Carlypso (B): Pumping the Brakes
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.
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.