Nicholas Hinrichsen- MBA’s, Investing, Startups, and Motivation

Youtube Link

Interview with Nicholas Hinrichsen 09_16_2020


[00:00:00] Mike: [00:00:00] Hey everybody. Welcome back to Java chat and this one I’ve been looking forward to, cause I didn’t do it. Let’s just say the stammering should tell you exactly how excited I am to interview this person, because it’s pretty freaking amazing who this is and what he’s done. And the fact that he’s an entrepreneur, which is also awesome, and understands startups and understands… he’s been down the run.

[00:00:22] Let’s put that, let’s put it this way. He’s run the full rail and did it both on the pump cart and then on a train, is that fair to say? 

[00:00:33] Nicholas Hinrichsen: [00:00:33] Yeah if you say so, yeah. 

[00:00:37] Mike: [00:00:37] His name is Nicholas Hinrichsen. And he founded a company  called Calypso after graduating from Stanford business college.

[00:00:49] and then he went through the, the Y Combinator, which is, you know, some others that have gone in like Airbnb door, dash Stripe, those guys, he raised a total of 10 million in venture funding by 2015 and then sold the business off to Carvana. You guys know Carvana is right. I’m sure you do. So the guys with the automated, vending machine in Arizona, I thought that was the most ingenious thing I’d ever seen.

[00:01:10] The coins are a little large, but you know, that’s beside the point. and then they joined, and ended up the pre IPO. They went public and so on. And so that’s what we’re here to talk about is that whole journey. So, thank you Nicholas for coming and hanging out on Java chat and. Coming to share your story, man.

[00:01:29] Nicholas Hinrichsen: [00:01:29] Thanks for having me. I’m excited for this. 

[00:01:31] Mike: [00:01:31] Yeah, this is, this has been a, I’ve been waiting for this one. I think we asked you to come on, like somewhere around last month. Just a little bit. And give us a little idea of your background. I mean, I get it. You graduated from Stanford business college. That that’s cool.

[00:01:46] But the entrepreneur part, I mean, how did first off, how did you come up with car lifts? So what was the motivation behind that? And, you know, go through that run. 

[00:01:54] Nicholas Hinrichsen: [00:01:54] Sure. Well lets, take a step even further back, tell you where I’m originally from what motivated me to go to college, to Stanford and then the entrepreneurial journey.

[00:02:04] So I’m from Germany originally, born and raised in Germany. 

[00:02:08] Mike: [00:02:08] (singing in german) I’m half German. That’s why I’m doing that. 

[00:02:09] Nicholas Hinrichsen: [00:02:09] So that’s the version we don’t sing anymore. 

[00:02:13] Mike: [00:02:13] I know. I always do that for fun. 

[00:02:16] Nicholas Hinrichsen: [00:02:16] Yeah, don’t do that in Germany. So I was born and raised in Munich. I think that’s where the Oktoberfest is from.

[00:02:31] Mike: [00:02:31] My mother is originally from Leipheim. You’ll have to talk to her one of these days. She still speaks there in German, you’d get along.

[00:02:39] Nicholas Hinrichsen: [00:02:39] It’s pretty funny. Anyway, 

[00:02:40] Mike: [00:02:40] so you moved over from Germany. 

[00:02:42] Nicholas Hinrichsen: [00:02:42] I moved over in 2011. Wanted to go to business school amongst others to get into tech. Cause if you, you can’t just move to San Francisco.

[00:02:51] I think you know, everyone and understand that. I need to figure out a way for me to get into the community. Was hoping Stanford could be that way. Had no idea how incredible that worked out. On that front. And so I met a bunch of really impressive people, including one of my friends, classmates and co-founder Chris, who was a huge car enthusiast.

[00:03:14] And so one of the business schools, he was working on a car. He had like four different all project cars. His first car was a DeLorean. The one from that really. 

[00:03:24] Mike: [00:03:24] Yeah, nice. 

[00:03:26] Nicholas Hinrichsen: [00:03:26] Yeah. Bought it on Craigslist of his dad and it was wrecked and they put it together and then it ended up driving. 

[00:03:31] Mike: [00:03:31] Really. They were actually able to get it functional again?

[00:03:33] Nicholas Hinrichsen: [00:03:33] Yeah, that’s cool. Apparently it’s not a very fast car. Barely makes it fast enough to time travel, but barely. And then. Towards the end of business school, all of a sudden what Chris and I were thinking about starting a business in the car space. All our classmates asked us the question, “Hey, how do I send my used car?”

[00:03:52] I need to leave the area, get rid of it, give advice, but then every, and this typically MBA students, can you just sell it for me? Yeah. Okay. And you said it was, you pay me for it. They’re like, sure. I’ll pay you for it. I’m like, Oh, that’s weird. Do you offer something to someone? And he then volunteers to pay it since we wanted to do something in the startup space.

[00:04:16] And we had just taken a lot of classes around the most important thing about it, startups to find value that we bought and then figure out how to wrap a business around it. We thought, Oh, wow. Clearly. Okay. There’s value. We can provide Chris. Chris had sold a bunch of cars before, so that he felt really comfortable doing it.

[00:04:32] So he did, he taught me, we were selling our, our classmates used cars, detailed them, took photos, put them on Craigslist, met with chest drivers. And so the more cars we sold, the more people reached out to us for a really positive sign that we’d found something that people really went to. The problem was that business doesn’t scale very well.

