lanelogic founder is an evil genius

I’m convinced that Bruce Thompson, founder of aaXchange and lanelogic, is an evil mastermind bent on changing the auto industry as we know it. I first heard about him a few years ago while “consulting” for DrivenXChange (an online bid/ask marketplace for wholesale cars) and researching into potential competitors, aaXchange was loosely a competitor.

aaXchange, for those of you not familiar with the company, helps dealers optimize their profits by analyzing what cars sell the best, and then recommends those cars to the dealer. I’ve heard they also take into account outside data, potentially from AutoCount or other services. From the time line I’ve been able to reconstruct, aaXchange started in ’05 and sold out in ’06. But, the genius behind aaXchange, and what Thompson did with it, was not the quick exit, but what he set himself up for.

I’m not sure if it was a precondition of the sale, or just some good negotiation later on, but for his next venture he made the data primary part of the business – that company is lanelogic. lanelogic is the first market maker in the wholesale industry that actively trades cars between dealers, bringing liquidity the market, improving how efficiently cars are distributed among dealers, and bringing an industry first – the “Put Bid”.

lanelogic is easy to use:

  1. Sign up as a dealer and let them know how many cars you sell a month
  2. As a precondition of using their service, you allow them to purchase inventory on your behalf, up to 30% of your total inventory
  3. lanelogic has a 45 “Put Bid” on the car, that is basically a european put option, allowing the dealer to sell the car back after 45 days at a given price
  4. When a customer wants to trade in a car, the dealer can “launch” it to their trading deks, where the dealer receives a guaranteed buy bid within about five minutes

lanelogic has built a great system for dealers, and for themselves. Dealers can now take almost any in car in on trade, and know at what price they have a guaranteed buyer. Trade-in values are important to most buyers, and an objection to overcome during the sales process. Plus, the inventory that lanelogic does purchase for the dealership will usually be high quality inventory, and if not, lanelogic will take it back. The real beauty is what Bruce has built up.

I’ve read that lanelogic makes about $200 a trade, essentially moving cars between groups of buyers and sellers that are forced to take the vehicles, but, with the aaXchange data, the traders know what cars the dealers can sell. This limits the risk that a dealer will exercise their ‘Put Bid’. More than just a single smart move, Bruce has built up an ecosystem around lanelogic that enables dealers to buy cars, and turns the company into a comprehensive application. Partners include: Copart (a salvage auction company), Cross Country (a vehicle transport provider), SGS (Inspections), DSC (dealer floorplans), and Great American Insurance Co. (I think the company that provides the Put Bid).

 

All of these companies together work to improve the buy and sell process for dealers. If a dealer is forced to buy a car, they need a line of credit with which to buy – DSC. Once they buy a car, they need to be able to transport it – Cross Country, and before lanelogic ever takes possession of car, they need to verify the condition – SGS. And, in those instances where LaneLogic is unable to dispose of a car, they can use Copart’s Virtual Bidding 2 platform to auction off the car to the highest bidder. Bruce’s vision?

“At some point, we go to the consumer.” Pure. Evil. Genius.

LaneLogic is backed financially by Copart (CPRT), HBK Investments L.P., and Cain Capital, L.L.C

4 responses to “lanelogic founder is an evil genius

  1. This is very insightful to the lanelogic model. Thank you for sharing. I think you will appreciate the AutoConversion model I am working on. Let’s be sure to keep in touch. –Ryan G.

  2. BruceThompsonVictim

    Lanelogic has gone out of business and has left hundreds of dealers with $10 of thousands of dollars in vehicles they can’t sell. Bruce Thompson has walked away from his dealer agreement with the dealers.
    NOW, he is pushing caroffer.com. The public version of Lanelogic. What happens when caroffer.com meets the same fate as lanelogic.

  3. I thought the model was amazing, actually had been a dream of mine to create a model identical from 99-04, then I realized it simply would not work. I saw LL making it work, my dealerships were enrolled and using the service, but I continued to get updates from their insurance carrier to ensure that the risk was sill insured as Bruce had advertisied. He may make it work this go round, but moving that many cars becomes uncontrollable. They had hundreds of units paid for, not even knowing where they were. The units LL sent us were not 200 off the money, they were 2-2500 over mmr, thats why I cut them off last summer. When I saw that huge spread, on the wrong cars, and they sent out a pep rally email about raising more capital, when a month before they claimed to be over capitalized, my guy said game over.

    I think Thompason is a smart guy, think he is an honest guy, but I also think that he just proved that brick and mortar auction houses are here to stay for awhile.

  4. Who is going to buy the cars from their latest venture caroffer.com? There is a similar used car value website operating in Florida now called MyTradeWorth.com that allows dealers in the network to bid on consumers trade-ins. They are planning a national rollout this year. It’s a great site and has really worked well for our dealer group. Watch these guys. They are the real deal.

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