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Malcolm Lui:
Welcome to the High Value Sales Show of Eversprint.com. I'm Malcolm Lui, the Managing Member of Eversprint, and today we're speaking with Jason Goldsmith, the CEO and Co-Founder of CARCHEX, a consumer focused reseller of vehicle protection plans and other automotive protection products. Welcome to the show Jason.

Jason Goldsmith:
Thank you

Malcolm Lui:
Jason, you grew your company's revenue from $32.2 million in 2014 to $56.6 million in 2017, a 76% increase. Before we talk about how you grew y. our company so fast, can you briefly share what your company does beyond my quick intro, and how your company differs from the competition?

Jason Goldsmith:
Sure so. Our background is is kind of an important part of the equation here. I'll keep it brief for you and your listeners but we actually started as a pre purchase inspection company and I bought the assets of a little mom and pop company which was called car checks at the time. After using the service. This is back in 2003 and so we would travel to and we still do we travel to vehicles across the country. You may be if I'm here in Baltimore or maybe I see a car in California we're able to send an inspector and give you hundred fifty five point section and make sure that the sellers representing the vehicle accurately so you know a lot of folks know about Carfax which is a vehicle history report that tells you about the history of the vehicle. Essentially what's happened in the past. What we're doing is getting professional eyes on the car to help you understand the condition of vehicle at the time that you're buying it. So that was how I got into the business and then we quickly added which became the fastest growing part of our business and a driver of that growth that you were talking about just a minute ago our vehicle Protection Plan Division our business so we sell vehicle protection plans a lot of companies or a lot of customers rather have referred to them as extended warranties not quite the right no McClatchy but that is that's the type of product that we sell. So aftermarket legal protection plans and that's we've got products from zero to two hundred fifty thousand miles on the odometer and up to 20 years in age. So we have a big breath of product offerings in order to make sure that we can ultimately capture as much of the marketplace as possible

Malcolm Lui:
Now you have the extended warranty programs you have your car inspection. What are the other automotive protection products you have

Jason Goldsmith:
So we create unique products for four other partners. So I'll give you one example. We power the Edmunds Promise program which we call the price promise program. And so that's almost like a certified third party certification program. So we provide a a 30 day bumper to bumper which we refer to the right term as exclusionary warranty or exclusionary equal protection plan. And then we offer other things with that. In that case it's a 12 months of road side and roadsides and other offering that we have. We do some work with some partners on the auto insurance side and also the auto finance side but we create all types of products for our different partners that could be combinations of vehicle protection plan plus something else or a unique product. We have a car check certified product for dealers we have a remarketing program. So we do a lot of work with dealers car dealers in general where we help them RE market to customers where they may have missed them in the FBI office. And so ultimately they're trying to capture those folks as they come off their three year thirty six thousand mile or their four year fifty thousand mile warranty and we help them do that we market actually as the dealer for the dealer in those cases. So we do some with our direct consumer business that's very much car checks branded and then we have some some other pieces of our business where we work with our partners and maybe actually just the plumbing and that situation and work under their brand

Malcolm Lui:
Right now. Are these services that you offer do you offer at all in-house or are you reselling for example the 30 day Exclusion Plan of another vendor.

Jason Goldsmith:
Yeah. So that's a great question. So we're not an administrator. The part what you're just describing is the work of what an administrator does. So when you have a claim you'd call a particular phone number and they'd adjudicate your claim and they'd ultimately pay your repair bill if that's covered under your contract. There's a reason why we say we're administrator agnostic because we actually partner with these administrators and lots of different ways. There's there's two things that we we do here. One I come from the banks compete model in the in the lending space. My previous business was a company called the loan page AECOM very similar to Lending Tree and we took that model of being able to get multiple quotes and we kind of we think we fixed what was a flaw at the time. Now that models evolved today but you were due to get multiple quotes but you also have to talk to multiple people which could be quite annoying to have the same conversation four times. Right. So what we did was we actually found the best administrators in the marketplace. We put them into a proprietary system that we built out and we offer it kind of a menu for our customers where we're we're working to get them the highest level of coverage at the most competitive price.

Jason Goldsmith:
And so that's in order to do that. We can't be an ad men otherwise you know essentially we have one rate card. So we have multiple rate cards where the customer gets the benefit of these competing parties essentially to provide them that highest level of coverage at the most competitive price. And then secondarily as I was talking about just a minute ago about our dealer business. One thing I learned early on is that I do not speak car dealer. I'm a marketing and technology guy predominately an Internet marketing guy and car dealers speak their own language. And so we built a program for them that was essentially found money and they they would the objections that they had early on when we talked to them about this program were somewhat mindblowing I won't go down that rabbit hole but the reality was we we really needed to partner with folks that knew that business well that ultimately had those dealer relationships directly and those that those are really the admins that work with those dealers and their base of either in some cases agents or direct employees that service those dealerships. So by being agnostic we get to work with everybody and ultimately we can market in two to multiple dealers through those relationships

Malcolm Lui:
All right. Got it. So as a consumer right I potentially could buy the same programs that you offer directly from your partners or

Jason Goldsmith:
Well.

