lucacafici-blog

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Why investment in auto is soaring?

According to a 2016 report by the UK's no1 auto marketplace Auto Trader just 7% of consumers said they trusted car dealers. making car salespeople regularly ranked among the least trusted professions.

Interestingly enough, despite the car dealer being quite an untrusted professional it was able to survive the massive shift from brick and mortar sales to e-commerce that affected almost every other retail sector.

However in the last years several innovative solutions with the aim of breaking this trend have appeared and have received considerably more funding that its peers in other sectors.

Source: https://blog.dealroom.co/the-future-of-online-marketplaces-2/

One of the trends that explains the significant rise in the amount of dollars that are being poured intro the mobility & auto sector is the raise of a new type of marketplace know as the iBuying marketplace. This marketplace is significantly more capital intensive than the rest and its growth was driven by companies in the auto & real estate sector as Auto1 (or InstaCarro in Brazil) or OpenDoor.

A report published by dealroom explains the evolution of marketplaces in 4 simple steps: 

The first wave of marketplaces were considerably asset-light and supply-driven (e.g: classifieds).

Later, these marketplaces enabled the transactions and companies as Booking.com or Airbnb appeared.

The third wave of marketplaces added logistical processes to form a full-stack marketplace. A Brazilian example of this evolution is the evolution from iFood (processing orders, but restaurants have to do delivery themselves) to Spoonrocket or UberEats (own riders do delivery).

Finally the fourth wave of marketplaces are even taking inventory supply from the seller (so called iBuying).

The appearance of this more capital intensive marketplaces focused in increasing consumers' trust  has come together with a significant change in consumer's behaviour.

A recent study summarised by Carvana shows that already 42% of consumers would feel comfortable buying a car online without visiting a dealership.

A recent study developed by the consulting firm Bain & Co estimated that by 2030 up to 65% of car sales could happen online.

This change in consumer's behaviour -shifting to online from offline- has just started and with it we expect great changes to continue happening in the industry.

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How to be resilient and why that’s so important?

“If everything seems under control, you're not going fast enough.” Mario Andretti

If you are a startup founder or work at a startup or pretending to work in one you’ll need to be resilient. But what that actually means and why it’s so important?

I believe that what separates successful companies/entrepreneurs from mediocre ones is their capacity to surpass tough moments. If you analyze the history of successful entrepreneurs none of them has had a straight path to success. Actually, most of them have been very close of going bankrupt.

If we google for resilience’s definition we will find things as “resilience is defined as the capacity to recover quickly from difficulties; toughness” As you may notice that’s what entrepreneurs do every single day. Every month/quarter you’ll have a different obstacle to fight against it. 

Is resilience something that you are born with or something you can develop? 

In my experience as an entrepreneur, I feel that after each battle I come out stronger so I'm very confident to say that’s something that you develop with experience and time. As a result of that, I’ll detail below the 4 main things that I learned on how to develop & train your resilience:

1) Focus on the problem and on what you can do about it.

Many people at the edge of a problem or actually a big set of problems end up freaking out. It’s important that you try to keep control of yourself and focus on the things that you can actually do to make things better. So, the first thing to do is break down the different problems in smaller ones and for each of them think about the things that are under your control and the things that actually are not and that there is nothing you can do about it. Then set an action plan for the things that are under your control. 

2) At first be open to as many ideas as possible

Is very important that at when you begin this process you are open-minded and try to search as many solutions as you can. In order to find a good solution you need to be creative and creativity comes from gathering a big chunk of ideas and then iterate on them until they become better. 

3) Define clear steps and be laser-focused on getting them solved.

Once you have decided what will you do, the impact you expect those actions will have and the time investment that will require from you put them on your calendar. It’s important you now become extremely focused on getting those things done and are not distracted by other problems or issues (unless they really are more important than the ones you are currently solving)

4) Be decisive

If you have many issues on your plate that may be a signal that you may be dragging too much on taking decisions. The more things you have on your plate the more anxious you’ll probably be and less focused you’ll be on the problems that are really important. You should try not to overthink things that are reversible or that have not a big impact. Also, define a list of things you need to achieve to make a decision instead of always trying to reach the best solution for every problem as that may to costly time-wise.

