Amazon Bricks Brick & Mortar, 3 Ford Sectors, & A New Kind of Investment

March 3, 2022
Lots of movement in the retail sector today with Amazon bailing on its brick and mortar execution. We also dive a little deeper into Ford’s decision to split ICE and EV business units. Also, a new tech fund which is funded by Dealers.
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Amazon Says Bye to Bookstores

  • 68 Amazon Books Stores to close
  • Still focused on Brick & Mortar Amazon food & apparel entities

Ford split revisited:

  • Why did it ever make sense to have the same people working on both?
  • How could we be (as an industry) doing this inside our stores?
  • Marketing and technology
  • Sales and CX

Automotive Ventures DealerFund by Steve Greenfield

  • Multi-rooftop franchise dealers with capacity to embrace new technologies
  • Check out the Auto Intel Report


Kyle Mountsier, Paul Daly

Paul Daly  00:33

Good morning, troublemakers. It is Thursday got my day, right? It is March 3, we have a whole lot of things to talk about talking a little nada, a little Amazon a little forward a little troublemaking little entrepreneurship, let's go, let's do it. I know, the people who decided that bouncing is good. But if you're watching the stream watching Kyle and I bounce, single day, especially if you turn the sound off, isn't so good. So we're working on that we're gonna have like a video intro that plays during this part, if your audio version, you're not going to notice any difference, you

Kyle Mountsier  01:06

can, like leave the audio people are like, leave the music a little bit longer, please.

Paul Daly  01:14

What I'm, you know, we're gonna try to get this artist out at our next episode we live event because her performing that live would just be the money as a local, right? So, um, what to start today off with a quote that I came across that I thought was very, very appropriate for us as a CIO to us as an industry because everyone's coming off of big wins, we're coming off of big profits, and we know it's going to change. But we've also been saying that for the last, like 18 months, things are going really well. But we know at some point is going to change but it hasn't yet. And this quote is from Babe Ruth, and it says yesterday's homeruns don't win today's games. smack in the face.

Kyle Mountsier  01:58

This is in and I don't know if you you might know this. You've been around the industry long enough. But on the retail side, we call this hero to zero. Yeah, is that phenomenon that if you sold 50 cars last month, and it's day one, you know what? level playing field with right,

Paul Daly  02:16

everybody else? I don't I don't love I don't love that mentality, I think is a part. It's tough. It's our business. But the homeruns quote really kind of embodies the reality of it, right? This isn't someone making a decision that you're more or less valuable. This is like the market and business saying like, hey, that's great that you did that yesterday. But guess what? It doesn't show up on today's scoreboard. And that's an interesting parallel with the auto industry. So we're not saying it, like, hate on your people love on your people based on their immediate performance. But, look, we've been hitting homeruns in the industry, and it doesn't mean we're gonna hit homeruns tomorrow, it doesn't count to today's scorecards. Same thing for Soto right, we've been doing a lot for 18 months, right, but we're coming in as hard as we can. And you probably noticed this at nada, we're coming in as hard as we can we have a huge production crew coming we're gonna be running around like a pirate ship just got dropped off out front. If you want to follow the content, if you can't go to na da or if you're there and you want to see what we're up to without having to follow us around. Follow the hashtag asoto hashtag as ot you were going to be posting all the content there. So that'll work on any platform and I don't think anyone is really gonna hijack that.

Kyle Mountsier  03:24

We're like IP locked. Yeah, I was looking Instagram and we know someone that's working on that so I know hang with us.

Paul Daly  03:33

Oh, man. Hey, a lots going on. And retail massive news. I mean, this one this one really did slap me in the face that all of a sudden Amazon has decided to reverse its course on its brick and mortar bookstores I remember when they launched this we're like oh, that's that's a crazy everybody

Kyle Mountsier  03:49

I thought it was like si si you know that they're cut they know it's right within brick and mortar right and and so this is kind of that like ah man but but track with us here is they actually you know, the the the interviews that are out there were saying hey, look, we're getting rid of that element. But as we talked about, you know, just maybe three or four weeks ago they have come out with a new retail brand. And they have an intensified focus on brands like Amazon Go Amazon groceries, right groceries and then or Amazon Fresh Amazon Go and Whole Foods. So you've got you know, that's it. There's a lot of intensity still around brick and mortar just kind of stinks. It's kind of that Stinger of like, oh, we really wish the books one would you ever go in a bookstore? And I didn't know. We peered in in New York, but it was too