[00:04:51] Like you end up being a car dealer and what we said, well, the most painful part really is the test drive. 

[00:04:58] Mike: [00:04:58] Yeah. Yeah. 

[00:05:00] Nicholas Hinrichsen: [00:05:00] Yeah. Because people either don’t show up or show up hours late, some just want to take the tires. And so we said, well, let’s, let’s see if we can figure out a clever way to remove ourselves from the process.

[00:05:12] And so we created this box, which allowed us to create a Zipcar, like the experience where it’s swipe your ID box open. You can grab the key to start the car by yourself. The car is tracked. On GPS. So we’d always know where you are. And then if the buyer wants to keep the car would just go to the bank, pay for it.

[00:05:28] We did all the processing of the title and there we go. And so that started working really well. And then a bunch of our professors and lecturers would ask for advice. Followed us and then kept listening to us and got really excited about what we’re doing. And so we ended up raising our seed capital around from basically people associated with Stanford.

[00:05:49] Mike: [00:05:49] Wow. 

[00:05:50] Nicholas Hinrichsen: [00:05:50] And that was before we went through Y Combinator, Y Combinator is, as you said, the startup accelerator program where we’re usually startups go to then raise money and then grew the business with Y Combinator.

[00:06:01]Mike: [00:06:01] Did you, you guys did it inside the pre pre-funding, so you didn’t have to do what’d you guys do later at three 16 or reg D or what did you guys do? 

[00:06:08] Nicholas Hinrichsen: [00:06:08] No. So we started out back then. It’s changed a little bit, but back then, the way you would raise money as a little startup is through convertible notes.

[00:06:18] Right? Cause you don’t need any lawyers. You just, that’s standard paperwork. And then the second round of funding after YC was through what’s called a safe or similar concept. It’s a simple agreement for future equity. So yeah, I agree in evaluation, you get the money and it converts into real equity later.

[00:06:39] And the reason you don’t have to spend fortunes on lawyers and put the view around together. And then in 2015, we raised a big institutional round of $8 million bringing up. The capital to them all the way to 10 million. And that’s when everything converted into real likely. 

[00:06:55] Mike: [00:06:55] Sure. How long did that process take?

[00:07:01] Nicholas Hinrichsen: [00:07:01] Well, we, we went fundraising twice. We got to do fundraising because most companies go there to fund. And so this business model, this peer to peer thing, didn’t quite work. We weren’t very confident that this would be the end state of the business. And when we were pitching it to investors, they realized, yeah, this doesn’t scale.

[00:07:21] And this is not very, the reason being is he has these two people with different interests. You have the seller who wants more for the car. And the buyer wants to pay less. And so what we ended up doing, we pivoted away from this peer to peer model, into a model where we would work with institutions that leasing companies, rental companies, fleets, these institutions have a lot of cars.

[00:07:44] They can sell directly to consumers. Instead we ever tied these cars on their behalf, and found a buyer. And if, and when we found a buyer, we would buy the car, recondition it, deliver it. What’s. So that’s the business that started taking off. 

[00:07:57] Mike: [00:07:57] That’s different from, is, is that the same as the Carvana model? I think that’s, that’s slightly different. Isn’t it? 

[00:08:02] Nicholas Hinrichsen: [00:08:02] They are different and I’ll tell you why and how these two came together later on. That’s the model that took off. And then, then why the first round of fundraising that was end of 14 was not very successful because institutions didn’t believe this model would scale. Neither did we. Then all of a sudden, half a year later, we ran into this new model that worked really well.

[00:08:25] And for the first time time, the history of the company, we’d been two and a half years, two years old at the point for the first time, capital was a constraint because it would take cars in inventory. You actually need to finance them for two weeks and then turn them and margins were really good. We’ll send that point.

[00:08:40] That’s a really good time to raise money, right? Because he can demonstrate if we had more money, he could do more. 

[00:08:45] Mike: [00:08:45] Yeah. Yeah. It’s that holding time you had to cover amongst others. 

[00:08:48] Nicholas Hinrichsen: [00:08:48] Yeah. Yeah. And so that process took full weeks. That happened really quickly. 

[00:08:52] Mike: [00:08:52] Wow. 

[00:08:54] Nicholas Hinrichsen: [00:08:54] And then fast forward. So that business scaled really nicely.

[00:08:57] We were selling about 150 cars a month soon after that sounds like a small number, but it’s more than three now, a million dollars in revenue. 

[00:09:05] Mike: [00:09:05] Yeah. Most, most used car dealerships are happy if they can push out 40 units a month. 

[00:09:09] Nicholas Hinrichsen: [00:09:09] Exactly. Yes. And we did it all from a little garage

[00:09:12] tech to keep things small and it allows you to do things that you can’t do without taking. And so. So then the question was okay, what do we do now? We think we can scale this from 150, 2,500 to 10, 15,000? Or is there a better way you always need to figure out what are your options? What’s the most valuable thing to do in our case, the business became more operational than we wanted to.

[00:09:36] We wanted to move bits and bytes and have servers, and we ended up with a call center and car factories, practically, and people, people like car mechanics and fixing cars. And so one thing we had gotten really, really good at is we have this unique problem that we didn’t have the cars with us.

[00:09:57] We’re advertising thousands of cars every day, but none of these cars were with us. So in order to describe what trim they have, what packages options, what equipment was in the car, we needed to find a way, how to use technology to describe vehicles. Sure. You think if you have the VIN of the car, you know everything, but that’s not the case.

