TORONTO – Mark Endras, the cofounder and CEO of TradeRev, a Toronto startup which has developed an automated used-car bidding platform for the automotive sector, knows a thing or two about the industry he’s disrupting. After all, he runs a dealership himself.
After graduating from the University of Toronto at the height of the early-aughts dotcom boom, then leaving a job with a hot startup just before the first Internet bubble burst, Endras ended up at his father’s business, a network of car dealerships in the Toronto suburb of Ajax, Ontario, which he inherited in 2008.
It was for those dealerships, Endras Automotive, that Endras and his friends, TradeRev cofounders Wade Chia, Jae Pak, and James Tani, first began developing their platform in 2009.
Since its public release in 2011, TradeRev has facilitated more than $1 billion in used car sales across Canada.
“We understand the consumer side, because everyone understands what it’s like to buy or sell things, but we’re also dealers, and we also understand that not everything is as a consumer perceives it – there are some pains on the dealer side, and through technology, we think that we can bridge that divide and create a transaction that wins on both ends,” Endras tells ITBusiness.ca.
The central problem the TradeRev platform is solving – at least, from the consumer’s and, Endras says wryly, the “progressive” dealer’s point of view – will be familiar to anyone who’s delivered a used car to a dealership for appraisal. Though today’s Internet-savvy owners will often consult online authorities such as the Canadian Black Book to determine their car’s value beforehand, the truth is that prices in the industry can be more volatile than the stock market, often leaving customers frustrated when a dealer doesn’t offer their car’s perceived value.
“We have a saying – the data is great, but money is better,” he says. “Every used car is different… say there’s a recall on airbags, and the manufacturer can’t make new ones fast enough, the prices on the cars that need new airbags are going to depreciate.”
The impact of such factors on a vehicle’s resale – which the industry calls “remarketing” – value often change in real time, Endras says. And so back in 2009, he was struck with an idea: rather than trying to haggle with customers over the worth of their used cars, why not simply show them what dealerships would be willing to spend?
The TradeRev platform presently has more than 6000 dealerships across Canada on its system. To use it, prospective customers must first visit a participating dealer (a consumer version of the company’s mobile app has not yet been released but is in the works, Endras says), but once their vehicle information is entered they can watch multiple dealers bid on its value in front of their eyes. If an offer is accepted, the company arranges shipping for a nominal fee, and the customer receives their payment within 48 hours.
“It’s created efficiency,” Endras says. “Dealers can move cars off their lot faster… and it brings transparency to the whole transaction.”
If it sounds like the company was filling an existing demand rather than creating a market from scratch, it should: Endras says that TradeRev was profitable in its first year. It’s also left many of the industry middlemen who used to conduct auctions between two or three dealerships at a time out of work, and likely frustrated more than a few salespeople, since the company’s fees are much lower than both.
“There are dealers that feel we’re a disruption,” he says. “But from a consumer point of view, and from a progressive dealer’s point of view, we help the transaction.”
Among the “progressive dealers” who share Endras’ ideals: KAR Auction Services, the self-described and self-disrupting world’s largest conductor of physical and online auctions, which purchased half of TradeRev for $30 million U.S. in 2014 and has helped it expand to the U.S. east coast and the U.K. in the years since.
The company has also grown from four employees to more than 160, 90 of them in Toronto alone, and plans to hire at least 15 more programmers this year.
From tech to automotive and back again
Endras’ journey between industries is a fascinating one: Soon after his family arrived in Canada from Poland in the late 1970s his father began working as a used car salesman, meaning Endras, who was three years old at the time, grew up around the business but never wanted anything to do with it.
“The industry has, for obvious reasons, a bad reputation, and while there are some great operators in the car business, people who are obviously trying to change the business, I always saw an inherent distrust in the transactions,” he says, noting that he was always more into computers and science. “I thought I was going into biotech for awhile.”
In the early 2000s Endras graduated from the University of Toronto with a degree in human biology and computer science, and was hired by Wysdom, a Canadian tech cautionary tale which during the early dotcom boom managed to raise $50 million USD, before he had even finished his classes.
Wysdom’s goal was to build Java-based middleware for smartphone app developers – back when the Java platform had just reached smartphones, the majority of cellphones were flip phones, and before anyone could imagine what an “app store” was.
The company eventually received a buyout offer for more than $300 million, Endras says, but its board refused, and six months later, its workforce had been reduced from 150 employees to fewer than 20 (Endras had been hire number 15).
“I thought, ‘man, this thing is dying,'” Endras says. “I was really invested in the company and wanted to see it do well, but eventually I said, ‘Y’know what? I could’ve been married and had a dog. I gotta move on.’ So I begged my dad for a job.”
The senior Endras was not in love with the idea of his son taking over the family business, and Endras smirks as he remembers his argument: “C’mon – IT’s blowing up. Nobody wants to be a programmer anymore… Everyone’s getting out of the field.”
His father relented – after Endras went back to school in the U.S. and earned an automotive marketing degree, then worked with another dealership first.
“I really learned the business,” he says. “Of course, I was still very much a technically-minded guy, so I saw all of the inefficiencies in the processes, and when Steve Jobs announced the iPhone, and specifically the App Store a year later, I had this eureka moment – we could change part of the business.”
That history of hands-on experience informs Endras’ choices to this day, since he continues to run his family’s network of dealerships in addition to TradeRev. For example, he knows that many dealers might be intimidated by the prospect of a consumer-facing TradeRev app, but is reasonably confident he can teach them – and his own dealership employees – how to recognize its value.
After all, customers interested in securing the value of their used vehicle’s ideal price will still need a dealer to facilitate the sale.
“We believe in the car business,” Endras says. “We just believe that it needs to be fixed a little bit.”