Dan Gill, CPO @Carvana: The Most Wild Story in Public Markets | E1243

1. 0:00 – 0:50

   Intro

   1. DGDan Gill0:00

      We IPO'd at about two. We peaked at about 60 billion, we dropped back down to 500 million and we're back to 50 billion. The fun thing about dropping by 99% is that the difference between a 98% drop and a 99% drop is another 50% drop. (laughs)

   2. HSHarry Stebbings0:18

      Ready to go? Dan, I am so freaking excited for this. Dude, I love the Carvana business model. So thank you so much for joining me today.

   3. DGDan Gill0:37

      It, it's really an honor. Uh, you know, I've admired what you've built and, and you've got quite a, a record of, of impressive guests. So I, I'm, uh, honored to be here.

   4. HSHarry Stebbings0:46

      Well, my friend flattery will get you everywhere.

   5. DGDan Gill0:47

      (laughs)

   6. HSHarry Stebbings0:47

      But I, I, I do agree, it's been a fun journey.

2. 0:50 – 3:20

   How Did Gymnastics Shape The Approach to Business?

   1. HSHarry Stebbings0:50

      Now, I heard from, uh, a mutual friend that you were a US gymnast.

   2. DGDan Gill0:55

      (laughs)

   3. HSHarry Stebbings0:55

      Uh, that's a rarity on the show. So can you actually just start with how did your time as an athlete impact your approach to growing companies first?

   4. DGDan Gill1:03

      Gymnastics influenced me in, in every way. Um, I'm incredibly fortunate that I found it. Uh, I'm not a large human, um, and so I probably would have been pretty mediocre at almost any other sport. Um, but I am a very intense person and a, and a hard-wired competitor. And so at least I had an outlet in, in gymnastics. Um, the, the, the shortest version is I did it my whole life, I did it through college, I got to compete for the US as you mentioned, and, and I took a shot, um, at the Olympics in 2004. And, um, and, and so leading up to the Olympics, I completely shredded both of my shoulders. Like ruined them. And so I decided to stop seeing doctors so that I could take my crack at the Olympic games. Um, and so I go to try and make the Olympics in, in 2004. I finally get to the trials and, and I'm, you know, an underdog to make the team. Um, but on day one I have, like, the competition of my life. Uh, and, you know, I, I did high school in, in Northern Virginia and so the Washington Post was like, "Local kid might make the Olympics." And it was, like, this big thing. And then on day two, I fell on my best event, which you cannot do, uh, and, uh, my Olympic dreams were over. So I go back home and the doctors say, "You can't do gymnastics anymore. You've done, you know, irreparable damage and, and, uh, you just would never be able to do it again." So it was just sort of, like, taken from me. Um, and I had planned to continue competing for a while and whatever. But it ended up being just such a, a blessing in disguise, I had surgery straight away and I immediately started looking for jobs. And so sort of the full circle of gymnastics is that it gave me a work ethic and a perseverance and, and, you know, those are the attributes that, that I seek out in others and try to surround myself with when we're gonna pursue, you know, enormous goals together. Um, and so, you know, it, it just-

   5. HSHarry Stebbings2:52

      Do you, do you think young people today want to work hard enough?

   6. DGDan Gill2:56

      No. Um, and, and I would say it's not for everyone. I also think if you want to be exceptional, there is no other route. Uh, exceptional outcomes require exceptional effort, period. Um, and so I try and instill that in my daughters certainly and, and look for that in terms of who we're gonna add to our teams. Um, but I don't think it's, it, it comes for free or is the default.

3. 3:20 – 4:29

   What’s the Ideal Background for a Product Role?

   1. DGDan Gill3:20

   2. HSHarry Stebbings3:20

      I'm just throwing shit out there. It's Friday, I wanna have fun today.

   3. DGDan Gill3:23

      Yeah, let's do it.

   4. HSHarry Stebbings3:24

      Um, you said there about adding people to teams. A lot of people go into product from consulting.

   5. DGDan Gill3:28

      Yeah.

   6. HSHarry Stebbings3:28

      How do you feel about the right background going into product? Do you like consulting? Do you not? What's optimal?

   7. DGDan Gill3:35

      We've had great success with a small number of consultants that have joined. But you've got to look for that very specific type. It is the person who comes from consulting and says, "I hate it. We do all the research and we make these recommendations and then we hand it off to someone else to either do it or not do it. And I hate it." If you get the type of consultant who says, "I know everything and now I should make all the decisions." Absolutely not. Um, it's you need the people who have been put through that meat grinder. Consulting can be very hard work, um, and have very high expectations of output. Um, but you need the people who hate it because they don't get their hands on the finished product and they don't, don't get to see it all the way through. Uh, and we've had incredible success, um, with, with that archetype, but not the type that thinks, like, "Now that I've seen, uh, the way that a dozen companies operate, I'll tell you how to operate yours." Because operating is

4. 4:29 – 6:31

   Hiring Process

   1. DGDan Gill4:29

      hands-on business.

   2. HSHarry Stebbings4:30

      How important is it to have people in product who've delivered products to that customer segment before? Say if you're doing consumer social, they've done consumer social before versus B2B. How important is that past domain expertise in product?

   3. DGDan Gill4:43

      I would say it can be valuable, but it is not what we index on. Um, you know, when I'm hiring, um, I, I use two attributes, and I've sort of tried to pass this through the organization. The two I look for are horsepower and give a shit. And that's what we look for in the hiring process because you can... The, the fun thing about Carvana is there's basically not a single person at Carvana that's done their job before. Um, certainly not at the scale that we do it at. And, um, we've taught people about the automotive industry and, and put fresh eyes on a lot of assumptions about the automotive industry that are really long held. And so being able to question that is an advantage.

   4. HSHarry Stebbings5:22

      How, how do you test horsepower-

   5. DGDan Gill5:24

      Yeah.

   6. HSHarry Stebbings5:24

      ... in a hiring process?

   7. DGDan Gill5:26

      I will often ask what their favorite piece of technology is and, um, I want to know if you're gonna say what your favorite app is or favorite piece of hardware or whatever, you better have gone into the advanced settings and know what's buried under there and be able to compare and contrast it relative to competitors. And why do you use that? And what did you think when you used the competitive product and what are the differences and why did they make those decisions? And if the CEO handed you the keys to the product, what would you do differently? Those sorts of things you can really assess horsepower.... for Give a Shit, um, my favorite question is to ask, uh, "What is the hardest you've ever worked in your life?" And I'm not necessarily asking, you know, at work, in your job. I'm asking anything. It, it could be that in high school you had a sick parent, and you were trying to be on the track team, and you were trying to get into school, and... It, it doesn't matter. It's just demonstrating that you have gone through something incredibly difficult and you've pushed through, um, and, and I wanna hear that you have that intrinsic drive.

5. 6:31 – 8:58

   Was Founding Harder Than Being Carvana’s CPO?

   1. DGDan Gill6:31

   2. HSHarry Stebbings6:31

      Let's fucking go.

   3. DGDan Gill6:32

      (laughs)

   4. HSHarry Stebbings6:32

      When did you work your hardest? Like, tell me, like when did you're like, you're like, "That time, whoo!"

   5. DGDan Gill6:38

      Yeah.

   6. HSHarry Stebbings6:38

      "That was it."

   7. DGDan Gill6:40

      Well, I mean, I founded and built a startup for seven years, and, and, uh, you know, that-

   8. HSHarry Stebbings6:45

      Was that harder work than being CPO of Carvana?

   9. DGDan Gill6:48

      It was quite different. It is harder. I think the CEO seat is the, is the loneliest seat there is. Um, you know, there's the, the adage that, that shit rolls downhill, and, and I think most CEOs know that the most toxic (laughs) stuff rolls all the way to the top. And, and sort of by definition, it means that all these incredibly capable people that you trust to do so many things for your business and that they are really exceptional and you've chosen to work with them have decided they can't make the decision and they need you to do it. And so, the CEO seat is the worst of the worst, and, and I, I didn't have a single moment for seven years where I didn't feel the crushing pressure of, you know, making sure that all these people who had chosen to work at my startup, um, were gonna stay employed and have a great outcome and we were all gonna win together. And it's a, it's a crushing e- experience. Um, I think we have a lot of, of former founders on the Carvana leadership team and throughout the business, and so we bring a lot of that founder mindset, um, and accountability, but it's different.