Paul Daly  04:44

close. It was close. right every time the one right across from the Empire State Building. Every time we go to New York and go through Penn Station you want we'd walk by it on our way to Hudson Yards. And like it's there. I want to see it because like, I think a lot of us that are you know we had that college Barnes and Noble experience. Right, when you're in college and you go to Barnes and Noble, you get some coffee, some books, for free. You read the magazines, you put them back, right? You had before, right? And you sit in those really comfortable chairs, and that disappeared, and Amazon killed it. And then Amazon brought it back. And now Amazon's like, that's not working. I thought another interesting part of their move, as they said, they're focusing on cashierless technology. So are we going to see them develop technology that ends up in a lot of our currently favorite brick and mortar brands? Be just boy, I

Kyle Mountsier  05:29

guarantee it? Yeah,

Paul Daly  05:30

yeah. Can they understand the path the

Kyle Mountsier  05:32

profit is that way, that scale. That's how you scale right? Instead of going, Hey, we're gonna put 300 competitors to Walmart out there. We're just gonna make it so that Walmart can do what we do. Right. And I think that that's the, without a doubt, that's the SAS play. Right? So thinking, man thinking about that, as any business is like. And we see this with dealers a lot, right? We see this, we've seen this with many groups that kind of go, I need a solution for this problem, all of a sudden, they solve it for themselves. And instead of going, Hey, we're just going to go buy 15 More dealerships and do it in those dealerships. They go create a separate entity, create a software structure, and all of a sudden start selling SAS into other dealerships, because we know that when there's pain in one, there's probably pain in many, right? That isn't, that's

Paul Daly  06:17

the one that comes to top of mind, that's probably the most successful so far has done it, like most in depth is probably fuse autotech, you know, the tech space better than I do? Or they probably the best example of someone who's like, taken it, deployed in store, just jettisoned it, and now has gone like full scale is, yeah, we'll find the biggest one.

Kyle Mountsier  06:35

Yeah, I think, you know, there's been some that have that have kind of done it, where it's like, saw a problem, went out of the store and then started the company. I mean, that's how car now essentially happened. All right. I didn't know where Tim Cox you know, what came out of the store, got how to connect was in a store had a connection with someone that said, hey, what if we did this, and then immediately went out of the store to develop it, right? So there was still that built by car people fuse A to Z sync. Some of these, like showroom technologies are really the first ones to kind of be like, Oh, no, we solved it for our team. There's a company dealer Bible that I actually worked with at Nelson, right, that has done that there's actually conmigo is a trade tool that has done that. So we've seen that across the industry in different ways. A lot of the biggest companies, though, kind of came is like, Hey, I'm gonna get out of the dealership and then create this thing. But those homegrown products, I think are gonna be the next, the next level of that,

Paul Daly  07:32

for sure. Speaking of dealers, investing in technology, segway you probably didn't even know you were doing that. But I just skipped our next thing we want to talk about, because this one was such a good segue. Steve Murrayfield made an awesome announcement yesterday, and it was announcement for a New Dealer fund. And if you don't know Steve Greenfield, check them out at automotive ventures calm, he has a great auto Intel report that comes out any every week, it's really in the tech investment space. And, and basically, he announced a new fund that is going to involve only multi rooftop franchise dealers who have this appetite and capacity to adopt new technologies. And they're kind of kind of use this as a dealer funded almost like an incubator for new technology, or new companies that are bringing solutions. Think, yep, the thinking is that right? Like if the dealer is on board, and the the vendor is on board, the partners on board, they're going to both have a vested interest to make it work faster.

Kyle Mountsier  08:30

Yep. Yeah. So basically, it's a VC. It's a venture fund, right? Where they're inviting dealers to invest in the Fund, right. And then he's going to manage the fund with his advisory board, in investing in new technologies, they'll bet the technologies bring them in, you know, they have automotive Ventures has a an investment fund already that is filled with some some actual VC, you know, some VCs, but this is, I think, a unique opportunity, because then those, those partner, those programs, those technologies actually will get more access to dealers that are doing it on ground, both to input beta test, as well as get that feedback.

