2020 In Review: My First Year as a Startup CEO

Hello! Happy New Year! 

This past year was one full of tumult and excitement. The company I co-founded, Your Auto Advocate, has consumed nearly all of my energy for the past twelve months. After quitting my job, I dove head-first into my first true passion: entrepreneurship.I didn’t write as much as I would have liked in 2020. Instead, I got really good at talking into a camera. 

If you are connected with me on LinkedIn you may think I’ve had an incredible 2020 — I frequently post highlights from our accomplishments at YAA. However, the reality is that the past twelve months have been incredibly difficult. Bouts of depression, binge-eating, anxiety, the list goes on and on … When I reflect on the year as a whole there were certainly many ups, and equally as many downs.

That being said, this blog entry is not intended to comment on mental health, coping with challenging circumstances, or anything quite like that. Instead, I want to share my “year in review” with a particular focus on the startup I am privileged to lead, Your Auto Advocate.

I want to make it clear that 2020 has been incredibly hard on me personally. Amongst entrepreneurs I sense a pressure (and sensationalism) to portray success and momentum at all times, and yes, business is good right now at YAA, but no, not everything is perfect, and no my mental health isn’t always great. It’s a balancing act, and I simply want you to show that although there are a lot of “successes” (as I will highlight below), there were equally as many failures (of which you will see as well).

Okay, that’s enough of that. Let me tell you about my first year working full-time on my second startup.

Getting started - December 2019

Although it’s easier said than done, the advice “the best time to start a business is when you have a job” is really quite sound. Before my last day at MarketSmart on March 6th, I had put a considerable amount of work into Your Auto Advocate.

As I’m sure you’ve heard from other entrepreneurs that recant their startup journey, I worked after-hours to begin making progress on the new business. I was interested in YouTube, so I convinced my dad to let me film him on my new iPhone talking about what he knows best, the car business.

We focused on topics that I found from doing keyword research about the car buying process. Today, the second video we ever published on unsold new cars has over one million views. I laugh when I look at the video now because I had absolutely no idea what I was doing with the lighting or audio (which is obvious to anyone who does know a thing or two about lighting and audio).

I taught myself how to film (which I say loosely, since I still don’t really know how to do it), and how to edit (again, I still don’t know how to do it, but I am “serviceable”). In December of 2019 I would leave my 2016 Macbook Air running overnight to render and export the videos we filmed. In retrospect, it’s truly a miracle that those videos even made it onto the internet. I have quite a few friends that have asked me, “How did you grow your YouTube channel so fast?” The answer is that we just started putting content out and eventually something “hit.”That’s really the truth, and I am forever grateful that I am not a perfectionist, or else we still wouldn’t have a YouTube video live on the internet.

Traction from our YouTube channel led to activity on our website. On the website we offered car buying concierge services for customers. The idea was that YouTube would be our primary marketing channel (that someday we thought could also make some money, which it now does), and that the concierge buying service is what would scale and grow. It grew alright, but it sure didn’t scale. More on that below.

It was on April 30th that we made our first dollar of Adsense revenue from our YouTube channel. We made $144 that day and it was truly an incredible moment.

It was on April 19th that we had our first paying customer for the car buying concierge service business. It was a husband and wife who wanted to buy a Chrysler Pacifica. I had NO clue what I was doing, and my dad had to hold my hand through the entire process. I learned a lot.

Scaling the concierge buying business - May 2020

Like any entrepreneur, when I see a problem my mind immediately becomes fixated with finding a solution. In the case of scaling our car buying concierge service, the solution was to pivot away to a different business model. Unfortunately, I didn’t realize that soon enough ... We’ll get to that in a moment.

As our YouTube channel experienced incredible growth (we went from ~100 views per day to 40,000 a day over the span of a few weeks), our website traffic grew as well. The concierge service business was simple; as a customer, you want to buy a car but you don’t want to deal with all the BS, so you pay Your Auto Advocate to do all the legwork for you. Easy enough, right?

Wrong. For too many reasons this business model proved challenging to scale. As you’ll recall, our first customer for the concierge service came on April 19th 2020. By mid May we had over 100 paying customers, which meant two things: one, we had over $50,000 in our Stripe account which was incredible, and two, we had to facilitate car deals for over 100 people at the same time. Our team was my dad (who was previously retired and not thrilled to be working 14 hour days), myself, and one of my co-founders, Arash (not to mention his wife as well). Between the four of us we couldn’t keep up.

That led to one of the worst decisions I made in all of 2020 … The decision to hire two full-time employees (former sales managers that had worked with my dad when he was still selling cars) to join us at Your Auto Advocate to “scale” the service business.

The two people we hired were awesome and generated even more business (under normal circumstances this would have been a huge success). Our issue wasn’t selling the concierge buying service (it sold itself), it was in delivering it (i.e. negotiating the best price on a car deal for 100+ people at once). To put it plainly, it’s just not feasible (especially with the level of service we aspired to provide) to scale this type of business well beyond a few dozen customers per person per month. I hired the two employees on a Monday and relieved them both of their duties by that Friday. This may have been my lowest low of the year.

