.
Our colleague, frank Rotman,has the comment that businesses
almost never fail due to lack ofideas.
They really only ever fail dueto lack of money.
So it had to be a really tough,really tough call to kind of.
You know, when do you kind ofkeep going, when do you decide
to stop and move on to your nextthing?
You know, what was it thatultimately allowed you to make
(09:02):
the call to that?
This is it.
Let's not, let's not keep doingthis anymore.
Yeah.
Speaker 2 (09:07):
I got to some quite dark personal places over the
kind of last four, three or fouryears of that business where I
was just really struggling to, Iguess, quite a deep level of
unhappiness.
And I think I eventually got toa place where it was just
really bad and I eventuallyseeked help and I said, look, I
(09:28):
need to do something about this.
And so you started to docognitive behavioral therapy,
probably about three yearstowards the end of that business
, and I'd had quite achallenging childhood, like I'm
sure lots of entrepreneurs likeI think ultimately you don't do
this unless you've kind oftrying to prove a point and I
(09:48):
had been through quite a bit andI needed to understand myself
better.
I needed to go on this journey.
So I went through cognitivebehavioral therapy and it was a
combination of things reallythat kind of was driving it.
All I want was I was heavilydyslexic when I was younger and
school was a massive challengefor me and you had this deep
(10:12):
emotional thing to prove that Iwasn't stupid.
And then I also had somechallenges with some of my
parents and so I kind of endedup in this world where I was
really really trying to prove tonot only the world that I
wasn't stupid, but also that youknow I was trying to do this
because I wanted to be loved andliked and some of these things
(10:36):
which meant the worst thing inthat kind of scenario is to fail
, because then ultimately it'skind of compounding that you're
stupid or you're not capable.
And I went on a massive journeyto really understand this and
to get to kind of acceptancearound this and still do it now.
But I ended up in a place whereI eventually kind of was able
(10:58):
to be more rational about it andnot being driven by emotion and
got to a place where I was verycomfortable actually saying do
you know what, if I draw this,you know I could take all the
learnings and I could stop doingwhat I'm doing and use that in
into a new venture, in a newbusiness.
That's just learning, it's notfailing.
(11:19):
And I was able to kind of go onthat journey and kind of enable
that self learning and Ilearned so much about myself.
I still do it now.
I think it's incredibly powerfulway of understanding the way
you're thinking about things andthe way you kind of move things
forward and was able to kind ofget to a place where stopping
(11:39):
that business.
It was extremely hard thing todo.
I remember writing the letter,ringing personally a lot of the
shareholders and explaining whyit was the right time to stop it
and stop you know like,effectively like wasting their
money, and you know we could usethe resource and build
something much better togetheroff the back of it.
Speaker 1 (12:00):
Yeah, yeah, well, look, I really appreciate you
sharing.
I mean, there's got to be lotsof both entrepreneurs and really
anyone out in the communitythat feels like they need help.
But it's always hard to sort offigure out.
How do you start, where do yougo?
I mean, it sounds like you wentthrough a long period before
you took the steps to seek helpand any advice you would give
for you know, for folks aboutkind of what, what caused you to
(12:20):
to finally seek some help, andwhat you know your learnings
were there that might, might,benefit others.
Speaker 2 (12:30):
Yeah, like for me it was a was a.
First of all it was aboutgetting to a place where you
were ready to accept the help.
I think a lot of people youyou've got to almost go into the
quite a bad place to be able toto get there.
I think it is recognizing thatyou're almost in a
self-destruction kind of mode.
I think you end up in a worldwhere you can go get quite dark
quite quickly, and so you almostgot to get to that point before
(12:53):
you're able to rebuild from it.
So once I'd kind of made adecision that I was wanted to to
kind of move forward and get toa better place, then I spoke to
probably like three or fourdifferent therapists and I did
some research and I learned alot about it.
And then it comes down to mypersonal connection with the
(13:14):
individual that you're going towork with.
And I was super lucky with thelady I ended up working with is
that she had a master's infinance.
She was very interested inmoney and entrepreneurial
adventures, and so we connectedreally well from a very early
stage.
And you then over time buildtrust and you're talking about
(13:37):
some quite deep traumas and soit takes a long time to build
trust.
Some people that say they cango through therapy and get it
solved in six weeks is acomplete myth.
Like for me, it's taken nearlysix, seven years and there's
still things that are not quitequite there.
And so, yeah, like I think,take it step by step, play the
(14:02):
long game with it and ultimatelyit's personal development
journey.
You learn so much aboutyourself and you're able to use
this in a business context whenyou kind of discover that and
how you can utilize that as anextra skill going forward.
Speaker 1 (14:16):
Yeah, Well, look, I really appreciate you sharing
some thoughts of that stage ofyour journey and, to your point,
it's kind of, at some level,never ending exploration, right,
there's always things goingwell, things not going well, and
everyone needs a supportnetwork, whether it's a formal
or informal.
And you know it's great to cometo the realization on how that
can help.
Well, look, let's jump fromMovebubble and some of the
(14:37):
learnings you had from that intoCarmoola, which you know I can
speak from direct experience isgoing quite nicely.
You know, let's start withgoing from a rental platform to
car finance.
It's a pretty differentopportunity.
I mean, I'd love to hear alittle bit of where the idea
came from.
Speaker 2 (14:53):
I love coming up with business ideas all the time.
I'm continually reading annualreports.
I read all the IPO prospectusesEven now.
I find it fascinating.
I love just to learn.
So I'm continually readingthose things.
And a member of time after Ifinished Movebubble and made a
(15:13):
decision, I went to Mallorca anda member sat there reading, as
I always do on holiday, theamount of business plans I've
written on holiday.
I was sat there reading theKavanaugh and the Kazoo IPO
perspectives.
Speaker 1 (15:28):
I I thought well, I can imagine sitting on the beach
of Mallorca reading the Redditannual report.
Speaker 2 (15:34):
Yeah, I was sat by the pool and I remember reading
the Kavanaugh one and the Kazooone, thinking, wow, this is a
huge market and there was acouple of learnings that was key
to take into the new business.
And I remember looking at it,thinking wow, like I can't
believe the number of peoplethat are buying a used car, not
just in the UK but Europe andthe US.
(15:55):
It was just a huge market andand I thought, wow, this is
really interesting.
And I looked at the, thereports and you could clearly
see that all the profit poolswas in the finance and the
ancillary services, and so thatwas really interesting.
And then I was very familiarwith, like Klana and all the buy
now, pay later solutions thathad kind of been building.
(16:17):
One of my friends was buildinga buy now, pay later business
and I thought, wow, it's reallyinteresting how all these
consumers they're being educatedand trained around download an
app, get a budget, be able tobuy, and I thought, wow, there's
an opportunity here maybe toput these two things together
and build a car financingbusiness and utilize some of the
(16:40):
latest technology that was outthere.
And I thought, wow, it's reallyinteresting.
And then I started doing moreresearch into the market and
could see very quickly how thiscould be a massive opportunity.
Number one the dealerships andthe brokers were taking massive
commissions at the point of sale, finance anywhere sort of
(17:03):
between 10 and 15 percent ofdisbursement.
So I thought, wow, that's athat's a huge commission that
they were taking the loss rates.
When I started looking at theabs data around the securitized
used car portfolios, I wasreally surprised at how big the
loss rates were.
They were anywhere between sortof five and eight percent and I
(17:23):
thought, wow, that's reallyinteresting.
I wonder why that that could bethe case.
And when you looked at it, therewas lots of layers in the value
chain people, actors withdifferent objectives, and so the
data was just getting acomplete mix of data between the
end consumer and what ended upat the lender.
And then also the OPEX of thetraditional lenders was massive.
(17:47):
Opex of the traditional lenderswas massive.
There was very little levels ofdigitalization, very old school
systems, huge headcounts, bigcall centers.
I thought, wow, there's a bigopportunity here to kind of
disrupt and change that.
So you know, and it's kind ofreally played through on those
kind of three key things.
So we, we built a proposition,as I said, that would be a
(18:11):
mobile app that would enableconsumers to go direct so they
could get their budget up front.
They would then just enter thereg of the car and then we'd
make it really seamless for themto pay and to pay back the loan
as well, and so, yeah, and it'sobviously gone extremely well.
We can talk about that in a bitmore detail if that's useful.
(18:31):
But yeah that's kind of where wegot to.
Speaker 1 (18:34):
I mean that's interesting, you know.
Let me dive just a layer deeper.
I mean in our Capital One days,capital One's become one of the
largest independent car financecompanies in the US and what's
interesting is people can getpretty afraid of car financing
and the first question thatcomes up is okay, well, don't
the manufacturers just subsidizeall the loans?
How do you make any money?
(18:58):
You're specifically going atthe used car finance market,
where that really doesn't exist.
I mean, until Carmoola camealong, how would people go about
thinking about financing?
Or were there really optionsfor financing in the used car
market?
