Losing his job 13 years ago devastated Dale Pollak. He was a self-described blind guy with limited options of what to do next. “What was I going to do, drive a taxi?”
Eventually shaking off the despair, he founded vAuto, a software company centered on a specific inventory-management product for car dealers. Moreover, he developed a philosophy to go with it. Some people say it has revolutionized how dealers sell cars. They regard Pollak as a guru of auto retailing.
The inventory-management system is designed to help dealerships select, price and sell vehicle stock based on marketplace supply-and-demand analytics. Now, vAuto is launching a new product, Stockwave. Pollak calls it another game-changer.
A former dealer, he has written books on his belief that to run a successful used-car operation in the price-transparent Internet age requires focusing more on volume
than fat per-vehicle gross profits. When it comes to inventory, it’s turn, baby, turn.
Pollak’s so-called “Velocity” philosophy is this: Hitting lots of doubles and singles rather than an occasional homer puts more runs on the board. It also prevents stranding a lot of vehicles on the lot because they are priced incorrectly or, because of local demand, shouldn’t have been there in the first place.
Pollak continues to head vAuto, but he sold the company in 2010 to the then-AutoTrader Group that included AutoTrader.com, Kelley Blue Book and Manheim auctions. In 2014, parent-company Cox created Cox Automotive. It put its 20 different automotive units under one roof. Sandy Schwartz, who had been Manheim’s president, runs it.
After that amalgamation, Pollak saw an opportunity to create Stockwave, which he says takes inventory management to a new level, because it requires less hands-on work by used-car managers when replenishing their pre-owned vehicle inventory.
Dealers set up parameters of the types of vehicles they want to stock. The software’s “spiders” crawl out to auctions, large and small, and send dealers what is available that suits their stated needs. Basically, the inventory comes to them so they don’t need to seek it out.
The software also analyzes individual dealer inventories, noting whether they have too few or too many of particular vehicles by segment based on tracked sales and market trends.
“Those imbalances are all over every dealer’s inventory,” Pollak says. “It’s astounding how sub-optimized their investment capital is in used-car inventory.”
In a WardsAuto Q&A, he describes how Stockwave originated from (among other things) a frustration, how it was developed, some dark days and how a blind person creates software products.
WardsAuto: Regarding those inventory imbalances, wouldn’t used-car managers empirically know if they have too many of those and too few of these?
Pollak: They like “those.” I’ve lived in this world. I’ll say to a used-car manager, “Why do you have so many of those?” and he’ll say, “Oh, they’re good sellers.” I’ll say, “OK, tell me how many you sold in the last 45 days?” He’ll say, “A lot.”
Based on our data, I’ll say, “Could I tell you that you’ve only sold two in that category?” So often, they are just working on gut instinct. Some are better than others, but most are just guessing when it comes to which vehicles to stock.
WardsAuto: Wasn’t vAuto’s original inventory-management software supposed to have solved that problem?
Pollak: You want to know something? What is truly the origin of Stockwave is my frustration that they aren’t using vAuto. I said, “Darn it, I’m going to do it for them.”
With a single click, I’m going to show you every vehicle you need in rank order based on any criteria you want, be it profit, price, geographical closeness, condition, mileage.
You don’t have to search for them. I’m going to serve it to you on a silver platter. If you tell me all you ever want to stock are former police cars that are red and with over 200,000 miles on the odometer, fine. Set your parameters accordingly.
WardsAuto: And the vehicles are coming from various sources?
Pollak: That raises an important point. When I conceived of this product, I went to Janet Barnard, president of Manheim North America and ultimately Sandy Schwartz, and said, “This is my vision to build this product, but the only way I’ll build it is if the recommendations we make to dealers do not in any way, shape or form favor vehicles we sell at Manheim.”
They went for it. You know why? They understand that in today’s business environment the only way you are a leader in this industry is if you put the interest of your clients before your own.
There will always be cars out there that may be better suited for a dealer than one Manheim is selling. What are we going to do? Hide those cars? Deny they’re out there? You can’t do business that way. Allowing our competitors to sell more cars is a small cost of doing business today. To do otherwise is a greater cost.
WardsAuto: Where are you getting the wholesale inventory then?
Pollak: VAuto has relationships with all the big players, such as Manheim, Adesa and Smart Auction, and most of the small ones. So we’re taking the current inventory feeds that we use at vAuto and dual purposing it. But you don’t have to be a vAuto user to use Stockwave.
WardsAuto: Could you potentially include private-party vehicles that are for sale?
Pollak: We will.
WardsAuto: You mentioned a lot of dealers weren’t using the vAuto inventory-management software. But I know many dealers who are sold on the idea of using marketplace analytics to stock and sell cars.
Pollak: Let me put a finer point on what you are suggesting. A lot of dealers use vAuto. It has pricing, appraising and stocking modules. The first two are used extensively by the vast majority of clients.
But when you get to the stocking module, the usage rate drops off dramatically. That portion of it was really frustrating to me. That’s the corner of the house not being utilized much.
Creating Magic, Shaking Off Despair
WardsAuto: Just to be clear, when you went to Sandy and said you were interested in developing this system, do you actually develop it. Do you write code?
Pollak: I’m on odd duck on this thing. I can’t see. My history is that I grew up in a car dealer family. My dad was a car dealer. I was a car dealer. In the late 1990s, I got involved in a digital dealer-management company called Digital Motor Works. We ultimately sold it to ADP in 2002. I am not a technologist, but I understand the technology from those years.
I have a team in Austin, TX, about 15 guys I’ve worked with for 20 years. I communicate what I regard as a problem and solution. They listen, ask questions and it seems almost magical that they go off and come back with a prototype. They explain to me how it looks and works.
WardsAuto: You must be a great communicator to be able to describe to IT people what you want and avoid the hang ups that can be involved in developing something like this.
Pollak: I appreciate your curiosity on this topic. Most people don’t ask about it. Maybe I am an OK communicator, but it’s just a certain magic in that these guys get me and I get them.
WardsAuto: Did you get together and say, “Let’s create some magic” or did it just happen?
Pollak: The process has matured. I feel like I am the luckiest blind guy in the world. Somehow, some way, I’ve got these guys that I can just communicate my vision to and they turn it into software.
Our agreement when we sold Digital Motor Works was that we’d stay there. My agreement was to stay for three years. Frankly, I would have stayed forever.
But after a year they fired me. Not their fault, my fault. I had never worked for anybody before except for my dad, myself and this small digital company. You get into a big company, and corporate politics require that you watch what you say and how you say it. I never had that ability.
On top of that, I’m blind. So, we’d be at a conference table like this and someone at the other end would say something I thought was ridiculously stupid, and I’d say so, not realizing it was the president of the division. It took about a year before they very nicely showed me the door. They sent me home with two years pay.
WardsAuto: That doesn’t sound too bad.
Pollak: For most people, that’s pretty good. For me, as a blind guy, it was devastating. I can’t readily get a job. My father and I by then had sold our dealership. Now, I’m unemployed.
I sat on my couch really depressed for three months, and then had this vAuto idea. It was a good idea. But lots of people have good ideas. How am I going to make it come about? Those guys who made my magic now are ADP employees.
This was 2003. My non-compete provision had worn off by then. I remortgaged my house, raised money and went to those guys and said, “Would you come back to work for me?” They still were relatively young guys, but some were by then married, a couple had young kids. And I’m asking them to leave the security of a corporate job to go to work for me because I had an idea. But you know something? Those guys came.
WardsAuto: They must have had a lot of faith in you.
Pollak: That’s why I feel blessed.