Malcolm Lui:
Give excuse

Jason Goldsmith:
Well

Malcolm Lui:
Me

Jason Goldsmith:
No most of the administrators in most cases they don't. Everybody kind of does what they do well. There are some of my competitors out there that are both an administrator and a reseller or a seller in that case. But in most cases administrators are more like the insurer they create the rate cards they work with us. We kind of create our own programs. I guess I should have mentioned that. So there's a you even know we may work with an administrator that maybe a competitor may work with that administrator as well. The programs that we develop we developed together with our own terms and conditions and are kind of have they have some level of car checks branding around them. But we still you know it's certainly possible that you could buy a similar product from someone else. However you wouldn't be buying that directly from the administrator in those cases they don't sell product they need guys like us who are ultimately marketing and sales agents for them to sell products so that they kind of do more of the back end in terms of the plumbing that they that they're responsible for.

Malcolm Lui:
Right now. Oftentimes the these car protection plants especially the extended warranties if know when I've researched it oftentimes the takeaway was that it because it is a service they are providing protection. And of course the the vendor they make their way they make their money of course is that the amount that they pay out is less than the premiums or fees that they take in and that it may not be necessary depending on the kind of vehicle you buy. And the reliability of the of the vehicle right. Car that's more likely to break down you get better value out of it extend it protection plan and then the cars that are really reliable maybe not as much value but you might like the peace of mind. What's your take on that thought.

Jason Goldsmith:
Yeah I think that's a I'm I'm I'm thrilled that you actually brought this up. I think that's a big misconception in the space. The problem with this space and it's actually the opportunity that we saw was really to become the gold standard in this space. You know these products vehicle protection plans sold correctly the right level of coverage at the right price to the right customer is extremely valuable. And so what was happening in the industry and it started in car dealerships we've all had that terrible F and I experience where the whole plan is to keep you locked in that room as long as they can and so you ultimately submit. I mean that's been the model since the 1950s and in most car dealerships it hasn't actually changed but. And then that propagated out with a bunch of bad actors and that came along early in the space. And so what the opportunity was to get was to get the right customer the right product at the right time and at the right price. And and the key here is and you brought up something before is like oh well if you have this car you know maybe a Honda for example it's not as valuable as if you have a BMW and you got to remember this that just like any other shorts product the losses are priced appropriately. So the way that I look at it is a little bit different and I have the protection plans on all my cars and as you might expect being in the business I'm an advocate.

Jason Goldsmith:
But the reality is this. You have three choices when you're looking to fix your repairs right. Either you're going to self-insured. Right. That's an option if you're you know if you can afford a four thousand dollar transmission surprise maybe you're just going to pay that when that surprise comes up. Your other option is you could create your own savings account and put some money away every month. OK that four thousand dollars prize comes up you only save three thousand at that point you're a thousand right. You got to come up a thousand out of pocket and then what happens on an extra pair or you know for about one hundred twenty dollars a month over that time period you're paying back because we only we. For us we do premium financing so you can finance up to 24 months interest free. If you or if you're looking at that well then now let's say that you had the 4000 dollar surprise but then you had another five hundred dollars surprise and all these other surprises that build up you've got a way to budget for your repairs. And that's really who this plan is for. It's for people who need to budget. It's not just people who are obviously on a fixed income it's anybody who wants to be able to budget the repairs and then the other piece of that is really to make sure that you get the right level of coverage.

Jason Goldsmith:
What we do a car checks is we call it top down selling. So we're always selling the highest level of coverage first. That exclusionary coverage if it's available in your vehicle whatever the highest level is that's what you're gonna be offered from us the first time around. And then there could be reasons why you might want to lower the level of coverage. But you're always going to start with that. So if you get the right level of coverage you're going to get a lot less claim denials which is what creates complaints in this space. If you can imagine from any insurance business whether it's you know a Geico or state form and you think about auto insurance. People get upset when their claims get denied. And if you can sell him into the right product the right price and minimize the possible denials of claims that's going to ultimately create a happier customer and oftentimes in our space what happens is you've got folks out there basically selling the lower level lowest level of coverage representing it as if it's a higher level of coverage and then trying to make kind of the biggest spread or margin and that's what creates problems for people in the space and you know to to anybody who may be looking to research the space or try to figure it out it's kind of hard to understand all of those moving parts.

Malcolm Lui:
Is it the fine print that kills people because they don't read it.