At this point it was clear as day that we weren’t going to be able to scale the service business model, and even though there was revenue flowing, I made the difficult decision to “shut down” the concierge offering. This was an expensive decision (both financially and mentally) ... Ask anyone who saw me in the month of May about my mental health during this two week period ... I was in a ROUGH place to say the least. I wasn’t sleeping enough, I was stressing like crazy, I was frustrated with myself, etc, etc.

Ultimately the concierge service business cost us ~$20,000 when it was all said and done. We paid a severance to the guys we hired and then fired, and we got hit with A LOT of fees on all the refunds, and I lost a lot of sleep.

That being said, a lot of great things came from this experience. Most notably, we validated that our audience really were people buying cars, and they would pay for help in that process. And even more importantly, during all the chaos Arash and I were able to recruit two new co-founders Nathaniel and Marnie (our CPO and COO respectively) to join the team. As I reflect on the chaos that was those few weeks, I don’t know how or why Nathaniel and Marnie decided to stick around, but I am forever grateful that they did! What happened next was one of the best decisions we made of 2020, our decision to pivot to a content and technology company.

The pivot - June 2020

After the “May debacle” I took a week off before returning to YAA. I distinctly remember the week I took off, because I rode my bike A TON. During the month of May I was working so much that I neglected my body (poor eating habits, no exercise, etc.)

By the time we shut down the service business, and decided as a founding team to reorient Your Auto Advocate around content and technology, I told the team I was going to “go away” for a week — I simply needed the time away from my computer screen and cell phone to regroup and get reenergized.

A week of quality bike rides later, it was time to chart our new course. In June we knew what we had; an active, engaged, and authentic community of car buyers and owners who wanted help getting a fair car deal, and a group of co-founders energized and excited at the idea of producing solutions that genuinely benefit the consumer. We asked ourselves, “How can we leverage our helpful content and combine it with technology to provide solutions in a more scalable manner?” That was the question.

We went back to the drawing board, and I genuinely mean the “drawing board.” I emphasized the importance of “starting over” to each co-founder. One of my favorite phrases at the time was something along the lines of, “We can design this business from scratch, we have a blank slate in front of us,” and design from scratch we did.

We surveyed our audience to learn which aspect of the car buying process was the most painful and difficult for them. The results painted an obvious picture — negotiating a car deal was the worst part of the buying process. So we did what any product-driven team would do, we recruited an awesome user experience designer (Anna, we wouldn’t be where we are today without you, thank you!), and began conducting user interviews with mockups of potential software solutions we could develop.

Ultimately we landed on our Market Price Report, a report that empowers car buyers with market insights on a particular vehicle and mimics the behavior of a tool car dealers have called vAuto. We used a mixture of user science and my dad’s four decades of dealership experience to design the Market Price Report.

If you’ve ever built a software product from scratch, you know that it takes longer than you anticipate to get it into the market. As we developed the Market Price Report we also invested our time and energy into creating content-based products for our audience.

Deal School was our first attempt at helping car buyers with targeted and focused content. The e-course was entirely designed, shot, edited, and produced by my dad and I. What a crazy experience! I had never created an e-course before, and my dad and I both found it ironic that two college dropouts were putting together educational material … Where was my mother when we needed her? She was the teacher after all!

Nonetheless, we got Deal School published in August, and with fifty videos, six quizzes, and nearly two and a half hours of content in total, we were excited to share it with our community. The response was awesome, with nearly 2,000 enrolled students in a week. To date over 5,000 people have enrolled in Deal School. To suggest I am excited about re-filming, re-organizing, and re-platforming (the user experience right now stinks because I used a Wordpress plugin that I would strongly not recommend), is an understatement. Something to look forward to in 2021.

The initial success and praise for Deal School gave our team confidence and momentum going into the “launch” of our software product, the Market Price Report. That would come soon after in the beginning of November.

Product in market - November 2020

Similarly to Deal School, the Market Price Report was well received by our audience. We never really “launched,” instead we simply invited a small number of community members day over day until we felt the software wasn’t too buggy, or on the verge of crashing, at which point we sent an email to our database and began “promoting” it in our YouTube videos.

Our browser extension came out a few weeks later, and the response there was positive as well. We followed the tried and tested advice of “have an audience to launch to,” and that worked out well. Because of our months of community building (through our YouTube channel, Deal School, and consistent guides posted on our website), we had a captive audience to share the Market Price Report and extension with. Within a few short weeks we had created Market Price Reports for more than 50,000 vehicles.

Raising venture capital - December 2020

This topic deserves its own blog post … Raising venture capital for the first time was a good learning experience. In retrospect, I wouldn’t say it was too difficult. Getting meetings and finding people who we actually wanted to partner with was incredibly difficult, but the process of actually raising money (i.e. selling the vision for the business) was fairly easy.

I think it’s easy for me to say that now (after-the-fact), especially because all I have been doing this year is “selling the vision.” My job has been to sell the vision to internal stakeholders (i.e. my co-founders), and external stakeholders (VCs and angel investors).

