Why do you certify vehicles that are up to 15 years old?
Because you can go back that far now for a financial-services product. This is like an actuarial services business, right?
If you can create an insurance product — which, ultimately, you have to — that's a reasonable insurance product, then you have the opportunity to create a certified warranty. We've spent years getting our products built, underwritten and rated, and we think 15 years is a good number.
Now, the average car we certify is about 7 years old, has about 55,000 miles and sells for about $20,000.
You have a regimen to certify these vehicles?
Every vehicle has to go through a background check, have a clean title. We integrate with all the data sources you can imagine as well as state [departments of motor vehicles]. The car goes through a 150-point inspection.
We've got a couple thousand [subcontracted] inspectors, but a lot of the franchise dealers are doing their own inspections using our tools. We've got a mobile app, a Web app and a bunch of technology built around the inspection process.
We're trying to get all that information up to the Web, much like Carvana. Our thesis is that dealers aren't in a price war; they're in a transparency war. What we're really trying to do is provide them the tools to get this information up to the Web, which opens up their market opportunity.
What matters will you address with the $7 million capital raise?
Scalability, distribution. We're adding salespeople around the country.
What do you say to dealers who have their own certification programs?
We run into that every day. What I tell them is that you don't have the standardization and the tool kit to really benefit from the program that you're doing.
Let's just take the inspection: We have Web apps and mobile apps to capture all the inspection information. We get it up to the Web, and then we have integrations with [dealership management systems] to get it back into [the dealership] website.
What are your biggest priorities for 2020?
We're continuing to build out our inspection tech and tools. That's a big one. That's really where we're spending our time with the product and just continuing to improve the way the inspections are conducted and put up to the Web.
We're scaling our sales force. That's really important to us. Our objective is to get to [40,000 to] 50,000 cars this year.