Jason Goldsmith:
I think that the fine print in any contract can always hurt you. But the reality is you just you don't you should always read the fine print. The nice thing about an exclusionary plan and why I keep bringing this up is most people when they see a long list of things that are covered they feel like that's the best plan they can get. In fact an exclusionary plan that's called it an inclusionary plan exclusionary is what you want that's going to be closest to the manufacturer's plan and it's only going to list the exclusion. So it's going to be things like you know paint you know your breaks things that are regular wear and tear items so that it's easier to determine what's not included. And then there's other things that you need to look at. You need to look at seals and gaskets coverage and you need to look at make sure that you have the right things in place for your vehicle but ultimately to your point yes the fine print always matters in a contract. And you should always review your contract. But it's easier when you're buying exclusionary coverage when it's available to you because it's it's it's it's less. Yes it's a lot less difficult to kind of determine what's covered and what's not.

Malcolm Lui:
Right. Yeah. My problem in general with fine print in contracts and not in this not just for car warranties but in anything is that I'm not an expert in those things right. I don't really know the implications of what that fine print really means. Like why doesn't someone offer a a an extended warranty that's the same as the car manufacturers

Jason Goldsmith:
Well that's what an exclusionary warranty really is it's very

Malcolm Lui:
Like

Jason Goldsmith:
Close to the manufacturer. Right. There may be some certain things that you can't do that the manufacturer can covered cover. But ultimately that's what exclusionary coverage is. It's as close as the men to manufacturers as you can get.

Malcolm Lui:
Nick

Jason Goldsmith:
And so remember that when we go back to what I was talking about before a warranty and a vehicle protection plan or different or a vehicle service contract is another name that you'll typically hear for this product a warranty is something that comes with the vehicle and it's free. That's why it's called a warranty

Malcolm Lui:
Wright

Jason Goldsmith:
Protection plan is really it is a service contract. And the important thing that you have to think about here is the other side of the equation. So particularly doing business on the Internet you can imagine that a lot of my business comes from individuals who seek us out on Google for example and let's say they type in auto warranty and to Google. Well also you can imagine you you've get a lot of adverse selection through those folks. So we have something that's called an exclusionary period where for 1000 miles and 30 days. You can't file any claims that so that we can protect ourselves and that sites that you're not broken down on the side of the road and you ultimately get well. This is the easiest way to pay for this I'll just get a warranty and they'll pay for it. Right. I'll get a protection plan. So the the issue is there's a tremendous amount of fraud and my shock loss period in the first 90 days particularly for my particularly my digital business is very high. And so you've got folks that are also trying to really work the system and that's bad for everybody. Just like in any other you know people who are taking advantage of insurance companies whether it's your homeowners or health it doesn't matter. They actually raise the rates for all of us. So there's a lot to navigate through on both sides. And the only fair way to do it is to have a contract where you adjudicate those claims in black and white that way there's no question there's not a gray area because here's the contract and that's that is for the protection of both parties.

Malcolm Lui:
Right. So what are the things that aren't covered in your policies or programs that are covered in a car warranty in the individual manufacturers car warranty

Jason Goldsmith:
Well you might have cosmetic items for example. You know we're not going to cover if you know if you're if your dash trim let's say you have like a wood trim or carbon fiber in it you know it got you or you know maybe had some heat exchange something happened in that dash trim started to come off for example.

Malcolm Lui:
Right

Jason Goldsmith:
That's a that's a cosmetic item you're manufacturer is likely to cover that for you during that period because it's really a manufacturer defect. That's a big difference right. I mean manufacturer defects are not going to be covered as it relates to those cosmetic items. So that's one of the big ones that you put into that category.

Malcolm Lui:
Okay. Got it. It's more mechanically oriented the vehicle the service plants

Jason Goldsmith:
That's right. It's about you know this is coverage for something that breaks or something that wears the heart beyond the manufacturer's specifications depending on what type of coverage you have

Malcolm Lui:
Right. Got it. Now you mentioned the phrase shock loss. Did I say that right.

Jason Goldsmith:
That's right. Yeah.

Malcolm Lui:
And what does that exactly

Jason Goldsmith:
So that's basically the the the losses that we experienced during a particular time. So when when our administrators build a plan they're building the majority of what you're paying for when you pay me is you're paying for money to go into a reserve account. Right. And so that reserve account is used to pay claims. Well you know without boring the listeners what happens in a with different types of marketing you may do to generate your customers. They can produce different lost experiences. So if you're advertising on TV that might produce one loss experience digital might produce another. The same thing might happen in direct mail they all can produce a slightly different loss experience and you have to be kind of prepared for that. When I talk about that 90 day shock loss for digital what I'm saying is a lot of your losses are front loaded so you still have to ultimately have to be able to rate the plans correctly over the time period of the plans. And for us our average plans are about that we sell end up being about four and a half years. That doesn't mean that's what our plan our plans typically mean. You can have a two year plan. You could have eight your plan but when you average it out about four and a half years but you need to you need to rate those things correctly. And for us in digital we often are upside down early on. So here's the other thing and this is how you know you were talking about well if you don't make more money right than you pay out Well how can you stay in business and that is a good point.