Speaker 2 (19:09):
Yeah, so the traditional customer journey is
that you would go either to anonline broker where you would
complete an online applicationform, and then it's very manual,
step by step, almost like witha concierge person on the phone
that would kind of coach youthrough the journey a lot of
back and forth phone calls.
(19:29):
I remembered, like testing, itwas about a 16 17 step process,
from the point of which youcomplete the application until
you were able to buy the car,and it took days with the.
Alternatively, you could gointo a car dealership and you
would have to fill in apaper-based application form.
There was a lot of fear aboutbeing rejected at the point of
(19:53):
sale.
It was really kind of clunky,manual process, like once you
walked into the dealership anddid that as well, and ultimately
the consumer was paying for allof the inefficiencies in the
traditional model.
So you'd be paying a higher APR.
You would basically beeffectively paying a massive
premium for taking point of salefinance.
(20:15):
Obviously, since we havelaunched then, there's been
massive regulatory changes thathave kind of driven the business
even further.
So you had the consumer dutythat came in, which made it less
attractive for dealerships tosell point of sale finance they
have to adhere to being fairvalue and various other measures
, and it's become a realregulatory headache.
(20:37):
And then kind of a mega wavethat's kind of been driving the
growth more recently is that inthe UK we had massive commission
issue with the FCA where whatwas happening is a consumer
would go into a dealership andthe car dealer would then just
crank up the price depending onthe customer, just so they could
access more commission.
(20:58):
And this has been in the newsthere's over.
I think it's about 2 millionpeople now have made complaints
to the FCA about this.
The compensation that's goingto be paid out is huge.
I think you saw probably thatLloyds, which is one of the
largest providers of car financethrough Blackhorses something
like 400 million a side.
They expect it to be closer toabout 1.8 billion and basically
(21:21):
all of this has just drivenconsumers to look for an
alternative trust in point ofsale.
Finances just come right downas a result, kind of changing.
And then you've got this othertrend which is younger consumers
just don't necessarily want togo into a car dealership and buy
cars in the same way as theirparents did.
(21:42):
They're much more interested inbeing empowered and taking full
control of that and I think wecan talk about the segments of
our customers in more detail.
But around 50% of our customershave never taken car finance
before.
The majority of them say to usthey use Carmula because they
love the empowerment of it.
They like to be in control.
(22:03):
I think about 25% of theaudience is a female demographic
and they just say like they canget their car finance sorted in
advance and then they can justwalk in and buy without having
to deal with any car salesman orsleazy sales pitch.
Speaker 1 (22:18):
ultimately, yeah, I mean it is interesting.
I know that any entrepreneur infintech needs to think about
regulation and I think a lot ofpeople tend to approach it as
being a bad thing and being anobstacle and getting in their
way.
I mean, you just described acouple of great examples where
the market is clearly failing.
Regulation can help and then ifyou're an entrepreneur and you
create a great solution forconsumers, you know regulation
(22:39):
can be your friend.
I mean, looking at auto financein the US, the lack of
regulation, I think, is whatcontinues to drive so many of
these bad behaviors and at theend of the day, the most
powerful person in any smalltown in America is the person
that owns the car dealership.
So the lobbying power of thecar dealers is pretty stunning
and they've managed to getexempt from so many different
consumer protection regulationsthat it sounds like in the UK,
(23:02):
the FCA and others are able totake action on, and I think it's
a great thing for consumers andcan create a great
entrepreneurial environment.
Yeah, and I think it's a greatthing for consumers and can
create a great entrepreneurialenvironment.
Speaker 2 (23:11):
Yeah, I think it's the size of the market as well.
You know there's nearly 8million used cars bought in the
UK every year, I think.
If you compare that to new cars, I think it's about 1.5 million
.
So just a huge market as well.
Speaker 1 (23:24):
Oh, makes sense.
So I know I've heard you talkbefore that you know you've got
a particular framework as you'rethinking about new business
ideas the Hamilton Seven Powersframework, which admittedly I've
not I had not heard of before.
You know it's interesting.
I think many entrepreneurs comeup with their ideas through
personal experience.
Some do a little more of asystematic study in the
direction of what you'vedescribed before, but I think it
(23:46):
is pretty unique to take aclear academic framework and
apply that to how you thinkabout things.
I wonder if you could talk alittle bit about what that is
and how you leverage it and whatadvice you might give to others
searching for something likethat.
Speaker 2 (23:59):
Yeah, it's not an original piece.
I'm a huge fan of the Acquiredpodcast, which I'm sure you've
probably listened to, and at theend of it they do always do a
playbook and they come back tothe seven powers framework when
they're kind of discussing theplaybooks of the different
businesses.
So for me, I think it's areally good way to think about
it and I think that, ultimately,what are the things that you
(24:21):
are doing, what are you buildingin to kind of really drive
future value?
And we use a lot of thesethings.
But for me, like one example,is we heavily focus on
automation.
So, just to give you anindication, carmula will grow
probably 300% this year.
Top line revenue will add fivepeople to the company.
(24:45):
We spent a huge amount of timebuilding automation of the whole
system.
So we built fully automatedvalue-based bidding on
acquisition, fully automatedunderwriting, fully automated
loan disbursement and fraudmanagement.
We've also built our ownservicing and collections
platform that runs fullyautomated.
So our ability to to drive hugevolume without scaling cost is
(25:08):
one of our one of the key, keypowers they talk about.
They talk about processingpower.
So that's like one way thatwe're kind of really leveraging
it, one of the key parts of ourbrand like strategy is about
brand.
I think ultimately, carcarillionaire is selling car
finance, which is money,ultimately a commodity.
So how do you build a brandaround that?
(25:28):
The customers will choose touse us above anything else, and
so we heavily focus and investin brand.
So this includes not only justan amazing product experience,
thought about it in lots andlots of detail.
So when you're adding a car,you get to go through a fun car
name generator and you get toname the car, which are like old
(25:49):
English people's names.
As part of it, we send themlike a pack out after they
bought a car with their airfreshener story about car muller
and why it exists, socks andvarious other bits and pieces.
Our customer service I thinkour current mps score is 92 if
you look at the reviews online.
Customers just absolutely raveabout it.
(26:12):
We we really see that that'sone of the seven powers of brand
and we see that as like along-term investment into
creating a real emotionalconnection with the customer and
we do a lot of details aroundthat to kind of build that
equity over time.
So obviously, data andautomation is a key part of our
(26:32):
strategy.
As someone at X Capital One.
We're heavily invested in thedata side of the business.
So we see that that is like anetwork effect over time that as
you build more and morecustomer base, you can feed that
back into your decisioning andyou can get better and better at
underwriting.
The bigger the data set comes,especially with fraud management
(26:54):
and combining that with adirect to consumer approach, you
can really leverage the datafrom the acquisition channels
and feed that into yourunderwriting decision.
And we see that that is likeanother key area, that into your
underwriting decision.
And we see that as like anotherkey area that you will kind of
get, as well as some of thebasic things more that they talk
about with economies of scale.
You know, ultimately as alending business, the more you
(27:17):
prove, the better performanceyour cost of funding comes down
over time and various other bitsand pieces.
But I think it's a nice way tothink about how do you, instead
of some of the more traditionalframeworks that aren't super
relevant in some of the newerbusinesses, it's a good way of
kind of framing your thoughtprocess around.
Where are you putting yourcapital allocation and how are
(27:39):
you kind of building the valuein the business?
Speaker 1 (27:41):
Yeah, super helpful and, by the way, happy to give
props to the Acquired folks.
I do think that's one of thebest podcasts out there.
Sometimes I get a littleintimidated, since all the
episodes are three or four hourslong so I don't always start
them, but those are some of thebest content out there.
My personal favorite was theirLVMH dive, in which I know they
started as a tech podcast, butthat business is so cool.
Speaker 2 (28:01):
They've just done one on Hermes as well.
Actually, If you like luxurysector, it's really interesting
as well.
Speaker 1 (28:07):
Yeah, I listened to that one as well.
That was super cool, so kudosto those guys.
So let me dive into somethingthat you just said.
You started talking about brandand your 92% net promoter score
, which is incredible, and sortof the use of data and all of
these things Certainly back tomy days at Capital One, having
spent a ton of time with theguys at NewBank.
(28:28):
These are topics that aren'talways synergistic with each
other, right?
So at one point, your job is tokeep customers happy and have a
beloved brand.
On another hand, your job is todecline more customers than you
accept because you're managingcredit risk and trying to figure
that out, and presumably the92% NPS is among the customers
you approve.
There's the whole issue of whodo you not approve and how do
(28:50):
you think about those customers.
But how do you, how do youthink about making decisions in
that environment of if you overoptimize on analytics and I
would argue that's what CapitalOne did Sometimes it comes to
the detriment of brand andcustomer experience.
If you over optimize on brandand customer experience, if you
over-optimize on brand andcustomer experience, you really
just can't be too generous in alending business, because it's
(29:10):
not that hard to lend money,it's much harder to get it paid
back.
