Cobalt Group got its start building automotive Web sites. Six years later, the Seattle company has evolved into a 600-employee e-commerce products and services provider for car dealers. But like most Internet services companies, Cobalt has never made a profit. CEO and founder John Holt says that is expected to change in the fourth quarter, 'which would make us one of 20 or 30 Internet companies in the history of the economy to do that, not to mention in the automotive industry.' In interviews with Staff Reporter Ralph Kisiel at the National Automobile Dealers Association convention Feb. 5 and Automotive News staff members in Detroit on Feb. 13, Holt talked about the Internet, dealers and other topics. Here are edited excerpts:
How do you promote your brand?
We have never put any effort into developing Cobalt as a brand. Because philosophically, we said from the beginning that the brand we wanted to support was our customer's brand. You will never see a dealer Web site that has 'Powered by Cobalt.' You won't see consumer advertising for Cobalt.
How does Cobalt fit in with automotive dealers?
We don't have a very sexy story. We started the company in '95 and we decided to side with the traditional dealers. We argued from the beginning that manufacturers and dealers working together were going to win the war. Dealers just had too much on their side - assets, financial resources, advertising budgets coming out of profit, ability to handle a complex transaction like a trade-in, ability to service a car and legal protections, too.
What does the NADA endorsement of your e-commerce products mean?
They agreed they would not endorse another e-business provider. We agreed to price inflation limitations, and we agreed to co-fund a trust fund to market (NADA Internet portal) DriversSeat.com. So this year, we put in money, and they will, into a reserve to put more marketing power behind DriversSeat. You listen to (former NADA Chairman) Harold Wells and (current NADA Chairman) Bob Maguire; they believe that's one of the big accomplishments for NADA last year, where they took on the third-party sites.
How much money is that?
Not released. It's not the kind of budget that you'd see at Autoweb. In other words, they're not going to spend $4 million. I think the play for DriversSeat is to be here five years from now and provide some incremental value to the dealer.