Jason Goldsmith:
The point of the overall though you've obviously you've got just like with any other short product you've got a pulled set of money and that's paying these claims and you need to make sure obviously that there are enough funds in place to make those claims. And in our business the other thing that you have to look out for is let's say something were to happen the car checks and we went out of business. You know I'm a terrible manager of my business and it goes out we go to business you need to make sure that you have a top rated insurance company backing that plan because that gives you essentially dollar 1 coverage that if something were to happen to us your claims would be adjudicated in the same fashion that they were previously and you have nothing to worry about. And it also means that let's say a product was created that is under reserved. Right. And there's not enough money in that reserve account. Then the reinsurance kicks in and make sure make sure that that customer's claims are going to be paid and all those customers in that pool are going to be paid. And so you can see these companies some companies out there that are self-insured and they do some other things. And these are this is a really scary thing for customers we try to explain like that puts you in tremendous risk because you're you're backing on the financial wherewithal of that particular company versus a you know usually a Fortune 100 insurance company that is publicly traded where you have visibility into the performance of that business.

Malcolm Lui:
Right. So you shared some details as to what the plan administrators are doing. You're not the one that's holding the money and holding the reserves and so on. Correct

Jason Goldsmith:
That's right. I don't hold I don't hold the reserves I don't pay the claims and in fact from my perspective I would love for every claim to be paid for my cat my my customers would be happy. But again the the administrators got to adjudicate the claims based on the terms conditions of the contract.

Malcolm Lui:
Right. And know I appreciate you sharing all these e-mails. It's interesting hearing how it all already works behind the scenes. So. So going back to your business you grew from thirty two point two million in 2014 to fifty six point six million. You almost doubled it in four years. What were the biggest drivers of that growth from 2014 to 2017.

Jason Goldsmith:
Well I think it's a combination of many things. You know we have built a very what we believe to be a very good platform. And so we've been able to leverage that platform into utilizing multiple Well I'd say strategic relationships. Let me just simplify it. You know we have we've got strategic relationships with some of the the largest folks in the automotive space and folks that kind of share our vision very consumer centric and focused on helping consumers navigate the automotive space whether it's the buying side or the ownership experience. So we have very unique relationships I'd say that we have more strategic relationships than the rest of all of our competition combined. And so that's been a big piece of our growth. Certainly better performance in marketing getting smarter about our metrics and our KPI eyes and all the things that any business needs to do to get better. But I think it's really we focused on our kit our reputation with consumers and our reputation on the B2B side of our business to really make sure that those things could help us drive growth. And our partners have been a big part of that. The growth trajectory of this business

Malcolm Lui:
Ok. So from what I just gathered the three drivers our one year strategic relationships to you are better smarter always looking to improve your marketing and 3 the reputation of your service both on the consumer side and the B2B side

Jason Goldsmith:
Yeah I would I'll add this probably goes in there. I would add really are our ability to integrate with these partners and our our our ability to create kind of a proprietary technology across the board. And so we don't outsource really anything here. All all the technology we create happens within our four walls. And so integration opportunities with partners where others aren't able to kind of fulfill not just that but security data security PCI compliance compliance in general are just things where our competitors aren't able to keep up. So we become obviously a natural fit for folks that are looking to partner in this space.

Malcolm Lui:
Right. So when you say that you have more strategic relationships with others. Can you share who these partners are.

Jason Goldsmith:
Sure. I mean I can share a lot of the public information that you can find out there. So Carfax for example Kelley Blue Book Edmunds Auto Trader those are good examples on the dealer side. We have an exclusive relationship with Zurich and other admins in this space but those are to name a few

Malcolm Lui:
Got it. And then in terms of your marketing you said that your your marketing better always constantly improving it. And I guess maybe this might be a good time for me to ask you about this. I see from my tools my my my intelligence tools that you're spending a good chunk of change on paper click ads buy my tools it's looking at about fifteen thousand a month and your SEO traffic value is also pretty good as well from the keywords that are people are using to come to your Web site according to my tool it's worth about a thousand bucks a month to

Jason Goldsmith:
Well

Malcolm Lui:
You

Jason Goldsmith:
I wish I was only spending that a month but so that must make us look really good. Now I'm spending many multiples of that within search every month and

Malcolm Lui:
Ok

Jason Goldsmith:
And I think the key here is. And to anybody who whether you're in regardless of the business. I'm a performance based marketer. So for me the big strategy here has always been for every dollar we spend we know exactly what we're going to get back. So even in our relationships that within search whether it's FCO SVM and any of our strategic partnerships we're always paying those partners on a performance basis. So I'm not necessarily buying clicks I'm buying leads and my partners worried about how the economics and clicks work out right. And they have an opportunity to make more or less money based on the way that they perform. And so this is something that I early in in the late 90s I had a digital digital agency and and helped major brands with performance based marketing. And I'd done the same thing I'd seen my own businesses both on the loan page and in car checks. And so that's been our focus. Now there's some limitations to that as well but for us it's it's a it's a pretty good. As you can imagine it's a pretty effective way to market.

