Used Car Merger, GM Forces Subscriptions, GaryVee and Cars, Blue-Green Bubble Wars

August 10, 2022
This is an eventful Wednesday as we unpack some business and some drama while we talk about the Shift/CarLotz merger, GM forcing a very expensive subscription on buyers, Echo Park hiring a cutting edge social agency, and Google trying to shame Apple to get rid of it’s blue imessage bubbles.
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Used Car retailers Shift and CarLotz announce merger

  • Stock for stock transaction to be traded as SFT on Nasdaq
  • Shift is an ecomm platform has primarily a west coast presence, while CarLots has a  mid-atlantic presence and is primarily a brick and mortar consignment model
  • Shift will be cutting of its workforce (about 60%) through end of year
  • Shifts current President, Jeff Clementz will become the company’s CEO
  • They are expected to have a position of  $125m in cash
  • Take away: Consolidation is moving beyond franchised dealers, but can it hold

GM to force Buick, GMC and Escalade buyers to pay $1500 for 3 years of Onstar at POS

  • Price included in separate section of the sticker and is included in the MSRP of all ordered Buicks and GMCs June 2 and Escalades ordered starting July 18
  • Customer pays even if the service is never activated
  • Rack rate is $49.99, the baked in pricing comes to 41.67 with an auto renew at full price
  • GM’s research resorts that customers subscribe to 25 products and services and will spend $135 per month on them on avg
  • GMs goal is to have $20-25B in sub revenue by 2030
  • Take away: Forcing customers to buy something they weren’t buying before doesn’t seem like a winning strategy

Echo Park retains VaynerMedia as Agency of Record

  • Former Mazda N/A CMO Dino Bernacchi started working at EchoPark in October and said that’s “when the company really decided to shift gears on the trajectory of growth and start building more than just an infrastructure of locations.”
  • Now that infrastructure has been laid, it's time to “actually build the brand” said Bernacchi
  • Vayner CEO, Gary Vaynerchuk said the agency will handle creative, strategy, analytics, and more with a focus on social
  • Take away: We’ve been waiting for someone to do this at scale, the good news is, everyone can take this approach today

Google to launch shaming, er marketing campaign to pressure Apple to adopt universal messaging format

  • Trying to push adoption of the RCS, universal messaging format
  • One tweet from Android reads “iMessage should not benefit from bullying. Texting should bring us together, and the solution exists. Let’s fix this as one industry”
  • Take away: Where do we start on this one?

SPEAKERS

Kyle Mountsier, Paul Daly


Paul Daly  00:21

Every once in a while a show comes up in the morning that I'd get really really excited for stories used car mergers, GM forcing subscriptions Gary Vaynerchuk in cars and blueberry bubble wars.


Kyle Mountsier  00:39

Got it blue green bubble.


Paul Daly  00:42

Oh, we're gonna save blue green bubble wars for the end of this show because I couldn't believe it. I was like, I want first crack at this. So I was the first crack at this story. I couldn't not include the fourth story today because we had to just talk about it because so many people can relate. And it's a hot, contentious topic and the people need to be able to discuss this in an


Kyle Mountsier  01:05

open forum. The fight is up and oh my


Paul Daly  01:09

goodness. Oh my god, all these stories. I mean, all of the stories today well actually 232 Of the four are potentially explosive one is really cool. And one is just news.


Kyle Mountsier  01:23

This morning is really what got a whole extra hours last night in the pockets when I come to work today. Man, I


Paul Daly  01:30

got an extra hour of sleep last night because I was exhausted yesterday. I'm feeling good. A lot of things are moving forward right now. One of which is the fact that we sold out sold out of industry partner tickets yesterday for Sony. We warned you it was coming for the last two months. And if you're a friend and family and you're in the industry partner side we're so sorry somebody actually texted was like, I had them in my cart this morning. And I went to cash on they're gone.