How do you think about makingdecisions in that environment
where you have these forces thatdon't always align to each
other, I think?
Speaker 2 (29:20):
that's a great question.
I think sometimes the bestplace to start with that is who
is the entrepreneur behind it?
And sometimes like, what istheir reason for creating the
company?
I think, if you ask anyone inCarmula, I'm probably the
customer's biggest fan and Iabsolutely love I continually
talk about the people that we'reserving.
(29:41):
Ultimately, we're here to helpconsumers get easier, cheaper
and faster car finance, and ithas to start there.
And then it's a question ofstarting to talk about segments.
So who are you serving?
Why are you serving them?
And going deeper there, and Ithink that that's really key.
And then it comes down to how,then, do you utilize the data to
(30:06):
deliver on your business model?
And ultimately, there's nopoint having a business that
isn't delivering value to theshareholders, because ultimately
, you need to exist and build acompelling business case that
can ultimately continue to servethose customers in the real
long term.
And so I think it's about acombination of making sure you
stay really connected with thecustomer, build the brand and
(30:28):
then have the data layer as wellthat supports everything you're
doing.
And so we utilize the analyticsas like a core, as I'm sure
every business does, and reallykind of prove out the
capabilities and the core of thebusiness.
So, for example, we're recentlybuilt like a value-based bidding
(30:49):
tool which basically canpredict early in the funnel how
valuable a customer is,utilizing like an mpv framework
so that you can target more ofthe right type of customers that
you're trying to target, thatyou can serve and help, and then
you can, you know, acquire thembased on a bidding system and a
value base.
So you're trying to target thatyou can serve and help, and
then you can, you know, acquirethem based on a bidding system
and a value base.
So you're trying to attractcustomers that are that you can
(31:11):
help and you can serve.
And then it's around utilizingthe best in class underwriting.
So one of the really nicethings about being a direct to
consumer platform, unlike thetraditional lenders in this
space, is that you can use thetype of car the customer is
buying, the deposit amount thecustomer is using the loan to
(31:33):
value, that they're using creditutilization, and you can
utilize open banking.
You can utilize all your data onthe product side as well the
behavior, how they're goingthrough the product, and so
you're able to have a muchricher data set to be able to
underwrite the customer based onthat and, as a result, you're
(31:53):
hopefully able to help moreconsumers.
And because of the structure ofour model, we're able to
cheaper is a real challenge,especially in this space.
But ultimately, being able tocreate a model now where our
cost of acquisition is one thirdof the traditional auto lenders
, our loss rates are sub 1%compared to the traditional
(32:16):
players they're like 5% to 8%,and the OPEX is very, very lean.
There's only 29, 30 people inthe company and so ultimately,
by operating in this way andbuilding this model in this way,
you should be able to pass onsome of those savings to the
consumer, as well as find waysto be able to lend to customers
(32:36):
that other people wouldn'tnecessarily lend to, through
much more advanced underwritingand better way of doing it.
It's awesome.
Speaker 1 (32:43):
That's a great answer and it was hugely instructive
for me, having spent so muchtime with the folks at NewBank
on.
I mean, I think their answerswould have been very similar to
yours.
I mean, I think Capital One gotstarted as a data analytics
company and started to thinkabout customer later.
You know, whereas you know thestory you just told, I think
NewBank really exciting to seecompanies being able to kind of
(33:05):
do both at the same time fromthe start.
How can you be fanatical aboutthe customer and fanatical about
the unit economics?
Because at the end of the day,they both need to work to create
an amazing franchise.
So huge kudos.
Speaker 2 (33:16):
And I think they do ultimately interlink.
Like, if you build a reallyreally strong value proposition
that the customers buy in,ultimately that should feed
through to lower CAC.
You shouldn't be able toattract the right types of
customers and play it through aswell and also you're able to
building a brand and buildingcustomer loyalty is critical for
us is that we want toultimately sell more products
(33:38):
and services over time.
We want customers to come backfrom multiple loan cycles, which
traditional lenders just don'tdo.
If you're a traditional lender,you're just looking at one loan
cycle.
With us, the customer hadmultiple customers come back now
for second loans.
So you know these are all keythings to building long-term
(33:59):
value that we're really prettyfocused on.
Speaker 1 (34:01):
Yeah, and that's one of the benefits of going direct
right, a reason why no one evergets multiple auto loans because
they're being disintermediatedby the dealer and the dealer
just cares about who's going topay them the most commission on
a loan, right?
So that makes all the sense inthe world.
Hey, a couple more aspects ofCarmoola that I'd love to dive
into before we wrap up today.
You know it's not been theeasiest fundraising environment
(34:22):
over the last couple years and Iknow you've experienced that.
It sounds like you've had arelatively unique approach to
prioritizing who you wanted asinvestors and how you've gone
about it.
I wonder if you can talk alittle bit about your approach
to fundraising.
Speaker 2 (34:35):
Yeah, of course.
So, yeah, we have had probablyraised money in some of the most
challenging times.
I think at one stage I rememberwhen you guys first invested, I
think we must have gone throughlike three prime ministers in
the space of six weeks orsomething and I thought it was a
real challenge.
But I think, like fundamentally, as a lending business, not all
(34:58):
VCs understand them.
Like they all get very excitedabout fintech, but they haven't
kind of necessarily clogged.
The majority of the profit poolcomes from lending and I think
that ultimately, I think that'sstarting to change.
But I remember when we firstwent out, I was having to
explain the very basics oflending to some of the VCs, and
(35:21):
the pool of people that you'rereally kind of talking to, that
understand your business andthat can really add value, is
quite limited.
And so for me it was very, veryclear and I kind of prioritized
the list of everyone that Iwanted to speak to I would do
the research up front.
So who are the best VCs forlending?
Who in the VC fund understandslending?
(35:44):
So you're not having to explaineverything and ultimately, if
they do invest, you don't wantto start every board meeting
explaining how the revenues workand how the provisioning works
and all the various bits andpieces you have to do in a
lending business.
And so I basically created along list of all the VCs that
(36:05):
had invested in lending and Ithought were likely to do it,
and then I prioritized thembased on who are the number ones
that I want to work with in thespace.
Here are the most credible.
I put them on a Trello boardand started reaching out to them
, probably starting in reverseorder, so talking to the ones
(36:27):
the bottom of the list to startwith, so you can kind of improve
things as you go.
And yeah, it was.
It was not straightforward, youknow, like it was, it was real
challenge and they think thatI'm acute, like I'm not just
saying this, i've've sent it topeople.
But QED were number one on thatlist and I'm a massive believer
(36:49):
if you really really focus andyou really kind of believe,
things will happen.
They will happen to you.
And so I was very focused onmaking sure that you guys
invested and kind of made surethat I ran the process in that
way to ensure that you guys guyswere top on that list.
But the crazy stuff was, youknow, like I would go to IC.
(37:11):
I went to probably about sixICs that summer.
I remember like kind of goingto some of them where their
partner had spent hours andhours with me.
It was absolutely sold on whatwe were doing.
And then they would go to ic andyou would have people that were
not from that country or didn'tunderstand lending throwing the
(37:33):
whole thing off off kilter andit was like I found it extremely
difficult pitching on videocalls and had to do quite a bit
of training that summer how todo them, and I think you guys
were the last I see I did thatsummer actually and yeah,
hopefully by that point I'd gotto a reasonable space and was
(37:54):
quite, quite clear on what wewere doing and why we're doing
it.
But the but the amazing thingwas just how not data-driven at
all it was.
It was very opinion-based.
Who in the room shouted theloudest, which I was really
quite surprised about, and yeah,it was a huge challenge, but
yeah, I loved it.
Like it was probably one of thehardest things I've ever done,
(38:17):
considering like we've raisednow like 35 million in equity
but we've raised like 140million in debt.
We just got a big term sheetthis week on the debt side of
things which will enable us tolend in like super prime and
prime space, which is going tobe game changing for the
business.
It's very clear on the debtside how the value proposition
(38:38):
is really clear.
I think the challenge wasalways like how do you get the
equity investors on side andthat can add value?
Yeah.
Speaker 1 (38:46):
I mean, you know it's interesting to hear you talk
about the kind of VCIC processand it is something we spend a
lot of time thinking about like.
On one hand, you know thatwhoever the lead partner is on a
deal definitely can suffer fromproximity bias right, and they
can fall in love with an idea,and so there is value in having
some dispassionate people askingquestions.
(39:07):
On the flip side, you also knowthat the person who's leading a
deal knows 20 times more aboutthe subject than the other
people asking questions.
And so how do you create aprocess that's going to take
advantage of different expertise, take advantage of people
outside the process, but thenalso recognize that you know the
people closest to it doactually know a whole lot more,
and it's not necessarily an easytask.
I mean, we've kind of changedour process several times over
(39:29):
the years when we think we're,you know, biasing one way or the
other.
But it's interesting to kind ofhear that view and it's not
that surprising to me thatthat's kind of how you felt in
the generic VC process.
