App Stores for OEMs, Over-The-Air Fixed Ops and Creepy AI Insights with Steve Greenfield

Paul Daly: 0:00Hey, what's going on? It is Tuesday, April 4, Kyle and I are having a good time because we're Texas. And we have our usual special guest, Steve Greenfield talking about all the things that he's thinking about. And that's a lot of things. So it's actually a lot of things.

‍Kyle Mountsier: 0:15

It is a lot of things he hit me with it was, you know, when the month lands like this, it's like, Sunday afternoon Intel report. Monday morning. Everything I'm reading. Yeah. You know,

Paul Daly: 0:28

yeah, I got them. I can't open my inbox. And I saw them all at the same time. I'm like, when does this man

Kyle Mountsier: 0:33

sleep? Never. You just on Delta lay flat Yes.

Paul Daly: 0:38

To the civilian. Right. Meanwhile, they have the little they have the little port that plugs in so all of his thoughts and musings can just kind of download into its latest its latest version. Hey, we're so excited to be on the ground in Arlington, Texas. We're going to be in and out of a number of dealerships today. What are we what are you visiting classic Chevrolet tomorrow, and today will be a key of Frisco and Audi have great fine. So if you're at either of those stores look for us because we are going to be running around with cameras and a crew trying to highlight all the stories that are happening in retail automotive, all the good people caring for other people so that we can have a little bit of a premiere and a little TV show that shows the rest of the world what we already know is going on in retail auto. And then but obviously we want you all to join us Wednesday night the big combination for the Soto live tonight in the Arlington Music Hall. If you're in the area or can get to the area by 6:30pm. Please do we would love to have you you can visit a CIO to x.com and still get tickets we're also going to have a workshop before the main event taught by Todd Caputo back to basics in incredible second gen dealer credibly successful I've heard back to basics quite a few times Kyle and I think this is going to be like the sleeper workshop.

Kyle Mountsier: 1:53

He's going to tell us exactly what that means everybody at nada was like we're gonna get back to basics everyone's like what the basics you're gonna go these are the basics go

Paul Daly: 2:02

Yeah, Todd Todd doesn't mince words. But if you can't make it with us in Arlington in person, that's okay. We're live streaming the entire event live that we got all the audio equipment, all the video equipment so that the live band from the band is going to sound amazing. And we got a game show we got all kinds of stuff 6:30pm Eastern on Wednesday night you can again go to Soto X, tap into the live stream, put it on your calendar, make sure you gather your family around and get your popcorn. So they can also be a part of the best industry in the entire world

Kyle Mountsier: 2:33

which is retail speaking of the best way and especially patient yesterday we dropped the final poll for our motor madness brackets over we know that we know that the that we've gone through the NCAA tournament but our tournaments still finishing it up. We got the 20 twin 2010 Astro van naturally and the 63 Corvette split window coupe. Now look, come on.

Paul Daly: 3:02

We call this we call this one week, a week or two ago that his Chevy Astro was gonna just put on a strong showing we'll see if it can hold on. But But honestly, the Astro is pretty iconic vehicle and we'll see what happens but you get to decide we don't get to pick. You get to pick this model vehicle of all time. All right, we have actually let's let's bring Steve on now. We're gonna welcome Steve green coming to

Kyle Mountsier: 3:23

you live from a lay flat. I mean.

Paul Daly: 3:29

Steve, welcome to the show. Thanks, guys. It's

Steve Greenfield: 3:32

good to be back as always.

Paul Daly: 3:33

Oh, so just tell us what was the what was the last trip you took?

Steve Greenfield: 3:38

Oh, boy, I can't even remember this week. It's New York, New York tomorrow and Halifax. I'm actually gonna miss you guys. I can't believe I'm gonna miss you guys this week. But I'm flying out to Halifax to speak to some dealers out there. So I hope there's not snow on the ground when I get

Paul Daly: 3:51

there. Oh, I think you've a pretty good chance that there there might be. I mean, I'm in Syracuse, there's a little snow on the ground this week in Halifax, I think you have a little bit of a better chance. Oh, boy. So So you like I was saying I mowed

Kyle Mountsier: 4:05

my lawn this weekend. So third time she

Paul Daly: 4:09

was I have that problem yet. I had a fire going over the weekend. So. Wow. So Steve, you've obviously been very busy. Especially with the dealer phone. It's fun. It's near and close. And you released your monthly Intel report as well as kind of what's been on your mind from the last week. So I think we're just gonna flip to you and then let us know like what what's at the top of the mind? What's the point of the the report this month? And why should dealers be paying attention?

