Carlypso (B): Pumping the Brakes

By Jim Ellis, Patricia Nakache, Lucy Montgomery
2021 | Case No. E546B | Length 15 pgs.

After graduating from Stanford Graduate School of Business, Nicholas Heinrichsen and Christopher Coleman launched Carlypso, a peer-to-peer marketplace for selling used cars. Carlypso hoped to disrupt the $400 billion used car market by making it easier and more convenient for both sellers and buyers. However, Carlypso ran into difficulty trying to scale its operations, and pivoted to a reverse auction model, where Carlypso worked with leasing and rental companies to make the inventory that was selling at non-public auctions available to its customers.

The new model showed some initial promise, but once again, scaling operations was a challenge. Carlypso worked with lenders who were lenders who were unable to finance subprime borrowers, which drastically reduced the size of the addressable market. After struggling to find product-market fit on their own, the founders of Carlypso sold the company to Carvana. After three years of working at Carvana, the pair is ready to try a new entrepreneurial endeavor.

Learning Objective

This case illustrates the highs and lows of the founder journey through the lens of investor updates. The learning objectives are:

  • 1. Analyze how founders communicate with investors.
  • 2. Provide a perspective on a entrepreneurial ‘failure’.
  • 3. Create criteria for launching another entrepreneurial venture after failure.
This material is available for download by current Stanford GSB students, faculty, and staff, as well as Stanford GSB alumni. For inquires, contact the Case Writing Office. Download