Speaker 2 (39:41):
Yeah, and I think that ultimately they're making a
personal judgment on anindividual on like a 45 minute
phone call or video call and Isometimes question you know you
could get massive swings on thatprocess of you know how good is
this individual actuallydelivering?
How can they, can they lead,can they actually do the job?
(40:04):
Just Just because you can sellon a 45-minute kind of pitch, it
doesn't necessarily mean thatyou can build a lending business
, which I think is one of theharder things to do, because
you've got to be able to raisedebt, you've got to be able to
raise equity, you've got tounderstand credit risk.
You've got to understanddirect-to-consumer marketing
activity, credit risk.
(40:27):
You've got to understand directto consumer marketing activity.
It's not like a B2B SaaSbusiness where you just need an
amazing salesman maybe to go andsell to some consumer.
You know some businesses.
I think the challenge with thisbusiness is it's very, very
complex and not many people canpull it off.
No, that's great, that's great.
Well, look, I am flattered.
The QED was number one on yourlist.
Not, that's great?
Speaker 1 (40:43):
That's great.
Well, look, I am flattered thatQED was number one on your list
.
Not too surprising in terms ofa lending business.
We probably do know lendingbetter than most.
But just make sure it doesn'tget to Yusuf's head that he was
number one on the list.
We could see that creatingdownstream problems.
No, in all seriousness, look,we've gone kind of nearing the
(41:10):
end of time and while I admireAcquired's three to four hour
episodes, we try to keep ours alittle more bite-sized at 30, 40
, maybe 50 minutes.
So I really appreciate youjoining us today.
We always end with the samequestion for everyone.
Hopefully we've got a number ofaspiring entrepreneurs that'll
be listening to this series overtime.
What's one tip that you mightshare to an aspiring
entrepreneur?
Speaker 2 (41:26):
Yeah, I think that's a.
That's a.
I couldn't possibly give onetip.
But, like, I think the biggestthing I learned was I think a
lot of people get lost in whatis valuable and what is not
valuable, and I think a lot ofpeople focus heavily around like
the user experience and the UXof a product, rather than core
(41:47):
design of the business model andhow is it really going to
deliver value to the consumer?
And I think value to theconsumer is ultimately, how is
it easier, cheaper and faster?
And so when I was like when Icome up with business ideas now,
I really really focus on thosecore things, depending on what
(42:09):
the audience is, you know,sometimes if it's a B2B, you
know proposition, then how do Imake more money?
I don't necessarily alwaysthink that cost saving is that
valuable, but like how do youmake more money?
And so I really try and focuson those things and then really
kind of, how are you then goingto actually execute this
(42:29):
business model?
So, like, you know, ultimately,how big is the market?
And and and not focus in termsof number of people.
Focus on like revenue pool,profit pools, like that.
I think you really need to feellike probably more on the
profit pool side of things andthen really focus around how are
you going to actually accessthis market?
(42:50):
And got a friend at the momentthat was looking at starting a
business and it's like there'sno reason why you cannot
understand how you're going toaccess that market before you've
even built something, beforeyou've even sold an investor,
you can build a landing page,you can start targeting the
customer.
You can start building thatthrough very early and then I
think the the key other part ofthat is how are the competition
(43:12):
going to react to yourproposition and what are they
going to do to stop you?
And I think if you can reallyunderstand that early on, it's
really key then for yourstrategy of like, how do you
build a scalable business thatcan win?
And for us it was understandingwhat are the traditional
lenders going to do?
How could they react to this?
Can they build this proposition?
(43:32):
What are they going to do totry and stop us?
I think working all of thatthrough and being able to be
very, very clear about howyou're going to do that, I think
is really really key to getright before you even go and
speak to investors or even kindof do anything.
Really.
Speaker 1 (43:49):
No, that's great.
Well, look, I really appreciateyou sharing some of your
journey with us, Aiden across anumber of different topics, some
more positive, some morenegative, but I love the framing
that it's not really failure,it's just the opportunity to
learn.
And it's one thing I just haveso much respect for the kind of
(44:10):
tech startup community ingeneral is, while you're living
it, you know it's easy to thinkabout failure, but it is if you
sort of pull back up.
I do think that's one of thegreat innovations that Silicon
Valley has had over the last 50years is just recognizing that,
look, a lot of ideas don't work.
That doesn't necessarily meanthat you know something's wrong.
It's just a great opportunityto learn and then go be even
more successful the next time.
So I love that insight.
So thanks for spending the timewith us today.
(44:32):
It's been great chatting withyou and kudos on all the success
you've had so far with Carmoola, and can't wait to see, five
years from now, what all it willbecome.
Speaker 2 (44:43):
Thanks, bill, really appreciate you taking the time
as well.
Definitely.
Speaker 1 (44:46):
All right.
Thanks to all of our listenersand we'll see you next time.
Bye, this has been the FinTechThought Leaders podcast your
window into the world of venturecapital and financial services
with today's digital disruptors.
Qed is proud to provide thebest fintech advice you can get.
(45:07):
To learn more or to read thefull show notes from today's
episode, check outQEDinvestorscom and be sure to
also follow QED on Twitter andLinkedIn at QEDinvestors.
Thanks for listening you.
Thank you.
I'm Bill Salufo, head ofinternational investments at QED
Investors, today on the podcast.
I'm excited to be joined byAidan, international investments
at QED Investors, today on thepodcast.
I'm excited to be joined byAidan Rushby, co-founder and CEO
of Carmoola.
Aidan, welcome to the podcast.
Speaker 2 (00:52):
Thanks, bill, really excited to join and, yeah, it
should be a good episode.
Speaker 1 (00:56):
Definitely, definitely.
Well, look, I'd love to kickoff to see if you can give our
listeners maybe a 60-secondcommercial on who Carm Carmola
is and what you guys do.
Speaker 2 (01:04):
Yeah, no problem at all.
So Carmola is adirect-to-consumer auto finance
company.
We enable cheaper, easier andfaster car finance.
We do this through a mobile appwhere, within 60 seconds of
downloading, a consumer can geta budget or a credit limit of
how much they can buy a car for.
Customer then just enters theregistration number or the VIN
(01:26):
number of the car they want tobuy and then the app generates
them a virtual card where theycan buy instantly online or add
it to their Google or Applewallet, walk into a car
dealership, buy the carinstantly.
Speaker 1 (01:38):
That's awesome.
That's awesome and I know we'lltalk a lot more about that
business later on in the podcast, but I know that's quite
innovative in the UK market andnot something that you can find
elsewhere.
Speaker 2 (01:47):
Yeah, definitely, and consumers seem to really love
it, which is the most importantthing, absolutely.
Speaker 1 (01:54):
Well, look, before we dive into the Carmoola story,
that is not your first startup.
You've been an entrepreneur nowfor quite some time, so I'd
love to really dive into theearly days of entrepreneurship.
Your first company, if I'm notmistaken, is called Movebubble,
so I'd love to hear a little bitabout what was that and what
(02:14):
led you to get that started.
Speaker 2 (02:15):
Yeah, so it feels a very long time ago now, but
Movebubble was a propertyplatform very similar to in the
US apartment list.
There was a rental platformspecifically targeting people
that were looking to rent along-term rental and again, that
was a mobile app,direct-to-consumer business.
It was really trying to helppeople find a place to rent and
(02:39):
doing it more efficiently andeasier.
It was extremely challengingbusiness.
I spent at least seven yearstrying to get that to work and,
yeah, it was just a very, verydifficult space and a massive
challenge.
But I learned so much alongthat journey and, yeah, it was,
in many ways, learning what notto do more than anything else, I
(03:00):
think.
Speaker 1 (03:01):
Well, that's a big part of the journey for sure.
I mean I know how painful it isto rent apartments in the UK.
I mean I know so many peoplethat think they've got a signed
lease but they don't really havea signed lease and then it gets
broken later, so I can seewhere that's a big opportunity,
even if it proved to be hard.
What led you originally todecide to start a business in
that space?
Speaker 2 (03:20):
I love helping consumers.
I think that that was my biggestmotivator and I was working in
the industry very quicklyrealized that it could be
digitalized.
The one thing I didn't realizewas just, I guess when it was
early days, is just howdifficult the market was to
access the revenue pools.
Some of the incumbents and thenetwork effects of the
(03:41):
incumbents were so strong thatit was just extremely difficult
to actually access the revenuepools and the profit pools in
that marketplace.
I think those early classifiedbusinesses, if you like, the
marketplace 2.0s, if you like,which were just so embedded,
especially when you have like onthe supply side of subscription
(04:03):
model, have like on the supplyside of subscription model, I
think it makes extremelydifficult for a you know, new
entrants to come in because youjust have to get to like.
We worked out that you wouldhave to get to something like 98
of supply for it to becompelling enough to keep the
consumers on your platform, andso it's just a huge challenge to
to get to any kind of scale.