   10. HSHarry Stebbings7:49

       Everyone says that being a PM is like being CEO of the product. Do you like that analogy?

   11. DGDan Gill7:56

       I don't. I think that being the PM you need to be obsessed with every aspect of the experience, and I think that you need to really intimately understand the system. Um, and w- what I mean by that is that any good experience has so many inputs and so many outputs, and you really should have a fingertip sense of the relationship between all of those inputs and outputs, where if you're gonna make an improvement to one part of the funnel, you should have, uh, an intuitive understanding of what you think will happen as a result of that, and you should know how to prioritize as a result of that. But the CEO and saying, "I own a P&L" is so much less important, really, um, of saying, "What is my total payroll?" And, you know, "What are the payroll taxes associated with that and the total expenses?" And there's a lot of things that you need to do as a CEO that I certainly don't want product leaders to have to think too much about. Um, I think they need to be obsessed with the customer experience and with the metrics that they're moving.

   12. HSHarry Stebbings8:56

       Can I ask you... Let's talk about,

6. 8:58 – 10:10

   Top Lessons on Product Prioritization

   1. HSHarry Stebbings8:58

      um, prioritization first. There are a couple of, like, hotspot words that I heard there that I, like, wanna dive into. You mentioned prioritization. What are your biggest lessons on product prioritization that you've had over the last 10 years?

   2. DGDan Gill9:10

      Yeah. Carvana has been completely obsessed with unit economics from the beginning. Um, and so that-

   3. HSHarry Stebbings9:20

      Is, is that right? And I don't mean that rudely, but there are some marketplaces and companies where you have to be elastic to unit economic change, and so it's like it's okay to be negative for years if at scale it becomes really positive. Revolut is a good example, a neobank.

   4. DGDan Gill9:36

      I think you're 100% correct, and that is our experience. But the Excel model that our CFO, uh, Mark Jenkins, built 10 years ago has been quite prescient when we said, "This is where our long-term margins will come from. This is where the economies of scale will come from. Um, and these are all the areas that we want to vertically integrate, uh, so that we have massive unit economic advantages." And, and so that was laid out, and some of that takes a long time to come to fruition, but it's been built very intentionally and in a very specific

7. 10:10 – 13:19

   How Carvana Achieves Margin Improvement

   1. DGDan Gill10:10

      order.

   2. HSHarry Stebbings10:11

      Can you help me understand? How does the margin improvement in Carvana happen? Is it you get discounts on bulk buys of cars? Is it you get better at transformation margin? Can you help me understand how that margin profile changes from, bluntly, really challenging to really good?

   3. DGDan Gill10:27

      Yeah, absolutely. Um, a lot of it is about vertical integration. So, when I get to explain Carvana to new employees or to investors, I use one super zoomed out slide to start with and say, "Look, we sell a commodity product, um, and if you can sell a commodity product and capture more profit than anyone else can..." And I don't mean raise prices. Uh, I mean capture more of the profit pools surrounding the transaction, um, in, in an automotive, that is financing, that's insurance, that's accepting trade-ins and being able to monetize those effectively. There are a lot of hands in the cookie jar, um, of any given automotive transaction. Um, so if you can grab more of the profit pools associated with that transaction and you can spend less on a variable, uh, expense basis, um, and so, you know, at a dealership, that's the, the sales guy, the sales manager, the finance person, the finance manager, all of those sorts of things. If you can drive those variable expenses down, um, that also means all the third parties associated with the transaction, um, you know, you're, you're inheriting their cost structures. You're inheriting their profit margins anytime you're using third parties. So, if you can do more of the work yourself as a first-party and drive those expenses down, now that transaction is worth more to you than it is to anyone else. You're generating more of the profit pools, you're spending less, and you have a greater profit per transaction that you can give back to customers in the form of lower prices or repeat purchase incentives and other ways that make you very, very difficult to compete against over time. And so, that was the vision, is let's capture more of these profit pools and vertical integration, let's reduce the variable expenses aggressively, and now we've got a massive unit economic advantage.

   4. HSHarry Stebbings12:17

      Now, some of those expansionary products that you mentioned there, from financing to insurance to trade-ins-

   5. DGDan Gill12:23

      Yeah.

   6. HSHarry Stebbings12:23

      ... will be more impactful than others. What was the most impactful from a margin transformation perspective?

   7. DGDan Gill12:31

      Financing is a huge one. And so, uh, in the automotive retail, about 90% of transactions are financed. Um, and, um, because the industry is so fragmented, it's basically just outsourced to lenders. And so dealerships generally get, uh, basically a lead gen fee, about 1.5% of the amount financed, um, of the car. But the lender is making closer to 10%, um, of the amount financed, right? Because these are multi-year loans and they're collecting interest throughout, and net of all their expenses, et cetera. So on a $25,000 car, that's about $2,000 of profit per car in spread. And so we built, at Carvana, um, we've built ourselves as a full-spectrum lender. We do our own proprietary credit scoring, loan structuring, decisioning, underwriting.

8. 13:19 – 16:14

   How Dan Makes Tough Product Decisions?

   1. DGDan Gill13:19

   2. HSHarry Stebbings13:19

      Talk to me about that product decision-making because that is, that's a very tough product decision to actually make. It, you said that all very quickly and simply.

   3. DGDan Gill13:27

      Yeah.

   4. HSHarry Stebbings13:27

      It is not easy to do an underwriting engine-

   5. DGDan Gill13:29

      No.

   6. HSHarry Stebbings13:29

      ... or an accurate one. It, to build your own book, you've gotta, like, build a cr- like, a lending book behind you for that. Fuck me, dude, it is much easier to just say, "Hey, we're gonna get origination fees and be a lead gen."

   7. DGDan Gill13:41

      It is. And you're 100% right, but we saw, you know, that's $2,000 of incremental profit spread relative to anywhere else that someone can buy this commodity product. And so there's enough of a there there. You're 100% right. That involved originating loan pools and being paid $0 for them for several years while you're demonstrating to the market that you're good at doing it. But ultimately, there was enough of a there there that if we were rigorous enough at saying, "We, we not only have to get people to, to take a loan from us, but they have to be performant loans," um, and we were obsessed with that. And so I think one of the things that, that was amazing to watch is that we built that experience from day zero knowing that we couldn't monetize the loans, but we needed to start originating the pool. And even from the beginning, we had 60% attach of Carvana's financing. We did, you know, more than 10,000 combinations of down payment, monthly payment, APR, and loan term on a per car customer basis, pre-calc everything. And so by just making it transparent and intuitive, we had higher attach rates than we ever thought we would get from day one. Um, and then we just-

   8. HSHarry Stebbings14:46

      Du- dude-

   9. DGDan Gill14:46

      ... iterated on that.

   10. HSHarry Stebbings14:47

       ... dude, is simple always better in product?

   11. DGDan Gill14:50

       (laughs)

   12. HSHarry Stebbings14:50

       You said about transparency there. I'm thinking simple UIs, incredibly minimalist. Is simple in product always better?

   13. DGDan Gill14:59

       In general, yes. Um, I think that actually-

   14. HSHarry Stebbings15:03

       You know, we're, you know we're gonna just edit out the in general. (laughs)

   15. DGDan Gill15:08

       Yeah. (laughs)

   16. HSHarry Stebbings15:08

       I love it. So many people do this. They're like, "Well, it's two-sided, but like, uh, nuh-uh."

