The Best Way To Get Started

The Best Way To Get Started

Nicholas Hinrichsen

Devin Miller
The Inventive Journey
Podcast for Entrepreneurs

10/23/2020

The Best Way To Get Started

 

The bar to what is a good first step to take a start up is too high. So people have to high of expectations. So they start thinking about ideas and talk themselves out of doing things. The bar to get started is really low you just have to take a step. So just go. In our case we want to refinance our loans, what does that mean? We need to talk to people who have an auto loan, so talk to them. The second you start hesitating saying yah I talked to them I don't know what to offer because I don't have any lenders then you're stuck in this chicken leg problems that you have all the time in a start up. Then you talk yourself out of doing things. So you have to ignore that inner voice. Just do what feels like a mini step toward the right direction. And then another one and another one. Force yourself. The best way to get started is to get started.

 


The Inventive Journey

Starting and growing a business is a journey. On The Inventive Journey, your host, Devin Miller walks with startups along their different journeys startups take to success (or failure). You also get to hear from featured guests, such as venture firms and angel investors, that provide insight on the paths to a successful inventive journey.

Get New Episodes

Get 2 brand-new podcast episodes sent to you every week!

ai generated transcription

the bar to what what is the good first step to take a startup is sometimes too high so people have way too high expectations and so they start thinking about ideas and they're talking themselves out of doing things the bar to get something started is really low you just have to take a step so just go if you in our case we want to refinance islands okay what does that mean we need to talk to people who have an auto now so talk to them the second you start hesitating be like yeah but once i talk to them i don't know what to offer because i don't have any lenders like then you're stuck in these chicken neck problems that you have all the time in a startup and then you talk yourself out of doing things and so you have to ignore that in a voice just do what feels like a mini step towards the right direction and then another one and then another one force yourself the best way to get started is to get started [Music] hey everyone this is devin miller here with another episode of the inventive journey i'm your host devin miller the serial entrepreneur that's built several businesses the seven and eight figure companies as well as the ceo and founder of miller ip law where we help startups and small businesses with their patents and trademarks and today we have another great uh guest on the episode and it's nicholas and i'm probably gonna kill the last name henriksen that was so spot on all right so uh nicholas is giving us a short background so parents are from argentina uh i think you were born in munich or at least grew up in munich yeah that's right wanted to or wanted to be study engineering studied engineering and finance for a bit got a uh job at an investment company in uh renewable energy um then when there's did some things in germany and then from there moved to a company that you're doing kind of amazon for used cars and then you've now gone through an accelerator sold that off to carvana and brings you up to where you're at today with with clutch and uh i'll let you talk a little bit more about that as we go yes sir podcast so with that much as an introduction welcome on to the podcast thanks for having me i'm excited so i gave maybe a kind of a very short summary of your journey but maybe now taking those steps back maybe give us a little bit more of a of a full-fledged version of your journey yeah sure i would love to so i was born and raised in munich indeed parents are from argentina my two brothers and i were born in europe and germany uh i used to play soccer brought my leg skiing because we lived in the mountains i couldn't ski for half a year and then started playing golf uh got really into playing golf played on the national team for four years then decided to not turn pro study computer science and finance did this renewable energy uh investment company and then moved to the us to go to business school and so before we jump in so you were doing the renewable energy with the investment company what made you decide you know sounds like a good job or you know renewable energy is always good so what made you decide to move from germany and come to the us and study as opposed to staying with that job yeah good question many reasons uh it's condom backwards i really wanted to be in tech i wanted to figure out my way how to get a basically how to how to get to the bay area and have a like good warm intro and a foot in the door uh i could have just moved here but i don't think i would have had the same opportunities as as the ones that opened up when i went to business school um so take i really wanted a business school so i could combine these two things the company i used to work for cease to exist because we made a lot of investments but never got money back and so it's just a number of things that that made sense ultimately i really wanted to start a tech company and thought there's no better place than the bay area to do so no makes good sense so so then you do that you come to the us and i think you said you went to stanford is that right exactly yeah i went to stanford that's where i met chris my future co-founder he's mit undergrad ridiculously smart and