Kyle Mountsier  02:01

Nuts. It's not and I already had flights but I knew it was gonna come but I still have anxiety over it because like someone that I forgot to let know that thing was happening and hasn't seen it on social is going to text me in a week and be like, I thought you love me. Oh my goodness. I do. I love you but we got well gonna have some links in there. So if


Paul Daly  02:23

we do we're gonna have a lot of dealers there actually were were the the president of the Philadelphia auto Dealers Association reached out to us yesterday and was like, I heard about this event from one person in one venue. And then I heard it from a totally different person. And I had to reach out to see what's going on how can we support you, so like the dealer body are are into it, the second they hear about this, they're into it. So we're gonna pack this place out with dealers, we have a really good base, the suckers filling up, we already know we have a critical mass that is going to be rowdy and is going to have a great time. And we were on call yesterday with signage and audio and video and logistics. And if you're an industry partner, and your friend and family and if you're listening to this, we consider you that we may may have an idea on how you can still get there. But you're gonna have to like text us to figure that out. Because Texas will have our there will be a black marker for that dude, if we see these on Ticketmaster, I will see


Kyle Mountsier  03:20

him on eBay for like $800 And we're like, he's got marked up, we're gonna be on market.org or something the ultimate I want to give some love to to cars.com, again, are at home so much for the event, such a big deal that they threw in and said, Hey, we're going to make sure that this thing gets put on that we can bring speakers like Jim McKelvey and others, to the event Dave Meltzer. So that's a that's a big deal for us. Also, we got to have a conversation with our VIP lounge. actively engaged. And man, I'll just tell you, if you get the opportunity to be in the VIP lounge, it's going to be a next level experience. Also, just for the dealers watching, keep an eye out if you've already purchased tickets, or if you kind of pay attention to our socials, you might get an opportunity to be in that VIP lounge, it's going to be limited to only 100 of our attendees up there. So just going to provide a special experience to to a few of few of the guests and they might have some hall passes that they can hand out.


Paul Daly  04:27

Yeah, so 100 out of 600. So it's not like half it's just like the end we're talking about, you know, some special food, some special drinks. There may or may not be too therapeutic misuses up there. Little little background loosened up on way for the rest of the soda cod. So that's gonna be awesome and active engagement and they have just stepped up in thinking through like, how can we make this really special and really conversational and they also have the best tick tock account. I'm just gonna say it best tick tock account amongst the automotive industry partners. You should check it out. All right. All right, let's talk about what do we do? Okay, so what we're going to take an easy on ramp. Okay, so this one is news. And then we're just going to get more and more intense as the show goes on. So use car retailer shift West Coast primarily. And car lots with a Z announced a merger yesterday. This is from the press release the destination for the best online and in person used car purchasing experience allowing the customer to seamlessly shop for the broadest assortment of used vehicle inventory and complete the transaction however they prefer. Okay, so these are two retailers shifting primarily west coast, primarily ecommerce, and car lots, mainly Middle America with a heavy heavy brick and mortar presence focus, they really started focusing on consignment, they decided to merge as a stock for stock transaction. And they're going to trade on NASDAQ as now s f t. And, you know, the there's a few things to say about this. Number one, I think, Kyle, we're just seeing the consolidation we're seeing on franchise dealers, right? We're just seeing that creep into now, the standalone use car model, right? It's just a logical transition, and you're more familiar with Shift than I am.


Kyle Mountsier  06:09

Well, yeah, so shift has been around for quite a few years. And many people in the country don't know about him, because they started in California, they stayed very local there. They have a really good brand presence, they had, you know, they were kind of an extremely early adopter, in, you know, a new website experience a very dynamic merchandising experience and, and they even had some unique value propositions on delivering vehicles or purchasing online. So they were they were a very, it's it actually is interesting to me that they didn't go and pursue a more national brand earlier because they had a really strong brand in California. So this is this is definitely an effort to do that. Just because of the you know, the way that that car lots is available through the rest of the US. But I have to believe and and this is this is this was stated by the CEO have to believe that a majority of the reason for this type of purchase would be for inventory, right especially because car lots is more on the consignment side understands the customer conversation, because it doesn't matter if your car Max Carvana shift a franchise retailer inventory is the thing right now and then yeah, and it will continue to be for the next two years so I quite like Carvana ADESA right acquiring assets for the purpose of getting more inventory is enough to see like a business outcome on the other side


Paul Daly  07:40

no doubt so shifts current President Jeff Clements will become the entire company CEO and does say actually just that he says they see immense opportunity can combining shifts proprietary acquisition engine, right with car lots unique consignment model. So we're gonna see these two come together, they did say that they have a cash position of $125 million, which isn't a whole lot of cash shift however, is laying off 60% of their workforce in the transition. So you know, I think it was about the shownotes are a little off is actually about 600 plus people so you know, a big change a big consolidation and we're just seeing that you know, the consolidation move into the standalone use car brands. Speaking of standalone use car brands, segue. I'm actually going off script on this one. going off script on this one I'm skipping, we're gonna save the last two stories I'm skipping so Echo Park you know, Sonic automotives use car brand has just announced that they retained Vayner Media as their agency of record. It's the first agency of record they've ever had. And, you know, I mean, Vayner are my people. I've been in with them for so long. And I've been wanting so badly for good VaynerMedia if you don't know Gary Vaynerchuk is company or Gary Vee we're gonna ComCare D. So get or just Gary and friends. Friends calm, Gary. So I've been waiting for the better part of a decade in all my interactions with Vayner. And through the mentors program for someone in automotive, to realize that this is the approach they need to take to build their brand. And now it's happening former Mazda North America CEO, Daniel bernucci. Dino Dino, most of the day, I