   17. DGDan Gill15:12

       It's nuanced. Yeah, yeah, yeah. Uh, simpler is better. As product leaders, we spend a lot of time sanding the frictions off of experiences, and that's a good intuition. And I know that at so many points in Carvana's life, we've had instances of just trying to get a little bit too cute in terms of how much customization we offer to people versus just giving really thoughtful defaults. Um, on the other side, sometimes you pick your battles and you need to take a really big swing. I think the, the best example for us was that from day one, we did 360-degree photography of every single vehicle on the site. You could spin the car around and fly in through the window and do a, a tour of the interior and, and all of these things. Um, and it was a very complex and new experience for customers, but it was also fundamental in establishing Carvana as the future of car buying. We wanted it to feel different, um, and, and engender this level of trust.

9. 16:14 – 20:27

   Is Different Always Better in Product Design?

   1. DGDan Gill16:14

      And so-

   2. HSHarry Stebbings16:15

      To what extent do you think different is better in product? I, I always oscillate between, like, customers like what they know, just give them what they know, um, versus actually sometimes a new product paradigm is amazing and differentiating and leads to word of mouth. How do you think about that?

   3. DGDan Gill16:30

      I think generally speaking, don't make me think. As a consumer, you need to feel comfortable, especially in something that's not habit-forming, right? Um, like, people learn to use Snap over time, and I found Snap to be utterly unintuitive at the beginning, but it was habit-forming and, and they did teach people a new paradigm that was ultimately different. If I'm trying to find something o- on an e-commerce site, being able to search and filter and see results and click through, you don't need to fully reinvent that paradigm. Um, but for example, on how we want to, you're not gonna get to test drive the vehicle, right? You're not at a lot going and sitting in every single vehicle. We need to bring you as close as humanly possible to every single detail. We wanna show you if there are cosmetic things that we chose not to fix, and we're gonna take a, a high-resolution video and let you look at it so that we set really, really accurate expectations. And that was completely different from anything that had ever been done in automotive retail because we had to solve a very specific consumer problem.

   4. HSHarry Stebbings17:34

      You mentioned the multiple different products there. I'm really interested to hear about how you think about a review, so to speak, of what you've done. What did you do?... that you wish you hadn't done with the benefit of hindsight?

   5. DGDan Gill17:47

      I would say my biggest regret is more of a team structuring regret than, uh, a specific product decision. So for, for the first many years at Carvana, I said that my job was to build a machine that can parallel process the needs of the business, and there is a lot of truth in that. You need to build capabilities as primitives that can be snapped together. And for a vertically integrated business like ours, we do need to do many things at once. But, uh, I took it too far. At one point, we had 90 very small teams working in parallel. Um, but that also means 90 different prioritization queues. And ultimately, there are not 90 number one priorities. The, the fifth priority of a certain team m- might actually dominate the number one priority of many other teams, but they're not gonna get to it 'cause it's fifth on their queue. And so what we did in 2022 is we went from 90 back to eight, uh, and we forced so much more cross-functional prioritization, and we asked resources to be more flexible between teams and to have a willingness to jump into different projects and reprioritize more dynamically. And this ended up being so huge in putting more effort and speed behind the most important priorities in the business.

   6. HSHarry Stebbings19:04

      So if I'm an early stage founder, what should I learn from that? Don't allow for silo-ification or fragmentation of teams? W- what's the takeaway?

   7. DGDan Gill19:14

      I think that's exactly right. I think it is to be incredibly disciplined and rigorous about your prioritization. There's such a temptation to wanna do all of the things at once. Um, but the... probably the product advice I give more than any other piece of advice is if you can only change one thing and you have to hold all other things exactly as they are right now, what is the one thing that you want to change? And what I mean by that is you have to understand the complex system. And we can all look at any product or any piece of technology and think of so many things that could be better. But you have to say, "If I take this one thing that I want to change and I make it perfect, what do I think's gonna happen? How much lift am I gonna get in conversion or ultimately in the unit economics of that business?" Um, because you can't change everything all at once. Um, you, you're too diffuse with your energy and your effort. And so you have to force yourself to say, "If I make this thing that I want to change absolutely the best I can possibly imagine it being, what's gonna happen inside of this complex system?" And then really focus your energy on the one that you have the most conviction will have the largest impact. And you've got to serialize more, um, as opposed to trying to parallel

10. 20:27 – 23:25

    How To Choose the Right North Star Metric?

    1. DGDan Gill20:27

       process.

    2. HSHarry Stebbings20:27

       I'm a startup founder. You're an angel in me. Thank you for your belief, by the way.

    3. DGDan Gill20:31

       Yes, of course.

    4. HSHarry Stebbings20:32

       (laughs) Your, your money's just gone up in flames if you invest in me as a startup founder.

    5. DGDan Gill20:35

       (laughs)

    6. HSHarry Stebbings20:36

       Um, uh, my question to you is, okay, that one thing, how do I know which one to choose?

    7. DGDan Gill20:42

       Yeah.

    8. HSHarry Stebbings20:42

       Like, what is the advice on the right North Star metric and how to know you've got it right?

    9. DGDan Gill20:47

       Because you can walk down a path of many one things. Um, you certainly... the choosing the one thing isn't that there is only one thing. It's about putting them in order. And so what I like to ask founders when I'm working with them or investing in, in startups is, "How is it that your moat gets wider and deeper as you build?" And I want to hear how you're sequencing those choices and saying, "Once we've got, you know, the incremental gross profit of, uh, being able to originate these loans," right? "And we're, uh, making far more gross profit than anybody else, we're gonna plow that back into market expansion. And as we do that, we'll have a broader selection to choose from, and that's gonna increase conversion of people who are coming to the site. And also, as we then increase conversion, we can hold more inventory. That's gonna get the inventory closer to the customer, which drives delivery times down. And that's gonna increase conversion even further, so I can add more inventory," right? And these things build on one another. It is a flywheel. Uh, thank you, Jeff Bezos. Um, and, uh, you know, I want to hear how you're gonna sequence many one things. I just don't want to hear that you're doing them all at once.

    10. HSHarry Stebbings21:54

        Hm. How do you think about staging product expansion? That's the other hard thing of... I totally get you, not do it all at once. You're absolutely right. But you have the opportunity to create a product suite, as you have done brilliantly with Carvana. When is the right time to add another product?

    11. DGDan Gill22:09

        Well, you know, working i- in enterprise software early in my career, I was sort of a, a Geoffrey Moore acolyte, right? So you've got the Crossing the Chasm and, and other books to, to rely on a bit there. (laughs) Um-

    12. HSHarry Stebbings22:21

        L- i- it was one of my favorites. I read it when I was, like, 14-

    13. DGDan Gill22:24

        Yeah.

    14. HSHarry Stebbings22:24

        ... 15 at boarding school. I was single for all of my teenage years.

    15. DGDan Gill22:27

        (laughs) That's shocking.

    16. HSHarry Stebbings22:28

        And now I, now, now I'm-

    17. DGDan Gill22:28

        That didn't work out, did it?

    18. HSHarry Stebbings22:29

        ... what a loser. I wa- I was like, "Are you an early adopter of, uh, you know, Snap?"

    19. DGDan Gill22:33

        (laughs)

    20. HSHarry Stebbings22:34

        I'm like, "Well, have you crossed the chasm?" And they're like, "No wonder. Fucking loser." (laughs)

    21. DGDan Gill22:38

        (laughs) Yeah. Um, I think that what, what we like to hear is, um, how does that particular effort accelerate the spin of the flywheel, right? So let's use Carvana as an example. We could license so many pieces of software that we've built. There's a lot of companies in, in our industry that would love to use software that we've built. The idea of us generating $10 million of incremental SaaS revenue or $100 million of incremental SaaS revenue doesn't actually make the core business better. That is contributing to the core flywheel, as opposed to building an ancillary product. Um, and so we like to see the ways in which these product offerings accelerate one another and make the core offering better and better

11. 23:25 – 26:07

    Carvana’s Biggest Product Decision Mistake

    1. DGDan Gill23:25

       and better.

