In some respects, Cazoo has been incredibly lucky. Its proposition of selling used cars online is particularly well suited for a socially distant world. But the company’s ability to weather the volatility of the pandemic has little to do with luck. Since its inception, Cazoo has been dogmatic about leveraging agile technologies and a “fast driving” company culture that have made responsiveness and resilience to change core capabilities. In this session, you will learn from CTO Jonathan Howell about how the company executed on an incredibly fast launch to market and how they are applying the same resilience through the Covid crisis.
How One of Europe’s Most Exciting Startups Consistently Responds to Change
Katie: Hello, and welcome to FWD20 The Age of Resilience. My name is Katie Williams and I'm a senior strategist at Kin + Carta and since March I have been working with Cazoo as a product manager. I am joined today by Cazoo's Chief Technology Officer, Jonathan Howell, who prior to joining Cazoo was CTO at MADE.com and has also been in leadership roles at Huddle.com, lastminute.com and IBM. So, quite an impressive track record and we are very grateful to have you with us today, Jonathan.
Jonathan: Nice to be with you.
Katie: So today, Jonathan and I will be chatting at a metaphorical fireside about what has enabled Cazoo to be so resilient and agile, not just in the past two months of this COVID crisis, but also in the past year of their quite ambitious launch to market. Did I miss anything in your intro, Jonathan, or shall we just start?
Jonathan: We're good to go
Katie: Cool. So to start, you have previously described what Cazoo does is “so simple that it's almost boring.” So I would like to give you the opportunity to in as many or as few words as you like to tell us what it is that Cazoo does.
Jonathan: So what Cazoo is trying to do is to make buying a car, as simple as buying anything else online. So as simple as shopping on Amazon or your weekly shop but purchasing a car now. Traditionally, car buying has been a very fraught and complicated process. It's trips to dealerships, driving around the country to see various different cars and it's also a very stressful experience. People experience high pressure sales, and generally an experience that lacks trust and there's no reason it should be like that. Buying a new car should be a very exciting and enjoyable experience and a great moment. So our objective is to make it just as simple as buying anything else online like shopping on Amazon, you can do the whole thing online. Then a few days later the car arrives at your house and you have seven days to test drive it in the comfort of your own home in your own drive and if it's not perfect to your requirements, we'll take it back, no questions asked. Of course, the proposition to the customer is super simple and like many things, to make the simple complex is easy, to make the complex simple is much more complicated. So behind the scenes, there are many, many moving parts of the business of Cazoo. We're not a marketplace. We're not a listing site like AutoTrader. We are acquiring, refurbishing to our own high standards, and prepping, photographing, and listing our own cars. So there is a huge logistics and operations set up behind the scenes. So whilst the proposition to the customer might be simple, behind the scenes, it's not quite as simple to get off the ground.
Katie: So that's interesting because if it's so simple to a customer and yet a lot of work for you, it seems, it's interesting to me that Cazoo has managed to raise 180 million in venture capital, including 100 million this past March, when most VCs in the world were holding their breath. So what is it about giving something so simple to customers that's so complex, kind of in the background, that's so compelling to investors, especially in these times.
Jonathan: So obviously, the things that made it compelling last year are still compelling this year, if not more so and they are primarily that the used car business is a massive industry. It's a 50 billion pound industry in the UK alone. And yet, it has been largely unchanged by the internet and e-commerce revolution up to this point. So we've seen various different items shifted, started out with buying music, and then books and CDs. Now just about anything you want to buy has been available through an online retailer. But up to this point, cars are something that has so far been left behind by that. So, I think investors are slightly surprised they missed this huge retail segment, when they see the proposition of Cazoo. It's a massively fragmented market, so no one has a significant market share. And generally, as I said before, the customer's experience of buying a car is generally so poor that improving on it should be straightforward. So, the proposition is right, the market is right and I think in addition, the founder and the leadership is right. So Alex Chesterman is obviously a very successful serial entrepreneur having founded LoveFilm and Zoopla. So he clearly has a track record of large scale success and every expectation is that this won't be any less successful than the previous ones. So I think that's what the combination of the market opportunity and the founder and team he was building around him made it attractive last year and during the COVID-19 crisis, I think those factors apply even more than they did previously. So what we're seeing already is an acceleration of the move of the car industry online and obviously in the last few weeks and months, we paused. We paused deliveries briefly at the beginning while we made some changes to our processes to make sure we could do this safely, and to cope with some other operational issues. But recently, there have been plenty of people who need a car to get to work, critical workers and key workers who if they need a car, then buying from us is one of their only options at the moment. Obviously, that is starting to change again. But I think investors see that the groundwork we laid last year is still in great stead for an online only business and the current situation only accelerates the move of the general markets to being online.