Kyle Mountsier  09:30

know of him and I know what he did at Mazda to kind of shift the way the brand approached.


Paul Daly  09:38

What did he do? What did you do at Mazda like well,


Kyle Mountsier  09:41

for the last, I think, seven or eight years, Mazda basically has not put out any tier one commercials with price or payment. They're all of their commercials are emotive based, are people based. And they actually they actually really, really were one of the First OEMs to lean into the Creator economy. And so even like all of their model launches have been built on creator collaborations on like Instagram and Tiktok. And they will send these creators out. Prior to the launch in like these massive explorations, they'll send them out into the wilderness with the car, love it photos and videos and so that he understands like the Creator economy with brand build. And then if you recognize the commercials, like they just don't, you know, you'll see it at tier two and tier three level. But on the tier one level, they do not talk price or payment, they talk brand, they do a lot of emotive type things. It's interesting, because, you know, pulling that to auto is very even I know, it's really funny, because some of the operators at Mazda that I know, actually, we're not a fan of some of the commercials, because they were like, we got to talk features more, we got to talk about that, you know, and so, you know, I still think even even consumers have a hard time kind of reaching to that at this point. So I am interested to see how, like, Gary Vee, you know, VaynerMedia recognizes what Otto needs but also can bridge the gap in that communication and matrix because it is it's a different animal. It's


Paul Daly  11:24

it's such an easier play, I think, than most people realize, particularly because this is a used car brand. We don't have to talk about features, right, like Dino's got actually a smoother runway on this than he had with Mazda? Because he's not working with the tier one OEM he's actually working to. Its tier three, right? This is tier three marketing veiners insanely great at direct to consumer marketing. They have clients like, you know, Budweiser, right fortune 50 companies that Vayner works with. So their social media execution. Well, we have a couple codes Vayner CEO, Gary Vaynerchuk said the agency is going to handle creative Strategy Analytics, with a focus on social media, you know, Dino said, the company really decided to shift gears and the trajectory of growth and start building more than just an infrastructure of locations when he started in October. So Echo Park has opened a lot of buying centers, our good friend was led the charge and opening all I mean, not the buying centers, the delivery centers across the country. So they have infrastructure. And now Dino says it's time to and I quote, actually build the brand. I like that actually building. So I think it's an easier play because we're just talking about building an affinity and a feeling around the brand of Echo Park, which is no one really knows who it is, or some people do, but most new shoppers, so he doesn't have to talk about features. He's got to talk about feeling and veiners just great at understanding the flow of culture, overlaying social media content that builds a brand so I am so excited to see what somebody does with this. Yeah,


Kyle Mountsier  12:53

I would pay attention to it because I would imagine right now all of their USPS as Echo Park is essentially copy and paste from Carvana. And, like, they have to get away from that if they want to be any sort of social media brand. They just can't be like, Oh, you can finance it, pick it up. You know, you can't


Paul Daly  13:12

Carvana shutter hired Vayner they missed their spot again. Now


Kyle Mountsier  13:15

they're spot too late. They do pretty strong job.


Paul Daly  13:20

Dave I know. I know. I


Kyle Mountsier  13:22

know. I froze. I didn't I'm proud of them. Anyway, I'm proud of him. I


Paul Daly  13:25

just feel like Vader's just gonna crush it for them just because we know how many people that we should get dino on and somebody from Vayner we're gonna work on that. Let's see if we can get them on the talking about it and do that. Brian Ortega just drops into LinkedIn comments on Oh competition. And that is Case in point because Brian has been crushing knowing this truth that we're talking about right now for his stores for a long time. And the best part about this is yes, Echo Park is hiring you know, an expensive top top level agency to do it well for them. But every single dealer listening to this, every single agency can execute to this strategy today. Right without the expensive agency. That's why I love it because sometimes you just need someone to prove that it works. Right to show you that it works. I will argue


Kyle Mountsier  14:11

that they can do it better better because they can be more local and in tune with their local customer and in tune with the employees. Like we talked about the young man that's doing Tiktok at a Nissan store south of Nashville. Absolutely. Absolutely that that that I don't know. If even VaynerMedia can touch what that what that guy is able to do because he can do it locally on the fly in time every single day.


