To CarGurus founder and CEO Langley Steinert, his Cambridge-based company has all the benefits of a startup with none of the downsides. That’s because, he told BostInno, while the company has been growing fast and has little bureaucracy, it doesn’t have any venture capital firms to answer to.
With around just $5 million in funding from friends, family and some of Steinert’s former colleagues from TripAdvisor—which he was a co-founder of, by the way—the CEO said the company has been "really profitable" in the last six consecutive years, all the while growing it from 98 employees to 220 within the past 12 or so months. And an IPO continues to be a possibility for CarGurus at some point, Steinert said.
With additional hiring planned, the firm expects to reach about 300 or 310 employees by the end of the year, though Steinert said he “wouldn’t be surprised if we ended up around 350.” To make room for that growth, the company is planning to open another office nearby that is slightly bigger than its 50,000-square-foot headquarters in Cambridge, next to HubSpot.
The company has since expanded to Canada and the U.K., with plans to move into other European markets in the future. Outside of its Cambridge headquarters, the company also has an office in Detroit, along with field reps in five other markets. With an eye on European expansion, Steinert said the company is looking to open an office across the Atlantic.
"We were willing to rip up the whole business plan and come up with a new product."
Originally conceived as the "TripAdvisor for cars" in 2005, Steinert and his small team at the time would eventually pivot to become more akin to the "Kayak for cars"—by helping prospective car buyers “find the best deal from the best-rated dealer.” The service is free for consumers, and it uses algorithms to comb through millions of newly listed cars every night to assign each one an economic value based on a number of factors that are independent of the dealer’s price.
"The most important thing you can do is stay nimble, be willing to be flexible, don't be wedded to that beautiful business plan you wrote and be willing to chuck it out the window if it doesn't work because it may not work," Steinert said of CarGurus’ early pivot. "In our case, we were flexible. We were willing to rip up the whole business plan and come up with a new product."
It’s that idea of creating a better way for consumers to find good deals on cars that allowed the company to find traction and become profitable. As previously reported, the company was on track to make $50 million in 2014, and it’s now "well north of that," said Steinert, who declined to elaborate on the company’s revenue for last year. While the company brings in some revenue through advertising, most of it comes from the roughly 12,000 dealers who pay anywhere from $500 to $100,000 a month to post their inventory of cars to CarGurus’ marketplace.
To give you another idea of how CarGurus is doing, Steinert said it’s No. 1 in mobile traffic and No. 2 in desktop traffic compared to competitors, which includes eBay Motors. While it’s obvious that mobile traffic is growing faster than desktop, Steinert it’s still surprising to see just how fast that growth is. Last year, he said, mobile represented about 65 percent of all traffic.
"The statistics that we see on a weekly basis are staggering," Steinert said.
As the company continues to grow, Steinert said going public be will be one of options it will consider, but there’s currently no time in place.
To Steinert, that’s one of the upsides of running a company that doesn’t have to answer to VCs: the company doesn’t need to exit within a certain period so that VCs can post their returns and raise their next fund. He said the company’s investors are more relaxed, which in turn, creates a more stable environment for employees.
"They're like, 'you know, if it takes us 10 years to get our money out that's fine, we're OK with that,'" Steinert said. "There's no artificial horizon that's being imposed to go public or sell the company, so we have a very long-term perspective: We're building something big here, we want to be the biggest automotive shopping company in the world."
