How to Buy a Car from the Guy Who Invented The Google Business Model

Posted on October 28, 2006
Filed Under General |

I was reading Techcrunch today about the experience of buying a car from CarsDirect

CarsDirect was started about six months before some partners and I started our company with Idealab’s support. CarsDirect was one of Bill Gross’s ideas, along with many other great and not so great ideas.

Bill also started Goto.com, later to become Overture and then Yahoo’s search advertising service. Goto was the original implementation of the paid search business model which went onto become the business model that now powers Google.

He launched the company with some mangement he found, $250k of seed capital and $250k of idealab “support”. The management team had to prove they could sell a car online, and if they could a Series A term sheet was not too far away.

The best thing was that valuations back then were based on revenue growth, not profit, so selling cars would generate a huge valuation if they could prove anyone would buy one online. Sure enough, $250k later they sold a car, got a term sheet with a huge valuation and then started selling a lot more cars.

I know Bill put a lot of idealab’s money behind CarsDirect. I might be hard to get back the investment given the likely valuations, but it’s good to see CarsDirect still working for people.

Automotive retailing needs this kind of change - the current in dealer experience is clearly not great and if CarsDirect can change it, so much the better.

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