Michelle Seiler Tucker analyzes the bold Carvana business strategy as it expands into new car dealerships. Business owners often focus strictly on direct competitors, but looking outside your immediate industry reveals new growth tactics. Carvana built its brand by stripping away consumer friction and creating digital buying models. Now, they’re introducing technology-driven playgrounds to reinvent traditional dealership spaces. Tucker breaks down how entrepreneurs can apply these principles using her 6 Ps framework to scale enterprise value and eliminate friction in their own operations.

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Is Carvana Brilliant Or Headed For Trouble?

Welcome to another episode of the show. You know me. I’ve been doing podcasts for years. Also, you know, I’ve been really in the M&A business for over 26 years, specializing in buying, selling, fixing, and growing companies. Hundreds and hundreds of businesses and pretty much every single industry you can think of analyze thousands of business models and really help entrepreneurs build companies that are scalable, sustainable, and, of course, sellable. We’re going to examine one of the most fascinating business moves happening in America right now, Carvana.

You’re going to ask me, “Michelle, why are we talking about another business?” Here’s the thing in business. Most business owners want to focus on their competitors, on their competition, what they’re doing. It’s imperative to look outside of your box, look outside of your circle. Look at what Disney is doing. Look at what Tesla is doing. Look at what Amazon is doing. Look at what these multi-billion-dollar companies are doing because you can pick different things to incorporate into your company that you never thought of.

Looking Outside Your Industry For Innovation

Guess what? Neither did your competitor. We’re going to look and see what we can emulate from Carvana. Carvana, the company that disrupted used car sales, is now making a bold move into car dealerships. The question is, is this brilliant? Is this brilliant? Is this dangerous? More importantly, what can business owners learn from it? Whether you’re running a manufacturing company, a healthcare practice, a technology company, or a service business, there are lessons here that apply to every single entrepreneur.

Let’s dive in. The problem. Carvana is trying to solve. Now here’s what makes businesses really highly successful. Find a problem, solve a problem. You do not always have to start something new. You can go back and look at everything that’s already been created. How can you be unique? What problems can you solve? That’s what I encourage all of you to do in your businesses. Let me talk about Carvana and what problem they’re trying to solve. Let’s start with something simple. Most people hate buying cars. I know I do. Think about it. You spend hours negotiating. You sit in a dealership.

Removing Customer Friction To Drive Scale

You talked to multiple people. You fill out mountains of paperwork. You wonder if you’re getting a good deal. You always wonder if you’re getting a good deal. You leave exhausted. Carvana recognized something that traditional dealerships ignored. Customers didn’t want more salespeople. They wanted less friction. That’s a huge distinction. Think about what’s happening in your businesses causing friction for the customer experience.

Many business owners think growth comes from adding more people. The smartest businesses remove unnecessary steps. Carvana built an entire company around that concept. Online shopping, know-how, go pricing, home delivery. You can order a car in your pajamas. Transparent pricing, minimal paperwork. They simplified a process consumers already really disliked, hated for decades. That’s one reason they became a massive disruptor, and they used car sales. What are they doing now?

One thing I always say in business is that you always have to aim. If you do not aim, you’re going to become obsolete. Aim is always market and innovate. What is Carvana doing? They’re attempting to apply that same model, that same proven concept, to new vehicles. What exactly is Carvana doing? Let’s dive into it. Most people do not realize how significant this move is. Carvana has really quietly acquired multiple dealerships, selling Jeeps, Dodges, Chrysler, and Ram. Instead of operating them like traditional dealerships, Carvana is really redesigning the customer experience.

Creating what they call New Car Playgrounds. That’s unique. If you think about it, the customer experience in buying a car has really never evolved. It’s been the same way for decades. What Carvana is doing with the new car playground is that customers can walk in, walk around vehicles, scan QR codes, use their smartphones, research features, schedule test drives, and buy with very little salesperson interaction. That’s what customers are wanting.

Salespeople become guides instead of closers. That’s a major shift. Think about that. What major shift can you make in your business? Why is this a smart strategy? Let’s talk about why I believe this strategy has tremendous upside. Reason number one. What are they doing? They’re solving a real consumer problem. The best businesses solve friction. Carvana is not inventing demand. They’re not inventing demand already. People already want vehicles. They’re improving the buying experience.