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How to define the culture of your startup and why it’s so important?

“I like to think that the C in CEO stands for Culture.” Satya Nadella - Hit Refresh

As a business owner, you'll want to have a consistent culture that’s aligned with your values all across your company.

If you are not upfront with the culture you want to create from the very beginning, hire accordingly and talk about it at all times you run high chances that your company culture will just happen and once established it will be very difficult to change.

Culture is what your employees do when they don’t think about why they do what they do. Culture is what we do as a habit and once that habit is deep in your organization minds; people will stop questioning why they are doing that. To illustrate this point is very interesting this social conformity experiment. Hopefully, you will not want this to happen at your company...

Culture is also important because it will guide how employees behave when you are not looking. Strict management is not the solution to this, as a company where people don’t believe in why they do what they do is not sustainable in the long term. Eventually, people will find a company where they feel more identified with what they do and that’s why defining a culture for your company that’s aligned with your values is so important

When your company starts growing; recruiting talent will become key to your company's success. Having a defined culture will be fundamental to recruit good talent.

“Many people, when considering a job are primarily concerned with their role and responsibilities,... Smart creatives, though, place culture at the top of the list” How Google Works,  Eric Schmidt & Jonathan Rosenberg

The best way of defining culture is by defining 3 to 5 values you really believe in. Actually, verbs are much better than “values” as it gives it’s much more actionable. 

“Imagine someone coming to work on their first day of a new job and seeing a poster of the company’s core values in the cafeteria. Seeing the word “integrity”, they might think, “Okay, sure. But what do you want me to do?” Now imagine that same employee is given a copy of the company’s Why Statement and sees the HOW “Always tell the truth.”

Find your Why, Simon Sinek

Another way of doing this right is by defining your values in terms of preferences or choices. For example one of Facebook’s values  says:

Move Fast: Moving fast enables us to build more things and learn faster. We’re less afraid of making mistakes than we are of losing opportunities by moving too slowly. We are a culture of builders, the power is in your hands.

This way of writing values is really effective as it leaves very clear to Facebook employees that it’s ok to do some mistakes in order to move fast. “Move fast” by itself would be useless as values are always intrinsically good.

This is really important, especially when your hiring plan is agressive and run the risk that value communication become less efective. You need to make sure everyone understands your values. 

At InstaCarro as we were entering intro a stage of high growth and lot of new hires would arrive in the next months we decided we needed to re-brand our values and update them to the current state of thinking. 

As a result of that we did several workshops with the team trying to understand what made them feel the proudest, we invited several clients to talk about the had liked about InstaCarro  and after a couple of weeks of frequent discussion we arrived to a new set of values.

This values today are used in different settings: hiring, strategic discussions, employee recognition, etc. Below you can see a picture of our ATS which allows our interviewers to evaluate our candidates in relation to our values for more assertive hiring.

As your startup grows it's important you talk all the time about your values. If you have an HR director is important you properly align with him on how to recruit and recognise with rewards according to your culture.  Otherwise, your culture & company values will become only nice posters on the wall.

If you started talking about culture a little bit late, things will more challenging as probably there will already be another culture happening. Your job will be to rebuild it.

As I said before, the first thing you’ll need to do is communicate the values of the company and constantly talk about them. Eventually, you’ll also need to let go of the people that are not aligned with the new’s company way of thinking.  

“For anything monumental to happen... there needs to be a great mind or a set of agreeing minds. I don't mean yes-men. Debate and argument are essential... But there also has to be a high quality agreement. We needed to be aligned on mission, strategy, and culture." Hit Refresh, Satya Nadella

Remember that at that moment you should involve your employees & executive team. If you are the founder of the company, its values should be very much aligned with yours; but its also mandatory you involve your team.