(04:25):
We managed to get to about 4million customers on that
platform or downloads of the app, and we got to some fairly
decent revenue numbers, but itwas extremely difficult, to say
the least, I think Karl Muellerdwarfed the revenue that we
managed to generate in thatbusiness within the first six,
(04:45):
seven months.
So yeah, it was a hugechallenge.
Speaker 1 (04:49):
I mean that is fascinating, right.
I mean you've talked about howmuch of a challenge it is and I
want to dive into some of thelearnings here in a minute, but
4 million customers is stillimpressive.
So maybe the business modeldidn't work, but pretty
impressive to get 4 millionpeople.
You probably give away freemoney and not necessarily get 4
million people to do it.
Speaker 2 (05:09):
Yeah, it was like in the supply side was was
relatively.
You know, we built a reallygreat brand.
We focused on the city by cityrollout, that kind of really
kind of leverage, some of thosenetwork effects, of really kind
of leverage, some of thosenetwork effects.
But even so, like I think wedid a lot of things right.
But I think one thing you can'treally kind of understand is
(05:30):
that you know how do you accessthose revenues and what is the
competition going to do to blockyou.
It was, it was really reallyquite challenging to do anything
of any meaningful sort of scale.
Yeah, no, that makes sense.
Speaker 1 (05:43):
So I know you've shared in the past that you know
you feel like while you wererunning this, you got in the
cycle of failing.
I mean, I know you talked abouthow challenging it is.
What do you mean by that andwhat were some of the steps you
took to pull yourself out of it?
Because clearly you're on avery different cycle of that
today.
Speaker 2 (05:59):
Yeah, so we first started out that business move
bubble, which was more of anonline rental agency, is
probably the best way to thinkabout it.
That's quite a common thing now, but back in the early days,
that's what the kind of initialpremise was that you could
digitalize the letting agencyand become more scalable as a
result.
We pivoted and pivoted, andbecause you couldn't necessarily
(06:22):
access the revenue very easilyin this market and it was very,
very difficult to monetize, Ihad to keep pivoting the
business model and this kind ofled to learning to fail quite a
lot and it was extremelydifficult to actually get it to
work.
It was just really, reallydifficult.
It was very easy to grow thedemand side.
(06:43):
It was extremely difficult togrow the supply side and
monetize.
That's where we were trying tomonetize and it was just
extremely difficult to get thatto work.
And, yeah, it failed, failedmany, many times.
And I kind of got into this loopwhere, as an entrepreneur, I
didn't want to give up.
There were times when Idefinitely should have given up
because I tried and tried andtried and I kind of knew it
(07:06):
wasn't working, but I justdidn't want to let the
shareholders and the investorsdown At this point they'd
invested quite a bit of moneyand I didn't want to give up and
I was fortunate enough to berelatively good at raising money
and so managed to keep through.
Pure absolute determinationwould kind of drive through and
(07:27):
be able to keep it going.
And I, from a very young age, Ididn't want to look as a
failure.
I think if to the outside world, I think, like by stopping and
saying like it's just not worked, I would have, it would have
felt quite bad and I just wasn'tin like an emotional point
where I was able to at thatstage, kind of just say look,
(07:48):
I'm not going to do this anymore.
And so I kept kept trying andtrying and trying and managed to
get to, you know, reasonablescale and the final failure
point was that we kind of wereraising about a 20 million pound
round and it was going throughthe final stages of due
diligence and the deal fellapart in the summer of 2022.
(08:12):
I kind of, at this stage, knewthat it needed a significant
check to kind of make it reallywork.
And I just was got to a pointwhere I had to stop because I
just the board wanted me to goback to the existing
shareholders to go and ask formore money, and I knew that they
wouldn't be able to provideenough money for it to be a
(08:34):
meaningful step forward.
And so, yeah, I decided to stopat that point, but yeah, it was
quite a challenge.
Speaker 1 (08:41):
Yeah, I mean, that's certainly never easy.
Our colleague, frank Rotman,has the comment that businesses
almost never fail due to lack ofideas.
They really only ever fail dueto lack of money.
So it had to be a really tough,really tough call to kind of.
You know, when do you kind ofkeep going, when do you decide
to stop and move on to your nextthing?
You know, what was it thatultimately allowed you to make
(09:02):
the call to that?
This is it.
Let's not, let's not keep doingthis anymore.
Yeah.
Speaker 2 (09:07):
I got to some quite dark personal places over the
kind of last four, three or fouryears of that business where I
was just really struggling to, Iguess, quite a deep level of
unhappiness.
And I think I eventually got toa place where it was just
really bad and I eventuallyseeked help and I said, look, I
(09:28):
need to do something about this.
And so you started to docognitive behavioral therapy,
probably about three yearstowards the end of that business
, and I'd had quite achallenging childhood, like I'm
sure lots of entrepreneurs likeI think ultimately you don't do
this unless you've kind oftrying to prove a point and I
(09:48):
had been through quite a bit andI needed to understand myself
better.
I needed to go on this journey.
So I went through cognitivebehavioral therapy and it was a
combination of things reallythat kind of was driving it.
All I want was I was heavilydyslexic when I was younger and
school was a massive challengefor me and you had this deep
(10:12):
emotional thing to prove that Iwasn't stupid.
And then I also had somechallenges with some of my
parents and so I kind of endedup in this world where I was
really really trying to prove tonot only the world that I
wasn't stupid, but also that youknow I was trying to do this
because I wanted to be loved andliked and some of these things
(10:36):
which meant the worst thing inthat kind of scenario is to fail
, because then ultimately it'skind of compounding that you're
stupid or you're not capable.
And I went on a massive journeyto really understand this and
to get to kind of acceptancearound this and still do it now.
But I ended up in a place whereI eventually kind of was able
(10:58):
to be more rational about it andnot being driven by emotion and
got to a place where I was verycomfortable actually saying do
you know what, if I draw this,you know I could take all the
learnings and I could stop doingwhat I'm doing and use that in
into a new venture, in a newbusiness.
That's just learning, it's notfailing.
(11:19):
And I was able to kind of go onthat journey and kind of enable
that self learning and Ilearned so much about myself.
I still do it now.
I think it's incredibly powerfulway of understanding the way
you're thinking about things andthe way you kind of move things
forward and was able to kind ofget to a place where stopping
(11:39):
that business.
It was extremely hard thing todo.
I remember writing the letter,ringing personally a lot of the
shareholders and explaining whyit was the right time to stop it
and stop you know like,effectively like wasting their
money, and you know we could usethe resource and build
something much better togetheroff the back of it.
Speaker 1 (12:00):
Yeah, yeah, well, look, I really appreciate you
sharing.
I mean, there's got to be lotsof both entrepreneurs and really
anyone out in the communitythat feels like they need help.
But it's always hard to sort offigure out.
How do you start, where do yougo?
I mean, it sounds like you wentthrough a long period before
you took the steps to seek helpand any advice you would give
for you know, for folks aboutkind of what, what caused you to
(12:20):
to finally seek some help, andwhat you know your learnings
were there that might, might,benefit others.
Speaker 2 (12:30):
Yeah, like for me it was a was a.
First of all it was aboutgetting to a place where you
were ready to accept the help.
I think a lot of people youyou've got to almost go into the
quite a bad place to be able toto get there.
I think it is recognizing thatyou're almost in a
self-destruction kind of mode.
I think you end up in a worldwhere you can go get quite dark
quite quickly, and so you almostgot to get to that point before
(12:53):
you're able to rebuild from it.
So once I'd kind of made adecision that I was wanted to to
kind of move forward and get toa better place, then I spoke to
probably like three or fourdifferent therapists and I did
some research and I learned alot about it.
And then it comes down to mypersonal connection with the
(13:14):
individual that you're going towork with.
And I was super lucky with thelady I ended up working with is
that she had a master's infinance.
She was very interested inmoney and entrepreneurial
adventures, and so we connectedreally well from a very early
stage.
And you then over time buildtrust and you're talking about
(13:37):
some quite deep traumas and soit takes a long time to build
trust.
Some people that say they cango through therapy and get it
solved in six weeks is acomplete myth.
Like for me, it's taken nearlysix, seven years and there's
still things that are not quitequite there.
And so, yeah, like I think,take it step by step, play the
(14:02):
long game with it and ultimatelyit's personal development
journey.
You learn so much aboutyourself and you're able to use
this in a business context whenyou kind of discover that and
how you can utilize that as anextra skill going forward.
Speaker 1 (14:16):
Yeah, Well, look, I really appreciate you sharing
some thoughts of that stage ofyour journey and, to your point,
it's kind of, at some level,never ending exploration, right,
there's always things goingwell, things not going well, and
everyone needs a supportnetwork, whether it's a formal
or informal.
And you know it's great to cometo the realization on how that
can help.
Well, look, let's jump fromMovebubble and some of the
(14:37):
learnings you had from that intoCarmoola, which you know I can
speak from direct experience isgoing quite nicely.
You know, let's start withgoing from a rental platform to
car finance.
It's a pretty differentopportunity.