    2. HSHarry Stebbings23:25

       Okay, so it has to go back to the core offering, and it has to drive value there. What product decision did you make that was the biggest mistake in Carvana's time?

    3. DGDan Gill23:34

       It's a fun one but it, it's somewhat counterintuitive. Um, one thing that we did early, uh, is we wanted to offer free shipping for everyone. And, you know, so we are an e-commerce business, and we want to give you a broad selection. And our cars are in these, like, 100-acre facilities around the United States, like five, 6000 cars on the ground. We have a nationwide logistics network that we own and operate, and we wanted every car in the network to be free for every customer in the network because the truism of e-commerce is that you must have free shipping.... um, and consumers love free shipping. So you think, "Okay, that seems reasonable." But in our case, the costs are very high. We can't rely on FedEx or UPS or USPS to just deliver a car to you. We have to do it ourselves.

    4. HSHarry Stebbings24:24

       How much does it cost to ship? H- how much does it cost to ship a car?

    5. DGDan Gill24:25

       It depends, but we were shipping cars upwards of 1,500 miles, right? And so if you're gonna move a car from Philadelphia to Fort Worth, Texas, and while it's en route the customer says, "Oh, sorry, I bought another one while I used the free option you gave me for the one that you were sending. I bought a different car." That's very expensive to us, and now we've got to basically restock that car. We've got to find another customer. Meanwhile, these are depreciating assets, right? They're losing value with every passing day. So what we then came to over time is that we can't allow for that and we need to charge for shipping when you're moving a car from a long distance. We wanna offer free shipping if we have a car that's close to you, it's still a wonderful value proposition to say, "This is free delivery to your door," and we want to offer that. But if we're gonna move a car a long way, we actually added in a nonrefundable shipping fee to just create a little bit of friction at that moment to say, "We're gonna start moving this thing, but it's gonna cost you money, um, and it's nonrefundable." And what ended up happening is as a result we unclogged our network, um, from sort of wasted excess transport. That brought delivery times down for everyone. We have fewer late deliveries from this sort of excess clogging of the network, and we sell more cars. Um, so by taking away free shipping, we actually sold more inventory.

    6. HSHarry Stebbings25:48

       What's your primary customer acquisition channel today, Dan?

    7. DGDan Gill25:52

       We, like many, um, have come around to the fact that brand advertising is incredibly powerful, and that we want Carvana to mean something as a brand to our customers. Um, and so we spend a lot of time storytelling.

12. 26:07 – 28:58

    Top Lessons in Product Storytelling & Marketing

    1. DGDan Gill26:07

    2. HSHarry Stebbings26:07

       What are your biggest lessons or pieces of advice when it comes to effective product storytelling today, and product marketing for founders listening?

    3. DGDan Gill26:17

       I think that people like to conflate storytelling with sales, and they like to shit on sales. Um, it's like, "I don't wanna be in sales." And the truth of the matter is, you're in sales, uh, and you better be in sales. You better be in sales to attract incredible talent, but you also should be storytelling because it's motivating and inspiring for your teams to know what they're chasing after. And so let's contrast it to not having a more fulsome story when, you know, if you look at a particular product and you say, "All right, um, you know, we've got to make, um, this, this product massively better," an engineering mindset may say, like, "Well, I see the thing that's broken and I'm gonna fix the thing that's broken because nothing else matters until we get better at this immediate next step." But you're actually trying to get many, many people to collaborate and work on this thing, and telling them, "No, we're trying to get way over there, and when we get all the way there, this is how much better the unit economics are gonna be and we can give a better customer experience and a totally differentiated offering which is gonna help us carry, you know, more share of market, et cetera," um, people are more motivated, uh, and, and more excited to go chase after that. And so you need to be able to paint a high-resolution picture of what that future looks like so that people, when they get completed in, in the what you've asked them to do, they understand the why and they can keep going autonomously and independently. And so I just think that, that being able to paint pictures of the future is absolutely requisite and is something that you should work really hard on.

    4. HSHarry Stebbings27:54

       What's a good picture of the future and what's a bad picture of the future?

    5. DGDan Gill27:58

       Uh-

    6. HSHarry Stebbings27:58

       Like, like, "I hate Zoom." Uh, it's, like, make everyone happy. Who's gonna be like, "No, I disagree. I want, I want sadness-"

    7. DGDan Gill28:06

       Yeah.

    8. HSHarry Stebbings28:06

       "... instilled upon everyone"? It's a, it's completely ridiculous. Like, you know, ve- 20VC is very explicit. We are not for beginners. If you don't get what we talk about, no worries.

    9. DGDan Gill28:17

       Yeah.

    10. HSHarry Stebbings28:17

        This is not the show for you. We are for or against a brand, and that is great. Nike and Adidas, McDonald's and Burger King.

    11. DGDan Gill28:24

        Yeah.

    12. HSHarry Stebbings28:25

        What is good/not good?

    13. DGDan Gill28:26

        Yeah. I think exactly as you said, be intellectually honest and be transparent about what you are and what you're not. So for Carvana, we have always said that we intend to build both the largest and the most profitable automotive retailer ever built. And we're unapologetic about the fact that we are building a highly profitable business, and we're gonna do that by offering the best experience, the broadest selection, and the best value for consumers in a way that allows us to capture market share that no one's ever captured

13. 28:58 – 31:50

    The Best Experience Hurt Margins the Most

    1. DGDan Gill28:58

       before. And-

    2. HSHarry Stebbings28:59

       Where does the best experience hurt margin most?

    3. DGDan Gill29:03

       Yeah, um, well, it certainly subscale trying to move cars across the country. There is so much underutilization of assets. These are big nine-car haulers going down the freeway, and if they've got three cars on them, it's not a very good use of expenses. But you have to be willing to move those trucks and get cars to customers, because if you say, "I'm gonna wait until the nine-car hauler is full," then I can only tell you, "I will get you your car somewhere between 3 and 11 days from now," which is not a good customer offering and is gonna take a long time, which is low converting. And so you have to be sort of willing to absorb some of that underutilization for a period of time, but then once you get to the point where you're actually sort of fulfillment constrained instead of demand constrained, there's so much incredible optimization work to be done, where we get, we've done so much software building around intelligent labor utilization and, and logistics network and fulfillment utilization to make the unit economics really, really sing. Um, and that takes, takes time.

    4. HSHarry Stebbings30:07

       Do you know the lesson that I have from interviewing 30, 40 of the best CPOs in the world?

    5. DGDan Gill30:12

       (laughs) Lay it down.

    6. HSHarry Stebbings30:14

       Uh, I- I'll tell you, the lesson is the best are not product people, weirdly. Or they don't sound like product people. They sound like intense business leaders who understand unit economics and product better than anyone else. And the good just get product, and the bad don't get either.

    7. DGDan Gill30:32

       Yeah. (laughs)

    8. HSHarry Stebbings30:33

       So the combination of getting business and unit econ and product is what makes the best. Do you agree? Or is that a stilted view of what a great CPO is?

    9. DGDan Gill30:43

       I completely agree. I think that you have to be unapologetic about the fact that you're building a business. And, um, you know, we say, "We do not win by shipping features. We win by moving metrics." Um, and ultimately, while there are so many input metrics and you should have a very clearly defined unit economics driven hypothesis for why we're taking on any given initiative, and you should have leading indicators that you're measuring from minute zero of launching a new initiative and looking for evidence that your hypothesis is valid or invalid. Ultimately, if it doesn't drop to the bottom line, you have not contributed anything. Uh, it has to ultimately show up inside of the business, and we are unapologetic about that. It is everyone's responsibility to care about that. That's product, engineering, analytics, design, operations. It is everyone's responsibility to care about the initiatives that we've taken on and what we're prioritizing and seeing that all the way through to economic impact for the business. Um, and so yes, I think it's- it's absolutely the case that- that everyone should be rigorous there.

14. 31:50 – 38:49

    Is Being a CPO Hard When the Product Isn’t Software?