"If a movement is to have an impact it must belong to those who join it not just those who lead it" Find your Why, Simon Sinek

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How to delegate effectively?

I’ve mentioned in another post that delegating effectively is one of the key skills you need to learn in order to scale your company successfully. In this post I would like to share some of the key learnings I had at InstaCarro in this regard.

1) Choose an Objective Setting tool

One of the issues I started having while delegating tasks to my team was lack of coordination and focus. This started generating anxiety among the management team that didn’t have clarity on what their peers were working on and/or why and also a lot anxiety on myself as it seemed as I say my team didn’t have focus at all.

One of the things we did to solve this issue is started working with quarterly OKRs. In a nutshell OKRs (objectives and key results) is a management tool that will allow your team to define how the work they are doing is connected with the overall strategy of your company.

The way you the process will be conducted Is by asking each of your direct reports, based on the overall strategy of the company to define: • 2 to 3 broad objectives for their area • At least 4 key results for each objective.

Objectives can always be something inspirational and broad; however key results always need to be SMART (Specific, Measurable, Attainable, Relevant and Time based). Thus, an example could be:

Objective #1: Improve customer satisfaction Key Results #1: Implement NPS methodology to measure customer satisfaction up to end of the month Key Result# 2: Achieve an NPS of +20 ...

OKRs are also good because aside giving focus, they will allow their team to delegate the tasks among the team. The example below seems a little bit theoretical but is very easy to understand:

Source: http://content.betterworks.com/goal-setting/getting-started-with-okrs

If you like this tool I suggest reading some additional material to grasp the tool more thoroughly. Otherwise you can look into other objective setting tools. MBO (management by objectives) is another very popular tool. Working only with KPIs is something I don’t recommend as it extremely short-termed and does not always allow you to see the big picture of what’s really going on.  

2) Don’t micro-manage, be a supportive partner

Something I noticed in my experience as an extremely anxious, ambitious and not patient entrepreneur is that when I received feedback that I needed to delegate more I became an absent manager. This is, when a direct report came with a problem I started having attitudes as “don’t bring me problems, bring me solutions” This is a terrible thing to do as you are literally discouraging your team to give you a heads up when they are lost or need your help. At the end of the day your job as a leader is to give direction to your team, and only step in when they ask for help or you see they are lost.

As a result of this, when I realised my team stated to get lost or they asked for help several times I went back to the micro-managing style.

The following framework explained by Kim Scott in her book Radical Candor has been an amazing framework that has helped me a lot to find the right balance and since I started applying it my relation with my team has been healthier and more effective.

Source: Kim Scott, Radical Candor: Be a Kickass Boss Without Losing Your Humanity, St. Martin's Press, March 2017

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When and how to start your company?

In the last year as a result of the buzz InstaCarro has had I’ve been approached by several entrepreneurs or potential ones asking how to make the leap from the corporate world to starting their own company. As a result of that I’ve decided to write some hints that have helped me always I had to take a difficult decision and also to know if your business idea is worth the risk.

1. The No Regret Framework

When I received an offer to move and go to Vietnam to start a company with Rocket Internet I was shocked (more detail here). I didn’t know what to do. After a lot of thought, I realized the following.

 If I didn’t go: I would continue in my routine and little things in my life would change. On the other hand if I decided to go two things could happen...

I could go and things go really well and would open new doors, learn new things, grow personally and professionally.

I could go and things go really bad. If that was the case i thought I would come back in 3 months and look for a new job at home. However, if this happened this experience would still become a life experience with a lot of learnings.

After thinking with this framework I realized that I would have much more to regret/lose If I stayed home than if I decided to go.  It was a no-brainer that I had to go and I'm happy of having to take that decision because this turned out to be one of the best experiences I had in my life. However,, I'm sure that if things had gone bad, I would still be happy of having had the courage of going and would still have learnt plenty of stuff.

2. Don’t wait for the perfect timing

I always talk with friends and colleagues about when is the time to do things. What I generally notice is that we generally tend to procrastinate on big/stressful decisions. We generally do this finding a reason to justify the timing is not the proper one. Or either the economy is not good, good things on work are about to happen, etc. 

