Mitch Golub had a lot invested in the effort to lead Cars.com to profitability.
But there was one line he wasn’t going to cross, even if doing so would have meant instant financial security for the young company that was seeking to remake the way consumers buy cars.
“One of the auto manufacturers came to us in the early days and said if we would redirect the search of their vehicles on our website, and search represents the vast majority of traffic on our site, they said they would give us tens of millions of dollars for that,” Golub says.
“At the time, we were losing money and obviously, this would have put us well into profitability. We decided not to do it. Those opportunities have come our way on three or four different occasions. But it would have meant compromising the consumer and compromising the entire vision of the company. We would have lost credibility not only externally, but internally with our employees.”
Golub was willing to take a little longer to see Cars.com reach its goals. He was confident that if he and his team kept their sights firmly planted on the goal and weren’t swayed by shortcuts, they would meet and exceed those goals.
“Be patient, do the right thing and if you manage your business the right way and you serve your customer first, you’re probably going to succeed,” says Golub, president and the 1,300-employee company’s first employee.
“Our original value proposition and mission statement for the company hasn’t changed in 17½ years. We’ve had lots of challenges and we’ve been humbled repeatedly. We’ve learned a lot of lessons. But our initial mission and focus was to put consumers first and that hasn’t changed at all.”
Cars.com isn’t losing money today.
The company’s website has 30 million monthly visits and hosts about 4 million vehicle listings. It serves 20,000 dealer customers across the country and has watched revenue and profitability grow by double digits every year except one in the past 16 years.
Achieving that success required more than just building a business that the consumer marketplace had never seen before.
“To be successful in this business, it wasn’t enough to win the consumer,” Golub says. “We had to go out and train and educate the dealer.”
Building an industry
Golub joined Cars.com in July 1997 after a successful 21-year career with Tribune Co. The Chicago native had relocated to Fort Lauderdale, Florida, and had made it his home. He was engaged to be married and he and his fiancée had put a deposit down on a home when the opportunity to join Cars.com was presented to him.
“I turned the job down five times,” Golub says with a chuckle. “I had a wonderful job at Tribune Co. and I didn’t want to come home to Chicago.”
The people recruiting him were relentless, however, and Golub decided to give it a shot.
“I agreed to do the job for a year, but I kept my house in Florida and rented an apartment in Chicago,” Golub says. “I worked the crazy startup hours of 80 or 90 hours a week. And within six months, I decided to stay.”
Golub was intrigued by what Cars.com was trying to achieve. That being said, it wasn’t easy and required a great deal of legwork to even get the concept off the ground.
One of the first steps was the creation of a training program to educate auto dealers about how consumers were buying their product.
“The seminars were not about Cars.com,” Golub says. “The seminars were about here’s what consumers are doing, here’s where they are going online to car shop, here is why they are doing it and here’s what you must do to keep pace with what some day will be the primary place where your shoppers and customers go to buy a car from you. In the early days, the consumers were a good five years ahead of the dealers.”
Golub was doing more than just showing auto dealers how consumers could buy a car online. He had to show the dealers there was value in the process for them.
“We built a very robust back-end reporting system,” Golub says. “Every email lead, every phone lead, every time the consumer printed out a page, our system reported that to the dealer in real time. And on phone leads, which were so critical to the early days of the business, we would send out an email to the dealer every single day showing them who called the day before, from where and their telephone number. It was something that was historic for the advertising industry.”
He says the key to building a strong foundation that would allow this new business model to thrive was hiring people who were experts in the field and then tapping into that expertise.
“In our industry, a lot of our competitors went out and hired car dealership employees,” Golub says. “They had those relationships. It’s an obvious place to look to hire people from that industry who are very well-networked. The challenge of doing that is it’s not necessarily a formula for success.”
The reason is that relationships are only part of the equation. You have to turn those relationships into value for your customer.
“Relationships will get your foot in the door, but after that, you better start delivering value,” Golub says.