[00:10:17] Mostly most, most VINs. Don’t tell you anything like that. Tell you the year, make and model sometimes trim. 

[00:10:31] Mike: [00:10:31] Really it doesn’t tell you that stuff? I didn’t know this. I honestly didn’t know this, that that’s that’s news to me. 

[00:10:36] Nicholas Hinrichsen: [00:10:36] If I give you a BMW VIN of a three series, you know, it’s a three series, but it could be the base model or the one that’s $30,000, more expensive that has this fully loaded.

[00:10:45] And so we needed to become really good at describing vehicles that we didn’t own a hundred percent online. And so we, that’s what we use tech for tons of data, scraping and normalization. Oh, so we were the first one who had, had the problem of having to describe vehicles that are not in your possession.

[00:11:07] and Carvana ran into that problem a little later because they were growing so big that they couldn’t have, couldn’t rely on people describing these cars. And then when we compare notes, cause that’s what you do. If your competitors, you’re the same space. It’s a huge space. Like we’d never felt like competitors.

[00:11:24] We taught them, Hey, we’ve built this. This is working really well for us. We started with the operational piece curviness that, well, we got the operations piece. We also got the financing. Like they had the fully fledged experience. One thing they wanted to invest in was getting better describing vehicles, a hundred percent digital.

[00:11:42] We had already figured that out. At least like the last piece of the puzzle. At The beginning of the last piece of the puzzle and so then instead of raising more money, we decided to sell what we had built to Carvana and for the whole team to come over and join Carvana. And that’s how the deal happened. 

[00:12:01] Mike: [00:12:01] So are you, are you a part of Carvana now or are you…

[00:12:04] Nicholas Hinrichsen: [00:12:04] Good question.

[00:12:05] So we stayed for three years, which was incredibly fun, obviously, because I always describe it as it’s switching lanes. We, we, I felt like we were driving a nice car going down the road, but at some point, Carvana was just much faster than us. And then we got the chance to just hop on their board and their train and then go with them at full speed.

[00:12:25] And we had really interesting roles at Carvana. We love the founders and executives were really good friends. And so that was a really fun experience. But after three years, the company had become really big. And Chris and I wanted to start another business, we had a few convictions and insights. And so we left in June of this year to start a new company.

[00:12:46] Mike: [00:12:46] That’s all of the story. And this happened in the course of how many years. 

[00:12:50] Nicholas Hinrichsen: [00:12:50] We ran our companies, our company for four years, and we stayed with preventive for three years. 

[00:12:55] Mike: [00:12:55] So seven years. 

[00:12:57] Nicholas Hinrichsen: [00:12:57] Yeah. It doesn’t feel like something, felt like seven days. 

[00:13:00] Mike: [00:13:00] And then, then that was going to be the next question.

[00:13:03] Did it really feel like that? Because I know a lot of entrepreneurs, it’s go, go, go. And then when they turn around and they look back, it’s like, Holy  crap.

[00:13:10] Nicholas Hinrichsen: [00:13:10] Yeah. So number one, people don’t want to always want to build companies overnight and think all the companies going public overnight successes, that’s never true.

[00:13:23] They’re all overnight successes. 10 years in making a really big company takes at least 10 years. If you look at all the IPS now, like these companies, you haven’t heard of them, but they’re at least eight years old. And if you ask the management, like, yeah, no, this is.. The first four years when we were running the first two years of running our company were fun because we kept experimenting.

[00:13:47] The second two years were really hard because we worked so hard. We just wanted to make this business work. And then at Carvana, it became really interesting because we switched from at least that’s true for me from being like this entrepreneur in charge to becoming an employee. And so that, that has some benefits. You have a little more time. 

[00:14:08] Mike: [00:14:08] I was going to say, how did, how did that change? Yeah, I was gonna say, how did that change? Because at that point it’s no longer the stress of you producing for the whole company you’re still producing and there’s still stress on your shoulders. But I mean like your responsibility to the bottom line has kind of changed.

[00:14:23] Nicholas Hinrichsen: [00:14:23] That’s sort of the responsibility is the fun part. So not having that feels like a relief for two weeks, but then you’re like, Oh, I really liked that. The big difference in a big company, and this is not, not unique to Carvana. I think permanent is really good at that, but other companies feel it too.

[00:14:39] Like you can only run so fast because now you have a big team you’re integrating with them. With other people. This business is very complex. And so like the progress was a little slower than what it was used in our startup, because we were scrappy and the big, as I said, that happens to every company.

[00:14:56] And so I just have had more time. Like I was, well, this is not the gating factor to getting a lot of things done. And so I didn’t have to work on weekends and then it could take off at 6:00 PM, which we never did when we ran our own company. Yeah. So that was nice to recharge. A bunch of my friends got married or traveled a lot.

[00:15:14] And so now I’m really eager to be back in the weeds and working 16 hour days, and being really excited about the small successes. 

[00:15:22] Mike: [00:15:22] It’s, it’s an, it’s an interesting thing that I learned with most entrepreneurs is especially when they experienced what you’ve experienced going from being the guy out in the weeds versus the guy who is now a part of the machine.