    1. DGDan Gill31:50

    2. HSHarry Stebbings31:50

       I'm gonna ask a rude question.

    3. DGDan Gill31:51

       Do it.

    4. HSHarry Stebbings31:52

       Is it difficult being a CPO in a company/business where the product is almost not the software product? And what I mean by that is, the delivery time is really important. Letting me know where it is and when it's coming, and then ultimately it's on my drive and it's as I thought I would. That is really the product. The pixels that I discover it with, yes, important, but nowhere near as important as the other two. Is that difficult, being a CPO in a world of that?

    5. DGDan Gill32:21

       Not at all because the technology is what unlocks all of those capabilities. If you really want to get a car 1,000 miles as fast as possible and profitably, there is so much technology to be built to do that. And so you have to have all of these vertically integrated systems. You cannot have humans in the loop for every single decision. And so our articulation of that when I would hire engineers early on, um, and there was all this thing about there are certain companies in Silicon Valley that are engineering-led. And I would say, "We are not engineering-led. We are customer-led, and you need to be completely on board with the fact that we're trying to unlock more and more value for customers. And by doing so, we're gonna win a very big game by a very large margin." Uh, and-

    6. HSHarry Stebbings33:10

       Is everyone, is- is everyone not customer-led? I mean, like, ultimately. There's still a couple-

    7. DGDan Gill33:14

       I- I certainly hope so. But there is, I think the- the, this notion of being engineering-led can sometimes be trying to romanticize and- and give too much control, um, or a perception of control of it's really all about the technology. The, you know, if you build it, they will come. And I think that that is not singularly true. I think you need to have a go-to-market muscle, and you need to have tight feedback loops and analytical rigor and obsession. And there are emotional aspects to using any product that really matter, and psychographics and- and all of these things. Um, and so I think you do have to actually be, you know, customer obsessed, and I don't think that- that every organization evangelizes it in the same way.

    8. HSHarry Stebbings33:55

       You mentioned tight feedback loops there. Every product team has product reviews. Bluntly, some are done brilliantly and some are done terribly. What have been your biggest lessons in how to do effective product reviews?

    9. DGDan Gill34:06

       You can't hide from the metrics. So, uh, several years ago, we took on, um, an operating cadence where there is at least one executive team member, sometimes more than one, that meets with every single team in the company every single week. Um, and we do a review of what did you say you were gonna do last week? What actually got done? Uh, and what are you gonna do this week? And then how are we seeing that in the results? So, um, you know, as mentioned, you have to have a hypothesis for why we're taking anything on. And those hypotheses have leading indicators of whether they're true or not. Um, and so every single week-

    10. HSHarry Stebbings34:45

        What do you, what do you do, what do you do when there's a team that consistently has a chasm between what they said they were going to do and what they do?

    11. DGDan Gill34:52

        Reconfigure the team. Um, you know, generally speaking, we like to have single-threaded leaders that are highly accountable for those initiatives and the prioritization and execution of those initiatives. And so we look to that leader, um, and really try to understand their diagnosis for why it's working or why it would not be working. But it is that leader's responsibility to ensure that it is or to change course, right, and say-

    12. HSHarry Stebbings35:15

        To what, to what extent do you listen to team members on product reviews? And what I mean by that is, "I think we should do this." "That's great, Dan. Back in your box." Uh, like let's-

    13. DGDan Gill35:26

        No, we love the ideation coming from everywhere. Um, you know, we have a number of product managers in our organization that were customer advocates. They were on the phones listening to customers and dealing with customers all day every day. We have ones that were loan underwriters. We have ones that did home delivery of vehicles. And they know how the experience actually works and where the tooling has been falling down and- and where the frictions are and- and how to make those gains. And so we love that coming up from the bottom, but we have a very high bar for rigor. You better have a hypothesis for, you know, why this is gonna matter. And a- a good framework for that is, you know, the magnitude of impact times the frequency of occurrence. You can say that something is a horrendous experience, but if it happens one in every 50,000 deliveries, that's not a very good thing to bring to the table. Um, even something with medium pain that happens one in every 50 deliveries is much more important for us to- to pay attention to, and you can distill that into a unit economic impact. You can say, "What is this doing to our cost per unit?" Or, "What is this doing to our profit per unit?" And we ask everyone to collapse their ideas into that unit economic framework so that they can be compared apples to apples.

    14. HSHarry Stebbings36:36

        Gustav from Spotify, who I think is one of the best CPOs in the world, he always says, "The...Talk is cheap, so we should do more of it. And now I fundamentally disagree with this. I think the speed of execution is everything. And actually I think dictatorial product leaders generally work best. It's like you've got to appease people and make them feel heard, but ultimately we're gonna go. To what extent is he right versus I right?

    15. DGDan Gill37:00

        Ultimately, clarity of thought and clearly articulated strategy is very important. And so whether that's an Amazon seven-pager or w- you know, we are not, uh, religious-

    16. HSHarry Stebbings37:13

        What do you- what do you- what do you do? Do you do a seven-pager? Do you do slide decks?

    17. DGDan Gill37:16

        We do like written communication. Written communication is hard to hide, um, you have to distill, uh, your perspective into clearly articulated prose and you can't hide and say, "Well, that's not what I meant." It's like, well you wrote it down as opposed to if you just present it in slides. So we really like written communication for PRDs and- and for, um, you know, proposals of major initiatives in the business. Um, and, uh, but we're- we're okay, um, with- with rather visual heavy things as well.

    18. HSHarry Stebbings37:46

        I- I- I really agree with you in terms of the importance of writing. What do you think are the most non-obvious other skills that product people or the best product people have? You mentioned there writing, we mentioned business mindedness. Any others where you're like, "When I look at my team, the best have this less obvious skill"?

    19. DGDan Gill38:05

        I think high accountability is the number one thing you have to look for where people take it personally when things aren't succeeding. Um, and it's just that willingness to go the extra mile. To go and watch the customer session replays, and to take notes, and to do the product tear downs of competitive products and compare and contrast. Uh, to sit and read every word of copy on the page out loud, uh, and- and, you know, feel embarrassed when it's not intuitive. Um, and it's that taking it personally that you want to get it right is the number one thing that we look for. Uh, is just that willingness to- to want to go the extra mile and to want to sweat the details.

15. 38:49 – 41:13

    How Should Founders Use Take-Home Assignments?

    1. DGDan Gill38:49

    2. HSHarry Stebbings38:49

       A lot of founders worry about take home assignments when they have someone amazing. Say, uh, an incredible talent coming from a top company and they're like, "I don't want to give Dan a take home assignment, he's so, so s- kind of, uh, important." How do you advise founders on take home assignments? How to do them right in product and what not to do?

    3. DGDan Gill39:10

       Well, let's go the other way first and say the single best way to hire someone into an organization is for them to reach out to you with a vision for how your organization gets better, and they're so passionate about it and they already have ideas. And whenever anyone asks me, "Could you connect me into any companies?"

    4. HSHarry Stebbings39:26

       When- when does- when does that happen, Dan?

    5. DGDan Gill39:28

       It- it-

    6. HSHarry Stebbings39:28

       I would love that. (laughs) That'd be great, thanks.

    7. DGDan Gill39:31

       It- i- it is rare, but it- it happens. There are those people who at least when they say, "Can you connect me into company X?" I say, "Why? Why do you like that company?" And it can't be like, "Oh, I heard they're doing well." Or, uh, "I see their stock is going up."

    8. HSHarry Stebbings39:46

       "I heard they just raised a new round." Yeah.