Katie: So I wanted to ask you about the groundwork that you laid actually, because one of the things that I thought was so impressive about Cazoo's story when I first heard about the opportunity of joining the project is just how quickly it managed to get off the ground. So it took a year from when the company started to launching to the entire country, with the bulk of the technical work being done in about five months, which, as someone who has glimpsed in the past few months at some of the complexity that goes into moving a car anywhere in the country at the click of a button or moving 50 cars at the click of 50 buttons in one day, it's just astonishing that that happened so quickly. So I was hoping that you could comment on two things really. One, what that experience of that pace was like for you personally, as a leader, as a CTO, if you've ever experienced anything like that before, and then also just what you think made it possible. What was the enabling tools or ways of working that you found to be helpful.
Jonathan: Yes. Well, first of all, you're right. It was incredibly fast. It was 12 months to the day from Alex announcing the very first round of funding with no employees in place, to launching a fully online, retailing experience for the entire country. As you say, I was there for that. The team was built during that time as well as the craft being built and I have worked in all different size companies from mid-size growth companies to big corporates to small start up companies of my time, and I thoroughly enjoyed the high-pace and fast moving nature of start-up and growth-based companies. But Cazoo is growing at a rate that I have not experienced before. It's faster than anything even the start-up companies than I've been involved before.
Katie: Is it still enjoyable, that's the other question?
Jonathan: It's definitely still enjoyable, and I think there is one main thing that makes that possible. I mean there is a series of things that made that possible. One of the key things is the level of funding that we've had from the very beginning. So seed round funding for Cazoo was 30 million pounds and you don't normally get 30 million pounds based on your initial pitch to seed funding. But that meant we were well funded enough to invest where we needed to go as fast as possible. So I think that level of funding meant that resourcing wasn't necessarily a constraint as long as it presented value and got us to the end goal faster. That's the first thing. The second thing is, it's a green field site. We are building everything from scratch. We've been able to make decisions to get there as fast as possible. We could choose to make technology decisions which were the right decisions to make in 2019 to enable us to move faster. So one of the key things we decided earlier on was we were going to adopt AWS Lambda, 100% serverless, and that was a cutting-edge decision that 12 or 15 months ago, did enable us to not to worry about infrastructure as our infrastructure is largely Amazon's problem. That's one of the things that enables us to move quickly. The other thing is, obviously, partly due to the funding and backing we had, we were able to partner with agencies like Kin + Carta to work while we built up our in-permanent team, and have a team working alongside as part of a joint team. So we were able to build a big team much more quickly than if we had to recruit everyone from day one. So I think those are the things that sped it up and, I mean, frankly, grit and determination from the team themselves and clearly last year, it was fast paced but very exciting to be building up to the big launch venue proposition in the market, so it's also down to the determination and commitment of the teams that are involved.
Katie: Yeah, I can say that from some of the Kin + Carta colleagues that I know who were there in those early days of the blistering pace and getting everything ready for launch. They do speak, kind of, starry-eyed about those times. So I think it was exciting for everyone involved to be a part of that.
Jonathan: Yeah, definitely.
Katie: So, fast forwarding from those days to today, you mentioned that some of the things such as the infrastructure, culture, ways of working, vision and purpose, were so critical to getting that off the ground, and that it seems like those same things have translated really well to help the company, navigate this current situation. But even with all those things in place, of course there were still many challenges presented by the crisis. I mean, I joined in March just before lockdown happened, so I got to witness some of the early effects of initially sales decline, and I know deliveries were temporarily paused, there was a key logistics partner that suspended operations completely, so how would you compare that, or this current situation or even maybe the earlier parts of it, to the pressure or the sense of needing to make big important decisions quickly to those earlier days, as a leader, and then how do you think it happened throughout the rest of the company?
Jonathan: Yes so, I mean, certainly it wasn't without its challenges. And as you say, lockdown happened and overnight, we went from everyone being at the office to everyone being at home. And again, I think the story all along is the work we did last year set the ground work very well for us to be able to adapt and so just take working from home for example. As a company that built offices for structure from scratch last year, we had nothing on premise, everything was in the cloud, there was no VPN, no networking infrastructure to worry about, so literally overnight, we could go from everyone from the office to everyone at home. That included customer service agents, who, having worked in other companies in the past, the telephony infrastructure was one of the things that was very difficult to move. But literally, everyone went home with their laptops one day, opened up the next day, connected the headsets, and they were connected. I think we've learned a lot. We've been very adaptable and we've learned a lot about how to cope with our distance. And, as many people have done, the challenge of not being in the same place and the slower communication, or the lack of direct communication that gives, has definitely given some challenges. I think we took steps early on to make sure we had the right communication in place, particularly from a leadership point of view, so that people would know what was going on, but also taking steps in trying to reproduce the more informal chats that happen in the office, and the company aspect, because it can be very lonely sitting at home working at home all day. You mentioned logistical challenges. As you say, we paused delivery for three weeks while we figured out how to do that safely and I think we've been very adaptable. We recruited a great set of delivery specialists who understood our customer-centric ethos, and were fantastic with our customers. We adapted very quickly the handing over a car to a customer that was safe and met social distancing guidelines, and took other sanitation steps in the process. As you mentioned, one of our biggest challenges was, that our partner who ran the multi-car transporters paused operations, so we refurbished our cars and stored them in a massive site in Corby, then we run a hub and spout a delivery model where they get taken on a multi-car transporter at the regional hubs, and then in one of our close single-car transporters out to the customer. They stopped, and in fact, they have still stopped operating those multi-car transporters. It invokes flexibility from everyone to figure out we can cope without that, and we did put in a plan where we used our single-car transporters to move cars around the country as well. I guess the, moving fast, making decisions quickly, that's one of the things we learned well last year. Both the logistics team and technology team found a way through that reasonably straightforwardly. So I guess lots of it is about making lots of decisions quickly and moving quickly, that sets us up in a very good place. And of course the proposition itself was exactly designed almost perfectly for buying a car in these current circumstances as that transaction is fully online. There is no paperwork to sign. That's all fully online. And then it's delivered to your house, which is clearly a part of commerce that government has been actively encouraging to continue in the current crisis, and handed over in a way that can be safe. Technology, flexibility, and the proposition itself.