[00:15:34] We, and I’m the same way we find it for some weird reason, much more fun to be out in the weeds.  It just, 

[00:15:42] we liked it. We’re freaking gluttons for punishment. I swear. I mean, it’s, you know, people, you need your sleep. I sleep when I’m dead, you know, eating is a bad habit, you know, that kind of whole thing.

[00:15:54] And I did this when I was in other, other businesses as well. When I was an investment manager for an angel investment group out of, out of California. I was always looking to see how much was the dedication for the people that are looking for that funding. Obviously this is pre prepare a POC proof of concept, excuse me.

[00:16:17] where people would be like all week, we have this idea, we have this and, okay, cool. How long have you been working on it? Well, we’ve worked on it for the last few months. Really. How many hours have you put in? Never heard enough, never heard, never heard enough. Cause I know the moment I go back to the angels and I go, Hey, they’ve been working on this for six months.

[00:16:36] They put in a, you know, five or four hours a day on it. And they look at me and they go, are you out of your mind? Remember, they should have been that it took a month. 

[00:16:44] It should have gotten all that shit done in two months. What do they, what else are they doing? Well, they have jobs and that’s their problem.

[00:16:49] You know, it’s, it’s interesting. The angel, the angel investment world and the VC world, both. It’s interesting what they put value on when it comes to who’s driving this whole thing. And I’m sure you guys found that too. 

[00:17:02] Nicholas Hinrichsen: [00:17:02] What I think startups weren’t very well understood for a long time. I think like had I told you five or six years ago, every startup has a false start.

[00:17:15] You start with a conviction and then you find out, Oh, nobody wants this. Then people tell you what they want, what they want you to build them. Then you build that. So that happens to every startup, every startup pivots. startups don’t take three years. It takes 10 years. You have a distinct phase of what we call it, a finding product market fit.

[00:17:34] So finding something that people really love. Yep. And then only then when you feel like people are pulling it out of your hands and you can’t keep up with all the demand, then you transition into a scaling phase and what do you use money for? And what’s the good and bad is for money. And I think there is much more clarity around it because people are just seen way more startups do good and bad things.

[00:17:55] Now, I think it’s clear, at least to me, 

[00:17:58] Mike: [00:17:58] I’d have to agree with you. cause startups in the past would always be like, well, we got this wonderful project and 1,000,001 stories around it. Of course, the difference between somebody coming in with a fully laid out plan versus the guy that sits down and goes, Hey, if I could do this, would you be interested?

[00:18:14] Yeah, and it hits that nerve and the investor going, Holy shit, you can do that really. And then there’s still that pivot that you mentioned, because even that may not be what the market wants. It might be what the investor’s interested in, but that doesn’t necessarily mean it’s ready for market

[00:18:28] There’s new ones, something that Christopher COVID-19, you keep repeating over and over again, because we didn’t understand the first time. First time founders are obsessed with products. Yeah, you’re just obsessed with, I have this cool idea. The school product people will love it. Second time founders are like, well, I’m just obsessed with distribution, getting people, getting in touch with people, getting it for enough people.. 

[00:18:59] Mike: [00:18:59] It’s interesting how the process seems to reverse itself. Yeah. 

[00:19:03] Nicholas Hinrichsen: [00:19:03] Yeah. You don’t, you make other mistakes just don’t make the same mistakes again, right?

[00:19:07] Mike: [00:19:07] Yeah. Yeah. Well, and, and what, the, the thing that I see with a good portion of startups is they have a tendency to be so stuck in what their passion is.

[00:19:16] They forget that they need to do that. 

[00:19:18] Nicholas Hinrichsen: [00:19:18] That’s tough. Cause it’s emotional to a little baby. you don’t want to admit your baby’s a little ugly today and requires a little bit of makeup or maybe a whole change, but yeah, 

[00:19:31] Mike: [00:19:31] but I think there’s more than one diaper change that’s needed for any baby. So that just, that’s just kinda how that, yeah.

[00:19:38] I don’t know why we went down that way, but it went down. 

[00:19:40] Nicholas Hinrichsen: [00:19:40] That was your fault. 

[00:19:43] Mike: [00:19:43] I own it. I own it. It’s all good. Hey guys, we’re going to take a short pause and we’re going to come back. We’ll talk a little bit more about Motivations and who your influencers are. talk a little bit about where, 

[00:19:56] where you got, where you got your inspirations from. That cool?

[00:19:59] Nicholas Hinrichsen: [00:19:59] Sure. 

[00:20:00] Mike: [00:20:00] Okay, cool. We’ll be back in about 30 seconds, guys. We’ll see you in a second. 

  • ●●

[00:20:00] Mike: [00:20:00] And we’re back here at Java chat, sitting here having a cool chat with Nicolas Hendrickson. One of the founders of Calypso, that eventually merged into Carvana. Hell of a story, dude. I’m curious, who are the, who are the major influences, like when you were back at Stanford, did you have anybody that you kind of looked up to as far as the entrepreneurship side of things, like whether it was a professor or an actual person in startups and stuff, and how did that affect you?

[00:20:34] I mean, what, what did that teach you?

[00:20:36] Nicholas Hinrichsen: [00:20:36] Very much. So I think it’s so important. And you only know when you have these people in your life, how valuable they are. When, so Chris and I were selling our classmates’ cars. And then I just didn’t know what I was doing with my life. Like neither Chris thought this is going to be a business.

[00:20:53] We just spent the summer finding value. And so I sat down with this gentleman. His name is Andy Rachleff. I met him through school. He’s a lecturer. He got his MBA at Stanford himself. He started benchmark capital as the probably best, if not second, best venture capital fund in Nevada. 

