Start-Up: Refinancing Auto Loans Online • Kevin Bennett

CEO of fintech startup Caribou Kevin Bennett joins Niki in the studio to lament the ‘double marginalizing experience’ of buying a car – being treated like crap and paying for the privilege.. Luckily, his D.C-based company is here to help. 

"We do think that the period and the time and the days of cars being reasonably priced is probably over." -Kevin Bennett

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Intro:

[music plays]

Niki:  I’m Niki Christoff and welcome to Tech’ed Up. 

This week I’m in the studio with Kevin Bennett, the CEO of a D.C.-based tech start-up called Caribou that is developing software to help people refinance their auto loans. We talk about the ‘double marginalizing experience’ of buying a car – being treated like crap and paying for the privilege.  

I’m so enthusiastic about Caribou that this episode borders on toxic positivity. {chuckles] You would almost think I’m an investor - which I’m not. I just like this company, its team, and its mission.

Transcript:

Niki: Today in the studio, we have Kevin Bennett, CEO of a FinTech firm called Caribou. Welcome to Tech’ed Up.

Kevin: Thanks, Niki. Thrilled to be here. 

Niki: Thank you for coming on. I'm especially grateful that you're coming on because we were on a zoom once and behind you, it was a large animal with antlers. And I said, “Is that an elk?”

Kevin: [laughs] Yeah! It was, it was actually a caribou and seasonally appropriate- it was the winter. Some folks may not know a caribou is also a reindeer. So, the holidays are a big deal for us. We're really excited. 

Niki: [interrupts] It was a real Jessica Simpson moment for me. I was like, wow, of course it's a caribou! That's literally the name of the company. It's unbelievable! So I'm really grateful [laughing] you decided to still come on the show.

Okay, so I want to talk about what Caribou is and what problem you're trying to solve. So essentially, you are a FinTech firm that has built a software platform that is going to help people save money on their car loans. Is that right? 

Kevin: Absolutely. I mean, I think one of the challenges people have is they think of their car as an asset. It's, it's the largest or second largest asset most people own, depending on whether they own a home. Yet they often don't know how much they're paying for their car, what that interest rate is, what they're paying for insurance.

People are busy, their lives are complicated. It's not stuff they think about every day. But effectively, there's all this money that they are losing because their finances around the car aren't optimized and we're helping to optimize those finances, help people improve their financial relationship with their car, and save people money. Thousands and thousands of dollars. It's real money! 

Niki: Because people don't think about refinancing their car. 

Kevin: Absolutely! No, they don't. I mean, refinancing is ubiquitous when people think about refinancing their homes, so everyone knows, oh, you buy a house at some point, you're gonna refinance it. Almost no one thinks that way about their cars. Most people don't even know it’s a possibility.

So, we're trying to raise awareness to people that this is an area of their life that can really, y’ know, get money back in their pockets and can be really helpful with their finances. 

Niki: So, let's go up 30,000 feet to the experience of buying a car. 

Kevin: It's an experience. [sarcastically]

Niki: It is! 

Kevin: You can tell me. So, what was it like for you when you bought a car and when was the last time you did it?

Niki: The last time I bought a car and I will say, I know about cars and I,  I know-  I bought a house  no problem. I cried when I bought a car, [Kevin:  Yep] I left the dealership and I cried because I was so frustrated, because I ended up feeling like the only way I was going to be able to leave the dealership [chuckles] was if I purchased something I didn't want, which was a tire package, that cost $3,000.

And I just literally felt like a hostage. And I felt like I was being sold things I didn't need. To be honest, I don't even know exactly what I paid, to your point. They're making you wait to fill out paperwork. And, and, I just said like, I'll sign it, whatever I need to buy to get out of here with this, the most expensive thing I'm buying other than my house, I'll do it. And then I cried on the way home! 

Kevin: Yeah. Unfortunately, that is a common experience. I think a lot of folks think, “Oh, I'm just going to go. I'm gonna pick out a car. I'm gonna buy it. Drive off the lot and be happy and go home.”  And it shouldn't take that long. It ends up becoming this marathon experience where you, you do the fun part, you decide the kind of car you want, and then it becomes this, y’know: walk you over to the F&I office. And that's actually where dealers make all of their money in the transaction section, not the cars, it’s F&I. 