Malcolm Lui:
Right now are you doing a paper click ads in House yourself or are you outsourcing

Jason Goldsmith:
No we generally are outsourcing a good amount of that although we have a lot of internal talent that's managing it. So I'd say it at some level it's kind of a combined approach. But again to make sure that the risk isn't on us we use third parties at some level.

Malcolm Lui:
Right. And are they are you now your your for my data. I can see that you yourself are spending some money on paper click ads but you're not saying you're not fully applying the performance based marketing right

Jason Goldsmith:
If if there's money being spent there it's probably just for our key term. So we don't outsource like the word car checks for example. All right there's no point. That's just our ownership on that particular term. But when you start looking at your long tail keywords in your other thousands and thousands of words that we're marketing it into that's not you're you probably aren't going to pick up that spend and your and your software.

Malcolm Lui:
All right. Because it's being done by a third party and then

Jason Goldsmith:
That's

Malcolm Lui:
You're

Jason Goldsmith:
Right.

Malcolm Lui:
Paying them on a on a per lead as opposed to per click. Very cool. All right. Good to know. Now you talked before about improving your marketing can you give some examples of how you go about doing that.

Jason Goldsmith:
Well it's it's really just proving your marketing effectiveness right. I mean we want to create in our world our cost per acquisition has to stay below a certain threshold and you want to continue to drive that lower. But you also want to focus on areas at least in my experience has been to focus on areas that are scalable and and that's a big thing right. And also obviously I have to work but it's got to be a channel that ultimately is scalable or in general we're kind of wasting our time and we wasted our time. But you know I would say you know plenty of times you know over the over the many years trying to figure out kind of where we should be spending what's the right place for us and also being really discipline. So I we often talk about this internally and I think that we see a lot of our competitors overspending at times. So maybe it's a seasonality thing and they see leads dropping off and they go Wow Well we have to feed the business. We have to feed our sales floor and they start overspending or you're not going to find car checks doing things like that. We're very disciplined in our approach and we know how to ebb and flow through those things or you see new entrants and who come into the marketplace and just overspend and and so that discipline is really important as you go along at least it has been for us

Malcolm Lui:
Right. And for your third driver despite the reputation on the consumer side and the B2B side can you talk a little bit more about that.

Jason Goldsmith:
Yeah. So I think you know our brand promises customer experience above all. We live that promise. Everything we've done here everything we've built propagates from that promise. And so if you start there and that's really your kind of you know your beacon I think that everything works itself out. So you know every piece of technology we built every part of the experience. For example you know you can we can screen share with you when you're when when you're on us. We can. We have our own s MSM and the mass platform we allow you to be able to text trying to give you the best possible experience and most importantly a transparent experience. We don't want you to have that dealer experience right where they have the blue screen. It's turned around and their budgets of numbers and and they're telling you how great it is we want you to see everything that we say. So transparency both on the consumer side and on on the B2B side has been really strong for us in terms of how we've kind of kept these relationships

Malcolm Lui:
So we say earlier on you show my hand proprietary technology. So you're referring to things like the screen sharing S.M. a and in the messaging that you just referred to or some other sorts of proprietary technology

Jason Goldsmith:
So I'll kind of guys give you the short list anyway. So our CRM systems our help desk our lead scoring tools our lead distribution tools you know you you name our phone systems our S M S M s platform those are all pieces of technology that we've created internally.

Malcolm Lui:
Switching gears a little bit which it doesn't 19 what Polanski shared with us but growth targets are you looking for. What challenges are in the way of getting to those targets.

Jason Goldsmith:
Well I can share a high level. You know we are really focused on adding some very key strategic relationships that will drive more business and then focusing on integrating those relationships and doing the work there. So first for us we kind of grow in it's more like kind of stair steps versus you know these lean absolute linear growth right where you you add a big relationship and then you get a big bump. So there's a decent investment into that and time resources and then you get your kind of bump as you as you execute on those relationships. So we have several of those that we're working on now at various different phases that we need to get implemented over the course of 19 and into 20

Malcolm Lui:
Now are these essentially new products that will become that you'll be able to make available or are they just additional offerings

Jason Goldsmith:
It's more about relationships that provide us with more customers. There are plenty of new there's always new products coming out that is you know kind of meeting the needs the marketplace but for for us what I'm specifically referring there is is relationships that help us drive more folks that ultimately can become our customers

Malcolm Lui:
Right. Got it. And any other big plans for 2019 2020 beyond the strategic relationships.

