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.
Stick to your beliefs
When you’re creating a new industry, you are making decisions that will shape that industry’s future. One of the big ones for Golub was the way he responded to companies who wanted to buy their way to more customers on Cars.com.
Another was the resistance he felt from advertisers and industry veterans who had grown quite accustomed to the way things worked in the auto sales sector.
“We went to the Chicago Automobile Trade Association and told them about our website and shared it with them,” Golub says. “They were upset with the publishing of invoice pricing and they met and said, ‘We don’t like that. Take it down or you can’t participate in our auto show.’ That was obviously important to us not only because of the large audience it reaches, but also because it’s in our market. But they thought having this information and exposing it to consumers was heresy. Those are some of the forces we had to deal with in the early days.”
Golub had to demonstrate that his model would make auto dealers more successful by making their business user-friendly.
“It was building the system, having tracking on our website of everything that consumers did, matching it up to our reporting system and then going in on a regular basis, typically with that dealer, to go over the metrics,” Golub says. “How many vehicles they sold or in a lot of cases, how many opportunities they missed because they didn’t have the proper process in the dealership.”
Stay on target
It wasn’t just external challenges that Golub faced in building Cars.com into the successful company it is today. Early on, his eyes were opened to what happens when you don’t spend enough time nurturing your corporate culture.
“We’re toward the end of our first year as a business and getting ready to launch Cars.com,” Golub says. “I’ve been doing a lot of traveling and looking at a lot of partnerships. I keep noticing each time I come back from the road that people who were sitting at certain desks before I left weren’t at those desks. There were a lot of new and unfamiliar faces.”
Golub spoke to HR and discovered that the company’s turnover rate was an astonishing 200 percent.
“The No. 1 complaint of people that we were turning over was that they didn’t know what our strategy was,” Golub says. “They didn’t know where we were going. They wanted to contribute and be part of a startup company. But they couldn’t because they didn’t fully understand their role.
“If you’re building a successful business in a marketplace that is changing in dog years and you don’t have good communication, you’re not transparent and you’re not keeping employees abreast of what’s going on, you’re going to lose employees.”
So Golub set up regular meetings with employees and started creating “Mitch Minutes,” one-minute videos he produced to provide regular updates on company happenings.
“I view my customer support people to be among the most valuable voices in the entire company because they are my last line of defense to the customer,” Golub says. “They talk to more customers than I will ever talk to. If we aren’t listening to them or we’re independently making bad decisions without knowledge, shame on us.”
Cars.com has indeed changed the way consumers buy cars. And Golub is hopeful he can soon change the way consumers get their cars fixed. In 2012, he invested in RepairPal, which has a vast database listing the costs of virtually any car repair you can think of.
“It’s doing extremely well and dealers are craving the product because it’s such an important and profitable part of their business,” Golub says.
The key to its success is the same, however, as every other business venture he’s tried.
“You have three customer groups,” Golub says. “You have customers, advertisers and employees. Just because someone puts you in a chair doesn’t mean you are the smartest person at everything. You have to listen to your customers.” ●
- Give new ideas a chance to succeed.
- Don’t compromise your integrity.
- Think of your employees as customers too.
The Golub File
NAME: Mitch Golub
Education: Bachelor’s degree, mass communication, University of Illinois
What was your first job and what did you learn from it? I was a newspaper delivery boy and I was a vendor for nine years at all of the Chicago sports stadiums. I sold peanuts and hot dogs and later, beer. I’m a South Sider, so I loved the White Sox and I hated the Cubs. But the Cubs did very well by me. Vendors worked on commissions and I was able to put myself through college. That was why it was so wonderful.
If you could speak with anyone from the present or past, with whom would you want to speak with? He was Cassius Clay at the time, but Muhammad Ali lived half a block away from me when I was growing up. He lived in a little bungalow and he had a couple motorcycles. We would go and knock on his door and say, ‘Mr. Clay, Can we see your motorcycles?’ That meant, ‘Give us rides on your motorcycles.’ We were 7 or 8 years old at the time. He would open up the garage door, we would look at his motorcycles and he would say, ‘OK, who wants to go first?’ Among the many questions I would ask him, one would be, ‘Do you have any regrets about not retiring earlier?’
Golub on working from a cubicle: Everybody sits in a cubicle, including me. There is no pecking order in terms of your title, rank and how big a cubicle you get. Everyone is accessible, not only management, but people across business lines. Business moves so fast that most initiatives you take on are cross-functional. That means people must get along, must work together and must work as a team.