Churn and Opportunity Creation

Marc Andreessen is at it again with his advice and insightful posts, this one a career planning guide. It tied in to a guest post by Joe Pistell on DealerRefresh about game changing companies. The retail auto industry isn’t know for innovation, but the past few years are helping to break this stereotype. Innovation has been low in the auto industry for key reasons: high barriers to entry (capital & legal), low growth, and low returns.

Legal restrictions and contractual obligations have worked to reduce business model competition between dealers. The nature and form dealers must take is largely spelled out for them. Independent dealerships have an advantage over franchised, which is why companies like Carmax, CityAuto, and AutoAuctionUSA pop up. These dealers have greater control over their business operations.

The internet has also created new opportunities within the auto industry. Web 1.0 was primarily started by larger companies that moved operations online, or new companies financed by larger ones, e.g., Autotrader. The decrease in web startup costs have lead to new opportunities for small players to solve unmet needs in the auto industry.

I’ve spent a few days trying to get this post out and found that Marc Andreessen beat me to it! Now is a great time to be in the auto industry: new opportunities, more freedom, and lower startup costs!

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