He took a 97% downround—then grew to $400M ARR & a $575M valuation in 2 years. | Dan Park, CEO of Clutch

Dan Park joined Clutch when it was selling 20 cars a month. Then he grew it from $20M in 2019 to $200M in sales by 2022. He was one of Canada's fastest growing companies. Just as he was going to close a $100M round, the macro changed completely. Suddenly, he was left with only six weeks of cash. He was forced to go through a 97% down round at a $15M valuation.

Just two years later, he not only grew right back to a $575M valuation, he also doubled revenue from its previous peak to $400M.

This episode unpacks every near-disaster move, including turning off test-drives (and why it worked), re-engineering unit economics in real time, and renegotiating debt so Clutch could keep buying cars. 

Dan’s hard-won lessons will change the way you think about speed, iteration, and survival.

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Why You Should Listen

1. He had just six weeks of runway – Find out exactly how Dan rescued Clutch from the brink.

2. Taking a car startup to $400M in sales – The surprising moves that made consumers buy cars online, sight unseen.

3. Cutting 75% of staff—then doubling revenue – The inside story of Clutch’s brutal pivot and swift rebound.

4. How to survive capital-intensive nightmares – Lessons on debt, term sheets, and crisis-mode fundraising.

5. Why fast iteration trumps everything – Dan’s secret to making big bets—then yanking them back if needed.

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Keywords

Used Car Marketplace, Capital-Intensive Startup, Near-Bankruptcy Turnaround, Automotive E-Commerce, Cash Flow Management, Startup Layoffs, Rapid Iteration, Debt Restructuring, Growth vs. Profitability, Founding Team Dynamics

Timestamp
(00:00:00) Intro
(00:02:23) The Birth of Clutch
(00:04:37) The Chicken and Egg Problem
(00:08:31) How Do We Scale This?
(00:14:21) Baby Steps and Achievable Milestones
(00:22:45) Becoming Profitable
(00:34:45) Do Whatever Makes Sense for The Business
(00:37:29) Finding Product Market Fit
(00:42:23) Piece of Advice

Chapters

• 2:23 The Birth of Clutch
• 4:37 The Chicken and Egg Problem
• 8:31 How Do We Scale This?
• 14:21 Baby Steps and Achievable Milestones
• 22:45 Becoming Profitable
• 34:45 Do Whatever Makes Sense for The Business
• 37:29 Finding Product Market Fit
• 42:23 Piece of Advice

Transcript

Dan Park (00:00):

I think speed of iteration is this thing that's just been reinforced. When you're burning money as an early stage startup, you've raised a bunch of venture and every month is cash flow negative. You don't have time. Time is your worst enemy. The pressure of time is heavy and intense. The faster you can get to the right answer, the better off you are. And a lot of people spend too much time overanalyzing, scenario modelling, product testing and not putting it in the hands of users, and once that, if you don't put it in the hands of users, you have no idea how they're going to react.

I think we're building for the next 10, maybe 15 years here, and so I try to take a little bit of a longer term view. We've picked investors that take that longer term view because I think it takes at least 10 years to build a real company.

We were like six weeks away from cash out. 

Pablo Srugo (0:52)

Oh my god. 

Dan Park (0:52)

People try to define what an entrepreneur is and what it means to be a founder and all that kind of stuff, right? I think that the true test is if you feel the weight of payroll on your shoulders and if you feel the weight of the livelihood of whatever number of people on your shoulders, then I think you can give yourself that title. 

Previous Guests (1:12)

That's product market fit, product market fit, product market fit. I call that the product market fit question, product market fit, product market fit product market fit. product market fit. I mean the name of the show is product market Fit.

Pablo Srugo (01:23):

Do you think the product market fit show has product market fit? Because if you do, then there's something you just have to do. You have to take out your phone, you have to leave the show five stars. It lets us reach more founders and it lets us get better guests. Thank you.

Dan. Welcome to the show, man.

Dan Park (01:38):

Yeah, Pablo. Thanks for having me on.

Pablo Srugo (01:40):

I'm excited for it, man, because your journey was kind of just a crazy, classic rollercoaster in a way, but just very, very high highs and then just ridiculously, I mean if you went any lower, I think your business was done. You really came close, but not only did you rescue it, you're now all the way back. Just raised a 50 million round at the same valuation you had pre-covid. We'll get into all that. Let's start at the beginning where, how is Clutch born?

Dan Park (02:13):

Steve Seibel was the founder, started the company back in 2017 really around this problem of used car transactions. To us, it feels crazy that even in 2017, 2018, the only two options to buy a car were either go to a dealership and spend five, six hours haggling with a salesperson, or you meet some stranger that in a Tim Horton’s or a Walmart parking lot. In the US there's a couple of large retailer that have been around for decades. In Canada, there's a massive white space where there's no retail brand for used cars in this country. You go to Vancouver, you gotta go to some random dealership, you go to Toronto, some other set of dealerships. And so we felt like there was a need to provide a consistent experience under a trusted brand where consumers can go and know exactly what they're getting in terms of quality when it comes to buying a used vehicle, one of the largest purchases that most people will make. And to us it seemed insane that those were the only real ways to buy a car.