While you improve the customer experience, you often win market share without creating a new product. Think about that. I do business. All types of vendors in business. I bought cars, I bought homes, I bought commercial real estate. Sometimes the friction, the chaos, will cause me to walk out the door and not buy anything anymore. This is what’s been happening in this industry. Amazon did this. Think about this. Amazon did this. Uber did this. Airbnb did this. Carvana is attempting the same thing. They’re asking, “How do we make buying a vehicle easier?”

They ask, “How do we make buying a vehicle easier?” If you think about Amazon, what do they do? They simplify the process. You do not have to go to Target, Walmart, and all of those stores anymore. You can practically buy anything on Amazon from the convenience of your home in your pajamas and have it delivered to you practically overnight.

Asking The Three Core Strategic Questions

Walmart is now doing this. Uber did this. What does that mean? Instead of having to call a taxi cab, wait for them, and be extremely disappointed by the experience, Uber changed the way that we go from location to location. Carvana is doing the same thing. Why do you not look in your business and ask yourself, what can be done in my business that really changes the buyer’s experience and really removes all the friction?

Carvana asked, how do we make buying a vehicle easier? That question alone has created billions of dollars in value. Think about that. That one question, ask yourself three questions. I want you to ask yourself these three questions. Number one, what business are you in? What business are you in right now? The business that you think you’re in is typically not the business you’re even in, believe it or not. Number two, what is your superpower? What does your company do better than anybody else?

Number three, the most important question you can ever ask yourself in your company. What business should I be in? You heard me, what business should I be in? A couple of examples, Amazon. Amazon was in the bookstore business. They distributed books. That was their business. They asked themselves that powerful question. What is our superpower? Amazon said distribution is our superpower. We distribute better than anyone else.

Number three, what business should we be in? Guess what Amazon said? We should be in the business where we can buy anything from Amazon from the comfort of our own home. You do not have to run to the hardware store. You do not have to go to the grocery store. You do not have to really go anywhere. You can buy anything you want. McDonald’s asked the same question. What business are we in? The McDonald Brothers said, “Run the restaurant business.” Ray Kroc came along and said, “No, we’re not. In the real estate business.”

Ask yourself those three questions. Those are the most powerful questions you will ever ask yourself, and it will transform your business like that. What is Carvana doing? They’re leveraging existing infrastructure. This is where many entrepreneurs really make mistakes. They chase shiny objects. As entrepreneurs, we’re looking for the next opportunity. Instead of focusing on and growing what we have, we’re always looking for something next. That’s not always incongruent with our current company.

Leveraging Infrastructure To Expand Revenue

They build entirely new businesses. Carvana is not starting from ground zero. They already have brand awareness. Everybody knows who Carvana is. Logistics, financing, capabilities, online buying systems, vehicle transportation infrastructure, customer acquisition, systems in business, leverage matters. The highest value companies do not consistently reinvent themselves. They leverage existing assets into new revenue streams.

In my opinion, it’s brilliant. Carvana is taking an existing platform and expanding its use. That’s smart, my friends. Look at what you can do. Ask yourself those three powerful questions. Number three, they understand consumer behavior. Today’s consumers expect convenience. They want everything quick. They want everything now. Think about what happened to banking and travel. Retail, entertainment, everything moves online. Why do you think Toys “R” Us went out of business? It’s because you can buy all of those toys online. Toys “R” Us did nothing to aim. They stopped marketing, and they stopped innovating.

They did not pay attention to the customer experience. I can name a bunch of other businesses that followed the Toys “R” Us suit. You have to innovate. You have to market. Cars are one of the last major purchases still heavily dependent upon in-person processes. Everything else has changed. Everything else has evolved, but not the car industry. Carvanas sees the trend, and they’re betting the future customer wants less dealership and more technology. That’s a logical assumption. Whether they’re right remains to be seen. They’re following consumer behavior rather than fighting it.

Evolving Operations To Match Consumer Expectations

That’s what entrepreneurs do. That’s what business owners do. They want to do the same thing the same way they’ve always done it. That’s called death. You’re either living or growing. There’s no in-between. That’s why AIM is so important. Always innovate and always market. Reason number four. They may create a competitive advantage. One thing I teach in the show is proprietary. Proprietary is a number-one multiple value driver that can take you from a 4 to a 6 to a 10, sometimes even bigger.

