My guest today is Ernie Garcia, co-founder and CEO of online used car platform, Carvana. Ernie launched Carvana in 2012, and less than a decade later, the business commands a $60 billion valuation while selling a used car every other minute.
Our conversation covered a lot of ground. We discussed effective decision-making, what it means to be a long-term thinker, and what Ernie sees as the defining features of attractive markets. We then went deep on Carvana itself, covering the original insight, logistics operations, and counter-intuitive decisions Carvana took as they set about building the brand. I think you’ll find Ernie’s insights and energy infectious. I hope you enjoy this great conversation with Carvana CEO, Ernie Garcia.
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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[00:03:10] - [First question] - Defining average decision quality and he weaves it into his business
[00:05:40] - How he would assess average decision quality in another company
[00:07:04] - What company culture means to him and building it at Carvana
[00:08:45] - Key features of a market that is desirable to step into as an entrepreneur
[00:10:06] - Various levels of complexity faced in automotive retail
[00:13:51] - Reality Has A Surprising Amount Of Detail; The genesis idea that led to Carvana
[00:17:52] - Critically new things delivered to customers when buying a used car
[00:20:43] - Dealership unit economics vs logistics platform economics and what drives gross profit per unit
[00:24:47] - What is an IRC center, the hub and spoke model, and the skeleton of Carvana
[00:28:44] - The size and scope of one of their fulfillment centers and cost savings involved
[00:30:29] - How the spoke component works and ways it will be improved over time
[00:32:39] - Defining what being a long term thinker means to him
[00:35:50] - The story behind the Carvana car vending machine
[00:39:49] - His thinking on the dual-layer nature of customer experience and communication
[00:41:59] - Mistakes and failures made while learning to become good communicators
[00:44:21] - Great companies get a lot done very fast
[00:48:56] - Infrastructure set in place to maintain their pace as they scale
[00:51:50] - The embedded formula used for teams to communicate what they want to do
[00:52:50] - What it felt like as a leader going through the pandemic
[00:58:24] - Whether or not COVID-19 has permanently impacted the consumer landscape
[01:00:03] - Businesses, leaders, and things he’s studied that others could learn from
[01:01:55] - Surprising new things arising in the automotive and transport industries
[01:05:23] - The kindest thing anyone has ever done for him