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Making It with Jon Davids
152 - This Guy Sold 30K Cars, But He's No Car Salesman | The Story of BaT
00:17:47
Jon () tells us about the rise of Randy Nonnenberg. Hear about his story and how he went from blogging from his living room and turned into a billion-dollar marketplace for cars. And follow Jon across...
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John Davids
This guy sold 30,000 cars last year worth $1.4 billion. But he is not a car salesman. His name is Randy Nonenberg, and he's actually the founder of a company called Bring a Trailer. It's a website that he started as a blog and turned into a mega marketplace. This is a wild story because it's about a guy starting in his living room, literally blogging. And that blog getting so far along, building such trust and such community, that he ends up building a business that does $1.4 billion in transactions in a single year. Car sales. This is crazy, guys. I'm gonna get into it. I'm gonna tell you exactly how we did it and more importantly, the lessons that you can take so that you can do a lot of these same things for yourself. That's coming up in just a sec. My name is John Davids. If you're a fan of the podcast, you know what to do. Smash the subscribe button On Apple, Spotify, YouTube, leave a comment, leave a rating. That is how we grow. And of course, if you want to get my best stuff to your inbox, John Davids.com hit the newsletter. Let's get to the show. You're listening to Making it with John Davids. So Randy's story starts all the way back in 2007. So he's a guy with a day job, a 9 to 5, but he's got a hobby on the side. He's see, he spends his nights and weekends scouring obscure car listings. He's mining for gold. He just likes to find the vintage cars, the classic cars, all the cool cars that are off the beaten path. Maybe he'll buy them, maybe he'll just admire them from a distance, but he wants to find them. He wants to check them out. So he's looking at vintage cars, collector cars, exotic cars, and he's actually pretty good at spotting them. He knows how to find the gold. And he figures maybe there are other gearheads out there who'd be interested too. So he decides to start documenting his discoveries. He throws up a blog, and he calls that blog bring a trailer bat for short, B A T. And he's about to use that blog to reinvent an industry. So people start finding the blog, they're sharing it again. This is like 2007, 2008, 2009. So in that timeframe, blogging was really big. Think about what happened afterwards with Twitter and Instagram and TikTok. You know, the blogging was the social media of the day. You know, Facebook was really a young Company. It had just come out a couple years earlier. So blogging is how people got the word out back in 2007. And then what starts to happen is the people who are reading Randy's blog start to send in fines of their own. So they're finding exotic cars, classic cars, vintage cars that they like, and they're sending them in to Randy, and his inbox is filling up really fast. So he decides to start featuring their best stuff. Like, you know, the audience is sending me stuff that they like, that they're finding. All right, let me do a highlight reel. A highlight of the week. All right, cool. That's just the beginning, though. Before long, people start asking Randy if they can list their cars for sale. So think about it. He's got this thriving community. He's building trust with his blog, with his honest, unbiased, unvarnished car reviews. Hey, check out what I'm finding. Maybe you'll like this too. So people start saying, hey, this guy's got trust. Why doesn't he maybe sell my car for me? Because if he likes the car. Now, if he doesn't like the car, he's not going to sell a piece of junk. But if he likes my car, he can probably get top dollar because there's a lot of people in his community who like this stuff, who want to find this stuff. So in 2010, he launches a car listing business, bolts it on top of the blog. If Randy can sell your car, you just pay him 125 bucks. And the listings start pouring in. Now, let me just pause here for a second. The value exchange that we're talking about, so far, Randy is providing a ton of value upfront. He's looking for cars. He's doing all the legwork for you. Then he's publishing those fines. Then if you want to get in on the action, get, get in front of his audience. He's letting you send him cars so he can feature them as his car of the week. And then he takes it one step further and says, hey, guys, I'll provide you a service. I will actually sell your car for you if you would like. And the price that is $125. That's like dinner. That's nothing. I mean, this is the kind of thing where you would sell. You'd sell a car and you take a big commission, 10, 20%. The guy wants 125 bucks. That's probably like 0.0001% the value of these cars he's selling. So in immense value being given and very, very Little asked in return. This is a great way to start. Now, Randy's going to kick it up a notch or two. So let's fast forward now all the way to 2014. Bat gets into the auction business, and Randy puts a very fresh spin on a very old model. Auctions are not a new thing. Car auctions even are not a new thing. But he's looking at it differently. So first off, his commission at just 5%, again, a very low price. But then he goes a step further and says he's going to cap that commission at $5,000 per vehicle. So this means that you could sell a McLaren F1 for a million dollars and effectively pay Randy just a half a percent, because a half a percent of a million dollars is $5,000. And that's the cap. That's the most he could possibly make. Plus, all the vehicles that are listed on Bring a Trailer are reviewed by experts before going into the auction. So it's not an unvetted free for all. It is a vetted community. If it's on bat, you know that you can trust it. And there's a whole bunch of other stuff he does. He puts in all kinds of mechanisms to make sure that