Pablo Srugo (03:21):

That's the high level idea. And obviously you have, did you look at the models in the US? Did you look at Carvana and some of those or were you kind of building from first principles?

Dan Park (03:30):

Yeah, we certainly looked at them to a certain extent. I mean, it was still early. There were a number of companies across the globe, whether it was in Australia or the UK, Indonesia, Mexico, everyone had a version of this. It kind of felt like late to early 2010s when it came to ride sharing where there was Uber, there was Sidecar, there was Lyft, and there was the folks in the UK and it felt like it was still really early and I think we modelled it off of to a certain extent the CarMax brand and the CarMax experience. But again, with the Carvana that was starting to emerge at the time,

Pablo Srugo (04:10):

And I mean with a model like this, in a sense, there's parts of it because you're going after some traditional buying and selling cars that are kind of easy. There is demand for cars that people want to buy used cars if the pricing's right and so on and so forth. There will be people on the other side of that transaction, but then there's the hard parts, which is maybe everything else, especially just buying cars, getting a debt facility, all those pieces. What's the first move to get something like this off the ground?

Dan Park (04:37):

Yeah, it's this funny chicken-and-egg problem because it's effectively a marketplace. It's a two-sided marketplace. Supply and demand. Supply is obviously inventory of vehicles. Demand is people wanting to buy cars and you've got that cold start problem where in order to track people to the website and to the marketplace, you need to have selection. But accumulating selection is incredibly hard. In this industry. Every skew we have is anywhere between 20,000-$35,000, so building supply is capital intensive. Early days people were like, why don't you take it on consignment? Why don't you just do a marketplace, Asset Light? I think that's where I think a lot of these companies went wrong because you can't control the full experience. We don't own the asset, and so early days when I was pitching to investors, a lot of them were like, Hey, look, you can't own the asset.

(05:30):

It's too capital intensive. But for us that was such a fundamental piece of the model and buying the cars outright, one gives you immediate- gives the consumer immediate liquidity for something that traditionally takes hours, days, whatever weeks to sell, visiting a bunch of dealerships, inviting strangers to their home to kick the tires. It's just a terrible, terrible experience, super broken. And so for us, owning that asset allows us to have eyes on the asset. We have clutch employees inspecting those cars, reconditioning those vehicles to our standard so that we could put our seal of approval when it goes out the door so that we know that we can stand by that product quality. Otherwise, trying to do this on consignment, relying on the network of dealerships, it didn't feel like we were really reinventing anything. And so it was such a crucial piece of it.

(06:23):

And so kind of going back to your original question about how you start. You need a lot of capital. In the early days, we didn't have much and so we started off small, and had a personal guarantee on a small loan. Steve, the founder, had a peripheral guarantee on the loan. We wrote fully secured assets. We were thinking we were paying like 15, 16% interest rate. If I ever come back as a lender to fixed assets and back startups that are buying cars, I'd probably do that. It was basically risk free return, 15% risk return, but that's what we had to do early days to be able to get this off the ground. And even then, $3 million really only buys you 90-100 cars depending on the car. And so even at that level, you're not really building a real marketplace. And so I think we were lucky in that we started in a time that was, I guess capital abundant and capital.

Pablo Srugo (07:21):

This is what, 2018? By the time you were actually buying these cars?

Dan Park (07:24):

Well, I think when we really started hitting the inflection point, it was like 20- just post pandemic 2021, 2022. When I joined Steve in late 2019, and at that point we were only in Halifax. The regulator, Ontario couldn't really get around our business model and so we couldn't launch in Ontario because we didn't have a licence to sell cars. It's a regulated industry, and so we launched, Steve literally flew to Halifax, he had never been there before. It was the province. There's the closest province that had the least amount of regulations that allowed us to sell used cars online. So he started there, kind of found that-

Pablo Srugo (08:04):

When you came in, how many used cars was he selling a month, let's say more or less round numbers?

Dan Park (08:10):

20? 30? which was decent. It showed that we had something and it was clear that people that tried the service really loved it, and the name of the podcast is Product Market Fit. I came in knowing we had product market fit. The experience was phenomenal. Customers were raving about it. And so the question was really how do you scale this? How do you prove that the business model works, the unit economics of this business works? And so at that time, early 2020, like I joined in late 2019. We were only in Halifax. We were trying to launch Toronto. We finally got a licence to launch in Toronto, and then within 30 days of launching in Toronto was a global pandemic. People thought they were never going to go anywhere again. And so lockdown car sales went to zero the next month. We were scrambling trying to figure out what we're going to do with the business and furloughed some employees, really turned off anything that wasn't helping sell cars.