Steve Greenfield: 4:36

Yeah, so I apologize in advance. It's pretty lengthy, as I got into this week, and I'm like, we've got a month left. So we're closing up the dealer fund at the end of April here and I was like, let me kind of lay out the investment thesis overall. Right. So a bunch of stuff that we've we've talked to our investors about our investors are all dealer principals. So we've mapped out sort of like the areas of interest where we think there's the biggest opportunity to We'll help dealers and also make some money over the next five years plus, but really, I mean, a lot of exciting content, I hope people can dig in and get some insights, I've already gotten some really good positive feedback from folks that have taken the opportunity to look through this. But we can take the conversation anywhere you want today. But you know, I think that top of mind for me right now, especially what we're seeing in the news cycle, is in a few areas, you know, one is, you know, software subscriptions, and unbundling features and attempting to sell consumers to activate those rear heated seats and the Enhance horsepower on a monthly. And then you know, related to that is over the air updates. And, you know, the impact that's going to have on the service bays, as a lot of the recall work, and the warranty work that used to come into the shop is now going to be able to be remedied via software updates that get pushed to consumers cars via Wi Fi while the car sitting in the garage overnight. So there's a lot of change coming. And, you know, it's very exciting to kind of then think through. Okay, so if if we were going to start a startup that was going to benefit from some of these trends, what are the problems that we anticipate in the future? And then backing into how are we going to solve some of those problems? So

Kyle Mountsier: 6:14

well, I go ahead. Real quick, I think this is important, because obviously, there are a lot of dealers that have that have come in to the dealer fun, and I don't know how many you're at, but the for, for many dealers who may not be involved in that, I think that it's it's really, it's a clear line to draw to say, hey, look, these are, if there's a ton of dealer saying, Hey, these are the things we're investing in as far as where we want our money to be placed on future bets toward the profitability of dealers and to the success of dealers, then as a dealership network, these are some core areas where we should be paying attention to, to understand what the moves in the market, who the new tech players are, how that's impacting my profitability, and whether or not people are investing in this fund. It's important for us as an industry to go, Hey, these are, these are key topics that at least a large majority of dealers, or a large subset of dealers are going we're actually putting funds toward this, because we see it as such an important layer within our profitability ecosystem. So I'd love to start with that. You know, you said software subscriptions and unbundling features. Because I see this as a place where dealers are really starting to question whether or not they're going to get their, their their fair share of the revenue, whether it come from the OEMs, or it come from other technology providers that allow that are allowed to get into the tech ecosystem of these OEMs. And where the dealers have have a foothold there or whether or not they do.

Steve Greenfield: 7:43

Yeah, so let me paint a picture. And the mental juices will start flowing, because you'd be like, Oh, they're their businesses to be built. So I was in LA last week, and I was at two different dealer groups talking to the owners, and this conversation came up. So So you're a used car manager. And in three years, three years from now, a car comes in, and you're appraising an off brand vehicle, say we're at a BMW store and a Mercedes comes in, and you're appraising that car, not knowing which of those features are going to be active tomorrow when the consumer goes back and cancels them all on their credit card. Right? So now you're trying to appraise a car at it either at an auction, or in a trading process. And you're like, Man, I mean, if all those features persist, the car's worth 35,000. If they all get turned off, it's worth 25,000. Wow, so So think about sort of like, how are they going to know? Well, they're not going to know unless there's a centralized clearinghouse for all of this data? How is the consumer who you know, subscribe to these these these features, like three years ago, and has been paying for them monthly on their credit card? How are they going to get confidence that when they do leave that dealer and hand the consumer and hand the car in that they're actually going to I got a cat, there you go, yeah, just regular cat sighting. They're gonna get confidence that that all of their their their subscription products have been cancelled, that they no longer be charged. And then, on the flip side, that same use car manager a week later is trying to demo that car someone comes in for a test drive? And do you think that the manufacturer is going to want to give them an incentive to upsell all of those features? Even if it's an off brand vehicle? Well, of course they are. But are they going to give an incentive to a used car manager from a different brand to demo the car up sell them at the point of purchase? I mean, the complexity within the f&i office could be pretty intense when you've got you know, 30 different used car brands, you know, all different from from my brand that I'm trying to figure out like, what is this car? What can be up sold, so and when I do sell, is there any revenue share back to me, and does that revenue share? Go back to the salesperson or the dealer principal?

