Beepi and Vroom and Carvana - will they make a DENT?

[Cullen C]

A YouTuber left this comment on our video of the Refresh Friday recording w/ me, @Stauning @TomLaPointe and @Jeff Kershner

what i find interesting is that the CEO of the company was arrested and convicted of a scandal with a financial company. IN NEW JERSEY YOU CANT EVEN GET A DEALER LICENSE IF YOU HAVE SUCH CONVICTIONS!!! How on earth is he the dealer principal/ CEO?​

Does this have any bearing on the company, I'm curious?

Here's the video:

If you are truly curious you should probably do just a little independent research on your own Ryan. If you did, you would find that the CEO of Carvana has never been accused of any wrongdoing.

And please guys, could you try to at least pronounce the name of the company correctly if you are going to pretend to be an authority on their viability. It is Car-Va-Na like Nirvana. Not Car-Van-a.

It is also interesting that you are so impressed with Texas Direct, which was purchased by Vroom, which in philosophy so far is more in line with a total eCommerce model than even Carvana is. It will be telling to see how they handle their mid west expansion, they may opt to forgo having physical lots at all, they inherited the lot in Houston I am not sure they want to continue that model going forward.

 

[ryan.gerardi]

If you are truly curious you should probably do just a little independent research on your own Ryan. If you did, you would find that the CEO of Carvana has never been accused of any wrongdoing.

From what I understand, the CEO (Ernie Garcia) plead guilty to bank fraud in the early 1990s. He's referred to as an ex-con in most articles I've read.

But that's beside the point, I was brining in a comment from a user on YouTube that has relevancy to the conversation, citing that the Carvana CEO would not be able to deal cars in NJ because of his criminal past. Does this have any bearing on the company?

Thanks for pointing out the proper pronunciation of the organization, but no thanks for the backhanded comment about 'pretending' to be an authority. @Stauning knows his shit and how to express his opinion. Refresh Friday is a place where we welcome people like that.

Would you be interested in coming on the program sometime to expand on your input about Teas Direct? Would be great to have you on the air.

 

[Cullen C]

From what I understand, the CEO (Ernie Garcia) plead guilty to bank fraud in the early 1990s. He's referred to as an ex-con in most articles I've read.

But that's beside the point, I was brining in a comment from a user on YouTube that has relevancy to the conversation, citing that the Carvana CEO would not be able to deal cars in NJ because of his criminal past. Does this have any bearing on the company?

Thanks for pointing out the proper pronunciation of the organization, but no thanks for the backhanded comment about 'pretending' to be an authority. @Stauning knows his shit and how to express his opinion. Refresh Friday is a place where we welcome people like that.

Would you be interested in coming on the program sometime to expand on your input about Teas Direct? Would be great to have you on the air.

Ryan, Ernie(III) is 35 years old, as bright as he is I am fairly certain he would not have been able to pull off bank fraud while managing his elementary school homework. Again, curiosity connotes a strong desire to learn. If you were truly curious about the facts you would've initially spent a bit more time getting your story straight. When given a second chance to look into it it seems like you took a few cursory glances at an article or two. Seems irresponsible for someone producing content.

From your perspective I am sure you think Steve is an expert and he may be on certain topics, Carvana is not one of them. I have read his articles "Why Carvana Will Fail (and how it might succeed)". There a number of holes in the series of articles, I will not take the time to list them all but I will pull out a quote from the article that he recited again on the show....."Beepi also wholly misunderstood what consumers actually wanted fixed; that’s why they were solving for the wrong problem. Consumers overwhelmingly dislike the dealership experience, not necessarily the dealership visit."

To somehow parse out the "dealership visit" from the "experience" is baffling to me. The reality is that the F&I experience is the most frustrating part of the purchase process. Customer satisfaction significantly drops after 90 mins in store. The dealership visit is what people are trying to avoid in most cases. They want to avoid antiquated sales processes that take too long and cause friction.

I appreciate the offer to come on, I am in no way an expert on Texas Direct I simply wanted to add to the conversation because mentioning them as if they are a single entity now didn't make much since. There may not even be a Texas Direct in name much longer, Vroom will have to make a decision at some point to truly consolidate everything, running two brands seems counterproductive.

 

[ed.brooks]

Ernie Garcia II pled guilty to bank fraud in the 90's, but he is NOT the CEO of Carvana -- his son Ernie III is.

As far as @Stauning goes, he certainly has opinions...