obsessed with cars like his his first car was a delorean you know the one from back to the future delorean's a cool car and it's an interesting backstory as to how the founder eventually got uh all caught up with uh importing drugs in the us and smuggling those in and that's love the delorean i'm a car guy myself so you are we decide yeah so when i was 15 me and my dad restored the 67 camaro i still have that i still have that in my garage kept it all these years and i'll buy it it's not for sale you couldn't pay me enough well you could probably pay me enough you'd have to pay a lot so and then um more recently um i wanted to have kind of a fun family memorable vehicle so we actually fixed up an old vw bus and that's another car we have so i love cars and i love all everything about them the nvw bus is such a cute vehicle i i agree so i got the muscle car and i got the hippie car so no you're a muscular hippie that's right so anyway i didn't mean to interrupt so you got you got you went to school and you decided you got with your co-founder built amazon for cars right exactly so it started out as us helping our classmates sell their cars just towards to what's um business school and a business school all our classmates approach chris with one and the same question how do i sell a car because he's the resident car expert and we went from giving advice to selling their cars on craigslist and then more and more people approached us we took a little cut and realized it's a huge pain and and we believed that there was technology that we could put in there and use and leverage to make this a better experience we moved away from the peer-to-peer platform and started working with institutions leasing companies rental companies the wholesale auction to have more inventory at lower prices and slightly more rational sellers like you you're i'm not saying you're irrational but oh i bet you could be irrational i would want way too much of what my camaro is worth and so it turns out that everybody thinks that way and then you have the buyers on the other end who sell select into buying a car from a private person who are hoping for a deal and then every time we made a deal happen we disappointed both customers so that didn't end up being a good business but the institutions to appear 100 online worked really well and removed the ton of middleman totally costs we didn't have the classical dealership model and so that business took off we raised a total of 10 million dollars and then at some point we hit we hit not a ceiling but like a decision point where we needed to decide do we want to grow more is this really a venture scale business or is there other value that we created that we that we could capitalize on and so we we compared our like notes with our frenemies friends and and competitors talked to curve i became friends with the executives out there and realized that we had built software that they needed and were about to start building and in order to speed up the process we just agreed that's combined forces um we brought over the whole team and sold the business to carvana and i think one thing you meant and i think that's interesting so one thing you mentioned is when you guys were going to sell off to carvana you made the decision to take it in equity instead of with cash is that right yeah at the time as opposed to cash exactly yeah so all the whole team got shares and we didn't make any cash immediately we the company went public soon after so we could sell relatively soon after shares if we wanted to um but like we a believed in the mission we believed in the vision of what we could build and see wanted to see it through and we had senior roles we were treated really really really positively and nicely by the executive team over there and we we knew the space and we felt like we were far from from what could be achieved and could be created in the space and so we we wanted to stay on we stayed in for three years uh a lot of the team members are still there chris and i went on to start another company um but yeah it was a really really great journey and we left every day all right so you answered a lot and so in i'll ask one fault you already gave a pretty good answer but one follow-up question on that you know what if was it when you're looking for equity was that hey i'd rather continue to have ownership as i'm working hard and building it in or as you're saying i have a greater reward that you know if i stick with this for another year or two then my equity will be worth more than the cash or what was the reason because you know i'm sure if you're looking at some degree you're saying i'm getting acquired great i've made it i'll cash out i'll go retire on my island you know i don't know how much money it is but that type of thing versus hey i'd rather have equity so i can keep working on this see it through and then if i with my hard work realize a better payday so kind of what was the metrics as to how you made the decision to cash versus equity yeah so we i'm just doing the numbers in my head we went from i think we own 20 of our company chris and my co-founder to owning a lot less of a much much much bigger company um but we still believe that we were just in the beginning we just scratched the surface of how big the company can become uh the company has been growing almost hundred percent year over year ever since and a huge huge huge market carvanha has is the most valuable car retailer now i think they're worth around 30 billion dollars and their market share is 0.6 like it's nothing and so i just personally believe there there is i think