As part of my series about the “5 Things You Need To Know To Create a Successful Service Business,” I had the pleasure of interviewing George Arison.
George is the co-founder of Shift, an online marketplace disrupting the $1.4T used car industry. An immigrant from Georgia and a lifelong entrepreneur, George also co-founded the first on-demand mobile transportation booking technology Taxi Magic (now known as Curb), as well as working for Google and BCG.
Thank you so much for joining us, George! Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I’m a technology entrepreneur, but never did I think I’d be working in technology until I got started. I grew up in the Soviet Union and came to the US at age 14 for prep school. I went to a liberal arts college and studied politics. I love politics and always thought I’d be in politics one day, but also always strongly believed in the Bush family approach to public service — make money first, provide for your family, then go into politics. My best friend from college, Toby Russell, took a job at BCG after graduate school in 2004, and he really pushed me to go there because it would be the equivalent of going to business school. At that point, I did not know anything practical about business (other than what you read in The Wall Street Journal, which I’ve religiously read since I was 14).
Soon after, we decided to start our first company together in the late 2000s called Taxi Magic (later rebranded as Curb). It was a ride-hailing app for taxis and was pre-Uber but in the Blackberry era (whereas Uber really designed for iPhone). So we ended up being about two years too early to the game, but we did invent a whole new category of using mobile devices for on-demand services, and for a while were featured in a lot of Apple ads for early iPhones. The company eventually sold to Verifone and it’s still used a lot by taxi fleets across the country.
After that, I went to Google for a few years to get some exposure to Silicon Valley while I was thinking about my next company on the side and then in 2013 I left to start Shift, which is an e-commerce platform for used cars.
What was the “Aha Moment” that led you to think of the idea for your current company? Can you share that story with us?
So I was actually a founder previously and so I knew I wanted to start another company — indeed I moved to the West coast in 2010 precisely so that I’d be here for the next company. So Toby and I would get on the phone once a week and talk about ideas.. And I had this terrible experience trying to get a loan to buy out my leased Saab, I had to go to a ton of different banks to get financing, and they told me to go back to the dealer to get a loan, which made no sense to me since I already had the car. Toby had had a similarly bad experience in financing his car because the bank he wanted to use would not let him get a loan if he bought a car from CarMax. So these two experiences led us to realize that there was a huge opportunity here. We initially wanted to focus on financing for car purchasing but through testing and learning realized that you had to own the transaction if you wanted to build a financing product over time.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
I do not know about the funniest, but the biggest thing was with Taxi Magic. We really built our app to be by and for business travelers to be used on the Blackberry which was really popular among that crowd at that time. We didn’t envision this going on an iPhone. So we designed that as a mobile booking platform for taxis and integrated it there. But then Uber launched about 2 years later with the iPhone as their native platform and completely took things in a different direction. So the lesson was more or less, don’t be first, just be the best.
What assurance does Shift give buyers that the car is, as promoted? Is there a warranty? Is there a return option?
Yes, all cars are given a 150-point inspection process by our team of mechanics, and there’s also a 5-day or 200-mile money-back guarantee on all purchases. We also offer a 30-day warranty on a large portion of our inventory — cars classified as “certified.” Additionally, we also offer vehicle protection plans so you can get like-new coverage for your car in the years it’s going to need service the most.
Older cars typically have had some work done, whether to the engine, the transmission, the muffler or other age-vulnerable parts. Since there is often quite a disparity in the quality of the mechanic who made the repairs, how can Shift provide assurance for the quality of the repair work?
I’ll be honest — had you asked me six years ago if I was planning on having so many mechanics and other folks focused on car reconditioning working at the company I was starting, I’d say, absolutely not. I was thinking we’d be a technology company only. But you learn in this space that to have really good business you have to be awesome at reconditioning cars, so we’ve built a great deal of skill set in this. So we recondition virtually every car that we sell. We have certain standards that we need to meet before we can sell that car to a customer. As I mentioned, a large portion of our inventory is certified, so we provide a warranty on it, and we make an additional warranty available on every car that we sell.
Buyers are very vulnerable when purchasing used cars. Trust is an important factor. If Shift achieves that level of trust does Shift plan on going national?
We actually already have sold cars to almost every state in the country. But yes trust is huge for us, and I think that’s something that has been present since the very first sales we started making back in 2014. People wouldn’t buy from us and really love our business if they didn’t trust us, so the fact that we’re still around, and we’re actually growing at a healthy rate, really speaks to the fact that we have built up some trust with our customers, so that’s really cool to see.
You can build a huge, successful public business that operates just on the West Coast — the market is that big. The thing is that we want to have great service and experience, and sometimes growing too quickly can be an issue for that.