 

[craigh]

From what I understand, Ernie Garcia II owns DriveTime and provided initial funding for Carvana.
Their expansion plans were based on the DriveTime locations across America, but Ernie Garcia II does not operate Carvana, his son does.

As I understand it, in 2012 they were a wholly owned subsidiary of DriveTime, so I can see where the confusion comes from.

Carvana Group was formed as a limited liability company by DriveTime Automotive Group, Inc. (together with its subsidiaries and affiliates “DriveTime”) and commenced operations in 2012. Prior to November 1, 2014, Carvana Group was a wholly-owned subsidiary of DriveTime. On November 1, 2014 (the “Distribution Date”), DriveTime distributed its member units in Carvana Group to the unit holders of DriveTime on a pro rata basis (the “Distribution”). Carvana Group accounted for the Distribution as a spinoff transaction in accordance with ASC 505-60, Equity — Spinoffs and Reverse Spinoffs and reflected assets and liabilities before and after the Distribution Date at their historical basis.

 

[ryan.gerardi]

Yes, according to a June 2017 Bloomberg Technology wire, Ernie II, the ex-con, is Carvana's largest shareholder. As stated in the article...

And then there’s something investors didn’t learn from the prospectus for the New York Stock Exchange share offering: Garcia, who owns a controlling stake in Carvana and whose 34-year-old son Ernie III is its chief executive officer, has a criminal conviction tied to the savings-and-loan scandal that erupted in the early 1990s.

“A controlling shareholder having a fraud conviction is of interest to other shareholders,” said John Coffee, a professor of corporate law at Columbia University. While it may not be a legal requirement to do so, he added, “I think a company doing a public offering should disclose this factor.”​

Had the YouTuber not brought this up, I never would've known about it, but my question still remains...does this present an ethical dilemma for Caravana and does it have any bearing on the IPO?

 

[Cullen C]

Yes, according to a June 2017 Bloomberg Technology wire, Ernie II, the ex-con, is Carvana's largest shareholder. As stated in the article...

And then there’s something investors didn’t learn from the prospectus for the New York Stock Exchange share offering: Garcia, who owns a controlling stake in Carvana and whose 34-year-old son Ernie III is its chief executive officer, has a criminal conviction tied to the savings-and-loan scandal that erupted in the early 1990s.

“A controlling shareholder having a fraud conviction is of interest to other shareholders,” said John Coffee, a professor of corporate law at Columbia University. While it may not be a legal requirement to do so, he added, “I think a company doing a public offering should disclose this factor.”​

Had the YouTuber not brought this up, I never would've known about it, but my question still remains...does this present an ethical dilemma for Caravana and does it have any bearing on the IPO?

Ryan, I hate to call BS on your latest response but......these are your words from your post last Friday......"From what I understand, the CEO (Ernie Garcia) plead guilty to bank fraud in the early 1990s. He's referred to as an ex-con in most articles I've read."

Shareholders having concerns about a majority stakeholder having a past that includes a felony conviction is a valid commentary and one that I am sure played out prior to the IPO date. Which to answer your last question happened in April so I imagine whatever effect it had on the IPO has come and gone.

 

[Steve Stauning]

And please guys, could you try to at least pronounce the name of the company correctly if you are going to pretend to be an authority on their viability. It is Car-Va-Na like Nirvana. Not Car-Van-a.

I know how to pronounce their name; I just choose to pronounce it my way. Of course, if pronouncing a money-losing start-up's name properly "allows" one to have an opinion, then I suppose I should work on that.

On another Car-Va-Na (like Nirvana) note, here's a timely opinion from Wall Street: https://seekingalpha.com/article/4127772-carvana-engine-sputtering

 

[Cullen C]

I know how to pronounce their name; I just choose to pronounce it my way. Of course, if pronouncing a money-losing start-up's name properly "allows" one to have an opinion, then I suppose I should work on that.

On another Car-Va-Na (like Nirvana) note, here's a timely opinion from Wall Street: https://seekingalpha.com/article/4127772-carvana-engine-sputtering

Sure, Toe-may-toe / Toe-mah-toe

Thanks for the "wall street" opinions, the internet is a beautiful place, no matter what your opinion you can probably find validation.

 

[ruggles]

There is no viability regardless of how one pronounces their name. Their only impact on the market is in the individual markets where they have their loosing locations. Real dealers have to compete with them until they run through the sucker money that funds the company.