[00:21:12] Mike: [00:21:12] I’m about to say that name.

[00:21:12] Redcliffe sounds familiar. You got to sit down with him. 

[00:21:17] Nicholas Hinrichsen: [00:21:17] Yeah, he’s a friend.

[00:21:18] Mike: [00:21:18]  Holy crap, dude. That is, 

[00:21:21] Nicholas Hinrichsen: [00:21:21] and so he was the first investor of eBay. He started this fund benchmark capital. He left to start a wealth front. The fund investor was the first investor in Uber and then Snapchat, so incredibly successful.

[00:21:32] And so I sat down with him and I’m like, Hey, Andy, I need your advice. If you don’t mind, I don’t know what to do with my life. I really wanted to start a company, but I just kind of found a good idea. Maybe I shouldn’t work for a tech company or something, and then we grabbed a beer and an hour. He said, I’m really sorry.

[00:21:49] I need to leave now. But I think you already made up your mind. I’m like, what do you mean you should be selling cars? And if you want to make this a company, here’s $50,000 to get started. It’s like, yeah, there’s always a handful of students that want to support. I think you’re onto something, not because of the idea.

[00:22:09] It’s just because of your hustle. You’ve been sending cars to remind me of other entrepreneurs. So I backed into work with success in the past. When you do, let me know

[00:22:18] Mike: [00:22:18]  No way, like, just like handed you 50 K and said here, just go do this virtually. 

[00:22:23] Nicholas Hinrichsen: [00:22:23] No, 

[00:22:25] Mike: [00:22:25] But literally the man himself said here, here’s 50 K.

[00:22:29] You already know what you’re doing. Just go do that. 

[00:22:31] Nicholas Hinrichsen: [00:22:31] Yeah. And so then I called Chris, I’m like, Chris do it. We have a problem. And he wants to invest in us and he’s like, seriously? That’s cool. I’m like what the problem is, Hey, we don’t know what to do, what we’re doing. And you’re about to start a job in four weeks.

[00:22:48] He was like, yo, well, let me call them real quick. So he called this company that he wasn’t really excited about. Quite frankly and said, Hey, here’s this unique opportunity. This is an opportunity that he has to do it. Now, if he does it later, or if it’s being presented later, he will probably not take it.

[00:23:03] And, so we ended up kicking off our fundraising. He’s become like this really, really incredible mentor. Every time we do, we don’t know. Like us, we are on the right cross path and don’t know which direction to go. We ask any for advice. This is just a text message away. And I just many really love how he thinks about it and partnership.

[00:23:25] so that’s one role model and I’m feeling really blessed and lucky to have him. 

[00:23:31] Mike: [00:23:31] That’s amazing. 

[00:23:34] Nicholas Hinrichsen: [00:23:34] I think it’s like this whole entrepreneurship and wanting to start your own company. I think that comes from somewhere else. My grandfather had his own business. My dad always wanted it to be incredibly entrepreneurial.

[00:23:46] He’s a, he’s a doctor, he’s a gynecologist, a specialist in fertility treatment and he had his own practice and then started small clinics and joined a private equity fund and acquired more milk company practices and consolidated the market in Germany. And so I. Like from, from early on, I saw how, how much more energized he was working on like an entrepreneurial venture.

[00:24:11] Versus being an employee. And he was the one that’s funny because it’s funny how life goes. Sometimes I always wanted to study engineering. And I said that when I was playing Lego in my like teens or even younger when it was five, six, seven, and he said, yeah, you’ll definitely study engineering. And then at some point you’ll get something like an MBA.

[00:24:31] And so an MBA is, that’s not a thing you do in Germany. And like, people don’t know what that is. His brother had done it. His cousin had done it and both felt it was a really good experience. And then we never talked about it, again, until I took my first job, did it for two years and then wanted a break from that job because the company wasn’t going anywhere.

[00:24:52] Then I myself said, well, there’s this thing called MBA. Maybe I should look into that. And so I applied, got into Stanford and moved and the rest is history obviously, but I think if it hadn’t been for my dad who, who has this entrepreneurial drive and. Some of them mentioned the MBA early on and planted the seed without knowing, without him knowing.

[00:25:13] I think, I think I wouldn’t have, would have never chosen such an entrepreneurial path 

[00:25:17] Mike: [00:25:17] Quite possible, quite possible. Everybody comes from a different background. Sometimes it’s the family that does it. Sometimes it’s just somebody that’s an inspiration. You had two mentors pop in and Andy and that whole, that whole decision to go into the MBA.

[00:25:33] What was that experience like? Obviously we’re talking about Stanford here. So, I mean, but what was that experience like going through their MBA program? 

[00:25:41] Nicholas Hinrichsen: [00:25:41] Well, the MBA, I think most people don’t, well, I didn’t understand what it was. I had a perception for them. 

[00:25:47] Mike: [00:25:47] Most people have perceptions and have no clue.

[00:25:51] Nicholas Hinrichsen: [00:25:51] So it’s not a super academic experience you can choose it to be. But, I chose to. To a lot of like run, run, big risks, take classes in design thinking. And I learned Portuguese. It’s funny that you mentioned that earlier. Did other engineering classes and then I did a lot of classes around venture capital entrepreneurship, trying to really understand that, the hard part is getting in.