Jason Goldsmith:
Well I think we're focused on quite a bit of technology enhancement around our web properties. You know some app. That we'd like to. We've been kind of working on the structure of what we won more tools for our customers also in terms of making their experience a better experience. But that that's that's a constant theme for us. So it's not a specific theme as it relates to 19 or 20 although I think you'll see some some leaps forward in some of the things that we're doing. That's public facing technology anyway.

Malcolm Lui:
And what do you what are you doing besides the two GIC alliances to get more customers

Jason Goldsmith:
Well we do we we do a little bit of everything we were a little bit a television radio direct mail and more digital. But our key focus and that's a big difference. Most of our competitors in our industry the majority of the competition is really heavy indirect mail. There's some folks out there that spend a lot on television. We think we are dominant in the digital sandbox but we really do focus on the strategic relationships. There's you know there's lots of reasons for that. Specifically for us but that that's what our platforms built for.

Malcolm Lui:
Right. So I take it you do not do the robo calls because he did not mention that

Jason Goldsmith:
No I mean not only do I not do the robo calls I chase the call hers. So there's there there are it's very difficult obviously to track these folks down and what we do. They're bad for the entire industry. I mean you've been through the experience I'm going through that experience. I've never seen this is not a comment in regards to Trump in any way although under the Trump Organization it seems like there has been maybe a relaxed attitude on some of the dialing that's going on. So it's just it feels like I'm getting bombarded not just in this industry but every industry in regards to robo calls. But just like you I'm a consumer and I get called by you know vehicle protection plant companies. And so what we do is when that happens we buy the plans so that we can get the contracts figure out who they are figure out who's financing them figure out who the admins are who may or may not know that these companies are robo dialing and essentially try to cut their legs off at the knee.

Malcolm Lui:
Right

Jason Goldsmith:
Yeah yeah.

Malcolm Lui:
You did. Yeah. And how do you think they get their number. Because we bought we bought our car and now we. Since then you know years ago we get messages and they're very specific. They know that the year of our car. Have a good sense as to when a warranty is expiring. They have our phone number to have our mailing address. How did they get that information. Who sold it to

Jason Goldsmith:
It's a good that's a good question. Some of these things work. We try to figure out to we there's a lot of theories. We believe there's non-compliant data that's being sold maybe out the back door of one of these dealer systems and that there's a lot of compiled data where people are trying to put the pieces together in order to create accurate data. But it's it's been very hard to determine where a lot of this information came from. Now the folks that are doing it correctly in direct mail a lot of that information comes from the credit bureaus. So they're looking they're kind of building their lists the way that other industries do. But to your point it's a bit of a mystery to us as well where a lot of this data comes from.

Malcolm Lui:
Yeah. Really surprising because they knew exactly what model car we have and the age and when it is likely to expire. And I talk to every vendor that was involved in buying a car right. The car insurance company. The owner who sold us the car and of course they say yeah we don't sell you information for not

Jason Goldsmith:
Well that's why I think the one you're missing is the DNS so that the dealer's CRM and I think that's the most likely suspect is either knowingly or unknowingly. That's where the data is leaving.

Malcolm Lui:
The

Jason Goldsmith:
So it's not at the dealer level it's all that data is stored in the DNS and there's potentially access to it. And I wonder if that you know we've always wondered if that's one of the big kind of you know holes in the whole stream of kind of where data sets and flows on the dealer side. But it is hard to know. But when you look at kind of how quickly that data comes out after you buy a vehicle that's why

Malcolm Lui:
Amazingly fast.

Jason Goldsmith:
That's why many people suspect that there's a problem there somewhere.

Malcolm Lui:
Yeah. I

Jason Goldsmith:
Yeah

Malcolm Lui:
Mean literally within weeks if not a month or two to getting an email and the phone calls is

Jason Goldsmith:
You

Malcolm Lui:
Shocking.

Jason Goldsmith:
No you're absolutely right. And the thing is like you can't buy DMV data anymore so you can't buy or at least in most states as far as I know you can't. So you used to be able to buy data I believe where you could get the customer's vehicle information when it's registered with the with the DMV or in Maryland the NBA and you could get that attached to it then and now I don't think that the DMV is allowed that. So you know it's a big mystery it's a big problem for us now in the robo diluted side. I think that's a different answer. You know I think they don't they don't care. Right it's just a numbers game there. They'll call the phone book. It doesn't make a difference in what they're putting into their dialer. So that's a whole different animal

Malcolm Lui:
Yeah but even the way the marketing right they make it look very official and make it look like it came from the car manufacturer and it's far from that.