I mean, I'd love to hear alittle bit of where the idea
came from.
Speaker 2 (14:53):
I love coming up with business ideas all the time.
I'm continually reading annualreports.
I read all the IPO prospectusesEven now.
I find it fascinating.
I love just to learn.
So I'm continually readingthose things.
And a member of time after Ifinished Movebubble and made a
(15:13):
decision, I went to Mallorca anda member sat there reading, as
I always do on holiday, theamount of business plans I've
written on holiday.
I was sat there reading theKavanaugh and the Kazoo IPO
perspectives.
Speaker 1 (15:28):
I I thought well, I can imagine sitting on the beach
of Mallorca reading the Redditannual report.
Speaker 2 (15:34):
Yeah, I was sat by the pool and I remember reading
the Kavanaugh one and the Kazooone, thinking, wow, this is a
huge market and there was acouple of learnings that was key
to take into the new business.
And I remember looking at it,thinking wow, like I can't
believe the number of peoplethat are buying a used car, not
just in the UK but Europe andthe US.
(15:55):
It was just a huge market andand I thought, wow, this is
really interesting.
And I looked at the, thereports and you could clearly
see that all the profit poolswas in the finance and the
ancillary services, and so thatwas really interesting.
And then I was very familiarwith, like Klana and all the buy
now, pay later solutions thathad kind of been building.
(16:17):
One of my friends was buildinga buy now, pay later business
and I thought, wow, it's reallyinteresting how all these
consumers they're being educatedand trained around download an
app, get a budget, be able tobuy, and I thought, wow, there's
an opportunity here maybe toput these two things together
and build a car financingbusiness and utilize some of the
(16:40):
latest technology that was outthere.
And I thought, wow, it's reallyinteresting.
And then I started doing moreresearch into the market and
could see very quickly how thiscould be a massive opportunity.
Number one the dealerships andthe brokers were taking massive
commissions at the point of sale, finance anywhere sort of
(17:03):
between 10 and 15 percent ofdisbursement.
So I thought, wow, that's athat's a huge commission that
they were taking the loss rates.
When I started looking at theabs data around the securitized
used car portfolios, I wasreally surprised at how big the
loss rates were.
They were anywhere between sortof five and eight percent and I
(17:23):
thought, wow, that's reallyinteresting.
I wonder why that that could bethe case.
And when you looked at it, therewas lots of layers in the value
chain people, actors withdifferent objectives, and so the
data was just getting acomplete mix of data between the
end consumer and what ended upat the lender.
And then also the OPEX of thetraditional lenders was massive.
(17:47):
Opex of the traditional lenderswas massive.
There was very little levels ofdigitalization, very old school
systems, huge headcounts, bigcall centers.
I thought, wow, there's a bigopportunity here to kind of
disrupt and change that.
So you know, and it's kind ofreally played through on those
kind of three key things.
So we, we built a proposition,as I said, that would be a
(18:11):
mobile app that would enableconsumers to go direct so they
could get their budget up front.
They would then just enter thereg of the car and then we'd
make it really seamless for themto pay and to pay back the loan
as well, and so, yeah, and it'sobviously gone extremely well.
We can talk about that in a bitmore detail if that's useful.
(18:31):
But yeah that's kind of where wegot to.
Speaker 1 (18:34):
I mean that's interesting, you know.
Let me dive just a layer deeper.
I mean in our Capital One days,capital One's become one of the
largest independent car financecompanies in the US and what's
interesting is people can getpretty afraid of car financing
and the first question thatcomes up is okay, well, don't
the manufacturers just subsidizeall the loans?
How do you make any money?
(18:58):
You're specifically going atthe used car finance market,
where that really doesn't exist.
I mean, until Carmoola camealong, how would people go about
thinking about financing?
Or were there really optionsfor financing in the used car
market?
Speaker 2 (19:09):
Yeah, so the traditional customer journey is
that you would go either to anonline broker where you would
complete an online applicationform, and then it's very manual,
step by step, almost like witha concierge person on the phone
that would kind of coach youthrough the journey a lot of
back and forth phone calls.
(19:29):
I remembered, like testing, itwas about a 16 17 step process,
from the point of which youcomplete the application until
you were able to buy the car,and it took days with the.
Alternatively, you could gointo a car dealership and you
would have to fill in apaper-based application form.
There was a lot of fear aboutbeing rejected at the point of
(19:53):
sale.
It was really kind of clunky,manual process, like once you
walked into the dealership anddid that as well, and ultimately
the consumer was paying for allof the inefficiencies in the
traditional model.
So you'd be paying a higher APR.
You would basically beeffectively paying a massive
premium for taking point of salefinance.
(20:15):
Obviously, since we havelaunched then, there's been
massive regulatory changes thathave kind of driven the business
even further.
So you had the consumer dutythat came in, which made it less
attractive for dealerships tosell point of sale finance they
have to adhere to being fairvalue and various other measures
, and it's become a realregulatory headache.
(20:37):
And then kind of a mega wavethat's kind of been driving the
growth more recently is that inthe UK we had massive commission
issue with the FCA where whatwas happening is a consumer
would go into a dealership andthe car dealer would then just
crank up the price depending onthe customer, just so they could
access more commission.
(20:58):
And this has been in the newsthere's over.
I think it's about 2 millionpeople now have made complaints
to the FCA about this.
The compensation that's goingto be paid out is huge.
I think you saw probably thatLloyds, which is one of the
largest providers of car financethrough Blackhorses something
like 400 million a side.
They expect it to be closer toabout 1.8 billion and basically
(21:21):
all of this has just drivenconsumers to look for an
alternative trust in point ofsale.
Finances just come right downas a result, kind of changing.
And then you've got this othertrend which is younger consumers
just don't necessarily want togo into a car dealership and buy
cars in the same way as theirparents did.
(21:42):
They're much more interested inbeing empowered and taking full
control of that and I think wecan talk about the segments of
our customers in more detail.
But around 50% of our customershave never taken car finance
before.
The majority of them say to usthey use Carmula because they
love the empowerment of it.
They like to be in control.
(22:03):
I think about 25% of theaudience is a female demographic
and they just say like they canget their car finance sorted in
advance and then they can justwalk in and buy without having
to deal with any car salesman orsleazy sales pitch.
Speaker 1 (22:18):
ultimately, yeah, I mean it is interesting.
I know that any entrepreneur infintech needs to think about
regulation and I think a lot ofpeople tend to approach it as
being a bad thing and being anobstacle and getting in their
way.
I mean, you just described acouple of great examples where
the market is clearly failing.
Regulation can help and then ifyou're an entrepreneur and you
create a great solution forconsumers, you know regulation
(22:39):
can be your friend.
I mean, looking at auto financein the US, the lack of
regulation, I think, is whatcontinues to drive so many of
these bad behaviors and at theend of the day, the most
powerful person in any smalltown in America is the person
that owns the car dealership.
So the lobbying power of thecar dealers is pretty stunning
and they've managed to getexempt from so many different
consumer protection regulationsthat it sounds like in the UK,
(23:02):
the FCA and others are able totake action on, and I think it's
a great thing for consumers andcan create a great
entrepreneurial environment.
Yeah, and I think it's a greatthing for consumers and can
create a great entrepreneurialenvironment.
Speaker 2 (23:11):
Yeah, I think it's the size of the market as well.
You know there's nearly 8million used cars bought in the
UK every year, I think.
If you compare that to new cars, I think it's about 1.5 million
.
So just a huge market as well.
Speaker 1 (23:24):
Oh, makes sense.
So I know I've heard you talkbefore that you know you've got
a particular framework as you'rethinking about new business
ideas the Hamilton Seven Powersframework, which admittedly I've
not I had not heard of before.
You know it's interesting.
I think many entrepreneurs comeup with their ideas through
personal experience.
Some do a little more of asystematic study in the
direction of what you'vedescribed before, but I think it
(23:46):
is pretty unique to take aclear academic framework and
apply that to how you thinkabout things.
I wonder if you could talk alittle bit about what that is
and how you leverage it and whatadvice you might give to others
searching for something likethat.
Speaker 2 (23:59):
Yeah, it's not an original piece.
I'm a huge fan of the Acquiredpodcast, which I'm sure you've
probably listened to, and at theend of it they do always do a
playbook and they come back tothe seven powers framework when
they're kind of discussing theplaybooks of the different
businesses.
So for me, I think it's areally good way to think about
it and I think that, ultimately,what are the things that you
(24:21):
are doing, what are you buildingin to kind of really drive
future value?
And we use a lot of thesethings.
But for me, like one example,is we heavily focus on
automation.
So, just to give you anindication, carmula will grow
probably 300% this year.
Top line revenue will add fivepeople to the company.
(24:45):
We spent a huge amount of timebuilding automation of the whole
system.
So we built fully automatedvalue-based bidding on
acquisition, fully automatedunderwriting, fully automated
loan disbursement and fraudmanagement.
We've also built our ownservicing and collections
platform that runs fullyautomated.