[00:26:16] Once you’re in, you’re surrounded by these incredible people. We don’t really have proper grades. Nobody discloses what grades you have in your MBA program. Therefore all the employers would ask you for it. Therefore you take risks, difficult classes that have easy classes. So there’s a few things that are really, really cleverly done.

[00:26:38] And then you just need a lot of people in order to make incredible friends. People always say you got to get your MBA because yeah. The network, the network is, it sounds like a very transactional term. These are all your friends. So when would be, for example, fundraising again, two months ago, First thing we did.

[00:26:54] I just pinged all my friends who now work at these investment companies. These venture capital funds told them, Hey, we are ready. It’s like, perfect. I’ll make the introduction to the partner. When is a good time? This is what’s probably most valuable, including you make your best friends at business school.

[00:27:10] Mike: [00:27:10] Yeah. That’s for any college, USC Stanford here at UNL V that the networks of the alumni really is a friendship. You’re kind of part of a family, essentially, because these are people that, you can, you can pick up a phone and call them, even if it’s just to say what’s up, you know?

[00:27:30] Nicholas Hinrichsen: [00:27:30] Exactly. Yeah. 

[00:27:31] Mike: [00:27:31] There’s a degree of comfort in that. You never have to worry about the defensive mechanisms that come up during cold calls and all that kind of extra stuff. When you’re talking to venture funds, I was part of a, and I still have some shares in it. I was part of a tech startup that was serving the meeting space and we talked to a couple of funds.

[00:27:54] And those came as a result of people’s friends that they’d worked with before or gone to school with. So completely, absolutely true. It’s interesting that the MBA isn’t such an academic experience so much as it is a learning experience. And I hadn’t actually even thought of it that way, but you’re absolutely right.

[00:28:14] You can make it as academic as you want. It just really depends on what you’re really after. 

[00:28:20] Nicholas Hinrichsen: [00:28:20] Yeah, it’s nice that the design is really, it really is in your hands at that point on what you want to get. You’re super flexible and like the interesting learnings come from doing something that’s really, cross-functional where you meet other people from other faculties.

[00:28:35] I really enjoyed that part of the experience. 

[00:28:37] Mike: [00:28:37] The entrepreneurship program here at ULV. I’ve heard numerous times where the students from the entrepreneur MBA would be working with the, the, computer science and engineering department. Constantly for new ideas, because it’s just like, what if we could do this?

[00:28:55] I don’t know how to go there, go over to the engineering department, see if they can. And, and they, and they come up with some pretty cool stuff. I one of the ones that I heard of, I don’t know if it’ll ever come up, but I thought it was pretty cool with smell-a-vision

[00:29:07] Nicholas Hinrichsen: [00:29:07] What is that? 

[00:29:09] Mike: [00:29:09] Smell-a-vision is the ability to turn on a Roma’s during a TV show.

[00:29:13] Nicholas Hinrichsen: [00:29:13] Oh, wow. 

[00:29:14] Mike: [00:29:14] And it would come out of this little box. They built a prototype. I don’t know if it ever went anywhere. I haven’t heard anything since, but they built a prototype. And the idea was that you could get certain scents mixed in from different things. Now, obviously a real version of that would have to be super intricate.

[00:29:33] But the idea for the movie… 

[00:29:35] Nicholas Hinrichsen: [00:29:35] Richie rich. Yes. He has this thing where he can smell things and then buy them or something. 

[00:29:41] Mike: [00:29:41] Right. That’s right. I remember that that’s a different type of smellovision, but yeah, it’s the same idea. I wondered who would invest in something like that. That would be pretty awesome. “That smells good. I’d like to order that on Uber eats, please.”

[00:29:55] In the midst of all of this stuff that you guys did, and there’s always roadblocks, every entrepreneur runs into him. You kind of talked about a couple. What are some of the biggest ones you learned lessons from?

[00:30:05] Nicholas Hinrichsen: [00:30:05] You made, when you made the intro, you made me sound like the superhuman and like I’m definitely not.

[00:30:13] Every, every startup is like a bunch of failures in a row until something doesn’t fail. It’s actually the saying by Phil Knight. The guy who started Nike is like, there’s nothing wrong with failing. You’ll fail a lot. Just make sure you don’t fail the last time you tried it. And so I think that’s a good analogy or a metaphor for how startups work.

[00:30:39] And so in our case, we thought peer to peer model is the way to go. I’ll help you, Michael, sell your car to somebody else. Didn’t work on that for a year and a half. Busted our butts. Weren’t going anywhere. Then we changed the model, just admitting that you need to change, change everything.

[00:30:57] That means you have a whole team that needs to understand that the team likes the mission of the first business better, but didn’t understand it wasn’t a business. So that was a failure then building out our company that ended up actually scaling quite a bit, but then realizing, Oh, it’s not the tech company we wanted to build.

[00:31:15] That felt like a failure. We sold the curve. I know that the outcome is incredible, but we would have much rather quietly. So, like I, I don’t mind any of that. I have zero regrets. I think we learned so much, there was no, no better outcome we could have produced. And now we’re really eager to learn.

[00:31:35] Now we have a little bit on the chip, on our shoulder to do it again, but this time. Did the company acquire other companies? And so, yeah. 

[00:31:43] Mike: [00:31:43] So you guys have moved out of, you guys have moved out of being owners and employees. You’re now looking at investing, is that what I’m hearing? 