Paul Daly  09:10

Right, because how many times has a product come out of the incubator, and it gets installed in the store? And so many things come up? He was like, Oh, I didn't even think of that. Oh, that's broken. That's as much as you can test it. But when you have that partnership level, where you're real time testing it with people who can say that before you're like, oh, here it is. It's finished. That's so important.

Kyle Mountsier  09:29

Well, I was talking, I was actually on the phone with Jamie ottershaw, who helped create DealerRater last night. And, you know, DealerRater did not come out of the dealer. It was kind of like, you know, a couple of guys, you know, wanting to create content and build, you know, build something around dealers that Google and Facebook kind of couldn't touch. But I was just giving him a little bit of context for like how I used it when I was at the dealer. Right and that that was kind of like opened his eyes like oh, that that is really valuable. Oh, that is really important, or we have to be able to do this, right? I mean, you just get that extra level of insight, when it's when it's grown out of the dealer instead of kind of like handed off to the dealer post, you know, post creation, right. That's one

Paul Daly  10:17

of the things I mean, I think Steve's onto something with bringing dealers into these other ventures. And I do think that it's, it's an often ignored thing, but there were two remember that one of us is never as smart as all of us. And the friction in the dealer vendor relationships, the friction that builds up because it's kind of like siloed interest, right? Vendors always like you know, what dealers need to do, right. And I know dealers hate hearing that statement, right? Because like, vendors have no idea, right? And say that, that builds up all these like, you're going to move to your set of field, we're going to move to our side of the field, we're going to send a delegation to the middle and see if we can work it out. Right, and there's going to be a scrum. And that's what happens. And so these are things that are moving everybody closer together, same playing field, realizing I think, I think what's doing this that we realize now that we're uniting against the common enemy, right? We're, you know, against the technological innovation, the barbarians at the gate. And that's what happens. These things like a common enemy draws sides that usually had some contention. Well, and this

Kyle Mountsier  11:19

is yesterday, actually, on pitch tanking clubhouse, we had this kind of like, we didn't have, we only had two companies pitching. So we had some time to kind of work this out in real time, especially heading into na, da, where it was, it was like, wow, typically what happens is you come into na da, and you're like, all everybody's like gloves up, right? Whichever way it comes, it's like, we're here to suck you in the mouth and get you to sign and the dealer is here to you know, punch back so that they don't feel attacked that on the show floor. There in China. Our agenda, right, everyone's ready to fight. Yeah, exactly. And and the reality is, is that if we entered it with a mindset of collaboration, right, the if the, if the show wasn't the goal, right, and I know, you know, it doesn't matter who you are like whether you're a vendor or a dealer, you've got certain goals that you've got to hit, you know, the ROI goals of like, whether you're going to learn something, but spending the money on the dealer side, or whether you're going and you spent the money for the space and the ads and all that type of stuff on the vendor side, you have a goal to accomplish. But if the end goal is to accomplish is more collaboration, more thought together, right? What's what comes out of it instead of just what happens at it at the show is much greater. And I think that we're pointing to this more and more often, right. And that's, that was the spirit of the conversation in the room yesterday on clubhouse. So I think we're all kind of onto this. And that's the energy around the industry. 

Paul Daly  12:43

Here's the magic word in this whole scenario. And it's not a word that it's it's a word I think, is gaining traction in the behaviors of leaders in automotive, but it's not a word that has been part of automotive culture, it's humility. It takes you and I have both been on both vendor side, we both worked at stores you much longer than I have. But we've been in the situation where either a vendor knows everything, right, and everything the dealer is doing is stupid, or the dealer sitting there during the pitch, not even making eye contact, right next and just doing something else, right? You're laughing emails over here. And they're talking and their whole posture is I don't believe you, you're wrong, unless you can make me kind of look up from whatever else I'm doing that is so important. Right? None of that exhibits any level of humility, and like, I might be able to learn something here. And that I think, is what we're moving closer to. And that's what we're trying to build and encourage through ASOTU. And I think that that's what's going to, in large part, help us win. 