At the end of the day the perfect timing will never come and if you are waiting for the perfect timing you will never take that important decision. When you realize it will be too late.

3. What’s your motivation?

It’s always important to have very clear in your mind what’s your motivation for starting your own company. People always think being an entrepreneur is something amazing. But at the end of the day, this comes with a lot of sacrifices and stress.

If your motivation is “I will become rich with this business idea” I recommend you to desist right now. Look for something that touches your inner you; something that will make you proud of doing it regardless of the result. Money generally can be a good motivation to get you started, but that drive will not last long when you start facing the problems all entrepreneurs have to face. See more on: 

4. MVP

If you are thinking of quitting your job to start your own company it’s wise you do an MVP before taking the leap.

Depending on your business idea doing an MVP can be easier or harder. If you are starting a 100% online company, the easy way of doing this is building a landing page, put some money on Google Adwords and start understanding what your customer acquisition cost will be. Some good websites for doing this are Unbounce and Instapage.

Before starting InstaCarro we called more than 300 car owners and simulated we were trying to buy their car. We negotiated with them and reached an agreement (obviously we then desisted as this was a test). We then called +300 car dealers all over Brazil. All of this was done from Argentina using Skype. This helped us understand how hard it would be to buy a car in Brazil, which % of people were willing to negotiate and how inter-state margins worked in Brazil among many other things.

All this to say an MVP can be harder or easier depending on your idea, but at the end of the day what you need to answer is the following: What do I need to believe for my idea to be successful? 

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How to lead a 170 employees startup?

When I co-founded InstaCarro at 2015 with only three employees, my role was completely different from what is today with one-hundred-seventy.

In this post I’ll try to describe the main challenges I faced in this transition and the main lessons I learnt.

 1. Delegation:  

When InstaCarro started growing we started hiring highly-motivated, self-esteemed and experienced managers. As the managers’ motivation came from feeling accomplished and self-esteemed, the rules of the game changed completely. Until that moment, my co-founder and I were used to solve all the problems the company had. From talking to investors to calling the AC technician.  

However in this new context doing things ourselves didn’t help anymore. I rapidly noticed that my job was no longer about getting things done myself, but enabling others to get things done on their own. Being top-down and/or getting directly involved in the execution of projects ended up de-motivating and generating defensive attitudes among my leadership team. This meant I needed to let my team reach to the answers and solutions that the business needed by themselves.

See my post about delegation here

2. Motivating and inspiring

Delegating may mean that sometimes solving specific problems may take longer. However, if you are able to effectively motivate your team, your execution power will grow 10 times and your job will become much more impactful.

One useful way of motivating and inspiring your team that has been very effective for me is asking them to set objectives and projects that they feel like working in the next months. Delegating this work will make them feel empowered and happy driving motivation and your leverage on them.

3. Trust and courage One of the most important leadership skills an entrepreneur should learn is how to trust his team. Most of the people that’s working in your startup are probably there because they value independence and want to generate change by themselves.

“Trust is the highest form of human motivation. It brings out the very best in people.” – STEPHEN R. COVEY

If you do not sufficiently trust your managers to delegate the execution you either lack the courage you need to lead the company or is time to think in hiring new managers in which you can really rely on.

4. Coordination When you have a couple of managers reporting to you is important you make sure everyone is at the same page and that communication flows properly among each other. This is not easy as dealing with people is not a science.

As the company grows and more people start joining it will become harder motivating them and having everybody in the same direction. If the company grows big enough, internal teams may start forming. This is something you want to avoid at all costs! 