Katie: Anyone who has been keeping tabs on your Trustpilot reviews will see that adaptability has translated well to customers, and that the customer-centric ethos is certainly paying off, I think, because I think it was very quickly becoming one of the most renowned, sort of, obsessed-with-customer-experience companies out there. So I thought it was also worth asking, if, now that you've survived this kind of crazy intense fast launch, the company has managed to adapt very well to the new world that we inhabit, is Cazoo invincible? Is there anything that's too big that's not possible, if it's something that genuinely serves your customer, do you feel, kind of, prepared for anything or how do you, face the future now and weigh those risks against your own capabilities?
Jonathan: The experience of building the business last year took on a large challenge and succeeded and we are an ambitious business, and we want to provide that amazing service for our customers. To expand both the reach of what we're offering and be able to do that on a bigger and bigger scale, and broaden our inventory, and offer new services and new ways of interacting with customers over time. But certainly, that last year set us up to think that, you know, we can tackle anything. Clearly, as the business grows, that also brings its own complexities, so as I learned in my time at MADE, selling a product online is a small fraction of the total job of delivering the right thing to the right person at the right time, on time. And as we scale up the sales on a daily, weekly basis, there are some complaints in the backend you have to sort. But we certainly feel off the back of that that we can take on anything. I think it's good that you mentioned the customer-centric approach, because that is one of our fundamental values, is that this is a customer-centric organisation. Trustpilot reviews represent that. And I think that is one of the key ways in which we are disrupting a business that has not traditionally been seen as a customer-centric industry. I hope that our customer feedback shows that we are succeeding.
Katie: Even internally, I can say again, from having been in a few all-hands meetings, sense of fearlessness and just relentless push to always be thinking of new propositions and new ways of serving the customers better. From a product manager, it's stressful but also exciting. There is always something something new on the horizon.
Jonathan: I suspect that the next few years, there will never be a dull moment, and we will be announcing new and exciting ambitious things just like we announced them to you last year.
Katie:Yes, indeed. Great, well, I have two more quick bonus questions. One is another one about resilience and the second one is a bit of a wild card, so.
Katie: First, is there one thing that you have learned as a technology leader in the past two months that you would like to share with this audience? I know you have been touching on a few things throughout, but if you could summarise into one takeaway for the audience, what would that be?
Jonathan: There are lots of things. And I think that various different technology companies will have had different experiences of this situation, depending on what sector they are in, how old, the maturity of their technology, various other things. I think the thing I have learned is that remote working has been forced upon us, but is in fact being much more successful than we might otherwise anticipated. I wouldn't advocate zero face-to-face contact. I think we miss some of those office interactions, and there are stages in a product's life cycle, in a team interaction, or in, even delivering a story face-to-face is valuable. But I think we've learned very fast ways to make remote working work surprisingly well. And some of that will be carried forward into the future I think. That's been the biggest experience for me.
Katie: Brilliant. Brave new world. I'm looking forward to that world as well. And the last question. This is just a personal curiosity of mine, because my husband works for an AV company, so do you see autonomous trunking in Cazoo's future? Will a robot be trunking your cars, and if so, when?
Jonathan: I mean, I think in the future, yes. When? I think that is still some way off. I think someone asked me, it was probably 10 years ago, now in this kind of forum, what I thought was going to happen with technology in the future, and at the time, I was convinced that autonomous cars were gonna happen. It was just a matter of incremental time, and I think that is well and truly moving. I think there is still a reasonably long way to go before they are in the world and on the roads in the UK. And before that is a sensible and practical way to move large fleets of cars around. But I think it's definitely going to happen.
Katie: Well, this is being recorded, so you gotta put a date.
Jonathan: Lets think. I think it is five years away.
Katie: Okay. There you have it, ladies and gentlemen. Jonathan Howell, autonomous driving, autonomous trunking in five years time. Very exciting. Great, well that wraps up this session.
Jonathan: Great. Thank you very much.