Leaving A Legacy (An interview with vAuto founder, Dale Pollak)
Dale Pollak's interest in the success of the dealership model doesn't come from his business practices; it's something that's rooted in his very being.
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Transcription
I've been waiting to release this interview for a long time. Welcome to the Dealers Compressed Podcast. My name is Paul J Daly and I will be your guide today through this margin compressed environment that we're all living in.
Today, I get to air an interview that I recorded almost a year ago at Dale Pollak's home in suburban Chicago. So I know it's terrible, terrible, terrible practice to record content and then release it a year later...actually, almost a year to the day.
This interview was originally recorded on May 15 of 2017 and initially, we were going to do a podcast called 'The ReInvention Podcast' and we have a bunch of episodes recorded. We will probably still release that and have guests like Gary Vaynerchuk, and Scott Stratten, Glenn Pasch from PCG Consulting, Peter Leto from Google, Dr. Nicole Lipkin, and Dale Pollak is one of the guests. I was going to Chicago to record the interview and we were going to do it at the vAuto headquarters and his assistant Susan emailed me the day before and said "Dale is not going to be coming into the office today. Would it be ok if we did the interview at his home?" YEAH! That would be really ok.
So, I ended up going to Dale Pollak's home and he was a gracious host. We actually recorded two podcasts. One was an interview about just what makes Dale, Dale; talked about his journey, what happened and how he reacted to the onset of the blindness, and really, how he began to navigate through life and make decisions and really come out victorious. And the second podcast we did was automotive focused. That's what you're about to hear.
It's about 10 minutes long and it has Dale about the industry, and margin compression, and what he wants his legacy to be in the automotive industry. I think that's my favorite part. You know, we all work in the industry and work hard to make a difference and introduce products and serve customers, but in the end, somebody's going to tell a story about our life and that's our legacy. So I asked Dale, what he wants his legacy in the automotive industry to be. I hope you get something out of that answer; it's a great answer.
So, as we get into this interview, one of the interesting things is that when we recorded this episode, nobody knew about 'Like I See It'. 'Like I See It' was released in October of 2017, so if this is in May of 2017, that means the book was being written at the time we recorded the interview...or at least conceptualized; they were probably working on it. So, you're going to hear a lot of the principals that Dale talks about in the book, in this interview that is prior to the book release. It's kind of neat to go back in time, you know, use the time machine to hear what his mindset was and you're going to hear a lot of consistency.
He talked about margin compression and the fact that it's not going to stop. He talked about the fact that dealers are curious about "How am I going to make more money?". It's not about selling more cars, it's actually about making more money, you know, so all the operational efficiency imperatives and the human capital advice, all of that stuff really just trickles down to the bottom line.
So I hope you enjoy this interview...it's me and Dale Pollak in his home in suburban Chicago in May of 2017. I think you're going to be impressed by how consistent it still is a year later. Dale is just a forward-thinker, so he was thinking way out on the edge, and 'Like I See It' came out, but he had already been mulling over and processing that, those ideas, those thoughts, and that content. So I hope you enjoy this interview.
Paul: I'm here with Dale Pollak and we're just going to spend a few minutes getting his take on some current trends in the industry and basically, gain from his insight, wisdom, and experience. So you understand dealers because you were a dealer...
Dale: Not only was I a dealer, I believe that I am a dealer even though I don't own a dealership. I can't help but think like a dealer, so I sort of pride myself as even being a dealer today, just because it's every bit of who I am.
So, what role do you currently play in the automotive industry?
[laughs]
That's a fun question.
That is a fun question. I suppose that in a certain respect, I'm a teacher. I'm out there constantly prophesying the wisdom of Velocity Management. I'm also a solutions creator helping create new solutions for dealers to help them meet the needs of this very margin compressed environment.
With your insight and from the teacher's heart, what do you think the greatest challenge facing auto dealers today is?
No question, it's the margin compression in the industry. The market's becoming evermore efficient. It's just a reality of the internet. That's what the internet does in every industry that it touches. When you distribute information and knowledge more equally between buyers and sellers, fewer mistakes are made and margins are compressed. Will it cease? Absolutely not. I mean, it's taken and reformed and, in some cases even, eliminated certain industries. Our industry is really also subject to the same phenomenon so, our proper response to it is to have to become evermore efficient.
If you could have a dealer just teed up, ready for you to walk in and help them, what is the question they're going to be looking for an answer to but not realize it?
Well, "How do I make more money?" is what they're all trying to do. I mean, they all want to sell more cars, but at the end of the day, they want to make more money. Today, I think that making more money has less to do with selling more cars and it has more to do with more operation efficiency and when dealers think about operational efficiency, they naturally think about their expenses, which for sure is part of that, but certainly not all of it. Operational efficiency also has very much to do with those things that we do in the dealership every day, over and over; how well we're doing them, how efficiently we're doing them, or maybe some things that we're not doing that we ought to be doing, so a lot of that stuff that we call 'efficiency' is not on your financial statement, but adds up to the bottom line every bit as much as those expenses that are on the statement.
What is the usual, like I'll call it the 'low-hanging fruit', so some of the listeners are probably vAuto customers, some of them aren't vAuto customers...what are the usual areas that you go in first and you say "Here's the low-hanging fruit that we can make a change and a difference right out of the gate."
Well today, every dealer is on a journey of understanding. They will all eventually arrive at the enlightened understanding that they have to price vehicles rationally in order to see enough shoppers to sell enough cars to make it worthwhile and when they do arrive at that enlightened destination, they cannot avoid the conclusion that they can't negotiate or negotiate as much. So, dealerships definitely need to begin to measure and manage the amount of discount that's going on in the sales process.