Pablo Srugo (09:11):

And you're bleeding money when these cars are sitting on the lot like you financing these?

Dan Park (09:14):

Yeah, they're getting interest on- we call it floor plan, but that debt facility that you used on the vehicles, but then within three months everyone now didn't want to go on public transit, were scared to take Ubers and then cars were the hottest thing. And so that's when we had just raised a seed round, which again, that bought us some time and then luckily things started rebounding really quickly. I think we doubled revenue that year and then we raised a series A in late 2020. Investors got super excited about the category and then we quadrupled revenue the next year. And so it was a crazy frenzy and at that point, every company globally was raising capital, really trying to go big. In Canada, there was us and another, I met a competitor. We then raised our series B in 2020-  sorry, 2022. We raised our series B and that was like a 75 million round, and then our competitor raised a hundred and we were-

Pablo Srugo (10:19):

Who was the competitor

Dan Park (10:20):

They’re called Canada Drives. And so they'd raised a bunch of money, we'd raised a bunch of money, they were launching markets, we were launching markets. I spent some years at Uber. It felt very much like those Uber days where if you didn't launch a market first, you basically were never going to win market share. And so we felt very compelled to just go big, win market shares, effectively land grab. These marketplaces are effectively winner takes all if not most. And so there was this mad rush to launch markets. We launched Calgary, launched Vancouver, we launched Saskatoon, and at that point we hadn't proven out the unit economics at that point, and so we continued to burn capital after we raised that round. I think we hired 250 people within six months.

Pablo Srugo (11:07):

Wow. That's after which round? That's after the series B?

Dan Park (11:10):

Yeah, so late 2022. And people were aggressive. They wanted growth and so we were like, let's go.

Pablo Srugo (11:16):

And this was collectively, I assume the investors were telling you how do you spend more money, how do we grow faster, these sort of things. 

Dan Park (11:22):

Yeah, so we went from 10 million in revenue in 19 to 200 million in revenue in 2020. So scale, I mean again, we'd raised a lot of money and so that we were able to do that. But that very quickly, late 2022, early 2023, you started seeing the signs that things started cracking. Capital was less abundant. And-

Pablo Srugo (11:45):

How big were you then? So you're 200 million by the end of 2020?

Dan Park (11:49):

2022. In fact, we 20x’d the revenue in three years and then all of a sudden it was very quick. First the back half of 2022 people started- There was no more cash. I mean basically people were like, there's no more money that summer. Every VC I think was either in Aspen or in Italy. I was trying to, again, at that point, no one was taking my call and I have this rule that if you don't raise capital by Halloween, it's pretty hard to close it by the end of the year. And so we had this Halloween deadline that if we didn't raise capital by Halloween, we'd effectively have to make some pretty big changes to the business. And luckily we signed a term sheet in, it was four days after Halloween, November 4th, so we just got in there. We had the term sheet in hand pre Halloween, but signed it on the fourth and then we were working towards it, it was a $95 million CC round. We were working to try to close it. And then on January 5th, the lead investor called us and said, look, we're not dealing with this anymore. So within 12 days we did another 150 person layoff, which was painful.

Pablo Srugo (13:03):

You were at what? Just employee count, what was peak and then where were you before this then after it?

Dan Park (13:08):

Peak was 350 and then 87 was our low point.

Pablo Srugo (13:12):

But you brought down from 350 to 200. That was after this moment?

Dan Park (13:16):

80. Well, in the summer, we went from 350 to 250 and then we effectively went down to 87. The first one was stung, but I think it was something that a lot of companies were doing at that point though. The second was a survival move, and so we basically reduced the burn to virtually nothing.

Pablo Srugo (13:37):

How do you do that? I mean we will talk about the feeling side of it, but maybe just tactically, how do you communicate that internally so that the people there don't just assume there's two pieces of it? I mean, I'm just thinking out loud here. I mean part of it is like, hey, now that we do this, we're not going to go out of business in two months or whatever, so you don't need to leave. But then the other side of it is like, okay, so maybe you're not going to go out of business, but I was here because Clutch was supposed to be a unicorn, clutch was this rocket ship and now where's it going down? Why would I be here? How do you address that kind of concern?

Dan Park (14:12):

Well, I think the fortunate thing that I think we could always rely on was the fact that we weren't alone. It was a time where every-

Pablo Srugo (14:20):

Yeah, that's true.

Dan Park (14:21):

Every growth scale startup was going through the exact same thing as we were, and so sure maybe that didn't exist at Clutch, at least at that point, but it didn't exist anywhere else really at that time either you saw valuation even in the public markets, most markets slash e-commerce business were down 90, 95%. You saw companies even like Zoom and the Pandemic Darlings, Peloton, they were down 90. Well, zoom maybe not, but Peloton was down 97% at one point. So I think that was the one thing that makes it a lot easier when you're not alone, but two and more tactically, it is really about baby steps and achievable milestones. And again, going back to the name of this podcast product Market Fit, we really had  great product market fit. We knew that people really loved the experience and that this was needed in the Canadian market.

