From $300M Exit to Transforming How Dealers Buy Used Cars

Welcome to another episode of the Car Dealership Guy Podcast.

Today’s guest is Nate Mihalovich, CEO of The Lasso, a company determined to revamp the car selling experience for both dealerships and vehicle owners. In this episode, we discuss his journey from a $300 million tech exit to diving head first into the car business.

We also tackle which retailers pay the most for customer trade-ins, surprising dealership growth hacks, how dealers can out-compete Carmax and Carvana, and so much more.

Stream the full episode now: YouTube | Spotify | Apple

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Auto Hauler Exchange - The Auto Hauler Exchange has revolutionized the way vehicle haulers and vehicle shippers collaborate. The Exchange is the first digital marketplace of its kind in the vehicle logistics industry.
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The Lasso - The best way to get multiple offers for your car.
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(2:41) - How did you get from tech to the car business?

(5:26) - What did you set out to build in 2020?

(10:45) - What is the value proposition for dealers and why do consumers sell this way?

(19:46) - What’s your total volume of vehicle transactions?

(22:45) - How do you handle issues with a customer’s vehicle?

(28:52) - What are dealers telling you right now?

(32:30) - What are you seeing in the market right now?

(34:32) - What do you see for the future of traditional auctions

(39:41) - The importance of having a dealer’s license

1. How Mihalovich got started in the car business.

Mihalovich is a lifelong tech guy with a passion for cars. He got started in the car business after a successful stint at a construction marketplace company called Building Connected. The company was a runaway success. But, Mihalovich was drawn to the opportunity to create a better car buying experience. This was after he and his wife had trouble buying a car. So he decided to start The Lasso in 2020 (under a different name). He wanted to build a platform for consumers that would manage all car needs, like buying, selling, repairs, insurance, and warranties. However, in 2020, there was virtually no car inventory at the time and it forced him to adapt. Mihalovich pivoted his business model to focus on helping consumers get the best price when selling their vehicles.

2. The first iteration of Lasso.

Four years ago, the company focused on building software solutions. The solutions were designed for service advisors to talk to customers. He explains that even the best software wouldn't be effective if dealerships didn't prioritize communication with customers. “And how we actually got to where we are today is we said, well if we own the customer relationship and we go and find the customers, do you dealers want to participate in a system where we'll actually bring you, customers? We're going to communicate with them and hold their hand through the process, but then they'll become your customers. Obviously, they would say ‘yes’ to that," Mihalovich explains.

3. Where the company is now.

Today, The Lasso is a marketplace where consumers can "auction" their cars to a network of dealerships in a 24-hour window. It happens Monday through Friday at 11 a.m. Through the platform, consumers can get many offers and find the best deals. For dealers, it solves the challenge of finding good inventory at fair prices. It does this by offering a wider selection of vehicles. These vehicles come directly from consumers across the country. This removes the flaws of traditional methods, such as auctions, and lets dealers target the exact cars they need.

4. Pain points in the traditional car auction process.

In traditional car auction spaces, the condition of the vehicle might not be accurately reflected and disputes can arise through arbitration, for example. He explains how their system addresses this by using non-binding offers.  Dealers can inspect the car upon arrival and either accept the deal or renegotiate with the seller. This transparency makes dealers more comfortable to offer better prices because they are confident in the vehicle.  In rare cases where the car isn't as described, they can renegotiate or even send it back at the company's expense.

5. What happens when a dealer doesn't want the car?

When a dealer rejects the car due to undisclosed issues, Mihalovich’s company works with the consumer to find a new buyer or helps them sell it elsewhere. To address concerns about immediate payment, they use their dealer license to act as an intermediary. They issue a check to the consumer upfront and handle the final sale as a dealer-to-dealer transaction.

6. Giving dealers a competitive edge.

Mihalovich’s company also handles vehicle delivery, paperwork, and even acts as a liaison for upfront payments to consumers. Their revenue depends on dealer success. "We do reviews with [the dealers] and then we'll look at the deals and you start to really see like how much revenue they can actually generate on these deals when they're getting a really great vehicle. And a lot of them will get customers who will sell them their car. Then they buy another car or they go back to the dealership directly and sell them another vehicle," he added. The Lasso has partnered with major dealerships like Echo Park, Koons, and Pohanka, which are finding success competing with online used-car giants like Carvana.

7. Navigating car values.

In the face of a softening market, Mihalovich observes a two-week lag between consumer sentiment and their selling behavior. They're seeing more realistic expectations from consumers regarding car values. Mihalovich envisions the future of auctions as a managed marketplace. It goes beyond simple lead generation. It facilitates transactions and offers white-glove service to both consumers and dealers.

8. How dealers can out-compete the likes of Carmax and Carvana.

Mihalovich believes that this creates a better experience, unmatched by traditional dealerships. It is like the success of Carvana's online car buying. "You might hear from some dealers, 'Well, you know, I don't necessarily want to compete with Carvana, and I don't want to, you know, why would I want to go and do that?' And there's really no good reason, I think, for people to say no to this. But the reality is dealers are all competing with Carvana and CarMax anyway. I think that you just have to accept that," he says. Mihalovich’s main goal is to create a huge marketplace like the UK's Motorway platform to quickly connect buyers with sellers. A key differentiator is their dealer license, which allows them to get involved in the nitty-gritty things like title processing, which most online marketplaces avoid.

9. Where is The Lasso headed?

Mihalovich envisions a future where Lasso can manage its marketplace and also provide white-labeled titling tools for dealerships. This would simplify the transaction layer for consumers, who could receive immediate checks, and help dealerships avoid the burden of title management.

10. Challenges moving forward.

Mihalovich acknowledges the challenges the industry faces in digitizing car sales. Which include overcoming dealer resistance to change and the need to temporarily float cash for car purchases. He believes the economics will work at scale and stresses the need to create a win-win for dealers and consumers. “I'm not a 30-year car guy who came from the space and there's totally value to that. But I think that being somewhat of an outsider gives me at least some perspective to have some fresh eyes on the thing,” he adds.