    9. DGDan Gill39:47

       Exactly. It needs to be, "I love the approach they're taking and I want to be a part of doing this." And even if they don't have that, I will encourage them, "You need to go and create that for yourself. You need to write down why you believe in this business, um, and proactively..." I mean there is nothing more magical than being a founder and having someone tell you, "I love what you're doing and I want to be a part of it." It's the most intoxicating feeling 'cause you're so self-conscious, um, and- and you have so much pressure on yourself, and to have someone that sees it and gets it and wants to be a part of it is just an intoxicating aroma for a- for a founder to feel. So, let's start with that. That you- you want people when they're applying to be very specific about why they're applying. They're not just lobbing in a resume and- and- and hoping that you say yes. So, that's one thing. Two, when it comes to, can you have them do take home assignments? Absolutely. I think you need to. Uh, this was something I learned very early in my career when we were selling enterprise software is I had a sales leader say, "How can you hire a rep without making 'em dance?" Uh, and that was, it really stuck with me is, how can you ever possibly hire someone who you're going to trust to speak to your customers without hearing them pitch a product? Um, and you have to hear that, and I think in product, how can I trust someone's judgment without asking them to first put their thoughts in writing and break down a problem, um, and hear how

16. 41:13 – 43:25

    Should New Hires Work on Existing or Neutral Products?

    1. DGDan Gill41:13

       they would approach it?

    2. HSHarry Stebbings41:13

       Can I ask you, how do you think about the challenge of whether to get them to work on Carvana, where you have a huge amount of knowledge, asymmetric information, and you'll probably just think that everything's not great 'cause it's not at the level that you are having spent years there, versus a neutral product where you start on a level playing field?

    3. DGDan Gill41:31

       It- it- it is an asymmetric advantage but we always have them do Carvana problems, and we'll try and make it something that is relevant to us. So we'll stand up, uh, you know, a dummy SQL database and say, "Query this and- and tell us what you would do in this strategy to increase a attach of warranty products on a sale?" Or, you know, and, "What's that gonna do to the unit economics of the transaction?" Um, and we'll give them a bunch of historical data and- and it'll be non-intuitive so that, um, you have to sort of ferret out those non-intuitive, uh, uh, realities that are buried inside of the data, and then come to a conclusion on what you would change in the interface to make it better. And you're right, that it's, um, an asymmetric advantage that we understand it quite well, but you get to see level of effort and critical thought and- and, you know, the versatility there. And so w- we aren't hesitant. We also don't hire super, super senior people. We like to grow our talent from within, and so I would not have the issue of, "Boy, this person's such a big deal, I can't possibly ask them to do homework." Um, that's less of a problem.

    4. HSHarry Stebbings42:33

       Do you- do you agree with this idea of a 10X engineer? Hire the 10X engineer, overpay them, yeah.

    5. DGDan Gill42:39

       I think there- there's no question that there are individuals in almost any functional organization that are many fold more effective than others. Um, and I think that that...... often has more to do with work ethic, accountability, pride, um, you know, those sorts of attributes, than just raw intellect. I mean, I should be honest, we are not building, um, AGI here. Uh, and that, you know, you can have singular insights that, that unlock. I do believe there are people who are better at turning big problems into small problems and executing with urgency and- and accountability and, uh, and that can really move mountains in- as individuals.

17. 43:25 – 48:08

    Does Every Public Company Need an AI Story?

    1. DGDan Gill43:25

    2. HSHarry Stebbings43:25

       You're not building AGI. You are delivering cars. But...

    3. DGDan Gill43:30

       (laughs)

    4. HSHarry Stebbings43:30

       That is very important, and you have to, I'm sure, come up with ways to tell Ernie about ways that you are leveraging AI to make your margins better, your product better. 'Cause you're a public company, and every public company needs an AI story. Do you agree with that, that every public company needs an AI story? And as a CPO today, how are you thinking, "Huh, how can I leverage AI to get as much juice out of this as possible?"

    5. DGDan Gill43:56

       100%. And we've been all in on AI for years. Um, I, I think that we think... So, so zoom out for a second and say that AI, um, a computer can only give an answer to a customer or take an action for a cu- for a customer if the computer has access to that information. Um, and in automotive retail, there are so many human decisions. You're negotiating the sticker price of the car, you're negotiating the finance rate, you're negotiating the trade-in, you're negotiating all of these individual things. Whereas in our world, all of these systems are deterministic and algorithmic and have been built that way from day zero. And so we can have an LLM tell you, "Harry, given your credit score and the VIN of the vehicle that you entered, um, you have $3,000 of positive equity on that car applied to your financing that will unlock a 7.4% rate, and this Tesla Model Y will now be $612 a month with $1,000 down." That information is knowable in our world, and it is not knowable in the sort of physical dealership world in the vast majority of cases. And so we lean very hard into AI because we think we're structurally advantaged to, to leverage it and offer, you know, increasingly frictionless experiences to our customers.

    6. HSHarry Stebbings45:17

       BYD is crushing in London. They are everywhere.

    7. DGDan Gill45:21

       Yeah.

    8. HSHarry Stebbings45:21

       Now, I'm a believer in Adam Smith's invisible hand, minimal market intervention, and then I saw the other day-

    9. DGDan Gill45:28

       (laughs)

    10. HSHarry Stebbings45:28

        ... how the unit economics of these Chinese cars are being subsidized so heavily.

    11. DGDan Gill45:35

        Yeah.

    12. HSHarry Stebbings45:35

        It is not a fair game when the Chinese government pays for 30, 40% of the cost. To what extent is Chinese cars a net negative for your business, and do you worry?

    13. DGDan Gill45:48

        On one hand, for any new brand to want to enter the United States, think about what it takes to get cars in the hands of customers. How much capital and how much time to get land and get zoned and get staffed and, and start to fulfill, um, and get those cars in the hands of consumers. Versus today, Carvana first party logistics touches 90% of US driveways. So if you can get any car to either coast of the United States, we will get it to 90% of Americans within a week. Uh, so I actually think our infrastructure is unbelievably well set up to facilitate, um, you know, OEMs and brands to get cars into the United States and to distribute them.

    14. HSHarry Stebbings46:32

        So would you sell, would you sell Chinese cars?

    15. DGDan Gill46:35

        Um, I think that that's a complex sort of geopolitical question, um, of, you know, what are the right moves for the government to make in terms of allowing, uh, US automotive manufacturers to, to thrive and grow and, and, and sort of protect them from this very subsidized unit economic model that could come in? Um-

    16. HSHarry Stebbings46:54

        I'm being unfair here, Dan. Do you think Carvana should sell Chinese cars?

    17. DGDan Gill46:57

        (laughs) Uh, I think that we should be selling other people's cars, and we wanna be Amazon for cars. We want to be able to distribute, um, the cars that consumers want.

    18. HSHarry Stebbings47:08

        Wonderfully ambiguous. (laughs) That was, uh, beau- beautifully done, by the way.

    19. DGDan Gill47:14

        (laughs)

    20. HSHarry Stebbings47:14

        Um, c- career and politics, right? I, I'd s- I don't think Americans want Chinese cars. You guys are so... The, the sentiment against China from you is very different to in the UK.

    21. DGDan Gill47:26

        It is somewhat surprising to me that UK doesn't care, but anyway. And I think Americans are largely that way, but I don't think the American government is that way.

    22. HSHarry Stebbings47:33

        No, I don't think the Americans... Amer- you go, I don't, if you go to Middle America and say, "Hey, this is from China," they'll be like, "Fuck that."

    23. DGDan Gill47:40

        Yeah. Americans do love cheap, though. I mean, we have plenty of Chinese goods. That's for sure.

    24. HSHarry Stebbings47:44

        Yeah, it's true. What do we not see about Carvana that we should see? Like, what does the world not understand about this business that you're like, "That's the really special thing"?

    25. DGDan Gill47:54

        I think the amount of vertical integration that we've taken on is pretty staggering, and it's hard to see from the outside, um, where there's, I think, early on, a bit of a misconception of, "Oh, yeah, I can buy a car online.

18. 48:08 – 50:33

    Are Chinese Car Subsidies a Threat to Carvana’s Business?

    1. DGDan Gill48:08

       I go to Google, I search, and I see cars." But that's a listing site. You're gonna go to a dealership and transact that car. It's not an e-commerce model for automotive. And I think that when you look at the number of companies that we've had to build... You know, we are a full fintech. We're a lender. Uh, we have one of the largest (laughs) automotive reconditioning companies.