Thank you for that. Let’s now pivot to the main focus of our interview. Extensive research suggests that “purpose driven business” are more successful in many areas. When you started your company what was your vision, your purpose?
Ultimately we wanted to make this process easier and simpler, but also more fair and transparent. This market is too large and too fragmented for any one company to own all of it, or even close to a majority. Indeed, the largest player has 1–1.5% of the market. However, we believed that if we created an amazing experience and pushed innovation forward, it would transform the whole industry. And that has already happened — six years ago no one thought “being the test drive to the customer” was viable. Now the largest player in the market is trying to copy it, not too successfully (they’ll get there in a decade). So we are forcing the industry to change.
It’s ridiculous frankly that the industry is still so flawed. And let’s be honest: consumers are smart, and they don’t like feeling like they’re being played with. Our initial vision was actually just to serve as a third-party verification company so that folks buying private party (without going to a dealership) and make it possible for them to get financing. But we learned over time that you had to own the entire transaction.
What do you do to articulate or demonstrate your company’s values to your employees and to your customers?
Well like I said transparency is really big for us, and I try to really do that as a founder too. I sometimes have no filter and that gets me in trouble.
We also are big on convenience and doing the impossible, so we found a way to be able to bring test drives to customers on demand. As a logistics problem that’s super hard, and people thought we were crazy for thinking of this. But we were like what if you take the extreme of making car-buying convenient and easy, and that’s basically, how can I do it on my lunch break at work or from my driveway when I’m home with the kids. So we built that out and made that happen for our customers.
Do you have a “number one principle” that guides you through the ups and downs of running a business?
Most people who work with me will know I operate with a “nothing is impossible” mentality which I definitely got from being an immigrant who had a pretty impossible story of coming to the US and becoming a founder in the first place. So I tend to think, like, if all of that was possible, what else could be. And just go big with what you’re aiming for because you can always (and probably will have to) scale things back, it’s much harder to try to scale out once things are already running.
Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?
I say that fundraising as a founder is like going through your college rejection letters one at a time for 6 months. It’s pretty brutal to get no’s — and you will get many of them — while still having to go out and convince other people to invest in your company. But remember VCs are in the business of saying no since each VC does 2–3 deals a year. There was a time when I was driving down to Menlo Lark pitch a VC firm’s final partner meeting (a fund that ultimately did invest in Shift and has been super supportive) and on that drive down, we got word that we got a no from a tier-one fund, with a typical “could not get there” explanation that makes no sense. So it was pretty hard to shake that off and get your game face on to go straight into a meeting and get others to say yes. But at some point, you also have to just have a thick skin because you know that if you’re not successful at raising capital, you shut down.
So, how are things going today? How did your values lead to your eventual success?
We’re in 5 major markets right now and a lot of that is thanks to our core value of “being an entrepreneur.” This is basically, see things that could be better or different and then go execute it. That’s the hardest part though. Most people get this wrong about entrepreneurship. Ideas are common, execution is what’s hard. So you can’t be an entrepreneur without being able to actually build something — coming up with ideas itself is not the same thing.
Based on your experience and success, what are the five most important things a founder or CEO should know in order to create a very successful service-based business? Please share a story or an example for each.
- Raise more money than you think you need
- Hire really really good talent from the beginning — talent tends to recruit other talents
- Great talent still requires management — most great founders are terrible managers so get coaching on how to manage early
- Test and learn
- Don’t overlook operations and find ways to use tech to streamline and enhance your operations
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
For the last 27 years, I’ve not made one big decision without talking to my best friend Toby about it. None of my stories since college would have been possible without him.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
I don’t know about great influence but I’ll try. I’ve in a time when some are being critical of our capitalist system, and the notion, proven time and time again, that free society that can only exist alongside the free economy. The history of America domestically and internationally is one of expanding political and economic freedom to hundreds of millions, if not billions of people. We have to be incredibly proud of that rather than trying to apologize for America. (This doesn’t mean we haven’t made our share of mistakes, of course, we have, but I’m talking about the totality of the evidence.) I’m an immigrant from the Republic of Georgia. When we faced the menace of Socialism in the Soviet Union we understood that pushing this ideology made no sense. But since we won the Cold War and ended that great threat, we’ve lost sight of that and now we have people seeking great political office and advocating policies based on those same foundations. Meanwhile, we are living through a situation where the leadership of one of the major political parties in this country is ignoring behavior in its putative leader that is beyond the pale of anything that’s ever happened historically. So if I could start a movement, it would be to rekindle the core constitutional and political principles on which our country was founded among as many people as possible so we can move past both socialist and corruption. And quite honestly I’m fairly confident this will happen — our nation is able to give birth to great political leadership at times when it needs it most (see, for example, Lincoln, TR, FRD, Reagan) and I’m confident in the coming 10–20 years it will happen again.
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Quora: George Arison