[00:31:50] Nicholas Hinrichsen: [00:31:50] No. So we, so yes and no, we started our own next company.

[00:31:56] That’s called clutch. It’s a digital platform to refinance auto loans. The domain is with Maybe you can put it there. 

[00:32:04] Mike: [00:32:04] We, we will, all of that stuff comes in in the comments. Absolutely. 

[00:32:07] Nicholas Hinrichsen: [00:32:07] Cause there’s a lot of people who can save a lot of money, even though they can. And then parallel. We do some angel investing, small checks to friends who remind of our, we might remind us of ourselves, but then when we were like in the weeds, Yeah, the new business, like we went back to be really big and have a lot of impact and help.

[00:32:27] A lot of people save a lot of money. And so I think the fact that we were required, created a little bit of a chip on our shoulder that keeps motivating us to still be really impactful ourselves. 

[00:32:38] Mike: [00:32:38] Sure, sure. That’s awesome. When you, when you’re doing those little things, I get it that you’re looking for, the people that are motivated like you guys were, but what are the kinds of things that you guys actually look to invest in?

[00:32:49] Nicholas Hinrichsen: [00:32:49] So I think there’s, let’s see there’s two different types of people. I invest in them. I love South America, every person who has a good education. In a sense, startups go back to Brazil to start a company. I would just write a small blind check because all of the country is, I know it’s a small community and they all know each other.

[00:33:12] And often they start businesses that worked somewhere else and it was just a little behind. So these are just really interesting business investments or in founders who would just really embrace getting advice if there’s any, to give and who remind us of ourselves, like in the weeds. Not trying to tell you the big picture.

[00:33:32] And there’s a huge vision of what you’re trying to build, but actually investing in the right discovery process. And so those without me actively seek if people approach me or if I, if somebody tells me, Hey, I know these guys, what you talk to them and then meet them into the thing. I understand what they’re doing.

[00:33:50] They never write a check. 

[00:33:52] Mike: [00:33:52] That’s cool. That’s always cool. Hey guys. Want to take one more short break? And take one more break and come back and wrap up and ask for a little bit of advice for you, from you, for our entrepreneurs and people that are thinking about stuff.

[00:34:15] So there’s 30 seconds and we’ll be right back. Y’all.


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 All right guys, back here with Nicholas Hinrichsen now of , formerly of Carvana. What drives you, dude?

[00:34:36] What, what really moves you to get moving? 

[00:34:40] Nicholas Hinrichsen: [00:34:40] Yeah, that’s a really good question. So when here’s a, here’s an anecdote that I think explains it really well. When we graduated from business school, we had one lecturer, an entrepreneur himself. Tell us, Hey guys, you need to understand you in a very, very unique position compared to everyone else.

[00:34:56] You’re leaving Stanford business school. You could have almost any job you want right now. You’ll all make a lot of money. So don’t worry about that. Like, what you should do now is you should worry about how you can have the biggest impact. Yeah, because even if you start a company and fail, you can always go back to the other job.

[00:35:12] Like it’s not going to run away. And so you’d be silly to not explore ways to have disproportionate impact. It’ll pay off for you. Like multifold, but especially the ability to have impact on a lot of people because of your plan B is what you should be striving for. And so that resonated very much with me.

[00:35:31] Cause it’s so true. It’s true. Ultimately, you want to ask yourself, what do you want to be remembered for? And I don’t want to be remembered for having worked in a consulting company or an investment bank all my life. Even when you make an impact, like I want to be remembered for helping Americans save tons of money on their cars. I think that’s something we’re after, like I left a mark and made a little dent and helped people get out of bad places and bad situations. And so that motivates me and the past money motivated me more than it does an hour, because I’m realizing the money.

[00:36:07] Like if you impact a lot of people, The money will come automatically. The more you impact, the more money you’ll get, but really needs to be the impact, not the money, because if you strive for money, you. You won’t necessarily have the impact. That’s what I learned. And admittedly, it took a little bit of time.

[00:36:29] Took me a little bit. It also took me a little bit of money to understand. Oh, if I go up to the asset, the end of the, the other thing, if I go after the impact, the money won’t come. And so yeah, that’s, that’s what I’m in for. And that’s what I’m looking forward to, especially with the new business, because there is the opportunity to help a lot of people.

[00:36:49] It’s our opportunity to address income inequality in a very creative way. And so that’s what motivates me. 

[00:36:56] Mike: [00:36:56] That’s sweet. When you’re looking at the point of being in a startup or being a startup, or thinking about doing a startup or something like that, what’s a good piece of advice you think you can give to some people out there that are just, you know, they have it in their mind, they have this wonderful idea?

[00:37:10] And they’re thinking about running into this whole thing called the startup.  Well, what would you be your best piece of advice for them? 

[00:37:16] Nicholas Hinrichsen: [00:37:16] The most important thing is to get it out of your mind and do something in your mind. Two things happen, Hey, you’re not doing anything you’re actually talking yourself out of it.

[00:37:26] You find too many reasons why something wouldn’t work. And if you, if you just know for a fact that whatever you start will change based on things you learn, then I think you approach it differently than you say, okay, let’s get this failure out of the way really quickly. So you can discover something that really works.

[00:37:44] And so my piece of advice would be just get started, like just do it. Find reasons not to find reasons to take baby steps. The most important thing is to end up talking to customers. The potential customers are they’ll tell you what they want and they’ll tell you why, what you have in mind, isn’t worth pursuing.