(15:23):

And so I think a lot of us, as maybe cheesy as it sounds, we were of mission-driven in the sense that we felt like we owed it to the Canadian population to have a service that made it easier for people to buy something that's pretty complicated. So we kind of looked at it in smaller increments. And so in January when we did that pretty major layoff, it was really about how do we get to the next three months and what do we need to show over the next three months to prove to ourselves and not even to investors, just to ourselves that this business model is going to work and maybe it won't be fully profitable by then, but what are the signs of life that will show that this is profitable in the long term and can continue to scale. Then at six months, what's that milestone once you hit it? And so I think the smaller wins over time, really are encouraging for the team and certainly was for me. From that period, we lost very, very few people from our 30 person leadership team of people, managers and folks that are in leadership positions. We didn't have anyone leave for two years.

Pablo Srugo (16:27):

Wow. What do you attribute that to?

Dan Park (16:28):

I think, again, I think people really got excited about what we were delivering. We internally knew that we had something that worked, but the outside capital markets weren't really valuing it at what we thought it was valued. And even today of that core group of 30-ish people leaders, we only had one person leave over the last since then. And so I think we've got now at this point, a really seasoned team that's been battle tested for lack of a better term that's seen some stuff. And when you go through some hard things together as a team, there's a lot of confidence that gets built.

Pablo Srugo (17:04):

Did you ever worry? I totally agree. I mean going through the battles, if you get to the other side, there's huge value in having gone through serious battles together. But did you ever worry you or your team in those days that one of the things, I'm just thinking back to those days that was being thought about was like, yeah, there's product market fit, clearly people buy cars, all these sort of things, but maybe this idea that this would be valued at 10x sales or 5x sales or whatever, that's just gone. It's just never going to go back to that. We're always going to be a 0.5x sales business. And then what does that mean for the potential of this business? Was that a discussion internally? Was that a concern?

Dan Park (17:39):

Yeah, I think I'm a big believer in mean reversion. So the car business has been around forever fundamentally, that train on EBITDA at some point. And so again, I wasn't too worried about what the market was going to value us because candidly, we weren't thinking about an exit. And I mean at that point, in earlier days, there were times where does this make sense? And we can kind of go into this, but longer term it doesn't matter. There's only so much as a founder or CEO, there's very little that you can control in terms of how markets value you. At the end of the day though, I think mean reversion is a real thing and if you build a big successful profitable business, there's going to be value in that.

Pablo Srugo (18:24):

So that was kind of what grounded you through that because that's the problem. The upside of you mentioned this, well, it wasn't just us, which is comforting. The flip side of it is, okay, maybe everybody was wrong back then and now everyone's right. The market is now, this is the true price of these things and that would suck just in terms of the equity value.

Dan Park (18:45):

And again, it really wasn't a focus area of ours because truly the only thing that matters whether you're an investor or you are an employee or financially, the only thing that matters if you're an investor or an employee is how much you owe and what the value is at exit, right? The interim valuations to a certain extent are milestones, but they don't really, you could be valued at 10 billion, but if no one's willing to have you exit at that number, then it doesn't matter. So I try to take a longer, again, I think we're building for the next 10, maybe 15 years here, and so I try to take a little bit of a longer term view. We've picked investors that take that longer term view because I think it takes at least 10 years to build a real company. And so I think you got to, as an entrepreneur, you kind of need to sign up for that and if you get hiccups, we have, it extends to a 15 to 20 year journey, but at the end of the day, it takes a really long time. It takes time. And so getting too worried about the interim valuation benchmarks, I don't think really- I think it's interesting, but it doesn't fundamentally matter.

Pablo Srugo (20:06):

How close were you runway wise? What did that look like? So this round falls apart, you do these layoffs and you have 87 people. Are you profitable or do you still have short runway?

Dan Park (20:15):

We were like six weeks away from cash out.

Pablo Srugo (20:18)

Oh my god.

Dan Park (20:19)

I think people try to define what an entrepreneur is and what it means to be a founder and all that kind of stuff. I think that the true test is if you feel the weight of payroll on your shoulders and

(20:31):

If you feel the weight of the livelihood of whatever number of people on your shoulders, then I think you can give yourself that title. For us, yeah, it was pretty dire straits for a bit, and luckily we had some really supportive investors, the press reported on some pretty big valuation declines as a result of the round that we had to raise in mid 2023 to get us through to- the goal of that round was to get us to profitability. And so we had investors, Canaan in particular out of New York, Laura, who is on our board and is still on our board today, really was supportive around the company, believed in what we were building despite the drastic downturn in public market valuations and really bridged us to be able to survive.

Pablo Srugo (21:21):

Was that all part of the thing, like you did these layoffs plus this round, that was kind of one thing, or did one kind of come after?