there's still opportunity out there and we haven't reached the top yet and like i wasn't in it to make money short term i think these companies become valuable it just takes much longer to build these companies than everybody imagines but that also means that the maximum value of these companies is still ahead of them that's what i personally think like i don't have any insider knowledge anymore i don't know exactly how it's going sure but i have reason to believe that they're still selling cars all right as far all the commercials tell me they are so good now now you did carvana you stuck with them for a period of time now how did you make the transition to the current company you know with clutch that you're not looking more into car refinances was it exactly you had you know they could be everything you had golden handcuffs and when you make the transition they say you have to stay on for a period of time did you find that hey you wanted to go back in the startup life you wanted to do something different what was the motivation for after carvana acquired you guys so then could go to move to where you're at today yeah so i'll take a step back and provide a little context with it because i think it's interesting to get a little more context so when you're younger and especially when you do your mba you have all these peers who are doing incredible things then being successful very very quickly is important to you and so you define success often as okay how much money do i make and that's not how you build the biggest companies the biggest companies you build by solving a huge problem by really really caring about what you're trying to change and so i'm i'm not saying that i was very financially driven at the time i don't think that would be true but chris loved cars and i was like i love the problem we're solving now what i feel really passionate about is helping americans save a lot of money on their cars and so the reason we left carvana was not necessarily financially at least not for short-term it was because we felt like there's a huge opportunity to help a lot of americans do our part to address income inequality by helping americans refinance their car loans lower the expenses and get out of bad credit and so i feel like it's something i feel very passionate about i'm really excited about doing i want to dedicate my life to it for the next foreseeable future and it happens to be a really good time because not only because of covet but also because of kovit because credit unions and banks they need to transition online customers need to find creative ways to get cash and so we're just really good at creating like online experiences to give customers cash and so we feel like they're above and beyond our prime motivation the timing also plays place very plays out very nicely that no makes sense so one maybe follow-up question to that you know it's one that you know different people approach different ways you know so you have the idea for you know what you're doing now with car refinancing and that's and we'll jump into that in just a second when you you could have carvan is certainly still in the car industry was it did you ever approach them see if they are interested or were you rather saying hey this doesn't fit with their business model or is different or did they tell turning down until you know or you're saying hey i want to do my own thing and be my own boss again or kind of what was the reason why you said hey i'm going to go to startup again as opposed to see if maybe this fits in with the carbana model or work it into there yeah and a really good question so there's there's some beauty in being like chris and i two co-founders scrappy deep in the weeds and just working really hard and being really excited about what we're doing on a day-to-day day-to-day basis having more work than time like we we just enjoy that phase of a company a lot carvanha has become a big company it's an amazing company to work for for us personally like we get a little bit more pleasure out of being like doing hand-to-hand combat and trying to figure out this business model it's just the phase of the company we enjoy more and so i'm i'm having a ton of fun in what i'm doing right now and i had like i'm fortunate that i had the opportunity to go back and fortunate wanted to do it with me again and financially we have a little bit of a cushion so we don't have to pay ourselves very high salaries for the foreseeable future and so all these factors combined just made it really really compelling we we are very close to the founders and executives of carvanha talk to them on a regular basis we we feel like that there is a lot of opportunity to cooperate for example if somebody has wants to lower their payments or her payments but has a lot of negative equity you probably can't refinance but you can get a better car for the same monthly payment and so that's an area where we work with carvana and send a lot of traffic their way um that makes sense so no uh that answers the question so now now you jump into where you're at today you're at with clutch as i think you meant you've touched on as if i understand it it's a way that you can re a lot of people and i think we talked before you said hey they go to the car dealership most the time when you buy your car there you get the financing through them because it's easy and they offer there but it's at a higher rate and so you guys kind of offer the opportunity to refinance your car so the payments or the amount is less is that about right yeah so there's two insights that motivated us to to build this company number one