Jason Goldsmith:
Absolutely. And I think that piece of the equation a lot in a lot of states and particularly attorney generals have cracked down on on that and the O M's at some level. But of course if you're willing to do these things then you really don't care. And so that's part of the issue. And again I go back. So one of the things that I hope for in this space I want to see. I'd love to see more and more regulation in our space. In fact banking on it. Because car checks is one of the few companies that would do really well in that regulatory environment whereas other companies may not fare as well in terms of the way that they sell cetera. It's not just about the data and how you're being marketed to. It's about what happens on the phone when you're talking to them. Right. How are they trying to twist your arm to buy or are they being consultative. Are they following up or are they insisting that you have to buy this today all those things and so there's a lot that goes into what makes a good experience and not certainly not just the marketing but it starts there.

Malcolm Lui:
Yeah definitely. So what do you see as the biggest trends you see evolving over say the next five years

Jason Goldsmith:
Well I think there's some changes in the product mix. I think you're seeing models that are moving away from the traditional vehicle service contract and oftentimes you're seeing month to month models that seems to be what the consumer likes and there's some good and bad to that you know people the American consumer oftentimes is a little bit infatuated with monthly payment so they actually may pay more money for something they could pay less for if they bought a term plan. But there's an attractiveness to that and I think for the four companies you know a recurring revenue model is interesting right. I mean that's it's it seems to be an over arching trend that we see at a macro level in multiple industries. So that's happening a little bit in our space too. I think you see MySpace and particularly there's a ton of consolidation happening. So you finally you're seeing private equity interest at a level that I had never seen before and strategic interest for that matter. But I think that this industry is really on on the radar screen now of a private equity for sure.

Malcolm Lui:
So who do you see being consolidated. Exactly

Jason Goldsmith:
Well I think you see consolidation between the administrators the resellers. I don't think you'll see as much consolidation at the insurer reinsurer level but I think a lot of the resellers are are being put in particular are being consolidated where you know different marketing and resale shops are kind of being bought up and and and aggregated into kind of one machine

Malcolm Lui:
Right. So that'll be good for you or negative for you

Jason Goldsmith:
Depends. I mean it's there. Our strategy is a little different. I mean I can't get too deep into that right now. But you know there's there's positives and negatives from both sides but I think any activity where there's a lot of interest in your space and an interested investment in your space is it's generally a positive thing. For both the companies and the consumers

Malcolm Lui:
Yeah I could see the competition becoming a bit more fierce if they consolidate right. Because then they're going to become more efficient and potentially might have some more marketing dollars to compete against you on the marketing front.

Jason Goldsmith:
I mean sure that's always a risk but see so the insulation for me is that you aren't taking my strategic relationships you're not coming in behind me. You're not buying

Malcolm Lui:
Right

Jason Goldsmith:
Those relationships and so that's one of the reasons we built ourselves with that foundation from the beginning. You always run the risk that people get big or overspend or just throw money at something and that can have an impact on you. There's nothing you can do about that but you try to. For us our strategy has always been to spread our eggs in multiple baskets and make sure that we're not we're not really concentrated in any one in particular marketing areas so that we can weather some of those potential storms.

Malcolm Lui:
Yeah. Well I definitely see that strategic relationships you have. She gives you a pretty formidable defense against consolidation.

Jason Goldsmith:
Exactly.

Malcolm Lui:
Three last questions for you. Say you had a billboard in fact you didn't make your billboards. Do you have a billboard anywhere.

Jason Goldsmith:
No not currently. I don't think we've ever done billboard advertising in our many years.

Malcolm Lui:
Uk.

Jason Goldsmith:
We have done some things like mall kiosk. We built out a really cool kiosk when we back and we sponsor Dale Earnhardt juniors Jerry motorsports. And so that was kind of cool where you could go into the mall and sit down and actually you'd have all the screens in front of you and there's probably an image somewhere out there in the web of our kiosk. But that was something that we tried back in the day but never we've never done billboard advertising

Malcolm Lui:
If you were to do a billboard what would your message be. Keep in mind if people drive by billboards pretty fast they only have about six seconds to

Jason Goldsmith:
That's

Malcolm Lui:
Witness.

Jason Goldsmith:
That's kind of that's kind of putting me on the spot. You know I think our message would be really focused on and you have to figure out again how to do this quickly as you know we'd present the problem quickly which is you know repair bills are expensive. And just not from a billboard perspective but overall you know the only thing that's growing faster than the increased expense of repair bills is like college tuition. So its cards are expensive to fix. So you know here's your problem which is your repair bills are very expensive. Here's your solution. Right. Car checks you can budget for those repair bills and simply call now. I'm a direct marketer right. I'm not a brand marketer. That's not the focus of what we do. There's lots of of overlap in those two things and there's a benefit of some of the things that we do. So my billboard would be really focused on driving call to action and getting the phones during where people to visit our Web site.

