Very few great entrepreneurs went to business school. Almost none, in fact. Recently, Elon Musk pointed out that MBA’s tend to learn the wrong things.
“They could be good at say PowerPoint presentations or something like that, and they can present well, but they don’t actually know how things work. They parachute in instead of working their way up.”
Great entrepreneurs know what a great product looks like because they understand what consumers want. John Ulman is an entrepreneur who perfectly illustrates that point.
John has worked in car dealerships most of his life. He worked in his parents car lot when he was a kid and then opened his own when he grew up. Dealerships have been around for a long time. It’s a business that most of us don’t think too much about. Until we’re ready to buy a new car, that is. The business didn’t change much. Sure, the cars were always new but the dealership – well, the dealership pretty much stayed the same.
But then technology upended things. Online classifieds were the first big revolution. Suddenly, buyers and sellers could be instantly connected in a way that was totally unimaginable just a few decades previous. Now COVID-19 has changed things again.
When the pandemic started industry experts were predicting the car market was likely about to go into free fall. But then something surprising happened. People were suddenly unwilling or unable to use public transit. So the car market (especially the used car market) started to explode.
Using technology to change the game
The huge increase in demand was good for dealers in the short term. But now demand for used cars is high. And supply is tight. Dealers need to know quickly when people want to sell their used vehicle. The best way to do that is to keep a close eye on classified sites. But that can be incredibly annoying.
So John developed software that made it easier for him to source for vehicles. His aim wasn’t to commercialize the software. He just wanted to make the process of searching for vehicles, contacting and negotiating with sellers easy for himself.
Once he launched the software, the dealership went from selling an average of 40 cars a year to 200 cars a year. In fact, as he was driving away from one deal, he would get notifications of other cars that were available to be sold.
With time, John realized that he could commercialize the software by creating an app that he could sell to other car dealers because they were the ones who are constantly online searching for cars. He went through several hurdles to find the right developers until he finally got accepted to the DMZ – which has partnered with Innisfil Accelerates.
When the pandemic hit, it was a matter of having the right product at the right time. Now, more than ever, car dealers are seeing the value of his app; AutoPulse and five and a half years of struggling with developers, pricing and changing mindsets was worth it.
Starting a software company as a car dealer without prior experience in the tech field hasn’t been without its challenges. One of the hiccups John has faced despite AutoPulse being an efficient tool is changing the way car dealers think. To overcome this challenge, he tailored the system to not disrupt what people are doing every day. They are just enhancing it.
Still, he recognizes that you can’t win over everyone. His focus had been on the tech-forward thinkers who see the value of the app.
Why Demand for Budget-Friendly Cars Increased During Covid-19
During the pandemic, many people stopped using public transport and preferred to buy budget-friendly cars to commute. A year down the line, this demand for budget-friendly cars has not decreased yet auto dealers are dealing with a shortage of supply. Many dealers rely heavily on classified sites but it’s tedious to keep checking sites and pressing the refresh button to catch a deal.
How the Autopulse App was Initially Designed to Work
Usually, car dealers will search through online classifieds and visit car auctions to buy cars. Since you can’t be online throughout the day, it’s easy to miss a deal. Also, the process of visiting auctions to see what’s available is time-consuming.
John hired a developer to design software that automated this process. The software allowed him to instantly be alerted of any new post that matched his search criteria. The goal for the software was to make the process of searching for cars more efficient and to increase his sales.
Discovering a Profitable Niche for Autopulse
It was through another car dealer that he was selling Jeeps to in Atlanta that made him realize that he could commercialize the app. The dealer called him, asking for more Jeeps and John responded that if he couldn’t find the dealer Jeeps then no one could.
Curious, the dealer asked John what he meant by that and John then told him about the software he was using and how it worked. The dealer exclaimed saying he would love to have the software in Atlanta which was John’s light bulb moment.
Cheap is Expensive – Hiring the Right Team
Most startups try to save costs because they don’t have enough capital at the beginning. In the long run, this route tends to become more expensive. 99% of John’s struggles have been centered on reliable development.
First, John hired a freelancer on Elance which is now Upwork. The developer didn’t have time to take on the project as a full-time gig.
Then they worked with a team overseas to reduce costs but it was still challenging. Later, they applied and got accepted into the DMZ which was a breakthrough for them. He switched from working with low charging developers to working with a more expensive but far more reliable team. John is now much more focused on getting great work from his team. Not just getting a good deal.
“Finding reliable people that can do what they say they can do is extremely difficult so the fact that we have a team right now takes a huge burden off our shoulders, and lets us focus on what needs to be focused on right now. “
Pricing and Choosing the Right Model for the AutoPulse App
“For anyone listening, the pricing of a SaaS product is one of the hardest things that we’ve had to do.”
He’s changed the price numerous times. He tried $99 a month. Then $1500 a month. Several people in the industry advised them to offer a $99 subscription fee. One on-board he could then upsell other products like reports and analytics. Others recommended he sell the subscription for $1499 a month because people who understand and value will be willing to pay more.
Considering the long-term value the app provides besides sales such as servicing of the cars bought and knowing that the sales a dealer makes in one month through the app can pay for AutoPulse for the whole year, his team has settled on charging between $899 and $999 a month.
“The dealers who get it, they look at it as an investment with a great rate of return and the dealers that don’t get it, they won’t even pay you $99 a month.”
Approaching the Right Person in an Organization When Selling
It’s not just about selling but making sure that you’re speaking to the right person at the dealership; the person that has the understanding and authority to give the go-ahead. For example, selling to a general manager and selling to another executive with a sales background is different. The one with the sales background will be quicker to see how effective the app is.
Fortunately for John, the app sells itself. It allows the car dealer to be proactive rather than reactive with regards to reaching out to customers.
The tool is so effective that recently, a dealership hired a person specifically for Autopulse leads. In the first day, they booked two appointments proving the value of the app.
Running a Startup from a Small Town
When you think startup and tech, it’s easy to quickly think of big cities but John has lived in Barrie for about 5 years. Unlike the big cities, it’s peaceful. The town recently created the DMZ to bring tech and jobs to the town. That means people like John get to enjoy the quiet and calm of a small city but with all the supports of a major center.
Innisfil Accelerates is a program sponsored by the town of Innisfil. You can learn more about how they can help support your great business idea at Innisfil accelerates.ca.