you can't game the system. For example, if you're on bat and you're looking at an auction and the timer's counting down, this Auction ends in 10 seconds, in five seconds, in three seconds. You can't backload your price and wait until the last second and throw a bid in. What actually happens then is it kicks back the ending of the auction. So if you throw a bid in, it'll say, hey, no, no, no. We're gonna give people more time to up this bid. Because otherwise people could just come in and bid a dollar more than the last guy. That's not fair. There's all kinds of things they're building in. It's not just the trust in the community and the trust in Randy, but it's the trust in the mechanics of the auction itself. This stuff is really, really unusual in the world of online auctions. And bringing all this ingenuity into the equation, really, really innovative. All right, so everything we're talking about, it's all working again. Last year in 2023, BAT sold $1.4 billion worth of vehicles. So Randy is using a classic strategy to build a wildly successful brand. Step one, he starts with a community. A community strategy. What does that mean? It means we're finding like minded people and we're overloading them with value. We're giving them a ton of stuff without asking for anything in return. That's the best way to start any community. You give value, you give, give, give, give, give, and you ask for nothing. You delay the asking for as long as you possibly can. Eventually you will ask for something, but you're going to always make sure that the value equation is I'm going to give you 2x3x5x10x whatever I'm asking of you in return. And he kept giving until they literally begged him to take their money. They begged him to list their cars and help him sell their cars. How amazing would it be in your business, in any business, if people were literally begging you to take their money and provide you with a service, A service that maybe you don't even offer yet. Randy only launched the auction business when demand came, knocking, came banging on the door and, and he literally just couldn't refuse it. And all along he let his community steer the roadmap of the product. So first it was about featuring their cars, then it was about selling their cars, then it was about auctioning their cars. Always listening and then doing. Randy totally cut through the bullshit. This market is flooded with lies. Think about the car market. Buying a new car, buying a used car. I've done it a whole bunch. It's just, it's filled with information asymmetry. A lot of people have information and many more people don't have information. So if you want to buy a vehicle, you're taking a certain amount of trust in the other hand of the other person. You're saying, hey, listen, tell me xyz, what's good about the car, what's bad about the car, what's the history of the car, all this kind of stuff. Unless you're a super experienced car buyer, it's very hard to do well in this business. And not only that, but if you're not an experienced car buyer, if you're new to the business, trust is the number one component. This market is flooded with lies. And Randy builds trust so buyers can feel safe dropping serious coin on bat. That's how you turn a car blog into a $1.4 billion selling machine. All right, so some more history on bat. In June of 2020, Hearst Autos acquired the company. Price was undisclosed. If I had to imagine, probably in the high double digit millions, low triple digit millions. So probably somewhere between 80 and 150 million. That's me doing my back of the napkin math, which is usually pretty on the spot, but no guarantees there. I have no insider information and it did not take any funding prior. So this was not a venture capital. Let's throw a bunch of money on it and see what happens. And then we'll sell this for 5x revenues. It wasn't that at all. It was Randy building the business. I think there was a few other co founders as well who came in. I don't actually know the full history of that. I see the name Gentry Underwood, maybe that was a co founder. Not 100% sure, but at the end of the day, this was a bootstrap business that grew via community. Now, I talk about community a lot, and this is one of the tremendous examples of community growth. Now, there's a few things working in Randy's favor here. Number one, you have an area of extreme passion. People love their cars. So if you are into vehicles, you're automatically drawn in because there's something here that you can talk about, that you can relate on, that you can associate with other people on, and you can all gather around and talk about your cars and search for cars and read about cars. So right away, when you have a passion area, it's much easier to build a community. The second thing is, I like the idea that other car communities exist, other car marketplaces exist, but something happened here that was much more authentic. It just kind of grew from the ground up and became kind of special in its own right. And that's something else that pops up often. You know, people will say, what's the point of building a customer community? What's the point about thinking of your customers as a community? Because it helps you wedge in to very busy markets, to very noisy markets. Think about all the places and all the ways you could buy or sell a car in 2024, in 2025. Like, there's so many ways and places to do it. But if you build a community around something like this, you can actually have it be unique and stand on its own. Because at the end of the day, it's personality driven, it's character driven. It's like, yeah, I know that I can go to that place and buy a car and that place and sell the car, but I kind of want to do it with Randy. Right? It becomes a figurehead and you kind of start to get to know the people, feels like they're part of your community because they are. So communities help you not only build businesses, but grow those businesses in unique ways. Another thing that I mentioned is that the product roadmap