Paul Daly: 9:56

Oh, my goodness. Yeah.

Kyle Mountsier: 9:59

Yes. Yeah, one thing and then I'll go another thing too.

Steve Greenfield: 10:03

I'll give you one more so so think of a window sticker in the future, a window sticker on a car is going to have this grayed out area that you know what, there are hard options and there are soft, soft, and the soft options J or may not be grayed out,

Paul Daly: 10:16

Oh, my goodness.

Kyle Mountsier: 10:19

Other the other potential here is this, these are operating systems. Now, these are not just you know, infotainment systems that have a closed door to upgrades. These are operating systems. So you think about the Apple ecosystem is an operating system with an app store with opportunity for other developers to layer in their apps within the app store. So what apps could be layered in into these operating systems? And are we going to allow third party that's where that's where you said, this this, like this clearinghouse or this data warehouse of everything that could be or is available on this car? And then how do third party developers have relationships with dealers, manufacturers and technology platforms? To make sure that there's an understanding of what or what not is available? Or what's been turned on? Or not? Or what's the free app? Or the or the, you know, where does all of that start and stop? So I think, and, you know, you said something there, it's like, well, who gets paid for all this? Right? You know, which is always the question, goodness, right? What portion of revenue, what proportion of who's going to be the seller, and who's going to be the reseller? You know, there's a, it's interesting, because this is, when you look at other other places, like where software as a service is normal, where App Store purchasing is normal, you start to see these, like, Penny shares, right? Like you think about all of the scandals with iTunes and musicians. And well, my music is on that store. And I get point oh, one of a penny for every, for every download of it. Right? And so how far do we have to go with the revenue model? To figure out whether or not these things are are part of the revenue of a dealership or a salesperson or anything like that? Wild question. So So

Paul Daly: 12:15

obviously, this is looking over the horizon. And like you said, trying to predict what is going to be the important challenge of the next three to five to seven years and starting to back into solutions through the fund. You also spend so much time on the ground with dealers, and obviously the fund is full of dealer principals. How does somebody on the front line of the store, whether it be a used car manager or a General Sales Manager? What should they even do about this conversation that has over the horizon? Because you're hearing and you're seeing a lot? What would your advice be to the front lines today?

Steve Greenfield: 12:47

Yeah, so I think the main thing is to like separate the signal from the noise, and there's a lot of noise. So there's, there's a lot of things that you don't need to be paying attention to. I think if I'm on the front line, there's a few things that I should be paying attention to in the news cycle. One is how quickly for my brand is our subscriptions coming. We know for some brands, like if you go to BMW right now and you configure a car on the OEM site, there are subscription products that you can elect into as a consumer. So you're gonna start feeling those immediately, if you're selling new cars, and you're gonna start feeling those fairly immediately, as those new cars come back as used vehicles. I'm more concerned around, you know, if you're a used car manager, the the complexities that I sort of spoke to earlier, what are you doing when you're starting to look at vehicles in the auction lanes, because this uncertainty is going to hit you, maybe not for six months, but surely, 12 months from now, as some of these rental cars start coming back into the auction lanes, it's gonna hit you. So I think that's another thing. And then, you know, we didn't really get to like the conductivity and over the air updates. But you know, if I'm a fixed operations director, or a service writer, surely some of that I'm going to start to feel as you know, recalls come out, but then the OEM say, hey, we don't need to actually have that car go back into a franchise dealer for the work, we can push a software update. And the service writers and the fixed operations directors are going to have to be attuned to what software updates have been pushed to vehicles. And you know, it's gonna be a new service that when you come in, you're gonna have to check on vehicle to make sure this car has had all of its software updates, because if they haven't, something can be malfunctioning. Think about your phone, like my phone doesn't operate quite well when I don't have the latest operating system. And, you know, there's an incentive for me to always have the latest operating system, battery life, etc. It's gonna be the same thing with vehicles. Wow.

