When Chip Perry moved from Los Angeles to Atlanta in 1997 to start AutoTrader.com for Cox Enterprises, he was given a one-page business plan, significant financial backing and an empty office and told to go for it.
“It was the Wild West days of early startups,” says Perry, the company’s president and CEO. “It was before the meltdown of 2000, 2001. There was tremendous capital flowing in that formed a bubble that burst. There were many different ideas about how the Internet could participate in the automotive industry, and we were there with a clean sheet of paper.
“How would we build a service that consumers would want to use and dealers would want to use and create a source of competitive advantage that would sustain the company through the early years and help it have a foundation from which to scale?”
From the beginning, he didn’t want to have a company where people bought and sold cars online — he wanted it to be a marketplace to help people locate vehicles and provide more comprehensive information than newspaper ads provided — the transactions themselves would happen offline. But from that simple vision, he had to build a business that could scale.
“To scale a company, once you discover a successful model, it requires very careful year-over-year execution of a plan that needs to change every year,” Perry says. “One of the ways we were able to grow was we created a new plan every year. We called it the ‘Annual reinvention of AutoTrader.com.’”
Creating a new plan every year has taken AutoTrader.com from nothing when it started to more than $700 million in revenue today. While it’s not easy to come up with a new plan each year, it’s the key to ensuring you create a scalable business.
“Every year we reinvented ourselves by setting new objectives,” Perry says. … “Our vision to dramatically improve the way people buy and sell cars was consistent. Our vision to be the best car-shopping destination and the best advertising vehicle for marketers, that was constant, and the business model of enabling our sellers to advertise to consumers for this pay-for-placement style was constant. But many of the details around exactly how to execute that strategy changed every year.”
