How we built a business out of recession - chapter 26 - the worst and best of times
The story of CitNOW*
This is the 26th chapter about CitNOW, the company started from a kitchen table in Winnersh, Berkshire. If you’d like to read from the beginning, here’s a link to chpt 1. Each chapter is a 5-minute read. It’s an early draft of a book.
CitNOW was founded by Andrew Howells and Donna Barradale in 2005, although the company was only registered in 2008. In February 2018, we sold the company to Tenzing, a UK private equity company. It has been sold again since.
It was the worst of times, it was the best of times**.
Apart from being a wonderful way to start a famous Victorian novel, it’s a good way to describe Gordon’s arrival at CitNOW. It couldn’t have been better for making sales or worse for becoming a significant shareholder.
Gordon finally joined the company, hanging up his freelance boots in favour of a salary and the promise of what would happen next - Alistair’s vision of the future. I wasn’t party to these discussions, and it wouldn’t have made much sense anyway. The relationship was with Alistair, and he felt responsible for sorting out any deal that would be done with Gordon.
The board (of shareholders) ratified Gordon becoming another one, which would vest if and when the company was sold. He was never entirely happy with the deal, which resulted in me having some, if only, conversations at the bar with Gordon, away somewhere when there was time, probably at a conference, and the promise of another early start the next day.
The nub of the discussion was always the same - what would have happened if I’d met him before Alistair? Nothing could change, but it was cathartic and a point of reflection we both enjoyed discussing.
Even though the CitNOW sales app was firmly established in the UK, the manufacturer buy-in had largely been left to the dealer groups. The exceptions being BMW, Volkswagen and Renault Retail Group. Like BMW, VW was highly efficient at encouraging take-up for their used car programme.
The success with UK groups was because a core part of their business was selling used cars. Every vehicle is different, so a short, personal video with some detail provided real added value when a customer was trying to make a decision.
Manufacturers are unexpectedly far more excited about new sales. The fact that a part exchange often complicates the sale is one of the reasons why an uneasy partnership exists between the groups and the manufacturers they represent. New car sales are predicated on there being an efficient used car business behind it. It’s also where there’s an opportunity for a dealer to make some money.
Part of the thorny conversation that Alistair must have had with Gordon was about the future opportunities he would have, not just in sales but in the workshop. Gordon had started his working life in aftersales and knew this side of a dealer’s business as well as anyone, which would have been encouraging.
It wasn’t long after Gordon arrived that we launched CitNOW Workshop. It was, without a doubt, the biggest success point for our company and the product which turned the manufacturer’s heads the most.
For 10-15 years before our launch, workshops had gradually adopted a process-driven software system for the everyday servicing of cars. It’s called an Electronic Vehicle Health Check (eVHC), an efficiency tool replacing the need for pen and paper. Technicians were now undertaking vehicle inspections with a digital checklist and mandatory fields, helping to avoid errors while meeting agreed group and manufacturer standards.
It was a competitive business with at least half a dozen systems in the UK when we launched our workshop video service. None were using video, and the UK’s adoption of eVHCs was far ahead of anything else in Europe.
The reason why our new app caused such a kerfuffle was because it helped to build trust. Receiving a short personal video of your car in the workshop, high up on a ramp, draws attention. If the technician shows you the result from a digital tyre depth gauge, pointing out that your tyre is now illegal and should be replaced, what do you do next?
It was the other half of the equation. An eVHC created efficiency in the workshop, and the video gave the customer a more compelling reason to approve a repair. More approvals meant more new parts were sold. It wasn’t long before the number of manufacturer meetings increased, and we started to work on integrations with some of those existing eVHC suppliers.
It also led to a manufacturer-endorsed workshop programme with the launch of Nissan eVision in the UK.
Divvying out the shares in your company is not something you ever think about until the situation arises. You can’t prepare for it, and any value judgments are almost entirely subjective. It’s not just about how you value the business; tricky enough at the best of times. It’s also what store you put by the people you work with.
I’ve explained the rationale behind Alistair before. Having taken the company to the stage that we had, the next step had to be to find another Honda, which turned out to be BMW. We needed to meet some senior decision-makers and be guided by their needs, which is why Gordon wanted to torture himself with our late-night discussions.
Gordon’s database was far more extensive than anything Alistair ever had. If this were a game and I had to pick who, it would be Gordon every time, not just because he was a better salesperson.
But let’s continue to play for a moment longer. You can’t make this decision in isolation. Our job offer would have to have read something like this in reality.
Senior-level automotive consultant required. Must be prepared to work long hours for very little money for a business with approximately 40-50 dealers. Currently, at least 50% of our 90-day pilots are unsuccessful because salespeople and their managers don’t like a live video service. In return, we will gift you a third of the company.
I don’t believe this person existed. The chances are that the ones that come forward will likely be duds, like some of those consultants we tried out later.
This was my argument to Gordon. You wouldn’t take the job because you already had many more opportunities elsewhere. And I didn’t have a crystal ball to show you that your potential leap of faith would turn out for the best.
When I met Alistair, he was clutching at various straws, none of which were going to be long-term success stories. Jason*** had intrigued me and was one of the reasons I kept badgering him for over a year. When was the mystery man going to appear? I at least wanted to rule him out.
In a sense, Alistair had a significant advantage over Gordon, apart from being first in the queue. (What am I saying, there wasn’t a queue).
Alistair wasn’t in a great place, but he knew his situation was temporary, and he would find a way out. He also had firsthand experience of how powerful the web was for selling cars, and he knew technology would play a big part in the future.
I was amazed when he told me he’d been using a digital stills camera to upload images on the family’s Vauxhall dealer website back in the nineties. (I’d worked for Sony and knew all about the Mavica stills camera). This guy was a tech enthusiast who saw all of the potential and didn’t really worry much about preserving the status quo.
Alistair had vision, was a risk-taker and had little to lose when we met. It made him a good fit for us. The terms might have been difficult; a third of not a lot is still not a lot, but where we were going made up for it.
*CitNOW was our company’s trade name before we sold it in 2018.
** The opening sentence from Charles Dickens’ novel, The Tale of Two Cities.
***Jason was the Dealer Principal who once worked for Alistair and told me I needed to meet him.