The fourth view. Proprietary is not just about patents. It’s systems, it’s processes, technology. It’s customer experiences, brand positioning, brand awareness, and brand advocacy. Carvana has, for years, been building a unique buying experience. Now they’re applying that experience to a market segment. Many competitors have it really modernized. It’s the same old, same old. Remember I said the way we buy cars today is the way we’ve always bought cars for decades. It’s successful.

That becomes a powerful competitive advantage. Really focus on that. What industry can you look at that has not changed in decades? What industry do you think needs to aim? Now let’s really talk about the risk because every strategy has weaknesses. Nothing’s perfect. You always have to take inventory. What are the strengths? What are the weaknesses? What’s the best that can happen? What’s the most likely thing that can happen? What’s the worst that can happen when you implement new strategies or create new businesses or new product lines?

This one has several risks. Risk number one. New cars are not used cars. Is it going to be the same philosophy? Is it going to be, are our buyers going to want the same experience as used car buyers want? That’s something you’d have to ask. This is where entrepreneurs often get into trouble because they do not think these things through. They assume success in one area. It’s just automatic translation to another, but it doesn’t work.

New car dealerships operate under franchise agreements. Manufacturers impose requirements. Facilities must meet standards. Processes must meet standards. Operation becomes more complicated. Carvana is moving into a heavily regulated environment that historically resists disruption. That’s why the industry has not moved because of some of the risks. Risk number two. They may lose their focus. One of the biggest reasons businesses fail is a lack of focus. Remember the entrepreneur?

Entrepreneurs get sidetracked like that. Focus is the number one thing that a business needs to survive and thrive. Business owners get excited. They chase opportunities. They really want to expand too quickly. They move into adjacent industries. That can be okay if you’ve done your research, if you’ve done your due diligence, and if you’ve built a solid foundation. You can move into concurrent industries. You cannot do it overnight. There’s a lot of due diligence, a lot of research, and it really is a necessity that you’ve already built a solid foundation.

If you try to align with a different industry and you have not built that solid foundation on the six Ps that I describe in Exit Rich, then you’re just creating more chaos, and neither business might survive that chaos. Suddenly, they’re managing complexity instead of creating value. That’s what I want you to think about. The question investors should ask is, does this strengthen Carvana’s core business, or does it distract management from what made them so successful? That’s a legitimate concern.

Again, goes back to those three questions. What business are you in? What’s your superpower? What business should you be in? Risk number three, consumers still want human interaction. Think about that. There’s nothing more frustrating than when you have an issue and you cannot contact a real person. Facebook, all these social media channels. There are so many different companies out there that you can never contact them.

I choose not to do business with people and businesses I cannot contact. Sometimes we do not have a choice. In social media, we do not have that choice. Human interaction is imperative. Here’s something that many technology companies forget. People buy emotionally. I’ve been talking about this for years, and I’ve been asking the question. Do people buy based on logic? What do people buy based on emotions?

People buy based on emotions, especially cars. They want to drive that car. They want to sit in that car. They want to feel themselves owning that car. That’s where salespeople are empowered because they can help create that experience. Cars are emotional purchases. Research suggests that many buyers still want to sit in the vehicle, just like I said. They want to test drive it. They want to ask questions. They really want to discuss financing, and they do want to meet with someone face to face. Not everyone wants a fully digital experience.

Balancing Operational Friction With Personal Relationships

We’re not quite there yet, folks. Technology often improves transactions, but it does not always replace relationships. That’s what you have to think about. Risk number four. Dealer pushback. Traditional dealerships are not going to sit quietly. These businesses have political influence, industry relationships, manufacturing relationships, and state-level protections. Whenever a disruptor enters a protected market, resistance follows. Resistance is going to follow anyway because nobody wants to change what they’re doing.

People are comfortable being where they are. I always say that in order to grow, you must get comfortable with being uncomfortable, or you will stay stagnant. You will never ever grow. You will have resistance. We’ve seen it with Uber and Airbnb. Tesla still gets a tremendous amount of resistance. Carvana should expect the same. They’re not going to be any different. The big lesson for business owners. Here’s what I find to be most interesting. This story really is not about cars. It’s not about cars at all. It’s about strategy.

It’s about asking yourself what business you are in, what your superpower is, and what business you should be in. The businesses that really create extraordinary value do three things exceptionally well. Number one, they remove friction. Every business owner should ask, what frustrates my customers? What wastes their time? What slows them down? The answers usually reveal opportunities. I will tell you, this is prevalent in every single industry.