Niki:  [interrupts] So wait, so define that.

Kevin:  Finance and insurance. Yep. That's a great question. And so, the reality is often a car is more expensive if you pay cash, which seems insane. It seems like folks should want your money, but it's because they're making the money on the financing and insurance at, at pretty high markups. And so, the reality is, most people, just, y’know, it's capitulation.

They just say, “I give up, I just want- let me go with the car, let me go home. That's really what I want.”  And, unfortunately, that's far too often the experience and I should say, it's not always the experience. It's not like every industry that there are great actors, but far too often, it is the experience. And the reality is that most people usually upwards of 80% of people drive off the lot overpaying on their car, on their finances, their insurance, and they could save money. 

And so, what we do is try and help people save money. And, y’know, we, we've talked a bit before, but it's, you know, kind of more academic terms and parlance. It's a double marginalized experience often, which is:  you are, you often have a bad experience. You're treated poorly and you're paying extra for it. 

And so, we're trying to kind of help fix that a little bit to the extent we can, y’know, once you're, kind of have that car and help optimize your finances, help you save money, help you on financing, on insurance and, and that's, y’know, an average, that's a hundred dollars a month or more on your car payment alone, much less than thousands of dollars on those insurance products.

We can get that money back to you because often, you have that stack of paper, you're in that office, you just want to sign and go. You don't read that paper. You don't often know what you're buying. You throw it in the glove compartment and you may never think about it again. And so, we say, “Hey, why don't we take that out of your glove compartment? Let us put something, y’know, put a couple thousand dollars back in your pocket.

Niki: So, before we get to how Caribou works, how the platform works, I want to talk just for a minute about it's really timely because every single day there are headlines about cars, car prices, the chip shortage. So- What is happening with consumers, trying to buy cars today? And then we'll talk through how you guys are going to help a little bit with this.

Kevin: It's a really tough time. I mean, consumers are feeling squeezed. Everything in their lives is getting more expensive on what feels like a daily basis. It is gas. It is cars. It is almost everything. But cars are driving inflation right now. And, and you've seen this over the course, actually over a decade, which is-  there were articles coming out in NPR, in the Wall Street Journal, et cetera, in 2019, talking about car prices going up. So, this is a trend that has been happening for, for quite some time. Auto debt as a category is $1.4 trillion right now. So it is grown and 

Niki:  [interrupts] Wait, so you just said auto debt as a category is $1.4 trillion?

Kevin: Correct! [Niki: Ok] It's massive. And so, it's, it's massive to the economy. It's a weight on the economy. It's a weight on consumers and their wallets. And so, it's a real issue. And, obviously, as I mentioned, it's been increasing over time and so monthly payments have gone up, the terms on those loans get longer, and it gets to be a real tax for consumers.

Take COVID, and it has just been jet fuel onto the problem. And so, you've seen the price of a new car is now above $47,000 on average. Price of a used car is now above $28,000 on average. It's gone up 40 plus percent in the last year. You know, it's a supply and demand problem. So, the supply chain from COVID chip shortages. What that means is, they're just fewer cars to buy and more people want to buy them.  Y’know, used to be you could drive up to a lot and buy a car. Now you can drive out to a lot, pay to place an order, and maybe in 12 months you'll get a car.  And so, they're just massive delays in manufacturing, all of these problems, that's driving the cost of cars up. And now, most people are paying above sticker price significantly for vehicles.

And, we do think over time as the supply chain works itself out, that will moderate a bit. But we do think that the period and the time and the days of cars being reasonably priced is probably over. We don't think we're ever going back to the prices of 2016-17, 18, 19. So we think this is kind of the future, unfortunately, and it is, it is a big asset. That just means they're more, it's, it's that much more important that we can help save people money because it is real, real dollars that we're saving them. 

Niki: Right. So people are signing larger loans for longer terms, which means their monthly payments are going to go from maybe a couple hundred bucks to 500 bucks. And so, tell me about Caribou. What do you do to help people who have gone in paid, probably too much for this really expensive asset, and how can they save money?  And, what do you guys do? 