Dan Park (21:26):

No, we did the layoffs and then six months later we did the round. It was almost like let's show some proof points between now and when things are really going to be mad,

Pablo Srugo (21:36):

But you had six weeks, you have six weeks of cash out, what do you do?

Dan Park (21:40):

Well, we had to restructure some of our debt. it was a debt issue, and so without getting into too many details, but at one point we triggered some debt covenants, and so

Pablo Srugo (21:54):

I see

Dan Park (21:55):

It created a bunch of uncertainty and at that point, that was the early part of 2023, we actually had to contemplate potentially selling the business. And so we did get a pretty low ball offer that we considered for a hot second, and then there was even a point where it's like, Hey, does this make sense to continue at this scale? But again, I think there was this belief that I think we had a great product, but I think we could scale across the country. It just was a bad point in time.

Pablo Srugo (22:23):

But what was the focus again? I'm just trying to get the narrative. You do the layoffs six weeks, you restructure the debt, and then do you focus the team on growth? Do you focus them on just strictly, let's just get the profitability unit economics, what's the key thing?

Dan Park (22:38):

Effectively it was a four thing playbook that we used, and it's really specific to our industry, but one of it was just setting a standard for all our reconditioning. Some of our cars are being over-reconditioned, so putting too much money into the car. A good example is windshields. It costs you about 800 to $900 to replace the entire windshield. It costs you like $20 to fill in a chip. A good quality chip fill is actually quite good. And so we made that trade off, so there was that. Also we had in our business, we also sell warranties and half the business is almost like a FinTech business where we sell warranty and insurance and financing. It wasn't really a focus when we were scaling at hyperscale, but now that we were trying to become profitable, building gross margin was an important factor, and so we focused on that. We did a lot of work around inventory management. A lot of our cars were aging too much, and so a big focus to make sure that cars weren't aging. And then we spent a lot of time on CAC efficiency, and so that helped us drive down costs, increased profit, and gross profit. Ultimately last year we got to profitability

Pablo Srugo (23:48):

In 2024?

Dan Park (23:49)

2024.

Pablo Srugo (23:50)

but halfway through you raised, so what did that bridge look like, so you got that bridge across, what did that look like?

Dan Park (23:55):

That was in the summer of 2023, so it took about a year to get to profitability. It was a $20 million bridge in the summer of 2023, and it did what it was designed to do and get us to that milestone.

Pablo Srugo (24:08):

How did you price that?

Dan Park (24:11):

It was such a big crammed down round. It was priced really by the lead investor at a number that put money back in the company, but also was able to, they were able to get the ownership that they wanted,

Pablo Srugo (24:23):

But this, it was like a 90% markdown or something like that?

Dan Park (24:28):

So basically they're weighted. effectively ,you do the math around what you think the exit value can be in the medium, the long term, and then you backs solve it to the amount of capital that you put in, and then you look at what return you want to get, and then you got to figure out what your ownership's going to be, right? And so given the amount of capital you're going to put in and then the ownership that it needs to be in order to get to this return hurdle, then you basically, that sets the pre money valuation.

Pablo Srugo (24:57):

So at this point, you're profitable, do you go back then into ramping, and how many employees are you by now? Do you go back into ramping after this round or what was the point? What was the goal with this round?

Dan Park (25:07):

This round, the one we just announced?

Pablo Srugo (25:10):

No, that bridge round. That bridge round.

Dan Park (25:12):

Oh, that bridge round. No, so the point of that round was really just to get the profitability. We didn't hire that many people. We really just focused on variable cost hires, so hires at scale with the business. So for example, licensed mechanics, if you sell 10 cars, you need to call it one. I'm just making these numbers up. If you need two, if you're going to sell 20, you need two. So those are linearly variable, but we didn't really do a lot of dev or product hiring. Our marketing team was like three people, and so we kept all our fixed costs very flat, really to get ourselves to a point where we were profitable and that was the focus, and that way we were laser focused on getting there, but we had to grow, we had to double. We effectively doubled the business. In order to do that, we had to grow and get profitable at the same time, which it's never easy, but we were able to do it.

Pablo Srugo (26:13):

That 200 million revenue, did it start crashing down and then you had to bring it back up, or was revenue pretty steady, but it was more just under that was kind of messy?

Dan Park (26:24):

Yeah. The next year, well, the only reason it kind of crashed is because we shut down three of our west coast markets, and so we took out the cost, but the revenue went out with it. So those were unprofitable markets. So from a EBITDA perspective, they were creative for a revenue perspective, they were dilutive.

Pablo Srugo (26:45):

Are you back now more or less to where you were?

Dan Park (26:48):

No, we are now double our peak, but we're at 400 million of revenue now.

Pablo Srugo (26:52):

You love this show. You don't want to miss the next episode. Why would you? So hit that follow button! Trust me, it's in your own best interest.

