Cars used in post-Covid Britain have gone into prime time. Turn on the TV and you’ll see lots of brilliant creatives promoting new cars from leading manufacturers but, similarly, you don’t have to wait long before you see advertisements inviting you to sell your own car in the online marketplace. With the rise of second-hand sales, companies like Cazoo, Carwow, Cinch and We Buy Any Car are flooding the airwaves with call to action.
The growing presence of online car-using marketplaces was underlined late last year when Motorway – a VC-supported marketplace – gained the lucrative status of $ 1 billion Unicorn, securing a সি 190 million Series C investment in a deal led by Index Ventures, ICONIQ Growth, On board with BMW i Ventures.
“It’s dangerous to read too much into an evaluation / funding milestone,” said Tom Lathes, founder and CEO of Motorway. “But it was definitely a milestone for us. This is a moment where we can stop to consider how far we have come. But we are at the beginning of a journey. ”
When I spoke to Leathes earlier this week, I was curious to discover what the journey was like from startup with three employees to Unicorn with 350 people on payroll and how the company tackled the challenges associated with rapid growth.
Connection of sellers and vendors
Motorway resumed business in 2017 with the aim of connecting dealers and vendors. The idea was simple. Vendors will post details of their vehicles online. Dealers will bid against each other to buy them. “Vendors get the cars they need, sellers get the best prices,” says Lethes It was a technology-enabled, used car market.
For the first few years of self-financing, the company raised $ 11 million in 2019 in Series A funding. Then the epidemic hit and the market began to change rapidly.
“The epidemic was an acceleration for us,” Lathes said. “We’re starting to grow very fast.”
Used car boom
There were various reasons at work. As experienced in other sectors, lockdowns and restrictions imposed in the UK have forced (or requested) to change behaviors. Sellers become more willing to buy through an online platform and consumers find a convenient way to sell it. In addition, the used car market itself was booming. Thanks to component shortages, sales of new cars have fallen and prices have risen, which has encouraged a rise in pre-owned sales. You could further argue that economic uncertainty has played a role in boosting the second-hand market, as consumers thought twice before buying new ones.
Whatever the reason, the motorway has seen a business boom. In 2021, the platform had a turnover of 1 1 billion. Today, 5,000 dealers use the system.
The challenge of growth
So what were the challenges of rapid growth? Leathes cited culture. In the early days, the company built a business based on the services of both dealers and car dealers. This was essential because both had to be persuaded to act differently. Human support was a key element with operators to increase platform automation. This means a lot of direct communication between platforms, dealers and vendors.
Equally important, all employees were encouraged to respond to customer feedback by respecting the product and continuously improving the service. “The quality of service comes from the team,” says Leathes.
The question was – and let’s see this as the biggest challenge – how can you replicate the primitive culture as the team grows? You need more than luck to succeed in affiliate business. “We’ve spent a lot of time defining our values and creating a set of guidelines,” Lathes said. “It has in turn created a strong culture.”
Leathes not only emphasize hiring the right people who are culturally speaking, but also bring out the skills to enhance service and drive growth. Many of those who were with Motorway in the early days are still there, but have created growing revenue opportunities through venture funds. “We’ve got more experts – the ones who are the best at what they do. And we’ve also strengthened the executive team, ”Lathes said.
Leathes sees this, the company now has a lot more skills. “Those who have joined us are far more knowledgeable than I am,” he said.
Leathes and his co-founders – Alex Buttle and Harry Jones – were all entrepreneurs and decided to self-fund for the first few years to prove the idea, “he said.
When Covid takes the business forward, Motorway brings index ventures – a VC with experience to scale the marketplace – and further growth leads to Series 3 rounds. Leathes says proven products, strong usage and rapid growth mean investors are buying an attractive business. Thus, unicorn status is bound by strong originality.
But funding is – according to Leathes – increasing motorway’s ability to compete. “We’ve increased our engineering team to 130,” he said. “There is a lot of competition and funding has allowed us to innovate. Our squad can solve really difficult problems. ” The fund is also helping to build the brand through promotion.
A need for focus
Where’s the next one? Leathes sees opportunities for international expansion but not yet. The Society of Motor Manufacturers and Traders has ample growth potential in the UK with a market share of 2 per cent valued at around £ 79 billion. “We don’t want to confuse ourselves,” he said.
And focus is important. “It simply came to our notice then. It is a great market for dealers to buy and sellers to sell. We’re going to double that. ”