Paul Daly  14:36

No when you get a rockstar that knows how to do it you that you're you can be homefield advantage wins in this game. If you wonder if you understand the game.


Kyle Mountsier  14:45

Speaking about games gonna say oh man, great.


Paul Daly  14:50

Oh, that's a great one. That's a great one. You want to take this one out. You want to dive Hold on. If you if you're watching the live stream right now. This is the great Time to like text your friends the link to this live stream. But like you want to get in here for these next two stories. And if you have little reaction buttons, if you're on LinkedIn, you can hit the like the hands, thumbs up the hearts, the frowny, whatever it is like,


Kyle Mountsier  15:11

alright, that would come out that GM is going to not just highly encourage, not just offer, but force Buick, GMC and Escalade buyers to pay $1,500 for three years of OnStar at the point of sale, so that they're like, immediate Hey, thanks for buying the car. You also got


Paul Daly  15:37

this was just waiting to blow up. Tina 83


Kyle Mountsier  15:39

with a tie on the on the on the press three press hard three copies, right. It's like, oh, man, oh, but there's, I know the 1500. It's just you gotta just go for it. It's


Paul Daly  15:51

when you tell everybody that if you're picking up a little anxiety in our voices, or angst, probably more that it's, it's real, because thinking of this, from a consumers perspective, you're a public company that comes out and says, we're going to increase subscription revenue to around 20 to $25 billion by 2030. And you're like, great, what's the plan to do that? Let's just force people to subscribe for products that they weren't, they weren't voluntarily subscribing for, which tells you, they don't really want the product that much. And so forcing them to pay it on the MSRP saying, We don't care if you use it, you're still paying for it. And it's not a cheap subscription, either. It's like 50 bucks a month. Like if you add up Netflix, Disney plus Fitbit, you know, like, add up your top like six subscriptions, and they probably come to 50 bucks and they bring your life I'm sure a whole lot more value than on


Kyle Mountsier  16:42

our like, like OnStar is like 50% of it is managed by if you just have Apple CarPlay it's the same stinking stuff.


Paul Daly  16:54

I don't know. I'm frustrated over this. And you can mark automotive troublemakers words on this. This is going to be reneged very shortly, because the brief the soon as people figure it out, and I also don't understand why it's just the Escalade. If you buy a Buick or GMC, it's starting on June June 2. Wait, that's already gone. They talking about next year? I'm confused now. But either way, maybe they already started this. I don't know. But if you buy a Buick or GMC, it's included you have to do it if you buy a Cadillac Escalade, its included but the other Cadillacs are apparently okay with this. Okay, so


Kyle Mountsier  17:31

Oh, ordered Oh, so yeah, so ones that are ordered by is in place. So these people probably haven't been delivered on these cars.


Paul Daly  17:39

So it's too late to order it if you don't want to buy this and I don't know why. You know, a couple there could have been a couple things you could have you know, increased the price of the vehicle and included it for free to ease into it. I mean, for just jack the prices on the on the light. Everybody's raising prices right now. But I assume they want to do that because now they're going to show that that is like subscription revenues exactly what they're doing, but it's not voluntary subscription revenue, you're on brushing with all the talk about consumer experience and don't do this and you can't resell the vehicle and making consumer signed contracts like to say you won't resell your loser warranty. This just seems so counterintuitive to what GM is trying to do. Are you saying


Kyle Mountsier  18:19

I want to know if the dealer Council like got no free right? No, there's no way so if someone knows anyone on the GM dealer,


Paul Daly  18:28

I had GM I had Jim dealers texted me today go this is the dumbest thing I've ever seen. It's unbelievable because I looked my personal story I'm over I'm so over it my personal story with Kia right auto start I didn't realize was a subscription feature and not a feature of the vehicle. So what happened was I this is my fourth Kia and 12 months ran out and it was the winter in Syracuse and I couldn't start my car. It's like oh, by the way, you have to subscribe and like oh, this is ridiculous. I'm upset. Right and so I called the dealer like yeah, it's just the way it is. Now guess what? I never subscribed to it out of principle in Syracuse and guess what I'm about to get out of my fourth kid my next car is not a Gonzo


Kyle Mountsier  19:04

you know what a Kia you know what I will say there are manufacturers doing this right? I just bought a Mazda three years the whole thing remote start gas stuff unlock lock your vehicle. It's just it's a part of the Mazda app. So we're not saying that all manufacturers, but like GM, get your eyes up. Let's go. I'm gonna call it out. I'm just calling it out. It's unbelievable. And it is a it is like, not just that, but the people that don't see it from the national news are going to have to get this news from the dealer. So watch how that just erodes trust at the dealer level as well.