Kevin: That's a really great question. So one, we help bring awareness to refinance. We help people understand, “Hey, we can save you money. You can save money on your loan.” We've partnered with great and trusted lenders, community banks, credit unions, other financial institutions. And we have them all integrated into our digital platform. 

First of all, most people aren't aware that they can refinance their car, even the people who are aware- it traditionally is a very time-intensive process and people don't wake up everyday thinking “I can't wait to shop out, you know, shop my loan today”.  [Niki: laughs] Right? It's not something that's on the top of everyone's list and something they're excited to do. Same thing with their auto insurance. And we can talk about that later. We help people save money in their auto insurance… And, and so what we do is, we make it easy. 

Traditionally, not only was it kind of difficult and you'd have to check different lenders’ websites, and you go to their site and they'd say, “Go to a bank branch” or something like that. But, so you'd have bank branches, you'd have to go to the DMV because you have to change the title over. I mean, it's incredibly painful. So, all of a sudden, yes, I can save money, but it’s just, like, pain on pain on pain and friction and just, no, thanks. Right?  And so folks often, there's just too many barriers in the process. We're doing, we remove the barriers, made it really easy, made it a 21st century experience, something you can do from your couch.

So now, you go to gocaribou.com. You can check your rate in seconds, so you can find out what type of offers you'd qualify for. We do not take your social. We don't ding your credit. It's easy. It's frictionless. You can just see. If you like the offers you're seeing, within 60 seconds, you can get a firm offer of credit, then you can use all of technology, your cell phone, your computer, whatever  you'd like, to take a photo of your license, get the steps and all the docs you need to kind of refinance. And we make it easy and use technology. And we also aggregate all of our lenders up and we only show you the best offer. The one we'll save you the most money.

You skip the bank branch, you skip the DMV. When, in a couple days to a week or two, you've gone through the entire process, we take care of the heavy lifting on our end and you're saving money, on average of a hundred dollars a month.

Niki: So, this is- when we first met. I actually had never heard of the idea of refinancing an auto loan. I had just gone through the process, which was excruciating, of refinancing my mortgage. And that was excruciating because I have sort of a complicated, it's a long story, but, I ended up with a really great local credit union who was awesome to work with. But it never even occurred to me that I could save a hundred bucks a month! 

But you’re right, am I going to go to the DMV to save a hundred bucks a month? I mean, probably not because it's just pain on pain on pain. So, what you guys are doing is essentially the backend. It's an app. People can go-  Is it an app? Or they go just to the website?

Kevin: It’s a web app. So, it's on the web. It's mobile optimized. You can do it on your phone. You can do it on your computer laptop. 

Niki: Okay, cool. So- People!  You can refinance your auto loan. If you're buying a car anytime and getting it in the next 12 months, you’re probably gonna overpay. So you might think about trying to save money.

The next thing I want to talk about is one of the ulterior motives of this podcast is to sort of highlight and humanize people who live in Washington, who work in tech.  Because we have a really cool, vibrant community. And people don't always think about Washington as a place where tech is. So, you're a CEO. You've been at startups in this town. Talk a little bit about that.

Kevin: Yes!  I love that you do this because it's so important and so exciting. And, I, I'm a Washingtonian and I've spent most of my life here. It’s the fifth startup in the DC area I've worked at, and there's so much talent here. And It is such a great town and it's, it's, livable. And we get a lot of folks who were not just living here before, but moving to DC in the tech community. And so it's a balance. You are basically importing great talent, but you also have great talent here. We’ve, y’know talked about this before, but I, y’know, I was like, “IPOs, and there were great tech companies that have been very successful.

They're also just great companies like Uber, in general they great tech talent here as well, and great business talent and, and a lot of the R&D from the government. Lots of great talent here. It's a great place to be. And there is a really great tech community here. And we also have offices in DC, Denver, and Austin, Texas, and actually those communities are very similar. And so we have that type of vibrant ecosystem, the same way a Denver does or an Austin does.

Niki:  Well, that's how we got connected is, through Uber, a lot of Uber people have ended up at Caribou and I don't know that most people know this, but the entire operations team of Uber was run out of Washington, D.C. by a woman named Rachel Holt.