Paul Daly: 14:39

Man, people have hard enough time with their phone for the vehicles to do that. Alright. There's obviously so much to dig into there. If you are interested in getting this reporter Steve starts on a weekly basis, you go to automotive ventures.com Right. so.com automotive ventures.com and you can sign up for free and we highly recommend you do it. Because it always is kind of like an engaging like little stimulus that gets you thinking over the horizon? And how that affects what you're doing today. Speaking of things that are getting our minds thinking these days segue. All right, so we love, we're thinking about our minds, we're thinking about our minds getting our minds thinking, well, our AI is kind of like your mind thinking. It's complicated, but we'd like to bring Steve into these conversations. So artificial intelligence, we know all the talk about GPT. But just the broader AI community could help individuals become more self aware by offering more granular, personalized insights, according to a column by Thomas, I'm not going to pronounce his last name, you can see the show notes as a psychology professor at University College London. And he argues that this technology could use shopping behavior, and shopping patterns, and subscription patterns, to help interpret the data and give customers and consumers insights back into their own personalities, to help raise their ethical reputation. So basically, they're saying, you buy things, you watch things, you search for things, and we can take all those things. Now AI can tell us what your psychological tendencies would be based on this data. And he's saying that marketers and companies are going to deploy this even more. And it's a good idea to actually share this data back with consumers to just keep everything ethical and transparent. And he thinks consumers will be excited about the insights. Just like you know, your watch gives you insights, like, Hey, you might be tired, because your blood oxygen level or whatever. I'm going to start I'm going to kick off. I think this is a disaster waiting. Because, you know, congratulations, you're expecting, you know, postcards coming from Target back in the day creep people out quite a bit. But I think this is just going to be a whole new layer, my wife already still can't figure out how she gets ads on her phones, from things that she searched in the past. Steve calm, what do you think about this?

Kyle Mountsier: 17:02

Yeah, I'll kick the second one. So the interesting thing to me here is actually an I can't remember I showed you this with this with you last week. But basically, in art, there's already a homogenization of a lot of like art and the way that we perceive the world and the way that we do things. And my fear is that there would be these kind of like buckets of personality traits that would be so clearly defined, that the AI would further homogenize purchasing behavior, or activity behavior or personality behavior. Because of these trends in shopping, you think about the way that marketing happens, right? Now we put large swaths of people in big buckets and say, hey, it's a good chance that these people are going to move toward this behavior. And we act on that from a marketing perspective. And so we entice people into that. But if they're told that they're in that ecosystem, it's, that seems like a little bit of a dicey situation instead of instead of, hey, you might want this. You are this. That's a that's a wild proposition.

Paul Daly: 18:08

What do you think?

Steve Greenfield: 18:09

Why? Because the natural extension, you remember, back in the early days of the internet, it was like, You look alike audiences, right? People who like this also tend to like this. But now they can say, hey, we don't zip code you live in. And we know which car you drive. And we know which Starbucks you go to, we know which gym you go to. And we know that you know, on Tuesday night, you tend to order pizza, and you tend to wear this outfit. And now I think it's just, you know, hyper segmentation. I think, you know, in the hands of somebody who wants to do well, by the world, I think it could be great, you know, you could actually have very, very relevant advertising targeted to me making recommendations that resonate every single time. But we know, you know, the world isn't full of good actors out there. So I think it can be misused. And I don't know that the downside could be you are trying to recommend pharmaceuticals to consumers or find their weaknesses, et cetera. So I'm not super optimistic that this will only be used for good impacts.

Kyle Mountsier: 19:04

I feel like they've made movies about this.

Paul Daly: 19:09

One or two. Well, that's all the time we have for today. Thanks for spending a few minutes with us to get things going in the morning, Steve, thanks for joining us as usual. And look, we all have a lot of work to do. But in the bottom line, if we can serve somebody else with what we do, it's the way to go.

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