Another really big area of inefficiency is in the reconditioning process. We could spend a whole lot of time talking about where those inefficiencies are but, they are in multiple areas including the time that it takes to recondition a vehicle and another area that I particularly find obvious is their inaccurate estimates of reconditioning amounts. So, for dealers to start to appreciate or at least address those situations knowing that there is some efficiency to be gained just by looking at those areas in general. A great deal of efficiency to be gained.
What do you see as the next push towards efficiency?
Where I see a huge amount of opportunity and where I am spending a lot of my time these days is in the wholesale space because it frustrates me greatly when I hear dealers say as I often do that they can't find the cars that they would need. I hear it all the time. Yeah, they can't find them for the amount of money they want to pay and my response to that is "If you're doing it the old way, I certainly understand that frustration." But today, we have developed technology. Two years I developed Stockwave which really eliminates every excuse that any buyer would have who says I can't find the cars. I can't the ones that I need for the right amount of money. Technology can do that today, but it definitely requires a buyer to let loose of their personal need to make those decisions without data, put their ego aside to a certain extent, and learn to use technology (although it's pretty darn easy to do).
So, what do you think about- I heard a lot at NADA this year about this is going to be the year that digital retailing finally clicks into place. What do you think about that?
Well that's another initiative I'm spending a great deal of time on. You know, digital retailing has a lot of aspects to it. When you say digital retailing, people interpret that as meaning different things. But one thing, or two things, that I can say with a high degree of certainty is number 1: Dealers need to find a way to sell and deliver vehicles to consumers at a lower expense and doing a lot of the transaction, if not all of it, online before the shopper/customer gets to the dealership is definitely a way to reduce the amount of labor involved in selling a vehicle. I know that for sure and I understand that very clearly; the need for dealers to obtain that sort of sales operational efficiency.
The second thing I know for sure is that Gen. Y buyers are not so interested in coming to the dealership or, at least, not coming to the dealership to do the hard stuff like the negotiation. I do believe they like to come to the dealership for the fun part, you know, have that in-dealership experience of finding the car they want and test driving the car they want and learning about dealership services, but the hard part? Negotiating the sale, the price, the payments, the trade-in...they'd prefer to do that in a non-physical environment, at least, a growing number of them would. There is a lot of opportunity to meet the needs of both those consumers and dealers.
So you've been paying a lot of attention to that...do you feel like vAuto will have a contribution to that?
Well, more than paying attention to it. I'm actually the executive responsible for bringing the solution to market at Cox Automotive, so I'm working with a team of really bright and talented people today who are creating that solution.
And that's going to be something that, again, is widely available to your customer base?
Yes.
Ok, so, I've seen a lot of independent and privately held companies working on their own individual solutions and this is going to be something that is more widely available.
Well, there are a lot of companies out there claiming to work on digital solutions, but the reality is, is that there are a lot of pieces to that. You have to be able to engage a customer, you have to be able to agree, you have to be able to transact so there's a lot of technology and a lot of moving parts to that. One of the reasons I feel very confident that we have an advantage in this venue is because we literally have more of all of those pieces than anyone else does. I think that unless you are able to put it together end to end, you're going to have really a solution that is not likely to meet too many people's needs. You have a very big sandbox. We have a very big sandbox and it's a big obligation, it's a big responsibility. And listen, having a big sandbox isn't always an advantage because there's certainly aspects to working in a small start-up company that's quick and nimble. You know, there's advantages there, but we're learning how to do that sort of lean, rapid deployment in the big environment. But it's work, it's challenge.
One of my favorite entrepreneurs, Gary Vaynerchuk, he says "Goliath should have never, ever, ever lose to David. If he loses, it's because of poor execution."
That's true, but I can tell you as an entrepreneur, having done it outside the big giant, it's challenging to do it inside, but it's doable and there's a lot of advantages to scale, but I guess on either side of the equation, being a small company or being a large company, there's always going to be challenges.
Sure. Absolutely. Well, I'm going to ask you one more question. I kind of tend to be legacy-minded, just in general, what do you want your legacy in the auto industry to be? When you hang up the vAuto spurs and you decide "Ok, I'm out" or whenever that time comes, what do you want the industry to remember you as?
I owe everything that I have to the dealership model. My father was a car dealer, it provided me an excellent upbringing, it gave me all of the professional opportunity that I ever would have hoped for and I have a place in my heart and always will for the viability of the dealership and particularly the family-owned dealership. I really have a sense of family when I look into many of these dealerships and I understand the hardships, I understand the struggles, I understand the privilege of having a family-owned dealership. I also respect how much dealerships mean to their communities and to the families of the people who work in those dealerships, so I would like my legacy to be one that is recognized as helping dealerships survive and thrive in a very challenged environment.
Well said. I'm looking forward to that as well. Dale, thank you so much for spending a few minutes with us and our dealers today. Wish you all the best in this next year. Looking forward to some great releases.
Thank you, it's been my privilege.
So thanks again for listening to the Dealers Compressed Podcast. If you like what you heard, please subscribe to the podcast or leave us a review and let us know how we're doing.
Also, go to DealersCompressed.com where we have a ton of resources. We've actually created an entire video series around Dale Pollak's book 'Like I See It'. Use it as a resource to train your team, to get up to speed on what's going on with millennial buyers and employee culture and manufacturer incentive programs and a whole list of other things. Pass it up to the owner of the group. If you're the owner, pass it down to your management team so you can be aligned and on the same page.
We have an email list. Please subscribe to it on the website. We have fresh content every Tuesday and we'll send it right to your inbox. Also, my name is Paul J Daly. I would love it if you followed along with my journey. I do a lot in automotive and the creative worlds. You can go to PaulJDaly.com or you can follow along on Instagram or LinkedIn or Facebook or Twitter and we can just walk the journey together and hopefully inspire one-another. Get better together.
So again, thanks for listening. I hope you have a great week.
