❓ These Vending Machines Make $12.8 Billion a Year?

​[view in browser](=)​ ​ ​ Technology will eat boring businesses. We’ve said it before, today’s blog post covers one company doing just that. We’re talking about a vending machine so big, that a car fits in it and an industry can get disrupted by it. But first, we created something special just for you. By now I'm sure you know inside our premium community, Cashflow, we release how-to playbooks on a new cashflowing asset each month. We realized that each of these playbooks can add 4, 5 even 6 figures of income. SO we've decided to start making them available individually. We'll be releasing new ones each week! [Check it out and see what's available.](=)​ Today in <10 Minutes, We’re Going To Cover - Man Is to be Overcome – You are clay, have you been molding? - Worlds Largest Vending Machine – Carvana - car sales done in a tower. - The Used Car industry - Is it motoring or stalling? - How to get started in used cars - Do I actually kind of want to be a used car salesman?? - Buying a Used Car Lot - F buying the car, I’ll take the lot. - Not Running it Into the Ground - Car puns for days. --------------------------------------------------------------- BUT FIRST, A CONTRARIAN RANT: A thought… are we doing enough? The truth is we do not show up in the world as perfect versions of ourselves. We are not all we need to be. You standing breathing is not “enough.” It feels lovely to think that just existing is sufficient but feel that deep down in your core. Does it feel like enough when you have a day sitting, doing nothing, creating nothing, discovering nothing? Are those the moments you feel truly “alive”? No. Because man is to be overcome. He was not created to arrive in the world shiny and perfect. He comes with an inadequate blank slate that has to be formed and molded into the future version of himself. Like clay to a pot, he must be beaten and put into the fire to harden. We’re homeostatic creatures, mediocrity is a natural default. The thing about mediocrity is if you let things stay static they do not in fact stay. There’s a name for that, “The 2nd Law of Thermodynamics.” It means simply: hot things always cool unless you do something to stop them. It is a simple truth about the universe: that disorder, characterized as entropy, always increases. Unless you fight back on the entropy. I think of it as nature's tax. Left unchecked disorder increases over time. Energy disperses, and systems dissolve into chaos. That is the natural state of man, of physics, and of the world. Let off unchecked, your house will fall into disrepair, as will your body, as will your business, as will your garden. The question is only one: What are you doing each day to push back on the universe. This leads me to my next piece… vending machines for cars, how to profit instead of spend money on cars, and what does it look like to own an auto sales company? This quote says it perfectly… ​ ​ --------------------------------------------------------------- Vroom Vroom ​ I went to high school with a guy who became a billionaire. His name is Ernie Garcia Jr and he founded Carvana with his father. Think vending machines but for used cars. CARVANA - Big huge (dare we say phallic?) vending machines and big huge numbers: - 70,000+ used vehicles on their site - 2nd largest used auto retailer in the US (Dec 2021) - FAST: finance, complete purchase/sale, schedule delivery/pickup in 10 minutes (92% faster) - DISRUPTING: 1 million vehicles from 2013-2021 (purchased, reconditioned, sold, delivered) - 25.7 billion in cumulative revenue ​ [video preview]( ​ It’s pretty f*ng brilliant. His father bought and built Ugly Duckling Car Sales. A traditional used car business, then rebranded to DriveTime, to it not being a company that does $2.5 billion in annual sales. I remember playing at their house as a kid, wowed by how beautiful it was, and inspired to see someone with the name Garcia playing in the big leagues. Ernie always seemed like a guy who would do something grand. Despite starting at 3rd base, even I was surprised to see what he’d built. Although there is certainly a fair degree of controversy surrounding both him and his father, the model is fascinating. Ernie started Carvana because he saw the world was changing, while the horrific experience of auto purchasing stayed the same. Industry Today: Used Cars - Fragmented - 43,000 used car dealerships across the US, the largest brand is a little over 2% of the market. - Unhappy - 61% of car buyers feel the car buying experience isn’t improving and 57% of consumers think the experience is bad. - Changing - 91% of vehicle shoppers now use the internet in car purchasing. 83% of car buyers want to do 1+ steps online. - Slow - On average it is a 2-hour process to buy a car, including vehicle purchase, trade-in, financing, extraneous product decisions, etc. Big pain = big potential profit. A reminder that there are billions in the boring, you just have to see them. How do we play the auto market? I made a friend recently on Twitter, CarDealershipGuy (@GuyDealership), and told him to give me all the details on how he made his millions in used car sales. Thanks, friend. Fun fact a new NY Times article estimates that [over 20% of American auto-dealerships have owners making at least $1.58M per year](. The Used Car Industry =​ �€‹ Used car prices have rocketed up, and sales of used vehicles reacted to those price increases and decreased, with the low point (it was still 2.5M cars) in December of 2021. This however will not continue most likely. Prices and velocity will slow down. But often the interesting moves are to be made at non-consensus moments. What will continue are these two trends: - Brick and mortar car dealerships are dying/dead: - Buyers are unhappy with the time, up-charges, and in-person requirements of car buying. - Space for used car dealerships is getting harder to acquire. Cities are making it more difficult to zone for used car dealerships, so getting great frontage to show off your used car lot is increasingly difficult. - Buyers increasingly visit dealerships to test-drive, rather than buy. Dealerships may ultimately become pass-throughs for purchases. - More and more used car activity is occurring online, rather than in a physical space. - The average brick-and-mortar dealership owner (non-franchised) is 72 years old. - Franchise-dealer consolidation in 2021 was one of the highest on record. - Surviving dealers will increase vertical integration - Carvana, one of the most successful of the 43,000+ used car dealerships, began as an integrated company and continues