Malcolm Lui:
Right after brains we had a bit more time. You sure your brain started to get ideas for your billboard. I mean no one wants expensive in surprise. Car bells

Jason Goldsmith:
No I think it's that's the tough thing is that we're all I think the average I think the statistic now is the average American could not afford a four hundred dollar surprise and I think that's the majority of Americans. So it's it's a you know these are it's a real issue for people and people have to get to work.

Malcolm Lui:
Yeah.

Jason Goldsmith:
You know

Malcolm Lui:
Why don't

Jason Goldsmith:
When

Malcolm Lui:
You

Jason Goldsmith:
We're

Malcolm Lui:
Think it's the expected ones that are a bit a bit irritating even the ones that you know are coming right. Replacing your tires replacing your brakes right.

Jason Goldsmith:
Your regular maintenance items and you know there are maintenance plans for those types of things but it's the same thing. Yeah I mean you're it's not inexpensive to maintain a vehicle

Malcolm Lui:
Yeah it's not I'm not a cheap thing. And the two last questions I have for you. Who are your ideal customers and what's the best way for them to contact your company

Jason Goldsmith:
So my ideal customers aren't really anybody who owns a vehicle that plans on keeping their vehicle for some time. You could have you could be coming off your manufacturer policy you could even be under your manufacturer policy as long as you know you're going to keep that vehicle. And also folks who may be buying a used car and they go. Maybe they got a car checks inspection or a Carfax vehicle his report and they like the car that they're buying but they don't know anything about what's going to happen in the future so they want if you want to make sure that you're protected and you kind of in that transaction do have a bullet proof transaction. The best thing to do is get yourself a very good vehicle protection plan so you could be you could be early in the ownership process she could be later in the ownership process but if you own a vehicle and you don't have the vehicle protection plan you probably should. And that's my customer and there was a second part to that too. What was the second

Malcolm Lui:
Pathway for them to reach you.

Jason Goldsmith:
Best way to reach it is easy it's eight seven seven car checks. That's 2 2 7 2 4 3 9 and or visit our website at car check ask.com and you can simply fill out a form and we'll be back to you within seconds of submission

Malcolm Lui:
Second thoughts awesome

Jason Goldsmith:
During business hours. Malcolm I'll give you that during business

Malcolm Lui:
Okay.

Jason Goldsmith:
Hours right. Right. Yeah.

Malcolm Lui:
Would you mind spelling out your domain name because I use both car checks a little bit differently

Jason Goldsmith:
Sure. It's S.A. R C H E X and that's X is an x ray dot com

Malcolm Lui:
Right as you would describe your ideal customer question came to mind. How many customers have it has their company served over the years.

Jason Goldsmith:
Oh man. You know. That's a tough one. More than tens of thousands

Malcolm Lui:
Ok.

Jason Goldsmith:
Probably in the hundred thousand plus at this point

Malcolm Lui:
And I know being a marketer that you are you probably analyze the demographic data. Have you found some commonality as that who your ideal customer is from a demographic perspective is it male female

Jason Goldsmith:
Yeah.

Malcolm Lui:
Age 20 to 40 or something like that

Jason Goldsmith:
Sure it's probably changing quite as certainly as millennials get older it's changing but typically it's thirty five to fifty five is a sweet spot. Male female is almost about equal. In fact female buyers can be can be a better buyer. They feel very comfortable with the product but generally it's about 50/50 in terms of split and what we find and not to. I'm not here to to really be down towards millennials or anybody in fact I think that you just have millennials or are either mom or dad maybe still be helping with their car payments they may not be actually owning their own vehicle they may be doing some ride sharing as people kind of age and they have that responsibility on their own. That's why that thirty five starts to be a real a really nice sweet spot for us as

Malcolm Lui:
Right.

Jason Goldsmith:
An idea.

Malcolm Lui:
Right

Jason Goldsmith:
Yeah.

Malcolm Lui:
Right. Well thank you for saying that. Jason it's been great having you on my show today and I really enjoyed hearing about how you grew your company so fast

Jason Goldsmith:
I was my pleasure. Thanks for having me as a guest. And thanks for the really insightful questions.

Malcolm Lui:
We've been speaking with Jason Goldsmith, the CEO and Co-Founder of CARCHEX, about his company's rapid growth. For interviews with other fast growing, high value sales companies, or to learn how we can accelerate your firm's high value sales through automation, visit Eversprint.com.

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