So our ability to to drive hugevolume without scaling cost is
(25:08):
one of our one of the key, keypowers they talk about.
They talk about processingpower.
So that's like one way thatwe're kind of really leveraging
it, one of the key parts of ourbrand like strategy is about
brand.
I think ultimately, carcarillionaire is selling car
finance, which is money,ultimately a commodity.
So how do you build a brandaround that?
(25:28):
The customers will choose touse us above anything else, and
so we heavily focus and investin brand.
So this includes not only justan amazing product experience,
thought about it in lots andlots of detail.
So when you're adding a car,you get to go through a fun car
name generator and you get toname the car, which are like old
(25:49):
English people's names.
As part of it, we send themlike a pack out after they
bought a car with their airfreshener story about car muller
and why it exists, socks andvarious other bits and pieces.
Our customer service I thinkour current mps score is 92 if
you look at the reviews online.
Customers just absolutely raveabout it.
(26:12):
We we really see that that'sone of the seven powers of brand
and we see that as like along-term investment into
creating a real emotionalconnection with the customer and
we do a lot of details aroundthat to kind of build that
equity over time.
So obviously, data andautomation is a key part of our
(26:32):
strategy.
As someone at X Capital One.
We're heavily invested in thedata side of the business.
So we see that that is like anetwork effect over time that as
you build more and morecustomer base, you can feed that
back into your decisioning andyou can get better and better at
underwriting.
The bigger the data set comes,especially with fraud management
(26:54):
and combining that with adirect to consumer approach, you
can really leverage the datafrom the acquisition channels
and feed that into yourunderwriting decision.
And we see that that is likeanother key area, that into your
underwriting decision.
And we see that as like anotherkey area that you will kind of
get, as well as some of thebasic things more that they talk
about with economies of scale.
You know, ultimately as alending business, the more you
(27:17):
prove, the better performanceyour cost of funding comes down
over time and various other bitsand pieces.
But I think it's a nice way tothink about how do you, instead
of some of the more traditionalframeworks that aren't super
relevant in some of the newerbusinesses, it's a good way of
kind of framing your thoughtprocess around.
Where are you putting yourcapital allocation and how are
(27:39):
you kind of building the valuein the business?
Speaker 1 (27:41):
Yeah, super helpful and, by the way, happy to give
props to the Acquired folks.
I do think that's one of thebest podcasts out there.
Sometimes I get a littleintimidated, since all the
episodes are three or four hourslong so I don't always start
them, but those are some of thebest content out there.
My personal favorite was theirLVMH dive, in which I know they
started as a tech podcast, butthat business is so cool.
Speaker 2 (28:01):
They've just done one on Hermes as well.
Actually, If you like luxurysector, it's really interesting
as well.
Speaker 1 (28:07):
Yeah, I listened to that one as well.
That was super cool, so kudosto those guys.
So let me dive into somethingthat you just said.
You started talking about brandand your 92% net promoter score
, which is incredible, and sortof the use of data and all of
these things Certainly back tomy days at Capital One, having
spent a ton of time with theguys at NewBank.
(28:28):
These are topics that aren'talways synergistic with each
other, right?
So at one point, your job is tokeep customers happy and have a
beloved brand.
On another hand, your job is todecline more customers than you
accept because you're managingcredit risk and trying to figure
that out, and presumably the92% NPS is among the customers
you approve.
There's the whole issue of whodo you not approve and how do
(28:50):
you think about those customers.
But how do you, how do youthink about making decisions in
that environment of if you overoptimize on analytics and I
would argue that's what CapitalOne did Sometimes it comes to
the detriment of brand andcustomer experience.
If you over optimize on brandand customer experience, if you
over-optimize on brand andcustomer experience, you really
just can't be too generous in alending business, because it's
(29:10):
not that hard to lend money,it's much harder to get it paid
back.
How do you think about makingdecisions in that environment
where you have these forces thatdon't always align to each
other, I think?
Speaker 2 (29:20):
that's a great question.
I think sometimes the bestplace to start with that is who
is the entrepreneur behind it?
And sometimes like, what istheir reason for creating the
company?
I think, if you ask anyone inCarmula, I'm probably the
customer's biggest fan and Iabsolutely love I continually
talk about the people that we'reserving.
(29:41):
Ultimately, we're here to helpconsumers get easier, cheaper
and faster car finance, and ithas to start there.
And then it's a question ofstarting to talk about segments.
So who are you serving?
Why are you serving them?
And going deeper there, and Ithink that that's really key.
And then it comes down to how,then, do you utilize the data to
(30:06):
deliver on your business model?
And ultimately, there's nopoint having a business that
isn't delivering value to theshareholders, because ultimately
, you need to exist and build acompelling business case that
can ultimately continue to servethose customers in the real
long term.
And so I think it's about acombination of making sure you
stay really connected with thecustomer, build the brand and
(30:28):
then have the data layer as wellthat supports everything you're
doing.
And so we utilize the analyticsas like a core, as I'm sure
every business does, and reallykind of prove out the
capabilities and the core of thebusiness.
So, for example, we're recentlybuilt like a value-based bidding
(30:49):
tool which basically canpredict early in the funnel how
valuable a customer is,utilizing like an mpv framework
so that you can target more ofthe right type of customers that
you're trying to target, thatyou can serve and help, and then
you can, you know, acquire thembased on a bidding system and a
value base.
So you're trying to target thatyou can serve and help, and
then you can, you know, acquirethem based on a bidding system
and a value base.
So you're trying to attractcustomers that are that you can
(31:11):
help and you can serve.
And then it's around utilizingthe best in class underwriting.
So one of the really nicethings about being a direct to
consumer platform, unlike thetraditional lenders in this
space, is that you can use thetype of car the customer is
buying, the deposit amount thecustomer is using the loan to
(31:33):
value, that they're using creditutilization, and you can
utilize open banking.
You can utilize all your data onthe product side as well the
behavior, how they're goingthrough the product, and so
you're able to have a muchricher data set to be able to
underwrite the customer based onthat and, as a result, you're
(31:53):
hopefully able to help moreconsumers.
And because of the structure ofour model, we're able to
cheaper is a real challenge,especially in this space.
But ultimately, being able tocreate a model now where our
cost of acquisition is one thirdof the traditional auto lenders
, our loss rates are sub 1%compared to the traditional
(32:16):
players they're like 5% to 8%,and the OPEX is very, very lean.
There's only 29, 30 people inthe company and so ultimately,
by operating in this way andbuilding this model in this way,
you should be able to pass onsome of those savings to the
consumer, as well as find waysto be able to lend to customers
(32:36):
that other people wouldn'tnecessarily lend to, through
much more advanced underwritingand better way of doing it.
It's awesome.
Speaker 1 (32:43):
That's a great answer and it was hugely instructive
for me, having spent so muchtime with the folks at NewBank
on.
I mean, I think their answerswould have been very similar to
yours.
I mean, I think Capital One gotstarted as a data analytics
company and started to thinkabout customer later.
You know, whereas you know thestory you just told, I think
NewBank really exciting to seecompanies being able to kind of
(33:05):
do both at the same time fromthe start.
How can you be fanatical aboutthe customer and fanatical about
the unit economics?
Because at the end of the day,they both need to work to create
an amazing franchise.
So huge kudos.
Speaker 2 (33:16):
And I think they do ultimately interlink.
Like, if you build a reallyreally strong value proposition
that the customers buy in,ultimately that should feed
through to lower CAC.
You shouldn't be able toattract the right types of
customers and play it through aswell and also you're able to
building a brand and buildingcustomer loyalty is critical for
us is that we want toultimately sell more products
(33:38):
and services over time.
We want customers to come backfrom multiple loan cycles, which
traditional lenders just don'tdo.
If you're a traditional lender,you're just looking at one loan
cycle.
With us, the customer hadmultiple customers come back now
for second loans.
So you know these are all keythings to building long-term
(33:59):
value that we're really prettyfocused on.
Speaker 1 (34:01):
Yeah, and that's one of the benefits of going direct
right, a reason why no one evergets multiple auto loans because
they're being disintermediatedby the dealer and the dealer
just cares about who's going topay them the most commission on
a loan, right?
So that makes all the sense inthe world.
Hey, a couple more aspects ofCarmoola that I'd love to dive
into before we wrap up today.
You know it's not been theeasiest fundraising environment
(34:22):
over the last couple years and Iknow you've experienced that.
It sounds like you've had arelatively unique approach to
prioritizing who you wanted asinvestors and how you've gone
about it.
I wonder if you can talk alittle bit about your approach
to fundraising.
Speaker 2 (34:35):
Yeah, of course.
So, yeah, we have had probablyraised money in some of the most
challenging times.
I think at one stage I rememberwhen you guys first invested, I
think we must have gone throughlike three prime ministers in
the space of six weeks orsomething and I thought it was a
real challenge.
But I think, like fundamentally, as a lending business, not all
(34:58):
VCs understand them.