We raised a small pre-seed round of capital from a small group of angel investors and one venture capital firm, Flybridge Capital out of Boston and New York City. Like I mentioned above, getting meetings with VCs is hard. That being said, my meeting with Jesse Middleton, the General Partner at Flybridge who invested in YAA, came from cold outreach and the Calendly link on his “about” page on the Flybridge website.

Warm introductions to other venture capital firms, and countless hours researching, personalizing, and sending outreach to firms of interest yielded minimal results. Ultimately we were able to raise money from Flybridge because they were willing to provide me (the entrepreneur) with an opportunity to share my story. Many of the other VCs we met with told us to come back when we were further along. Fortunately Flybridge, and our group of angel investors, were willing to place a bet on our team, the progress we had made to date, and our commitment to grow the business in the weeks, months, and years to come.

Starting to make money - December 2020

I received a lot of “congratulations” upon sharing the news that we had raised capital to fund the growth of Your Auto Advocate. Interestingly enough, I’d say that raising capital (although a neat milestone) was not the most noteworthy accomplishment we experienced at Your Auto Advocate in the month of December.

With our tech product in the market for a month, we had grown to over 10,000 active members using the software. A YAA member could run up to 100 free Market Price Reports per month, and then upgrade to unlimited for $14.99/mo if they ran out. We purposefully set the threshold to convert to a paid account at a VERY high number so that we could gain membership and capture data on how people were using the reports.

We learned that 10% of those using the Market Price Reports ran more than 10 of them. As a team we made the decision to test what would happen if we restricted the number of free reports from 100 to 10. On December 7th we did just that.

Yes there was some backlash, but ultimately it was the right decision for us to make. Our rationale was simple; if people don’t upgrade we know we built something that isn’t worth paying for, and if people do upgrade, then great, we have a viable software product.

I’m thrilled to share that as of writing this we have surpassed $3,500 in monthly recurring revenue (MRR). We started the month at $200. The test proved very successful, and as a team we learned that car buyers will pay for information and resources that empower them to feel more informed and confident as they navigate the car buying process.

Subsequent tests of other revenue models (including one to one consultation calls, and the sale of vehicle service contracts) have also proven successful. Not only was December the month where the wire transfers and checks from our investors hit our bank account, it was also the month where we grossed over $30,000 in revenue, a neat milestone considering where we were just thirty days earlier.

This feels like a major accomplishment because many companies have attempted to build trust with car buyers and help them navigate through the car buying process, but few have figured out how to do that and make money. A lot of companies in this space (automotive) find it difficult to scale this business model.

TrueCar is a great example of this. TrueCar built consumer trust by providing innovative and compelling information that could help you be a more informed car buyer. They ran into the conundrum of “This is great, but how do we make money?” They ultimately decided to sell their user’s data to a network of car dealerships. In doing so, they lost trust with the consumer, and although they did make a lot of money, they hit their “glass ceiling” of sorts.

Selling leads to car dealers is a business model that works (CarGurus, Cars.com, TrueCar, the list goes on and on), but it isn’t innovative enough to move the automotive industry forward. It is also not in the best interest of the car buyer. Selling leads to car dealers serves car dealers, not car buyers. I know it sounds simple, but no one has been able to figure out how to serve car buyers at scale, and make money.

For Your Auto Advocate we are committed to “cracking the code” on how to monetize “helping car buyers” in a way that does not jeopardize the trust we have built with our community. The month of December was a big step forward for us in proving that this model could work.

What comes next - 2021

Although an abridged version, that’s what 2020 was like for me, and for Your Auto Advocate. Like I said at the onset, there were a lot of successes and many tragedies (I didn’t even tell you about the $11,000 we spent on PR that yielded practically zero results — that could be a separate post). But what is to come in the new year? Plenty.

Our goal is for Your Auto Advocate to become ubiquitous when buying a car. “Oh you’re buying a car, make sure you get Your Auto Advocate before you sign the paperwork.” In 2021 we aspire to have more people saying exactly that.

How do we do it?

First, we have to stay committed to supporting our community (car buyers). This doesn’t mean we want an adversarial relationship with car sellers (dealers and private parties), it simply means we make decisions based on what will best serve buyers (a novel concept, eh?). No other company in the automotive industry is looking at buying and owning cars through this lens — it’s easier to make money when you serve the dealerships. I’m energized to keep making progress on this front.

And second, we need to continue evangelizing this mission both internally and externally. So far this has been pretty easy. Like I said before, I’ve been “selling the vision” for the past twelve months, and most people “get it” and buy in fairly quickly. However, as we scale, I know it will become more challenging. We need to be one step ahead of that and continue to recruit members who are passionate about supporting consumers.

I am certain that the coming twelve months will challenge me in ways that I am not prepared for. My hope is that from past learnings, the people surrounding me, and my unwavering commitment to serving consumers, not car dealers, will keep me and the company on the right path. Time will tell! I look forward to writing next year’s “year in review” already.

Thank you for your continued support.

-Zach