Monday, December 13, 2010/
After spotting a gap in the market, Chris Noone and his friend Claude Morello launched CarGrabber.com.au, a search engine for used cars.
Noone spoke to StartupSmart about how the venture came about and his ambitions for the business.
What gave you the idea for CarGrabber.com.au?
My friend Claude runs a transport and logistics business called FNet. He’s constantly buying vehicles for his delivery drivers and he found that he had to look at 10 different websites.
He found it very hard to find the ideal vehicle. We thought it would be great to have one place, like a search engine, where you could see these cars. Something in between Google and the car sites.
What are your backgrounds?
Claude’s background is in the music industry before he set up FNet. I’ve worked for Village Roadshow and then set up a games business for Vodafone. I was mobile director for NineMSN. I also worked for Gamer TV, a web and TV business that was a joint venture.
I had a start-up mentality in larger businesses. I set up a commercial cleaning company straight out of university too, so I’ve always had that entrepreneurial approach.
How long have you been working on the concept?
We had a soft launch on November 17 after operating in stealth mode for two years. We didn’t want others to know about the concept before we launched.
How did you test the idea?
We threw the idea around and realised there were no real competitors. There’s the car websites and Google and a massive gulf in between. Google doesn’t give good results for cars, but that’s what we do.
Everyone we spoke to liked the idea and said it was a winner.
How did you fund and develop the site?
It has been self-funded. We didn’t want to dilute our stake in the business so we haven’t looked for external investment. We may look for that in the future to help ramp things up.
We’ve had four people working on the site for two years. We had designers and developers building it from the ground up. It’s been good to start a site from fresh without legacy constraints.
We were able to ask ‘what is the best way to do this? Do we want to look like a search engine or a car site?’ A lot of people said that you have to look like Google, but then users have to go on to refine their searches so CarGrabber does that all at once.
We have enough capital to fund it ourselves for now and we haven’t cut corners. We’ve got good quality designers, and good hosting and servers. We’ve hired a PR agency.
What have been the main hurdles so far?
The main one is how to balance resources. We are constantly balancing elements, such as investment in design or the back-end.
Ultimately, the back-end is the most important thing. If you get that right, the design works on top of it. We did a ‘phase one’ to prove we could maintain the data. Once we proved that, we could start doing what we aimed to do.
Doesn’t CarSales.com.au have a stranglehold on the market?
If you’re in Sydney or Melbourne, you would consider CarSales to be a very big player. But around Australia, other sites have a good share. There are around 50 other car sites that wouldn’t exist if CarSales had a stranglehold on the market.
We have duplicated the car listings and that showed that even if you take out the big one or two players, the longer part of the tail is bigger.
How have you worked with the car sites?
The first contact we had with the car sites was on the day we launched. We needed to operate in stealth because we thought the answer would be ‘no’ beforehand. When we launched we could say ‘here are the benefits – we are driving customer to your site and not detracting from your site.’
We don’t present too much information on listings on the site – people have to click through to the car sites to see seller information, for example.
We don’t have duplicate URLs either – the customer can choose their preference so if they have an account with a certain site, that URL is shown.
We started with the big sites and worked down. Some of the sites didn’t want their cars to be searchable on CarGrabber, some were neutral and some were keen.
We met with CarSales and they saw themselves as the market leader and felt that our site was a chance for others to catch up, so they said no.
It’s an evolving conversation with the car sites. We’ve spoken to all of them now and the door is open.
How will you commercialise this site and actually make money from it?
The business model is now moving into monetisation. We want to monetise the traffic and can do that with ad-funded deals, but we’re not too prescriptive about that.
We aren’t going to charge users – that defeats the point. We are pursuing ideas and we will apply the right monetisation strategy when we have the optimum deal.
What are your ambitions for the site?
We will bring in cashflow in the next few months and then make a profit after that as the cost of operation isn’t that high. We’ll choose to put that money back into the market next year to grow the site’s traffic.
We want people to understand that they can search on the site for cars, just in the same way they make searches on Google. It’s likely we will have the majority of cars in the Australian market.
What’s your advice to other budding entrepreneurs?
You’ve got to be solving a problem, in whatever you do. If you are not doing that, it’s hard to find a need for your business.
You’ve also got to find people who are passionate about your proposition and think about it all the time, even when they are on the beach on the weekend. You want that rather than someone who will do coding for you between nine and five and then go home.