There is so much friction trying to do business with banks, trying to do business sometimes with hotels, airlines, and social media. You name a company out there, there is friction. I always want to go and start fixing it, but it’s not that easy. Ask yourself what friction is in your business. What causes a buyer’s frustration? What causes a buyer to give you a bad review instead of a good one? Lots of friction in your business will not only cause your clients to disappear, but they’re also going to tell everybody else why they should not do business with you.

Number two, they build around customer experience. Most businesses focus on products. Great businesses focus on experiences. Customers really remember experiences. They remember how you make them feel. They remember that the buying experience was easy, simple, and uncomplicated. I always say a confused buyer is a buyer that never ever buys. Customers recommend experiences. That’s why Toys “R” Us died, is because they were not creating an experience.

Same thing with Disney stores. Remember there used to be a Disney store in every single mall? Those businesses fell because they were not providing experiences. Disney has stayed around for decades and decades because of the experience. Customers pay a premium price for experiences. Think about it. Carvana understands that. Carvana really understands that, and they really get that. Number three. They continue reinventing as the marketplace changes.

Consumer expectations change. Entrepreneurs want to keep doing the same thing the same way day over day. Customers want change. This is why Amazon is winning because they changed buyers’ buying habits. They changed the way we think. Before we jump in our car, we go to Amazon real quick and see if we can buy it there. Technology changes. The business that survives keeps evolving. The businesses that die keep defending yesterday’s model. This lesson applies to every single industry. I know it applies to yours.

Building Enterprise Value Through Operational Excellence

There’s not one industry that this does not apply to. The Exit Rich perspective. Let’s look at this. You all know how I think. Many of you have read my book. Let’s talk about the Exit Rich perspective, my perspective. Let’s look at this through the lens of what I call the Seiler Tucker 6Ps. Number one is people. You always have to ask yourself, as I’m sure Carvana is asking themselves, do they have the right leadership capable of managing this expansion? What got you here will not get you there. You have to look at your leadership team.

You have to look at your employees, and you have to ask yourself, are they able to maintain Carvana as it has been on this new platform? Do we need a new leadership team? You want to do a deep dive into the product. Can the customer experience transfer successfully into new car sales? I know Carvana’s done a lot of research, a lot of due diligence. The proof is in the pudding. We’ll see. You want to do the same thing and ask yourself that question. Processes.

Are their systems scalable enough for franchise operations? A lot of business owners come to me because my background is in franchise sales, franchise development, and franchise operations. I transitioned to mergers and acquisitions. They say, “Michelle, I should franchise my business.” Not every business is franchisable for multiple reasons. If you want to franchise your operations, you really have to ask yourself a bunch of questions.

Guess what? I’ll do an episode on just franchising. Proprietary. This may be the greatest strength. The technology. They have the technology, the brand, and the customer experience. Patrons. Will existing customers embrace the new model? Profits. Does that economic investment justify itself? Everybody seems to get stuck here. They’re like, “I’m going to grow this revenue stream. I’m going to acquire this business. I’m going to do this and this and this,” without really looking at it to see if it can support itself, if it’s going to be profitable.

Many entrepreneurs dive into opportunities without ever looking clearly at the investment side and the projections for the next 1 to 5 years. You have to make sure it’s a sound financial decision. Those are really the same questions buyers ask when evaluating acquisition targets. Those are also the same questions entrepreneurs should ask before entering new markets. Is Carvana brilliant or is it a huge risk? Are they brilliant? Possibly. Is it risky? Absolutely. The best strategies often are.

What I admire is that they’re really challenging assumptions. They’re asking why buying a car still works this way? That’s often where innovation begins. The biggest lesson for business owners is this. Do not confuse tradition with necessity. Do not confuse tradition with necessity. Just because something has already been done a certain way does not mean it should continue that way. At the same time, do not assume disruption alone creates value.

Disruption without execution creates chaos. Disruption combined with operational excellence really creates enterprise value. Ultimately, that’s what every entrepreneur should be building. A business that creates value, a business that scales. A sustainable business that can run without you. A business that can thrive with or without its founder. That’s how you build a company worth owning.  That’s how you exit rich. Until next time, thank you for tuning in to another episode of the show. Make sure you share this with your network. Remember, your network equals your net worth. Get this out and make sure you subscribe to the show. Thank you.

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