What's it feel like? Because to go down that low and to come all the way back up in revenue doubling it, but in terms of valuation, I'm sure there were many people that would've assumed best case, you sell this for scrap sort of thing. It is never going to go back to what it was, half a billion dollars, 575, it's a serious valuation. You know what I mean? It’s not like you were a small thing that it was 50 and then it was 10, and they're trying to go back to 50. You were half a billion, and then now you're like, whatever, tens of millions, and then now you're back to half a billion. So yeah. What's that feel like? Is it vindicating?

Dan Park (27:37):

I mean, a little bit. I feel like there's always, because we're trying to disrupt an industry and we're not mainstream yet, it just feels like we still have so much work to do, so it's like, okay, this is great, and that was a blip. I think a lot of us have just put it behind us, and so I guess it's like it's fun to tell the story now that we've gone through it, but it just feels like it's still day one and we've got literally a decade, I still feel like I've got a decade of building in front of me right now. Yes, I mean, it's nice to take it in for a second, but at the same time, it probably would've been nice not to have gone through that, right, and just linearly as opposed to having to take not only two steps back, maybe 74 steps back to take 78 forward. It feels slightly surreal that it feels like we got lucky, and so it feels like we can't squander this opportunity now that we're back to where we were maybe two and a half years ago.

Pablo Srugo (28:43):

By the way, question, this is completely off the timeline, but just going back to the very early days, because it’s not that common for- companies will bring in professional CEOs, but oftentimes it's later on, you're past 10 million or you're past a hundred, you bring in professional ceo, you came in super early. How did that happen? Why did Steve bring you in? How'd you meet him? All that stuff

Dan Park (29:04):

I was not a professional CEO at that time. <laughs>

Pablo Srugo (29:06):

An outside CEO, I don't know what you want to call it. Were you a co-founder?

Dan Park (29:11):

I was the guy that had run a business unit for a large company, and I've seen, I've sat on board, but I was not by any stretch of the imagination. I was not a professional CEO. I was the guy that was slightly older and had a little bit more experience than Steve, the founder and knew a few more people. And so I don't think he was actually looking for a professional CEO at that meeting. He was looking for a partner. I joined him pretty early. I joined him pre the seed round and he started the business when I think he was 24 years old, so I could not have started this when I was 24 years old. And so I think he wanted just some guidance around, particularly the fundraising piece. This is a very, very capital intensive business at this point. We've raised 190 million because you need the equity to support the debt.

(30:07):

You need the debt, to be able to support the equity. You need to be able to buy cars, you need to be able, our working capital, I think we buy about a million dollars worth of cars daily. And at any given point, we have almost a billion dollars of offers outstanding in the business. On a big weekend, we will flip 5 million of cars. So it's a very capital intensive business. I think that's where that came from. I got really lucky. We get along great, we're very different people professionally, we're similar people personally, which I think really works well. And I think the important thing over the last five years is that because of these shared experiences, there has been a lot of trust built. He's good at a lot of things that I'm not, I'd like to think that I'm good at things that he's not. And so that partnership really works well, and I think that's rare to find, so I got lucky there.

Pablo Srugo (31:05):

I think it is rare to find it. I want to dig into it just a bit just because I think from a founder perspective, I've seen it a few times, but it's not that common to think about it. Most founders start off, they want to be CEO and they probably will die on that ship, ride or die, sort of thing, whatever happens. But in the right cases, in the right instances with the right person, it can be an option. When you joined Steve, had he raised any money or was it just bootstrapped with his personal?

Dan Park (31:32):

No, he'd raised a little bit of money, like a pre-seed round. He raised a pre-seed round and I came and I raised it on notes, and then I raised a priced seed round.

Pablo Srugo (31:40):

How big was that seed round?

Dan Park (31:41):

4 million.

Pablo Srugo (31:42):

And when you started talking, and he met you, he said, oh, you'd be a great CEO. Or at first it was just like, come work with me on this. We'll figure it out. What was the setup for that conversation?

Dan Park (31:56):

So I got a call from one of Clutch’s board members back in 2019, and I was pretty happy at Uber. 

Pablo Srugo (32:02):

You were running what part of Uber? You were GM of?

Dan Park (32:04):

UberEats in Canada. And so we had a great run. I mean the UberEats business actually was launched out of Toronto. So we had pretty good global influence, which was fun because we got to sit

Pablo Srugo (32:20):

That was the first market, right? Uber Eats opened in Toronto

Dan Park (32:24):

Yeah first market and it scaled like crazy. Had a great team, really great team. We signed all these partnerships. So I had a couple more years left, but I got a call from one of our board members and he was like, Hey, look, I had met him in my VC days and he was like, Hey, look, you're delivering food. You should probably deliver cars instead. Why don't we introduce you to this company called Clutch? And I was like, I don't know if that's the same thing, but

(32:49):

They were actually looking for a COO at the top. And I asked the board member, his name was Andrew, I was like, Hey, Andrew, what do you want me to do? He's like, well, I want you to raise some capital. I want to hire, recruit some people, and be in the business longer term. And I'm like, okay, those sound like CEO jobs. And so I threw it out there just as a thing. I was like, well, if you need a CEO, let me know, but I'm pretty happy where I am. And he called me literally two days later. He is like, yeah, I had a conversation with Steve. He's open to that. Let's meet. And so we sat down and it was a really great conversation , we had a bunch of conversations. We probably had a dozen conversations really just talking about what we enjoyed doing or we didn't enjoy doing.