    2. HSHarry Stebbings48:33

       What do you think you vertically integrated that you shouldn't have done? You know, I still look at like Shopify and Stripe, and Shopify, I mean, and Stripe's partnership is incredible, but why Shopify has never vertically integrated Stripe, I have no idea.

    3. DGDan Gill48:45

       Yeah. Uh, I think that, um, we pulled back on a couple of the bets, even bets that I mentioned today. We have examples where we said, "Hey, this is such a logical adjacency, let's take it on," and we pulled it back. Um-

    4. HSHarry Stebbings48:57

       Why, why did, why did you pull it back, out of interest?

    5. DGDan Gill49:00

       Well, that was during the 99% drawdown of the stock (laughs) , uh, where we needed to say, "Hey, it's time to, to focus on the core, get the, you know, make sure that the unit economic model is crystal clear to the world, um, and, and get on better footing." And so, you know, that was, uh, a part of the refocusing.

    6. HSHarry Stebbings49:18

       Dan, uh, the market cap today is 50 billion.

    7. DGDan Gill49:21

       Yeah. (laughs)

    8. HSHarry Stebbings49:22

       And the market cap was five billion?

    9. DGDan Gill49:25

       We IPO'd at about two. We peaked at about 60 billion. We dropped back down to 500 million and we're back to 50 billion for the second time now.

    10. HSHarry Stebbings49:36

        You dropped down to 500 million?

    11. DGDan Gill49:38

        Yeah. The fun thing about dropping by 99% is that the difference between a 98% drop and a 99% drop is another 50% (laughs) drop. So it was a harrowing ride for a minute. And I think, you know-

    12. HSHarry Stebbings49:53

        I didn't, I, I didn't know you dropped to 500 million.

    13. DGDan Gill49:56

        Yeah. Yeah.

    14. HSHarry Stebbings49:57

        Oh my God. Do... So, uh, tell me, as a leader, what do you say to your team when it's 500 million?

    15. DGDan Gill50:06

        With the benefit of hindsight, it, it, it was so healthy for us to go through that together, um, because what you say to your team is, "Here's what the rest of the world misunderstands about the truth. And what you're reading in the Wall Street Journal or what you're reading in any of these publications, let's be really clear about what that version of the truth is, and then let's articulate to you our version of the truth. And then we're gonna check back in in 30 days, and we're gonna tell you

19. 50:33 – 51:58

    What’s the Most Misunderstood Thing About Carvana?

    1. DGDan Gill50:33

       which one is more true. Um, and so in 30 days, did we do exactly what we said we were gonna do? Um, and has everything checked out that we told you before? Yes, it has. All right. Well, let's roll that forward another 30 days." And we were just doing an enormous amount of communication through that about here's exactly where we're going, here's how to express that in unit economic terms, always our obsession, this is what we're gonna do in terms of cost per unit, this is what we're gonna do in terms of gross profit per unit, uh, and this is how we're gonna see through this storm and just share those results again and again and again. And so there are the people that opted out immediately, at the beginning of that drop, right, and said, like, "This isn't for me. This thing's never gonna make it." And I always knew it was never gonna make it, right? There's, there's sort of that crew. Um, and good riddance, uh, please move along. There's some that just couldn't handle the swings, and that's totally understandable, but those who chose to stay, um, we... It has been so galvanizing as an organization to go through that process together and to rebuild that trust and say, "Wow, you were right. We were misunderstood from the outside. Um, and we did do exactly what we were, said we were gonna do, so now what are we gonna do next?" And everybody's charged up and ready to run at that hill. Um, so, you know, with the benefit of hindsight and having survived, I think we're in better shape than we've ever been as an organization and, and really poised for, for an exciting future.

    2. HSHarry Stebbings51:56

       500 million.

    3. DGDan Gill51:57

       (laughs)

20. 51:58 – 56:45

    Keeping Morale High After a 99% Value Loss?

    1. DGDan Gill51:59

       It's quite a, quite a drop.

    2. HSHarry Stebbings52:01

       Oh, I'm ju- I'm just like... I remember someone, uh, we mentioned our friend earlier, showing it to me at, like, three or four, I think it was-

    3. DGDan Gill52:09

       Yeah.

    4. HSHarry Stebbings52:09

       ... and I was like, "Seems rich. It could go low." I'm like, oh, that's like a... Oh.

    5. DGDan Gill52:15

       Just a nice 100 bagger.

    6. HSHarry Stebbings52:17

       Jesus Chri- And, and this is what's amazing. That's a 100 bagger in public markets.

    7. DGDan Gill52:22

       Yeah. Yeah. It's been an incredible journey, and, and with just incre- just wonderful people who really care. And, uh, we are, we're an organization based in Phoenix, Arizona, and there's a, a little chip on our shoulder that we're not, you know, Silicon Valley and, and whatever, but the truth of the matter is, I would pit our team against any team in the world, um-

    8. HSHarry Stebbings52:45

       Why has being in Arizona helped you over being in Silicon Valley?

    9. DGDan Gill52:49

       Because, um, you have to opt into the mission, you know? We kept a very high standard around these things like grit and accountability and problem-solving and bias to action and those things, um, and so once we sort of found the right people, um, they were fully bought in. Because if you, you know, have those characteristics, you can be employed elsewhere. You could choose to, to go many different places, but you're in Phoenix and you have chosen to be with Carvana, and, uh, and, you know, we've really built, um, a very long-tenured group. 90% of our senior leadership has been with Carvana since before 2019, so well before the drop, um. Our executive team's been together for 10 years, uh, and, you know, we've real- built a, a real cohesion.

    10. HSHarry Stebbings53:37

        exhales ] I'm still getting over this 100 bagger.

    11. DGDan Gill53:40

        (laughs)

    12. HSHarry Stebbings53:40

        Guys, that's gonna keep me up at night. You've ruined-

    13. DGDan Gill53:44

        Yeah.

    14. HSHarry Stebbings53:45

        ... my day. (laughs)

    15. DGDan Gill53:45

        Yeah. Yeah.

    16. HSHarry Stebbings53:45

        Listen, I wanna do a quick fire round, dude. So I say a short statement, you give me your immediate thoughts.

    17. DGDan Gill53:49

        Let's do it.

    18. HSHarry Stebbings53:49

        Does that sound okay?

    19. DGDan Gill53:50

        Into it.

    20. HSHarry Stebbings53:50

        Okay. What's the most common reason early companies do not get product-market fit?

    21. DGDan Gill53:56

        I think that founders are often in such a hurry to found something that they aren't rational enough about what they pick to go and found. I think there's a lot of companies out there that are features and not products, and so you better have a very clear vision for how that feature is a wedge to something much, much bigger or something indispensable for an organization, not like a, "Well, we're just gonna build it and we'll wait and see." Um, and so I, I really am obsessive about this notion of how does your moat get deeper and wider as you execute? Um, and I think a lot of, uh, founders lack that vision.

    22. HSHarry Stebbings54:31

        What do you know now that you wish you'd known when you got into product?

    23. DGDan Gill54:34

        That it's at least 50% if not more about people and not just making product decisions. Um, you know, fortunately I love p- people. I'm a pro-social guy. I love my teams. Um, but really, the leverage is in getting lots of people to move with urgency and to care and to understand the mission and the vision and to attack it, um, and that's a lot of what it's about. It's not just making product decisions and saying, "Let's go do this." Um, you've really gotta get a lot of people to run hard along with you.

    24. HSHarry Stebbings55:09

        What's the most recent wow moment you've had with a consumer product and why that one?