Paul Daly  19:40

This is wrong on so many levels. GM we love you. We want you to win, which is why we're telling you the truth. Right making him wrong. We're telling you it said


Kyle Mountsier  19:49

that again. Speaking of being wrong on so many levels. Are you ready for this?


Paul Daly  19:57

Let them have a Kyle Android users


Kyle Mountsier  19:58

you're wrong. No.


Paul Daly  20:03

That's not what I was expecting you to say like. Alright, so Google


Kyle Mountsier  20:09

has launched a ship, a marketing campaign, we'll call it maybe not a shaming campaign, to pressure Apple to adopt a universal messaging format to welcome all Apple users said, Get out of here, your green bubble.


Paul Daly  20:28

Okay, so now, in a quote from an Android tweet, it says iMessage should not benefit. I don't know what Android sounds like iMessage should not benefit from bullying, texting should bring us together, and the solution exists. Let's fix this as one industry. So what it sounds like to me is someone's spending money to shame a company by by accusing them of bullying. But the basically the premise is that down for people that are struggling with this, so the Google is saying, I'm going to pay money and launch a big campaign. That's what's the campaign get the message campaign. That is, is, you know, trying to pressure openly, we're hoping this pressures apple into adopting this text message feature so that there's no longer the blue bubbles, and the green bubbles,


Kyle Mountsier  21:19

we got it, let's bully


Paul Daly  21:22

the bully to bullying because we're going to be on the right side of history on this, okay, I'm just happens to benefit us and tarnish their brand.


Kyle Mountsier  21:31

From a real technical perspective. I get it. And I do wish because that's everybody's like worst nightmare is being in a text thread with like five to 10 family members or friends. That is all blue bubbles. And then someone invites the green bubble Android into it. And then something gets said and you can't get out. And that is just the worst possible scenario ever. So I do think that like this, probably, this probably should happen. At some point.


Paul Daly  22:02

There are so many practical implications. And honestly, I've never had the experience of a green bubble person, which does probably sting every time. You're like, I don't know, do they even know there's a blue bubble? Or it's just all green bubbles for them? It's all bubbles.


Kyle Mountsier  22:19

I don't even want the bubble is I think it's just like, you know, regular bubbles. There's definitely this is like, this is a lesson.


Paul Daly  22:26

This is the lesson No, this is actually a lesson in brand building. It is brand build GM, linen, Apple built something that was so desirable that other people have to really beg them to change it. Right? The blue bubble is just something that iMessage did, because they were the first one to make a platform that just sends files easily works together easily, right? It works across all your devices. And they're just saying like, Hey, if you adopt us, we're gonna have superior technology and superior protocols that allow your experience to be super robust, and everyone else is catching up and is like, Hey, wait, we're finally there. And they're like, Hey, Apple, like, change your thing. But apples like actually, it's, it's like why you're asking your brand to give away some exclusivity, right and claim to exclusivity, which is really honestly what brand is built on. So I don't see Apple changing their mind. I think they'll probably find some way to make it a little easier. But I don't I don't see the crew at Apple saying like, Okay, I'll put a couple billboards out, we'll


Kyle Mountsier  23:28

get our community and we've really fun thing that we get to talk of,


Paul Daly  23:32

we feel really pressured by all the Android users, by the way, right? I mean, like, it's one of those things. It's one of those things, but it's a fun part of pop culture. And we love all of our green bubble fans. Just you're just gonna get less group text from us because it's difficult. There it is. Or you could just get an iPhone.


Kyle Mountsier  23:51

Everyone's WhatsApp.


Paul Daly  23:54

Right, exactly, exactly. Then there was WhatsApp so we love you so much in the community, whether you're in GM. Again, we love you. We're just telling you something in your teeth, and you need to get it out. Hey, if you're still a dealer, come in with soda calm, get your tickets to soda comm.com We got a lot more coming for you this week.