eighty percent of the car loans out there there's a hundred million car loans out there eighty percent are originated at the dealership because people don't shop for loans they shop for cars and then once they fell in love with the car they need the loan and then surprise surprise the dealer has one ready for you that's not the best loan for you though the dealer makes money on referring leads to lenders and the the lender that pays the highest referral for you gets the loan but guess what the consumer pays for it and so that means already on day one you drive off the dealership lot you can refinance that was insight number one the other driver and that's even more powerful is people migrating in credit so let's say you have 650 credit score you're building your credit um you get a car loan your rate will probably be around 10 or so and then you make your next 9 12 18 payments well now you qualify for a much lower rate now could easily be at five six five four three percent because you'll you'll be above 700 credit score but you're stuck in the loan that you got when you first applied and so this credit migration creates a huge opportunity to get people out of their current car loans and put them into better loans yet no but nobody really explores that opportunity because it a people don't know you can do it and out of the people who know that you can do it most people don't like the idea of having to visit branches because it's a very physical process or you talk to call centers and it's just not a good experience something that we think and we strongly believe we can improve no i mean that makes perfect sense so you have those insights you're saying we've got an idea for the new company we're going to build it around it how was the experience of doing your second startup as opposed to your first startup yeah it's very different you make new mistakes we startup is just an accumulation of a lot of mistakes and errors until you get lucky and then you wake up and like oh i built a company and so things that worked very well for us in the in the second round is a we knew exactly what we wanted to work on b we knew exactly our roles like we're two people it's like a relationship um i know exactly what what chris's superpowers are and he knows what i'm good at so we we just run at full speed instead of getting to know each other um we then when we went fundraising the story of hey we've done this before is really compelling especially during covet it felt like angel investors and venture capitalists were a little less risk-taking yet they invested more capital on safer bets and for some reason they've the investors we talked to felt like we're safe or bad and so these things played out really nicely for us and we just do like there's a lot of admin you need to do to set up a company that you just do on the site you can focus on building the business and so we we've learned a lot over the last seven years that are that's very applicable and so we've we got out of the gates really fast no that's awesome so so now you take that where you're at today's now so where do you see the next six months to a year heading as far as the company where are you going to heading grow trajectory trajectory and everything of that nature yeah we'll take over the world so it's what we're building is a two-sided marketplace that we need lenders because we are not the lender we work with existing lenders and we need the people with car loans and so in order to get the lenders you need to have people who need car loans and in order to have people in order to be attractive or have something to offer to people with car loans you need the lender so it's a little bit of a chicken neck problem the way we hack that is instead of working with lenders directly we work with other companies like us um who have the lender network and economics are not nearly as interesting but um the like we can at least serve customers and now we're starting to build up an audience follow us and get our word out there and so we're starting to get a lot of traffic and now we're turning around and present all this traffic to the lenders and say like all these people would fit what's called your buy box so the terms and the the stipulations under which a lender would lend and so now we're starting to have significant volume enough to be compelling for both sides of the market and uh yeah we'll just to grow slowly but surely and then hopefully we can provide more more value to customers we're thinking about an experience like credit karma where car owners come to us not only to refinance but to check in on their vehicle values and store their maintenance records and get a sense for when is a good time to buy or sell the next car so we're trying to be an advocate more than on either refi the refi is the market entry so to say okay no it sounds like an exciting trajectory now you can take over the take over the world one day at a time exactly one one car learn at the time that's right so now as we as we move towards the the end of the podcast so i always have two questions so we'll kind of jump to those now so first question i always ask is what was the worst business decision you ever made yeah so many of those let's see so the important thing about making bad decision is that you learn something that you didn't know before so it's a little little harsh to label them as a bad business decision but with hindsight things that we should have not done and have done were here's a good example in our previous company we we the first sales were all over the phone so we sent images but then we had sales people and so we