Careerography (part 3)
Right at that time I was just finishing up college and already had another business idea cooking…Engenius Motors. Engenius was based on a simple concept, in a nightmarish industry. Basically I (and my friend/partner Mark) saw a tremendous opportunity in the trade in cars market.
We realized that people traded their cars in at significant discount out of convenience. Selling your car yourself is not an easy task, so most people took the easy money and ran despite knowing how much they had left on the table. Mark and I realized that selling a car on ebay meant you could get rid of it in under 15 days, and the prices seemed to be a significant improvement over the avg trade in values. We plodded and strategized on that business model and business plan for nearly 7 months. I kept myself afloat financially with a few pda sales here and there, as well as the magic of credit card balance transfers (this is a great trick, even if you have plenty of money). We worked on my first real business plan with a financial model, a marketing strategy, and a distribution model. We spent hours discussing how to fill all the little problem holes that seemingly would pop up everyday. And finally on August 1st, we launched by running targeted google ads in Columbus and Chicago. I actually had quite a few people contact me to sell their car in Columbus, proving the concept, but the business was very short lived.
A week before our launch I was put in touch with a successful local entrepreneur and venture capitalist. He was working on a similar business model, and wanted to compare notes and possibly even invest (so I thought). When I met with him I was surprisingly confident in my model, the countless hours of research I had poured into it, and my knowledge of the industry. It turns out I was right about all of those things, except 1…the legal ramifications of this model. Here’s a free lesson…A good lawyer is worth it, despite how wasteful the money seems, it pays in the end to have a good one on your side. I went with a young (read: cheap) lawyer when forming Engenius. He told me that in his research, our business model was perfectly legit as long as we represented ourselves as “marketing consultants,” and not actual “vehicle sellers.” This seemed logical to me, and eager to push forward, I accepted his answer. When I met with the entrepreneur and venture capitalist, I found out the real answer. Regardless of how you worded your business, this model was “illegal.” The Nada, the dealers association, is an incredibly well funded lobbyist group and they had been successful in putting laws in place to prevent exactly what engenius was trying to do, in order to “protect the consumer,” (in other words, protect their fat margins on used car trade ins). The entrepreneur told me of the $xx,xxx he had spent on legal fees trying to find a way around these laws. He even flew out to meet with eBay motors legal team, who told basically told him “we’d love to help, but our business is too good to risk pissing off our best customers..the dealerships.” He went on to tell me, this is a multibillion dollar a year opportunity if you can just figure out a way around this, you do that and I’ll give you everything you need to make it a success. You’d think I jumped on that…