(33:37):

And that Venn diagram had a very small overlap. We felt like that could be a really good partnership. It felt like the things that he didn't want to do- like he did not want to fundraise. And I was like, I don't mind fundraising, which was one of the big things. He really liked product and engineering, he doesn't have a technical background, but he's very technical and I'm not as much. And so he wanted to run product and eng. I'm like, fantastic, you can do that. I did mostly the go-to market stuff. And so it ended up being a really good complimentary partnership that I think we both recognised could work. But again, I also think we were lucky in that regard.

Pablo Srugo (34:21):

Could you think of it like an internal external split, at least in those early days? I'm sure it evolved over time.

Dan Park (34:26):

No, I mean not in the early days. There was less external frankly, to do. Now it's doing more external stuff. I would say 80% external, 20% internal probably flips that. And so I think that works well. I don't think either of us have really any ego around what we do, whatever makes sense for the business. And I think that's kind of true for the entire management team. Everyone, I think almost could do anyone else's job. It's just a matter of who can do it better and who's more interested in doing that thing. And I think that works really well from a team perspective because I think everyone can kind leverage each other's strengths.

Pablo Srugo (35:12):

Was there a discussion around decision making? Obviously a CEO, the buck stops with you, you make the final calls, but I have to imagine from a founder perspective, that would probably be the biggest thing you'd want to not give up, is to the extent that you have a vision or a way you want to do things in whatever piece of the puzzle you want to own, you'd be probably hesitant to give that up. You know what I mean? Was that part of the discussions early? 

Dan Park (35:39):

Yeah, we did, yes, but not really. I mean, ultimately today we have a really great working cadence, and so there's times we disagree with each other, but if we do, we can generally talk it out and come to the right answer. I think, we've always come to the right answer together, whether it's around people, whether it's around strategic direction, launching markets. And I think there's also just a lot of trust, implicit trust. I've seen what he can do and we've seen a lot of success. And so I think we also give each other a lot of rope to just run with it and make mistakes. I think that just works well.

Pablo Srugo (36:17):

But initially, I guess it was just built on, we'll figure it out.

Dan Park (36:21):

We'll figure it out. I think it's almost - I mean, look, people use this thing, and it's a little bit cliche, but it's like a marriage. You can't go into a marriage and be like, I have ultimate decision-making power and this relationship, right?

Pablo Srugo (36:35):

I agree, but I'm not the CEO of my marriage. You got to ask my wife.

Dan Park (36:37):

Well, no, I know, but look the other way around, absolutely not either. But if it went the other way, I don't think that one's either, right? I don't think there's any relation functionals marriages where

Pablo Srugo (36:51):

That's true.

Dan Park (36:52):

I have final say. No matter what, there's always going to be compromise. There's going to be talking it through, it's going to come to the best answer, whether it's around what vacation to take or what to do with your kids. There's always going to be some kind of compromise. And we've been fortunate that we've been able to work every situation we've been able to work out and get on the same page and just support each other.

Pablo Srugo (37:14):

And let me ask you this, normally one of my final questions is when did you know you found product market fit, but you said you went in and you kind of already had product market fit. When you looked at the business back then, what did you think was the biggest unknown, the biggest risk, but the thing that you actually had to figure out?

Dan Park (37:29):

So I guess we knew we had product market fit in the sense that people wanted a better way to buy and sell vehicles. What we didn't know is what process people would be comfortable with. And the biggest question mark was test drives. People generally believe traditionally that you can't sell a car without a test drive. And that was a pretty fundamental piece that we hadn't figured out yet. And so what we were doing back then when I joined initially was we were basically providing vehicle-, it was called car enthusiasts or car concierges that if you wanted to test drive a car, we would bring you a car to test drive in your neighbourhood,

(38:17):

And you could do that up to I think three times. incredibly inefficient. And people talk about things like if you can't do things that you can't scale, that was not scalable, you take a car to a customer, they'd be like, I don't like this one. You take another one. Every time you take it, you have to detail it. And so you take it and they're like, okay, I like this one, but because you hadn't done the paperwork, you have to bring it back. It ranges for financing, and then they like it and then you bring it back to them. But in that turnaround time, they could cancel. It'd be like, actually, I don't want it anymore. So you've done all of this work for basically nothing. We knew that the right answer was, we have to just sell these like Amazon sells books, but we just didn't know how to do that. And I guess for us, that's probably the secret sauce. I think a lot of dealerships still feel like they can’t sell a car without a test drive, but we know we can. So that was the piece that we needed to figure out. And it took some time to figure that one out.