[00:38:01] And so then that allows for learning and allows you to find something that really works. 

[00:38:05] Mike: [00:38:05] That’s a resounding theme. When I asked that question, do something. Don’t let it sit proliferating in your head. That whole negative self talk comes way too easy, especially for entrepreneurs. We’re we’re masters at talking ourselves out of shit.

[00:38:22] Nicholas Hinrichsen: [00:38:22] Exactly. Yeah. I think they’re done at the head. 

[00:38:25] Mike: [00:38:25] I think one of the, one of the big safeguards of that is possibly taking a look in that mirror and going, am I doing this to myself and being honest with it? 

[00:38:37] Nicholas Hinrichsen: [00:38:37] That’s probably true. Yeah, I can, I would agree. 

[00:38:42] Mike: [00:38:42] So you’ve begun a new business.

[00:38:45] You’re being an angel investor. Obviously you’ve reached a level of success that right now you’re obviously happy with and looking forward to much more. What would you think is the biggest challenge that you guys are dealing with right now? Or you personally? 

[00:39:00] Nicholas Hinrichsen: [00:39:00] Let’s see. I feel lucky. Feel a little easier this time than last night. Get it this time. The challenge still is, I’m not going to do a good job repeating this quote, but there is this quote saying it’s much easier to tell people they have been fooled. No, I’m sorry. It’s much easier to fool people than to explain to people that they have been fooled.

[00:39:26] Mike: [00:39:26] Yeah. Yeah. 

[00:39:29] Nicholas Hinrichsen: [00:39:29] And so this is, this is basically what we’re going on against. People have a car loan and it was much easier to sell in the first car loan dealership than it is to tell them, Hey, it’d be full back then. So you better learn. People always were like, no, no, no. I think, I think you’re wrong.

[00:39:47] They’re like, no, no dude. You don’t trust car dealerships, right? So why did you trust them with your personal financial products? Yeah, that’s a good person. And so I think awareness, creating awareness. Which is part of the reason I love talking about the topic and I’m thankful that you can have this conversation here.

[00:40:04] Just need to know that you can refinance their auto loan and save thousands of dollars. And we’d love to be there for them when the time is right. 

[00:40:13] Mike: [00:40:13] I may have a solution for you on that one. We’ll talk about that later because getting information out is always a challenge, especially when it comes to putting out facts.

[00:40:23] by the way, I have friends that work in the auto industry. I’ve asked them about that whole thing. And they’re like, you realize that when they finance a car, they make way more money than if they sell it for cash. And I was like, we explain and they did. And my eye, I remember my job being on the ground for about a minute, going.

[00:40:39] Are you effing kidding me?

[00:40:41] Nicholas Hinrichsen: [00:40:41] Yeah. That’s what’s happening, 

[00:40:42] Mike: [00:40:42] But, but nobody knows. Nobody knows this stuff because of everything that gets wrapped into it. So, I mean, yeah, I think I may have something for you on them. We’ll definitely talk about that. So we’ve already mentioned That’s one place they can find you where else can people find you.

[00:40:57] Nicholas Hinrichsen: [00:40:57] Probably the easiest way to connect with me is on LinkedIn. And I really enjoy having new connections. So feel free to reach out if you have questions, advice, feedback, feedback, as a gift. So don’t hesitate. I’d love for you guys to connect with me and just look for Nicolas Hinrichsen on LinkedIn you’ll find me immediately.

[00:41:15] I’m sure Michael would put LinkedIn into the show notes too. And then I look forward to connecting. 

[00:41:20] Mike: [00:41:20] Yeah. And I’m not sure if we’re connected, but we will be after this that’s for damn sure. Listen, I want to thank you for sharing your story. I’m sure there’s much more that you can share. There’s more stuff to talk about when it comes to fundraising posturing.

[00:41:35] All that kind of stuff. We’d love to have you back to talk a little bit more about clutch too, and how things are going on the load. Yeah. this has been fun, man. I really enjoyed this 

[00:41:45] Nicholas Hinrichsen: [00:41:45] Thank you for having me. I feel flattered. 

[00:41:47] Mike: [00:41:47] Flattered? I’m the one who was flattered. Goodness gracious. You know Andy Radcliffe, what the hell.

[00:41:53] And now I know Nicholas Hendrickson. What the hell.

[00:41:57] Nicholas Hinrichsen: [00:41:57] One day maybe. 

[00:42:01] Mike: [00:42:01] Yeah. I’m always glad when I can actually say they know me. That’s my biggest joy is when somebody, when somebody can actually go back to that person and go, do you know who Mike is? Oh yeah.

[00:42:12] The crazy Hawaiian with the coffee chat. Yeah, I know him. I’m alright with that. So you guys know how we love to end this. It’s always the same. We always tell you, we love every one of you. We hope the best for every one of you, stay here, stay safe, stay healthy and live from both of us to all of you. Chow for now.

[00:42:37] Nicholas Hinrichsen: [00:42:37] Chow for now.

  • ●●

[00:47:38]For more information on Java chat, visit chat, You’ve been listening to coffee with Mike on Java, Chad tune in weekly to this podcast. For the next episode, you can also download or subscribe today on your favorite podcast. Pass platform, a production of Oasis media group, LLC. Located in Las Vegas, Nevada copyright 2019, all rights reserved. 

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