“When dealing with people, remember you are not dealing with creatures of logic, but with creatures bristling with prejudice and motivated by pride and vanity.” Dale Carnegie, How to Win Friends and Influence People

It’s important that as a leader you make sure everyone is united and in the same page. Some tips that have been extremely useful for me were:

• Foster discussion: join your team regularly to discuss random problems. Highlight the importance of solving things as a team and not individually. Sometimes giving an individual owner to a problem is useful for ensuring things get done, but sometimes is also good to build a team to solve a problem. In this way the problem becomes a company one and not an individual one. Let your team discuss, and solve the problems by themselves.Try not to give your opinion on the issue. Despite you may not agree with the direction the meeting is taking is important you keep yourself as quiet as possible to make them feel empowered. With time your team will start meeting by themselves proactively and solving problems without you needing to call for a meeting.

• Do not take sides: It’s important you try not to take sides. If you do, ego’s and insecurities inside individuals may arise and you may start forming teams inside your company. In case you feel you really need to take sides, try doing this in a neutral way, maybe asking a question to foster more discussion. Quoting company’s values and mission is always a very useful way to do this without making feel people is something personal

• Save face: People in South America are very worried about their esteem and do not like to be contradicted in public. If you want to talk about something you didn’t like, do it in private!

In order this to happen is important you motivate a good work environment so that people can talk and give feedback to each other in a constructive way. Once again to avoid chaos is important you stop executing projects by yourself and let your team do their job.

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The future of the auto-industry will be very different from what we expect.

The used car selling process has been broken since the creation of the first modern automobile. The industry has had some innovations, but at the end of the day the problems our great grandparents suffered when selling their car are still there.

To sell a car online you need to take several pictures of your car, upload them to the web, be patient with spam, bring strangers to your place, and eventually deal with a lot of paperwork where the chances of something going wrong are high.

Alternatively, if you decide to visit a car dealer, –as dealers suffer inventory and lemon risk- you will need to accept huge discounts. Dealers will rarely give you an offer on the phone, forcing you to visit at least 4 or 5 dealers if you are a diligent person. Terrible experience… At InstaCarro, the company we founded in 2015, all that a seller needs to do to sell his car is show up at one of our inspection centers where his car will be inspected, and auctioned online with +1500 dealers nationwide.

This process guarantees to any seller that shows up at InstaCarro that in 60 minutes (30 for inspection and 30 for auction) he will be going back home with his car sold at a decent price.

Lately many people have been asking me what will be the great next thing in the automobile industry. My answer so far has been that it’s really difficult to know. To be true, as human beings we have been pretty bad in predicting the future.

In 1954 people thought a personal computer in 2004 would fill in a complete room, and in 1903 the president of the Michigan Savings Bank advised Henry Ford’s lawyer,  “The horse is here to stay but the automobile is only a novelty – a fad.”

In the last years we’ve all been talking basically about the same things. I have a high degree of confidence that the next big thing will suddenly arise from nothing and will be something none of us was expecting.

And this happens because our brain feels comfortable thinking in straight line, while progress happens exponentially, in revolutions.

I’m confident that in the next 10 years there will be far more changes than there has been in the last 100. And this is because cars are becoming computers with wheels and computers advance at the rate of the Moore law. In 1903 we already predicted cars would disappear, lets not make the same mistake again.

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Starting - up across the world: Lessons learnt

I’ve had the luck of starting up 3 companies in 3 different countries and in this post I would like to share 4 of the most important things I’ve learnt along the road.

It all starts in in April of 2009 when together with a group of friends we decided to sign up into business plan competition in our university. We wanted to build a website that would allow people to make restaurant reservations in real time. Our webpage would be connected with the restaurants ERP allowing us to know in real time the availability of tables each restaurant had.

We ended up winning the competition and were happy and motivated. We decided we would build the business. That’s how CenaPlus.com was born.

Happiness didn’t last long. We soon learnt one of the most relevant Argentinean entrepreneurs was building the same business we were. Worst of all, he had funds with really big pockets supporting him.

This was big deal, but at the end of the day it ended up motivating us even more and gave us one more reason to work extremely hard.

For the next year and a half, we didn’t rest a second. We also had no money to hire employees. That meant everything had to be done by us. From financial planning, sales, customer service and so on. But we didn’t care about it. We loved what we did and that gave us focus and resilience that we needed to run the company.