Pablo Srugo (39:24):

Well, you kind of changed a free trial to a money back guarantee. Here's the car, buy it. But you have seven days, if I understand correctly, to kind of test it out, which is way much, it's much better in a sense. It's kind of a win-win. I mean, for the person who's just in test mode, maybe you have to go to the dealerships if you really want to try out five or 10 cars or whatever. But if you're actually serious and you want to buy a car, a test drive almost often times  isn't really enough. You know what I mean? You drive it around a little loop and you're done. Whereas this, you actually have the car, you truly test it out, and worst case scenario, you can give it back. But

Dan Park (39:58):

Here, the kind of first principles belief around test drives is that generally people, the average consumer doesn't know much about cars. And if you get into a car and try to test drive it, what are you learning about the vehicle? You're learning about whether the brakes work, whether the air conditioning blows cold. It doesn't smell funny. There's no cosmetic issues. There's rips on the seat that it's relatively clean. So that's, you look at the hood and I look under the hood, it's like, okay, well what are you looking at really? So that's like the average consumer, and they go to do these test drives and it gives them peace of mind because they've done those things. But you know what? We have licensed mechanics that put every single car up on a hoist and look at each one has an inspection list. We take pictures, we replace anything that doesn't meet our standard, whether it's tires, brakes, rotors, air filters, like full oil change, like alignment.

(41:00):

We do everything. These are licensed mechanics that do this professionally. They're in a better position to be able to assure the quality of your vehicle than you as a random consumer. And so if we can get that message across and let people know that, look, we've taken care, we really take pride in the quality of this vehicle and can offer you at an even better price than the dealership next door. You'd be insane not to buy this car. And then if it doesn't fit in your garage, your car seat doesn't work in that car for whatever reason, you should probably get a new car seat instead of a new car, but whatever, it doesn't fit in your driveway or it's like it feels too small or whatever, then you can return it. But you can't tell whether or not it fits in your driveway by just test driving around the block. I mean you can kind of, but the more nuances around how you use that car on a daily basis is harder to ascertain from just a test drive around the 10 minute test drive around the dealership parking lot.

Pablo Srugo (42:06):

I think that makes total sense. And then let me ask the final question, which is, and especially in your case, having gone through the rollercoaster that you went through, what's your number one, either number one learning or number one piece of advice for early stage founders?

Dan Park (42:23):

I mean, I think just the speed of iteration. It's this thing that's just been reinforced when you're burning money. As an early stage startup, you've raised a bunch of venture and every month is cash flow negative. You don't have time is your worst enemy, and the pressure of time is heavy and intense. And so the faster you can get to the right answer, the better off you are. And a lot of people spend too much time, particularly, I mean, I think this is important in consumer business, but also in B2B, they spend so much time over analysing scenario modelling, product testing and not putting it in the hands of users. And if you don't put it in the hands of users, you have no idea how they're going to react. So going back to this test drive thing, we just one day woke up and were like, we have to turn it off. We just turned off test drives. We didn't test it, we just turned it off. And then what that does is,

Pablo Srugo (43:26):

And you replace it with this? or you just had no alternative, 

Dan Park (43:29):

Well we had the get the money back guarantee. That was the peace of mind that consumers would get until you turn it off and see how customers react to that and have the conversation to do objective and train your sales teams and folks that are on the phones to do objection handling. And there's no way to know, right? There's really no way to know until you put it in the market. And so we could have spent so much time focus grouping people, and you know what? Every single focus group would've told you, no, I would not buy a car without a test drive for the most part. And so I think that's the piece that I think a lot of folks spend too much time on is like, oh, it needs to be- I think a lot of us are just perfectionist by nature, particularly if you're like type A and you want the perfect thing to be in the hands of consumers, you know what? If you mess it up, you just change it right on it. If that day we were like, oh my God, after a month we couldn't sell a single car without a test drive, well, we got to put test drives back and then go back to the drawing board and figure that out again. And I think that's where people lose too much time. And I think not being able to iterate quickly can be the death of a lot of startups.

Pablo Srugo (44:40):

No, I love it. I mean, it's a classic like Bezos, one-way door, two-way doors as well, right? If you know, can take it back, just try it out. 

Cool, Dan, thanks so much for coming on the show, man. It's been great

Dan Park (44:50):

Yeah, thanks for having me. It was fun.  

Pablo Srugo (44:51):

You remember the first person who told you about Bitcoin? The first person who told you about Uber? You want to be that person because being first is cool. So be a cool person and tell your founder friends, set it to them on WhatsApp. Put it in a WhatsApp group, put it on a Slack channel. Let people know about the show. Let people know about this episode. Don't let somebody else beat you to the punch and share it with your founder friends first, remember what Ricky, Bobby said. If you ain't first, you're last.