Like they all get very excitedabout fintech, but they haven't
kind of necessarily clogged.
The majority of the profit poolcomes from lending and I think
that ultimately, I think that'sstarting to change.
But I remember when we firstwent out, I was having to
explain the very basics oflending to some of the VCs, and
(35:21):
the pool of people that you'rereally kind of talking to, that
understand your business andthat can really add value, is
quite limited.
And so for me it was very, veryclear and I kind of prioritized
the list of everyone that Iwanted to speak to I would do
the research up front.
So who are the best VCs forlending?
Who in the VC fund understandslending?
(35:44):
So you're not having to explaineverything and ultimately, if
they do invest, you don't wantto start every board meeting
explaining how the revenues workand how the provisioning works
and all the various bits andpieces you have to do in a
lending business.
And so I basically created along list of all the VCs that
(36:05):
had invested in lending and Ithought were likely to do it,
and then I prioritized thembased on who are the number ones
that I want to work with in thespace.
Here are the most credible.
I put them on a Trello boardand started reaching out to them
, probably starting in reverseorder, so talking to the ones
(36:27):
the bottom of the list to startwith, so you can kind of improve
things as you go.
And yeah, it was.
It was not straightforward, youknow, like it was, it was real
challenge and they think thatI'm acute, like I'm not just
saying this, i've've sent it topeople.
But QED were number one on thatlist and I'm a massive believer
(36:49):
if you really really focus andyou really kind of believe,
things will happen.
They will happen to you.
And so I was very focused onmaking sure that you guys
invested and kind of made surethat I ran the process in that
way to ensure that you guys guyswere top on that list.
But the crazy stuff was, youknow, like I would go to IC.
(37:11):
I went to probably about sixICs that summer.
I remember like kind of goingto some of them where their
partner had spent hours andhours with me.
It was absolutely sold on whatwe were doing.
And then they would go to ic andyou would have people that were
not from that country or didn'tunderstand lending throwing the
(37:33):
whole thing off off kilter andit was like I found it extremely
difficult pitching on videocalls and had to do quite a bit
of training that summer how todo them, and I think you guys
were the last I see I did thatsummer actually and yeah,
hopefully by that point I'd gotto a reasonable space and was
(37:54):
quite, quite clear on what wewere doing and why we're doing
it.
But the but the amazing thingwas just how not data-driven at
all it was.
It was very opinion-based.
Who in the room shouted theloudest, which I was really
quite surprised about, and yeah,it was a huge challenge, but
yeah, I loved it.
Like it was probably one of thehardest things I've ever done,
(38:17):
considering like we've raisednow like 35 million in equity
but we've raised like 140million in debt.
We just got a big term sheetthis week on the debt side of
things which will enable us tolend in like super prime and
prime space, which is going tobe game changing for the
business.
It's very clear on the debtside how the value proposition
(38:38):
is really clear.
I think the challenge wasalways like how do you get the
equity investors on side andthat can add value?
Yeah.
Speaker 1 (38:46):
I mean, you know it's interesting to hear you talk
about the kind of VCIC processand it is something we spend a
lot of time thinking about like.
On one hand, you know thatwhoever the lead partner is on a
deal definitely can suffer fromproximity bias right, and they
can fall in love with an idea,and so there is value in having
some dispassionate people askingquestions.
(39:07):
On the flip side, you also knowthat the person who's leading a
deal knows 20 times more aboutthe subject than the other
people asking questions.
And so how do you create aprocess that's going to take
advantage of different expertise, take advantage of people
outside the process, but thenalso recognize that you know the
people closest to it doactually know a whole lot more,
and it's not necessarily an easytask.
I mean, we've kind of changedour process several times over
(39:29):
the years when we think we're,you know, biasing one way or the
other.
But it's interesting to kind ofhear that view and it's not
that surprising to me thatthat's kind of how you felt in
the generic VC process.
Speaker 2 (39:41):
Yeah, and I think that ultimately they're making a
personal judgment on anindividual on like a 45 minute
phone call or video call and Isometimes question you know you
could get massive swings on thatprocess of you know how good is
this individual actuallydelivering?
How can they, can they lead,can they actually do the job?
(40:04):
Just Just because you can sellon a 45-minute kind of pitch, it
doesn't necessarily mean thatyou can build a lending business
, which I think is one of theharder things to do, because
you've got to be able to raisedebt, you've got to be able to
raise equity, you've got tounderstand credit risk.
You've got to understanddirect-to-consumer marketing
activity, credit risk.
(40:27):
You've got to understand directto consumer marketing activity.
It's not like a B2B SaaSbusiness where you just need an
amazing salesman maybe to go andsell to some consumer.
You know some businesses.
I think the challenge with thisbusiness is it's very, very
complex and not many people canpull it off.
No, that's great, that's great.
Well, look, I am flattered.
The QED was number one on yourlist.
Not, that's great?
Speaker 1 (40:43):
That's great.
Well, look, I am flattered thatQED was number one on your list
.
Not too surprising in terms ofa lending business.
We probably do know lendingbetter than most.
But just make sure it doesn'tget to Yusuf's head that he was
number one on the list.
We could see that creatingdownstream problems.
No, in all seriousness, look,we've gone kind of nearing the
(41:10):
end of time and while I admireAcquired's three to four hour
episodes, we try to keep ours alittle more bite-sized at 30, 40
, maybe 50 minutes.
So I really appreciate youjoining us today.
We always end with the samequestion for everyone.
Hopefully we've got a number ofaspiring entrepreneurs that'll
be listening to this series overtime.
What's one tip that you mightshare to an aspiring
entrepreneur?
Speaker 2 (41:26):
Yeah, I think that's a.
That's a.
I couldn't possibly give onetip.
But, like, I think the biggestthing I learned was I think a
lot of people get lost in whatis valuable and what is not
valuable, and I think a lot ofpeople focus heavily around like
the user experience and the UXof a product, rather than core
(41:47):
design of the business model andhow is it really going to
deliver value to the consumer?
And I think value to theconsumer is ultimately, how is
it easier, cheaper and faster?
And so when I was like when Icome up with business ideas now,
I really really focus on thosecore things, depending on what
(42:09):
the audience is, you know,sometimes if it's a B2B, you
know proposition, then how do Imake more money?
I don't necessarily alwaysthink that cost saving is that
valuable, but like how do youmake more money?
And so I really try and focuson those things and then really
kind of, how are you then goingto actually execute this
(42:29):
business model?
So, like, you know, ultimately,how big is the market?
And and and not focus in termsof number of people.
Focus on like revenue pool,profit pools, like that.
I think you really need to feellike probably more on the
profit pool side of things andthen really focus around how are
you going to actually accessthis market?
(42:50):
And got a friend at the momentthat was looking at starting a
business and it's like there'sno reason why you cannot
understand how you're going toaccess that market before you've
even built something, beforeyou've even sold an investor,
you can build a landing page,you can start targeting the
customer.
You can start building thatthrough very early and then I
think the the key other part ofthat is how are the competition
(43:12):
going to react to yourproposition and what are they
going to do to stop you?
And I think if you can reallyunderstand that early on, it's
really key then for yourstrategy of like, how do you
build a scalable business thatcan win?
And for us it was understandingwhat are the traditional
lenders going to do?
How could they react to this?
Can they build this proposition?
(43:32):
What are they going to do totry and stop us?
I think working all of thatthrough and being able to be
very, very clear about howyou're going to do that, I think
is really really key to getright before you even go and
speak to investors or even kindof do anything.
Really.
Speaker 1 (43:49):
No, that's great.
Well, look, I really appreciateyou sharing some of your
journey with us, Aiden across anumber of different topics, some
more positive, some morenegative, but I love the framing
that it's not really failure,it's just the opportunity to
learn.
And it's one thing I just haveso much respect for the kind of
(44:10):
tech startup community ingeneral is, while you're living
it, you know it's easy to thinkabout failure, but it is if you
sort of pull back up.
I do think that's one of thegreat innovations that Silicon
Valley has had over the last 50years is just recognizing that,
look, a lot of ideas don't work.
That doesn't necessarily meanthat you know something's wrong.
It's just a great opportunityto learn and then go be even
more successful the next time.
So I love that insight.
So thanks for spending the timewith us today.
(44:32):
It's been great chatting withyou and kudos on all the success
you've had so far with Carmoola, and can't wait to see, five
years from now, what all it willbecome.
Speaker 2 (44:43):
Thanks, bill, really appreciate you taking the time
as well.
Definitely.
Speaker 1 (44:46):
All right.
Thanks to all of our listenersand we'll see you next time.
Bye, this has been the FinTechThought Leaders podcast your
window into the world of venturecapital and financial services
with today's digital disruptors.
Qed is proud to provide thebest fintech advice you can get.
(45:07):
To learn more or to read thefull show notes from today's
episode, check outQEDinvestorscom and be sure to
also follow QED on Twitter andLinkedIn at QEDinvestors.
Thanks for listening you.
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