In November of 2011, after having operated the company for a year and a half with almost no money we sold the company to Restorando.

I don’t believe we would have been able to make the company last for so long if we didn’t love what we did. Building a company is hard, you will have few resources, you will have competition and will need a lot of resilience. If you do not love what you are doing you will always will be one step behind someone who really does and your odds of succeeding will be much lower.

In March of 2014 I received an offer from Rocket Internet to join them in Vietnam to build a car classified company. I spent a lot of time reflecting on whether I should go or not and I really could not make my mind.  However, when I realised the worst that could happen would be not adapting to Vietnamese culture I decided to go. If that happened, I would just quit and come back to Buenos Aires. On the other hand, if I didn’t go, I was risking missing a unique and once in a life time opportunity.

Looking back in time, that was one of the best decisions I did in my life and I am grateful I took the risk of going. Or in other words, I didn’t take the risk of staying. The culture shock I experienced over there made me a different person. I grew insanely in personal and professional terms.

I consider myself a risk taker. Generally, whenever I took risks it really payed off.   My framework has always been, if things go well I will be better off, if they don’t, I will learn something new and that will enlighten me to know which my next steps should be

When I arrived to Vietnam to build Carmudi, the startup already had 3 months of life, the teams had already been built and their general tasks were clear. However, there were little processes at despite the great job that had already been done, things were still very messy. I had arrived there to re-structure those teams, build the processes and make them work. The challenge was big.

It didn’t take me long to start making changes and setting up processes and results soon stared to show. However, results were not radical as I expected.

I didn’t understand why. The decisions I had took were completely rational and logical. I had done my job. I had researched intensively on the topics I was working, I had consulted the decision with my superiors and even with smart ex colleagues.

Some weeks later I received one of the best insights. My boss came and tell me that some members of the team were not really following the changes I was making and that they didn’t feel so happy with the way they were working.

When I heard that, a clash of thoughts, feeling came to my mind. It was mind-blowing. I had aligned the changes with them in meetings and they told me they understood the changes. However, it seemed they did not. They had not bought in the changes. They just told me they did because they did not want to question my “authority”.

After learning that I understood I needed to: • Be less top down • Became a better leader getting more involved in their daily activities • Became one of them

I took 3 immediate action to address those issues:

• Do more meetings to collect feedback. I started doing group meetings every week to collect feedback, propose ideas to test the issues we had,etc. I also stared doing bi-monthly individual meetings where they had to come with things to criticise me. I did not want any more to receive a bad feedback from my team by a third party.

• I started to join them in some of their daily activities to suffer their pains. I started visiting clients with them, getting in touch with the platforms they did.

• Created the Rocket Vietnam Soccer cup where Rocket startups (Lamudi, Lazada, Food Panda) would play soccer every Wednesday. That would allow me to be closer to the team and get to know them better.

These changes motivated the team and the results I was expecting from the first day finally stared to come.

Aside from respecting me, my team also stared to like me, and that me feel very happy and fulfilled.

Respect your team, feel their pains, trust them, ask them what they think. Nothing its a one man show. You can be the smartest man in the world, but without your team you are nobody.

In 2015 I decided to come to Brazil to build InstaCarro. InstaCarro is a company whose mission is to help people sell their car faster at a fair price. In parallel we help car dealers source car more effectively. 

Several weeks before launching our service we organized a launch event focused on car dealers. We knew we needed to build a relationship with them and inviting them to our office was the best way to do it.

The event was a complete failure. No-show was way higher than we expected and all the dealers that showed up told us they would never buy a car online with us.

Today we have more than 1600 dealers subscribed to our platform who fight every single day to buy our cars and are one of the fastest growing startup in LATAM.

Luckily we trusted our gut and our analysis; if we had followed what our main clients told us that day InstaCarro would not exist.

You need to believe in your ideas as if you don’t, nobody will. Be careful with too many surveys. Not everyone really knows what they want. And if they know, they rarely say. If you have a vision, a dream, go after it and do not let anyone stop you.