    25. DGDan Gill55:14

        I have to give you two. One isn't crazy recent, but it's fun, was the first time that my wife tried Google Maps inside of virtual reality. Um, and she was, like, tromping around our living room like Godzilla, and, like, looking in our apartment window and, and just, like, experiencing this immersive experience. And I'm a... I'm still a big believer in, in what's going on in the Metaverse and, and I'm very excited by where that all c- can go. I think a second one is just literally two days ago I got a Rivian, and I'm obsessed with it. Um, there's just so much craft in every detail of that car. Like, the headrests have, like, a plaid inlay in the middle of them. And when you're setting the, the flow of the direction of the air vents, it's this beautiful animation. You can save it as your default, so that when I get in the car the air vents point in a specific direction, and when my wi- wife gets in the car, they point in a different direction. And there's just a lot of craft in that car and, uh, and I love it. It's beautiful.

    26. HSHarry Stebbings56:16

        God, yeah, we really do live in hard times, don't we?

    27. DGDan Gill56:19

        (laughs)

    28. HSHarry Stebbings56:19

        You know, when I get in the car, the air vents are in this direction. Goddamn, they... Fuck me. Life, life is tough, eh?

    29. DGDan Gill56:25

        I would not choose-

    30. HSHarry Stebbings56:26

        Putting the air vents left versus right, Jesus. I would not choose any other part in history to live in. This is... I'm happy to be here. Do you know what I find funny? And this is gonna ruin the whole interview for you. I don't even have a license.
21. 56:45 – 1:05:53

    Quick-Fire Round

    1. DGDan Gill56:45

       That's wild. Well, I hope my daughters never have to drive.

    2. HSHarry Stebbings56:48

       Dude, I, I live in London-

    3. DGDan Gill56:49

       I think there'll be full self-driving.

    4. HSHarry Stebbings56:50

       I live in London and I live literally 100 yards away from my office. And this sounds awful, and I take this out, but I'm a total prima donna diva.

    5. DGDan Gill56:57

       Yeah.

    6. HSHarry Stebbings56:57

       So everyone comes, everyone comes to meet me. (laughs)

    7. DGDan Gill56:59

       (laughs)

    8. HSHarry Stebbings57:00

       Question for you. Jaguar rebrand, terrible decision that will hurt the company, or weirdly genius move to get attention?

    9. DGDan Gill57:13

       I'm not a fan of the rebrand, if I'm honest. I, I think the Jaguar already means something. And when you've built brand equity for so long and their brand has stood for quality and innovation and luxury, um, and all these really great things, I think you could've reinvented product, um, and really let the product speak, uh, and tell the story of why the product is different and better, as opposed to trying to reinvent the brand, which I think already had plenty of value.

    10. HSHarry Stebbings57:44

        Yeah. I, I don't disagree with you. And the heritage element. I understand they want to appeal to a new demographic, specifically Asia, but the heritage element is what Asia loves. What one piece of advice would you give to a product leader starting a new role today?

    11. DGDan Gill57:59

        Ultimately you do need to understand the whole system that you're stepping into. And so I think product is really about having a systems mindset, where I've mentioned this a little bit, where you have to understand all of the inputs and all of the outputs and where the leverage is. And so my number one piece of product advice is, is always if you can only change one thing and everything else has to stay constant, what is the one thing you're gonna change? Imagine that future where that one change is as perfect as you can make it. How does that impact the, the business and, you know, KPIs that you're responsible for? Um, and that's what I always tell product leaders.

    12. HSHarry Stebbings58:36

        What other function has the most tension with product?

    13. DGDan Gill58:40

        We've really fought this hard. Carvana is such an operationally intensive business. But we have to be hand in glove between technology and operations. And I think sometimes operations has a reputation for wanting a Band-Aid for a pain that exists today, and sometimes product thinks they're smart and knows more and, and don't worry, we'll handle it. But you really actually need product to live in the weeds with operations and intimately understand the challenges and the experiences and the frictions and the deficiencies. And so you want those folks to be so close together and embedded. Um, and, uh, so I think, you know, product and operations can sometimes be in tension, but we work really hard to try and slam them together and, and make them best friends. (laughs)

    14. HSHarry Stebbings59:26

        What about the way that we build product today will be completely different in 10 years' time?

    15. DGDan Gill59:31

        The siloization of functional orgs are going away. Um, AI is, is re-imagining what it means to write code or to do analytics and even to do design. Uh, and the most versatile problem-solvers and thinkers are just going to be able to cover more ground, um, than they're able to today.

    16. HSHarry Stebbings59:53

        Will Carvana have more or less people in 10 years' time?

    17. DGDan Gill59:57

        It's an interesting question because there are aspects of our business that are very people-centric, and I think we will want them to be people-centric forever. The, the person who shows up on your driveway and delivers your car, um, even if that car were a self-driving car, I think, you know, there's, there's still that customer service in the face of our brand, um, that's gonna be really important and, and that scales, you know, slightly sublinearly in terms of labor optimization, but is gonna need to scale with, with unit sales. Um, on the other hand, I think that, you know, we, we're very transparent that I, I, I do not think that to sell twice as many cars we need twice as many product managers or twice as many software developers. Um, we should be expecting incredible leverage over our fixed expense base, um, in those areas and, and expecting those people to cover more ground over time.

    18. HSHarry Stebbings1:00:43

        How will AI impact your customer service? Like, uh, s- specifically support teams?

    19. DGDan Gill1:00:49

        Ultimately we believe that people don't want loans and they don't want trade-in values and they don't want loan underwriting. They want their car. They came to get a car. Uh, and we need to remove as much friction as humanly possible while also giving the customer confidence along the way that they're making a good decision. And so what we want is to automate everything and make everything self-service and intuitive. And if we can hit an API to get data on you to help our underwriting decision instead of you having to provide a document to us, we're gonna do that. But if at any moment you're not feeling confident or you're nervous, we want you to be able to pick up the phone and talk to someone who's knowledgeable and confident and competent, um, and give you that option.

    20. HSHarry Stebbings1:01:32

        Wh- wh- when I say Carvana support today, are we hiring more support people or do we replace with AI?

    21. DGDan Gill1:01:39

        It's both. Um, what we want is for, we wanna have the best people. I think we wanna retain them for longer than you would see from a typical customer service agent because they're exceptional. And I think what you end up doing when you have a business as complex as ours is you need to specialize. You have people that specialize in the early part of the transaction, people that do the loan underwriting, people that do the registration work, people that do the title work, people that talk about the delivery, because it's so complicated. But as we make those systems more integrated and more intuitive and AI can handle all of the low-hanging fruit, I want the person to answer the phone that can traverse any of those systems and say, "Here's exactly what's going on with your car. I've got you covered. I'm gonna follow up with you in two hours when I have more information and we're gonna be good to go." And so we want the caliber of those people to be just off the charts, and we want AI to handle as much of the low-hanging fruit as, as, as, as possible.

    22. HSHarry Stebbings1:02:31

        Final one: As a CPO analyzing other companies around you, which other company's product strategy-

    23. DGDan Gill1:02:38

        Yeah.

    24. HSHarry Stebbings1:02:38

        ... have you been most impressed by?

    25. DGDan Gill1:02:41

        This is a popular one, I suppose, but I love the go-to market of SpaceX. First order, if you're gonna drop the cost of getting to space by an order of magnitude, I have nothing but respect for the operational discipline required to do that. But simultaneously you're gonna then use that advantage to build out Starlink, which is likely to be an insane cash cow of a business that will allow you to continue to invest, and, uh, it's- it's brilliant and- and it's really to be admired because it takes such incredible vision and discipline and execution to do it. And- and that's what I love the most is- is disciplined, uh, eh, you know, execution operators.

    26. HSHarry Stebbings1:03:23

        I literally tweeted today, I've been in private markets for 10 years. I've never seen institutional demand be so concentrated towards one company stock-

    27. DGDan Gill1:03:34

        Wow.

    28. HSHarry Stebbings1:03:34

        ... than it is right now. Before it was always like, "Oh, I want Figma," or-

    29. DGDan Gill1:03:37

        Sure.

    30. HSHarry Stebbings1:03:37

        ... "I want Wiz or Notion or whatev-" No. Everyone just wants SpaceX.

Episode duration: 1:06:03