got addicted to the sales people sales team model and that means instead of building product that would allow con users to convert on the website themselves we double down and build product for the sales people to become more effective sales people and so that that's it's a trap where you fall in easily in fact it's it's something that happens if you inv if you have too much capital because you then start making moves and then you have momentum and then it's really really difficult to turn around and make a big change um but yeah i think the worst decision that sounds very dramatic but the worst decision is to figure out a hybrid between let technology convert customers versus sales people and so this time we'll do it exactly the other way around we're going to be really patient it will take much longer for consumers to convert themselves and educate themselves because there's so many questions we have yet to answer with a website but but you're not making the mistake where you're building a business that can be small and profitable but you invest in a business that can be big and profitable no i mean that's really good it's a good mistake to learn or to learn not to repeat exactly so now we'll jump to the second question so if you're now talking to someone that's just getting into startups or small businesses what would be the one piece of advice you give them you mean as an investor as a founder um as a founder so let's say you're if somebody was going down the path just uh looking to get into startup or small business what would be the one thing that you wish somebody told you or what would be the one piece of advice you'd give that give them as they were getting into it yeah okay that's a really good question the part the bar to what what is the good first step to take a startup is sometimes too high so people have way too high expectations and so they start thinking about ideas and they're talking themselves out of doing things the bar to get something started is really low you just have to take a step so just go if you in our case we want to refinance islands like okay what does that mean we need to talk to people who have an auto loan so talk to them the second you start hesitating you're like yeah but once i talk to them i don't know what to offer because i don't have any lenders like then you're stuck in these chicken and egg problems that you have all the time in a startup and then you talk yourself out of doing things and so you have to ignore that in a voice just do what feels like a mini step towards the right direction and then another one and then another one force yourself the best way to get started is to get started all right well i like that you know that's that's interesting out of all the episodes i've done that's probably the number one piece of advice across a lot of different people a lot of different industries as everybody just says if you know just get started just get going whatever that form or fashion is start because you no matter what the holdups there's never a perfect time you're never gonna have all the answers but you need to get started before you're ever gonna go anywhere so exactly yeah so all right so now as we as we wrap up so now people are wanting to find out more about your business they're wanting to reach out whether it's to refinance they want to invest in your company they want to get a job at your company they want to learn more about you or just make a new friend what's the best way to connect up with you yeah maybe they want to send me their their classical car maybe somebody else yeah who knows two ways the website the company's called clutch the website is with clutch.com maybe you can put the link in the show notes um or just connect with me on linkedin look for nicholas henriksen i'm sure my name will be in the show notes too connect with me i'd love to hear from you if you if you're interested in like the company we're building if you have something that might be interesting for me to look at to invest if you want to help if you want advice if you have feedback so don't hesitate reach out i'd love to connect with a lot of people all right well i certainly encourage everybody to connect up with you reach out and uh and use your service as well so well nicholas thank you for coming on the podcast it's been a pleasure now for everybody else that uh has if you have a journey to tell if you have something you'd like to share feel free to apply to be on the podcast and just go to inventivejourneyguest.com and love to have you on if you have a good story and a good journey if you're a listener make sure to click subscribe so you can get this episode and all the new episodes and lastly if you ever need help with patents and trademarks feel free to reach out to us at miller ip lot and we're always here to help thanks again nicholas loved hearing your journey and wish you the next leg of your journey even better than the last thanks so much thanks for having me this was super fun my pleasure [Music] English (auto-generated) All Recently uploaded

Download This Episode & More  on the Following Platforms


Podcast for Entrepreneurs on Apple Podcasts
Podcast for Entrepreneurs on Spotify
Podcasts for Entrepreneurs on Google Podcasts
Podcast for Entrepreneurs on Simplecast
Podcasts for Entrepreneurs on Pocket Casts
Podcasts for Entrepreneurs on Stitcher
Podcasts for Entrepreneurs on Tune In
Podcast for Entrepreneurs on Deezer
Podcast for Entrepreneurs on Radio Public

JOIN US ON SOCIAL MEDIA


← Older Post Newer Post →



Leave Comments/Feedback

Please note, comments must be approved before they are published