And so, there are operators in this town who have done sort of hard things that include complicated regulatory issues and sorting out high growth startups and sort of being steady during that high growth phase. And so, there's a lot of those people at Caribou. Which is interesting and exciting for me and part of why I'm pulling for you guys. But tell me about hiring during the time of the great worker shortage, the Great Resignation, what's it been like for you guys? 

Kevin:  It’s actually been great for us and, and I will also say, shout out to Rachel Holt, who was an early investor in us [Niki: Oh, I didn’t know that!] and on our board and, and is, is phenomenal. And, um, and we just promoted Eric Stradley to President and he was at Uber for six years. So, so great, great DNA shared between the two companies.

So, we have grown very aggressively. I mean our, our, revenue has grown, grown, exponentially over the last few years. Our headcount has grown exponentially, to put it in context:  when the pandemic started, we had 40 people on the team. We now have roughly 500 people on the team. So it's, it's been wild hiring about a person a day.

And one of the things that has been [long pause] really helpful for us is our culture.  For most people and, and most talent and tech or other industries today, they obviously want to be compensated, but they also want to feel like they are part of something that their work has, meaning, that there is a mission behind what they're doing. That there are values, that they are part of a community, not just a company, right? That they're, they are seen as human beings that they're seen as, as valuable. And I'm a big believer in conscious capitalism, stakeholder theory, and this kind of view that the future of capitalism is a future where, we are [pause] humanists where we really see and value people as individuals.

And that, I think, shines through in our company and our culture and our values. And it's really important we see ourselves as mission driven and that mission is helping to save consumers money and create a fairer financial system. But what's also values-led and we have values and those values are core to who we are. And they are values like: see people as people, take care of each other, get better every day, y’know, move quickly and bravely. Y’know, those types of values resonate-

Niki: [interrupts] Oh wait!  Move quickly and bravely, not move quickly and break things?

Kevin: That is, exactly!! There, there is a purposeful distinction between those two things and, and for us, startups are exciting. They are, they are vibrant. It is a wild ride and I think you do have to move quickly and, and we wanted to recognize the real courage and bravery of all of the people, and the work that they do and the challenges we tackle every day for consumers to, to help kind of make this possible. And I'm just in awe of the team that, that we have built  it is incredible. I'm fortunate to be a part of it. And I think we've been able to attract really incredible talent because of the mission, because of the values, because of the culture. 

Niki:  FinTech is really at an interesting moment where it is using software to create an experience that makes more sense, especially for younger people who, if you're in your twenties, you're not going to go to a dealer.  They're just not going to tolerate some of that humiliation [chuckles] and drag on their time to purchase one of the most expensive things. So, I think the idea that you can sit on your couch, you can do the backend stuff to help people save money. A hundred bucks a month over seven years or whatever the length of someone's auto loan is, is significant.

And I am absolutely here to be, like, hyping, a D.C. startup. And as the team is growing, I mean, I think you're right it takes bravery and it takes real steadiness to get through these moments where going from 40 people to 500 is so hard and then the next year is going to be even more challenging in that way. But it's also super exciting.. 

Kevin: It's a lot of fun and we have a lot of fun together. I think that is something about the dynamic and the team of, we all really enjoy each other and we have a great time together. And so, we, we aspire to be good people who do great work together and we were having a blast and, and you’re right- I mean, folks save $5- $10,000 when you add it all up. It is, it is, an incredible amount of money we can save for people and it really, iIt changes people's lives. And then the stories that our customers tell us, is amazing. And even on the auto insurance side, we had some calls the other day and thank us because we saved them $500 a month on their auto insurance alone! Just incredible stories. 

Niki: This is a moment in time when people need to watch their pocket books, because they're going to be paying more for absolutely everything. They shouldn't be overpaying for a car.

Kevin: Absolutely!

Niki: Thank you so much for coming on.

Kevin: Niki. This is great. Thank you so much.

Outro:

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Niki:  Next week our guest is Chelsea Kohler who will be talking about telehealth, GenZ, and the future of virtual healthcare. Be sure to follow Tech’ed Up wherever you get your podcasts.