Kyle Mountsier  13:43


Paul Daly  13:44

All right. We got one more thing to talk about speak to speaking of humility. Segue.

Kyle Mountsier  13:50

No, but I think you're right. Yeah, I think you're right. So it is. It's come out yesterday, we started talking about this with the Ford CEO coming in saying, hey, look, we believe that the dealer is the best place to execute our not just current but future strategy. Right. And so just a little bit more information about what happened. I think his name is Jim Farley, right. Yeah. So Jim Farley says, Hey, what we're doing is we're splitting our business into three entities. Those entities will be the things

Paul Daly  14:24

like flu flu, Louis Eisen combustion engine, yep.

Kyle Mountsier  14:27

Ford Model E, right, which is the electric version. And then what was the third one? It was the software I can't I can't remember the exact

Paul Daly  14:36

one actually, I only remember the two. Yeah. So but essentially like

Kyle Mountsier  14:39

three business entities that are operating in separate p&l so they can keep and then also operating with different personnel right so that the person designing the new Evie car is different than the person of designing the internal combustion technology because they're saying like that's not going away anytime soon, especially for even their own use. of items, they were saying not just that, you know, not just commercial and resident or and, and, sorry, retail, but also for Ford's use, and then saying that, hey, we're not just like, for the moment we'll put up with dealers, they were saying, No, we actually, we know that the only way for us to do this well is a better partnership with our dealers. Right, a better understanding of what we're working toward together.

Paul Daly  15:26

I talked to a Ford dealer yesterday. And he was so excited. He's like, did you hear the news? Right here, right. I was like, Absolutely, I actually. But he didn't, wasn't think he's like, we're so excited for Lincoln dealer. And he's like, this is what we've been trying to convince them of. And this dealer is committed to customer experience committed to Brand X, like he's exactly the guy that should be first in line to get Evie, the Evie stuff, because he'll execute to it. But he was so excited. And so I think there's a lot of excitement amongst Ford dealers. And obviously, this sends a signal out across the industry, because Ford was the first one to do it and say we believe in the dealers. And it's gonna be really hard for someone else to take a different turn, when such a big one. Now we'll see like, if it works, well, then, you know, we're fighting for it to be the standard.

Kyle Mountsier  16:15

And I'm telling you what Ford's pulling on my heartstrings recently, they're just pulling on all of them. And I love it. And I'm ready. I'm here for it.

Paul Daly  16:22

I know it. Um, another thing that is important to talk about with this Ford's kind of humility enough to say these should be separate. We'll get into this because we don't really have time for today. But you and I were talking earlier this morning about how we do this inside stores already with things that we bring together, for instance, um, you know, you Kyle, as being the marketing director, how many tech issues were you asked to solve for people like, hey, my emails now?

Kyle Mountsier  16:46

Absolutely. All the time, right. And having to figure out how to how to segment the tech, the IT person in the marketing person was always a struggle, right? Because they there is a lot of crossover there.

Paul Daly  16:57

But the more we are there to like, yeah, good at both, but most people aren't.

Kyle Mountsier  17:02

Yep, exactly. Yeah. And and it bogs down, what happens is the same thing that Ford is experiencing, it bogs down one element of the business, if you don't separate and draw the lines correctly, right, it's

Paul Daly  17:13

more important, making sure that your marketing is working, right, you're not wasting $400,000, or that someone needs their password reset on their email. Typically, I think we also do this in sales and customer experience, your salesperson is looking at one lane, right? They're like, I need to sell a car, I need to get them. But the customer experience is so much broader than the sales, right? It's sales and service, and how the building looks and how your marketing looks. So I think there's some opportunities for us to actually do like take Ford's lead and say, Actually, this is this segment. This is this segment, you put somebody in charge of each. So we'll probably dive into that a little bit later. Because like that is a big issue. And I think we can be a part of helping solve that. But until then, we hope that you're encouraged, right? Yeah, yesterday's homeruns. don't win today's games, but we're swinging every day every morning. So keep swinging with us. There's a lot of good stuff coming up till then have a good Thursday.