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.
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