is often defined by the community. You just listen to what people are asking you for, hey, can you do this for me. Have you thought about doing that? And you can actually start to think about, I don't wanna spend a bunch of money and experiment with a bunch of R and D. And maybe something works. And maybe something doesn't work. What's the way around that? Well, a way around that is you simply talk to your community and say, hey, guys, what is it that you want? What other kinds of value can I give you? And then from there you can extrapolate, cool, this is a product or a service that I might offer for free. And here's something, here's a premium, here's an upgrade that I can give you that you're gonna have to pay for. And that really doesn't happen unless you have a community. When I hear stories like this, I think, what else can this apply to? Like, where else can I bring this? I think there's a lot of niche areas. And you have to ask yourself, as an entrepreneur or as a business that has an area of expertise, what is it that we do really well? What is it that I do really well? And it's very important that you follow those passions. Because if you're thinking about someone like Randy, he wouldn't spend his nights and his weekends working on something for no money that wasn't interesting to him, right? You do things either because you love doing them or because you're getting paid for them. And if you're not getting paid for them, as most entrepreneurial endeavors, you're not getting paid for for a long time, you've got to enjoy the process enough. You've got to enjoy the mechanics. And I don't just mean you enjoy it because you enjoy cars. You enjoy the hunting for cars. So you could say to yourself, well, I like cars too. Yeah, but do you like it enough that you want to go through the process of hunting for cars in your free time on the Internet? Like, is that what you want to do because you're competing with Randy? So, like, that's what he did. Do you want to do that? And you could think about this in other areas too. Like think about E commerce, for example. In E Commerce, one thing people say is, you know, well, I'm really good at merchandising or I'm really good at fashion, so I should start an E commerce store. Most of the work involved in E commerce is knowing how to run Facebook ads really well and maybe knowing how to run search ads really well and maybe knowing how to do organic content on social really well. So instead of just thinking, I'm really Interested in this space or here's something that I think we could do. Well, what could you do that other people aren't willing to do or other people don't know how to do? And the mechanics or the application of doing that actually can fit something else. So here's what I mean by that. If I were to say I'm really good at running Facebook ads, I can apply that to E commerce. Now you might say, okay, yeah, but John, but what do you know about E commerce? Well, I know enough to bring traffic to a website. And so thinking about what are the applications of the skills? And when I think about Ronnie here, it's like, yeah, he was really interested in searching for cars online. So what's the application of that? Well, the application is I can do a blog where I tell people about these cars that I'm finding. And today in 2024, maybe that would be, I'm gonna do a TikTok channel, I'm gonna do a YouTube channel, I'm gonna do a podcast, I'm gonna do a video series. Think about what the medium is today that best suits the passion you have. And then from there, how do you provide enough value? And. And how do you then monetize? And monetization is last again, guys, when you're building a community, as Randy did, you've gotta wait as long as you can to monetize. Reason being, it's very hard to build trust, truly build trust, if all you're trying to do is sell, sell, sell. So, yes, eventually you will sell, but you've gotta start with something that provides enough value that people actually wanna buy it. Now, one little hack here I'll give you, and I've used this myself, is if you need to make money sooner than later, then you combine your passion, whatever the community is that you're building, with High Ticket White Glove service. So here's what I mean by that. Instead of saying, hey, we're gonna put a marketplace on top of our blog, and we're gonna do that on day one, which is very hard to do. What you can do is say, what service can I provide? That's High ticket, that's White Glove. That's more High Touch. That I can provide for maybe one or two or three people so that the other thousands of people I'm attracting into my community are still getting value, are not asking for anything in return. But maybe I have some whales in here. Like maybe in Randy's community, early on, maybe he sees, hey, I have one of the biggest car collectors in Ohio. Here on my blog that's actually looking at it like everybody else. And I'm gonna go ahead and just reach out to that person and maybe I can provide some white glove service. We see this happen all the time in the agency world, in the personal services world. So you're providing a whole bunch of value, but what you're actually doing is monetizing just very, very few of those people so that you can provide lots of value without asking for anything in return and still make some money on the side. So there are ways, there are hacks that you can use to do it. I love the story of bring a trailer for the reasons of community, of how it was built, of how it was eventually monetized, and how Randy cashed out and sold this to Hurst. And this thing continues to grow. He's still there. He's still running it, and it is doing really, really well. $1.4 billion in car sales in a year? Are you kidding me? This guy isn't even a car salesman. I love it. I hope you guys can use these strategies. Let me know what you think. Get me@johndavids.com while you're there. Get on the newsletter and make sure to smash. Subscribe wherever you're listening to this. I will talk to you guys next time.