Soapless

Welcome to Soapless. In this first post I explain how my first venture failed but is now worth $100 billion — and why my best startup will never be worth anything.

I'm on the phone with a woman at the DMV in Richmond, Virginia. Working hard to keep my voice flat, I pull out my personal credit card and read the numbers. Yes, I would be happy to pay the shipping fee as well. After hanging up, I do a small lap around my tiny box of an office next to the cafeteria on the 36th floor of the GM building in New York City.

It was 1995. I was just starting my second year as a "senior associate" at Sanford Bernstein — the nerdiest sell-side research firm on Wall Street — and I had just purchased all the transaction records from the very first CarMax store. A week earlier, my boss had mused: "The CEO of Circuit City has been hinting at some great successes with their CarMax experiment. Why don't you see what you can find?" When the box of paper receipts arrived, I sat at my computer and typed the data in myself, not leaving my desk until I had it all: sales, margins, average ticket, product mix. The "black book" that followed was the first-ever Wall Street report on CarMax. Hedge funds were still calling me for meetings a year later when I had already started business school.

Fast forward five years. I am sitting in a conference room in downtown San Francisco, at a board meeting for the used car e-commerce company I have co-founded. Around the table are some of the most successful early-stage consumer venture capitalists of all time — the first investors in Starbucks, Whole Foods, Costco, Office Depot, PetSmart, Ulta Beauty, Dick's Sporting Goods. Everyone is excited. Our revenue run rate is approaching $100 million, we've proven the model works, and we're approaching cash flow breakeven. Now is the time to triple down, they all agree. Open two more used car factories. Expand showrooms to every major metro in the US. Raise the money and own the country. In five minutes the deal is done.

By spring 2001, we had filed to go public. Our bi-weekly payroll had ballooned to $1.7 million and we were no longer anywhere near cash flow breakeven. When the internet bubble burst, we pulled the IPO because suddenly no one wanted to fund a .com business model. Not one of our super-successful investors stepped in to help. iMotors was over.

A few years later, on a beautiful fall afternoon, my son Levi and I were walking through the woods near our house just north of New York City. Out of nowhere — as if continuing a running conversation in his own head — he said: "Papa, I know I will be the worst on the team, but will you please let me play soccer?"

My wife Erica and I had been avoiding that question. Just after Levi was born, we discovered he had suffered a stroke in utero. His diagnosis was hemiparesis — a form of cerebral palsy affecting his entire right side. Soccer is a big deal for six-year-olds in small suburban towns, and we had hoped to spare him yet another experience of feeling different.

Of course we signed him up and he wasn't entirely the worst kid on the team. But over time, as the talented kids grew stronger and the untalented ones found other hobbies, he was struggling to keep up. One morning I came across a headline about Paralympian soccer players with cerebral palsy. Unlike many other Paralympic sports that cater to amputees or other physical challenges, Paralympic soccer is exclusively for athletes with neurological disabilities — stroke, traumatic brain injury, cerebral palsy. I thought: if the US has a Paralympic soccer team, surely there must be recruiting camps and feeder programs for kids who qualify. Levi would love that.

There weren't any. Not in the US.

Four months later, twelve kids shuffled awkwardly into an indoor soccer facility in Clifton, New Jersey. They ranged from six to sixteen, but they all shared one thing. Most kids with hemiparesis are cognitively neurotypical, so they're mainstreamed with able-bodied kids in school. They almost never interact with other kids like themselves — living their entire lives as a community of one. Standing in the anteroom overlooking the pitch, they looked each other up and down. For many, it was the first time they were meeting someone whose hand looked like theirs, who walked with the same limp, who needed a parent to open their water bottle.

The kids smiled. The parents cried.

Almost a decade in, CP Soccer serves over 500 kids across the US through nearly 20 regional teams. We host sleepaway camps, field teams to compete against other countries, and our kids make up 20% of the current US Paralympic National Team squads. It is a nonprofit. It is also the best business I've ever built.

I've built, scaled or turned around six businesses over three decades — some that worked, a few that didn't, one that was pulled out from under me and is now worth a hundred billion dollars. Along the way I've learned that the most important skill an entrepreneur develops isn't fundraising or strategy or product development. It's the ability to recognize what is actually happening versus what you hoped would happen — and to stay in the game long enough for those two things to converge. That's mostly what I write about here. The current story is Sans Savon, a company my wife Erica and I started because we couldn't stop asking why everyone uses soap when soap is the problem. But the through-line is everything that came before it.

This is not a newsletter about success. It's about figuring it out — the decisions that looked right before they didn't, the ones that looked wrong before they came through. In real time, for as long as I can.

Postscript: A little over a decade after iMotors collapsed, two fellow Stanford grads resurrected the identical business model and brought it back to life. It went public in 2017. It is called Carvana and has been valued as high as $100 billion. Timing is everything. So is knowing when the smartest people in the room are wrong.