integration efforts today. - Carvana integrates 50% more activities than the typical used car dealer. Traditionally used car dealers buy, fix, and sell cars. Carvana buys, transports, fixes, finances, sells, and warranties the cars they sell. This additional integration, particularly in-house financing for used car dealerships, allows Carvana to overpay for a used car and make up the loss in other areas of the transaction. (Although they did just have to do a massive round of layoffs so TBD if the model was correct). Buying and running a used car lot Alright, let’s talk about how to buy a used car lot. If the average used car lot owner brings in $1 million a year in income how do we replicate that process? There looks to be quite a few up for grabs. Let’s see if they’re BS or Invest. ​ Play By Play Guide - Learn the used car industry. Ya, this is obvious. You want to either work in the industry or go in with a partner that knows the ropes. Lots of regulation, lots of red tape, lots of industry insider intel. He recommends working in the industry for: - Experience. There are multiple phases to a used car sale, including vehicle selection, acquisition, inventory management, marketing, sales, customer relationship management, strategic partnerships, and more. This is not an industry that you can flourish in without some experience under your belt. - Connections. Steal someone’s 10,000 hours, particularly in car acquisition, financing, flipping, and purchasing connections. Ya gotta, “Have a guy.” - Lease an office [zoned](=) for used car sales. You can certainly google zoning information, but you will be best served with a lawyer helping you through this process. Minimize your overhead. Find the smallest properly zoned space you can; you don’t need a lot in today's market, just spaces to store your inventory and a properly zoned office to sell them from. - Get a car dealer’s license. Requirements vary by state (fun!), so let’s look at an example state. The state of Virginia requires you to: take a 2-day Independent Dealer-Operator training course, pass an exam, and purchase your dealer-operator license. Every state has different requirements, but you will be a licensed member of the car selling profession. ​ - Purchase cars for resale. Large auction sites for cars include [IAAI](, [CoPart](), [Gov-Auctions](), [ADESA](=) (requires a dealer's license), [Autotemptest](=), [Manheim](, and [Americasautoauction](. While the large auction sites above may be a source, we’d recommend starting local and getting to know your nearby auctioneers. It’s one thing to pay for shipping a used car for your personal use; your profits can get destroyed pretty quickly if you’re not tight with shipping. - Upgrade (add value) to the cars you purchased. You need relationships with maintenance partners who can help you quickly/safely/inexpensively refurbish the cars you purchase. This, and your ability to find quality used cars at great prices, are the two areas where you have the most leverage for your own profits. Search & Upgrade. - Price your resale. While there are many resources ([Kelley Blue Book](), [Nada Values](, [Edmonds]() you’re probably already familiar with to start, to really get this right you’re looking for price optimization. The National Independent Automobile Dealers Association (NIADA) has reports on the used-car industry at the national level. [iSeeCars]( (seriously, that’s its name) has detailed analytics about used car prices to inform pricing decisions. Below is an example: ​ - Advertise on listing sites. Start with [**Craigslist]( or [Facebook marketplace]().** As you gain experience with your target market, adjust your selection, acquisition, upgrade, marketing, sales, and post-sales strategies to serve your marketplace. - Sell your cars. Congratulations, you’re a used car dealer. Where’s your tie? - Run your business. - Customer service. Don’t suck at it. - Pricing. Make it transparent and skip the hot dog closes. - Marketing. Think like an eCommerce marketer, sell like a salesperson. - One-stop-shop. Increase your vertical integration by adding financing, making relationships with local auto repair shops for paid referrals, or consider an acquisition of a quality local garage. - Scale. Most used car dealers hire a car salesperson first. Their last hire (the last thing they let go of) tends to be acquisition. - BONUS: Get an Installment Seller banking license and offer both cars AND financing. Continuing our Virginia example, the state calls them Short-Term Lender Licensees and there is a laundry list of requirements ([A-U paragraphs, in fact](=)) with the largest being maintaining $25,000 of liquid assets at all times. How Would I Play? For me… I’d go try to be the capital for a guy like CarDealershipGuy. Then as I learned the industry from investing I’d look to get into a GP position in the space. Remember your Get Rich Tripod: Money, Time, or Expertise, lean on whichever you have more. Or perhaps we see if Carvana’s stock price changes. Time will tell. Carvana’s YTD stock return ​ Carvana’s 5Y stock return ​ Drive it like you hope to sell it, Codie PS, what are you guys interested to learn from us during these down-market times? Stocks? More on cashflowing biz's? We typically stay away from stock content but I think the best time to learn is when everyone bails on that asset. You tell me? REPLY TO THIS EMAIL with a "1" for yes stocks, and a "2" for no stonks just cashflow. --------------------------------------------------------------- The Not-So-Boring Section - My money don't jiggle jiggle - Looking for financing for your SMB? Compare and contrast small business loans with [Fundera]('s free tool. - Put those used cars to use with laundry delivery - Laundry delivery service [The Folde](=) can add a whole new revenue stream to your laundromat business with the exact operating breakdown on how to add delivery. - ...or maybe just use horses again? - [Gas prices jumped another 5%]() to hit record highs. Perhaps a reason to hoard those used Prius's? Or maybe just start riding horses everywhere again. ​ --------------------------------------------------------------- $179k a Week with Slime? All it takes is killer marketing, a mixer, some dyes, a little bit of glue and the ability to take selfie videos and you could be making the same kinda $$. Pretty wild eh? Watch to see how she does it and how I would play this game so you can jump into this slimy trend. ​ =​ [Watch the Full Breakdown](=) --------------------------------------------------------------- ​ Share Contrarian Thinking, Win Cool Stuff! 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