Building Outside the Valley: Jack Greco on Scaling ACV Auctions and Betting on Builders

[MUSIC PLAYING] Welcome to First Builders, the podcast for those who shape companies from the ground up. I'm Amber Illeg, founder and general partner at the Council Capital, where we invest in early teams solving critical problems in essential industries. And I am Rachel Choi, partner at the Council. This show is by the people behind the playbooks, the ones who took it to leap early and helped define what their companies would become before anyone else could see it. Today's guest is one of those rare courageous builders who did something a lot of people that was impossible. He built a unicorn company outside of Silicon Valley. And he didn't just build outside of the bay. He'd been on used cars in Buffalo. He went head to head with the Legacy Car Auction Model, and he turned it into a billion-dollar public company operating nationwide. That's not just unconventional. It's conviction. Not only that, he didn't in a space that most folks wouldn't even touch. We're joined today by Jack Reco, former co-founder, COO, and CFO of ACV auctions, the online used car auction platform that went public at a 3.85 billion valuation. Jack is a heavy hitter in the upstate New York startup world, and he's built a career on spotting opportunities in unlikely places. This conversation is really special to me today, because he's also been an early believer in backer at the Council Fund. And someone I love to hop on a phone call with for honest insights. We're so excited to get into his story with all of you today, what it took to build ACV from Buffalo, how he thinks about legacy, and why he's still betting big on founders today. Jack, welcome to the show. Thank you very much for having me. I'm super excited to have you on today. So, Jack, before ACV, what were you working on and what drew you to the auto auction space of all things? So, before ACV, I wasn't even living in Buffalo, actually. I was living in Rochester, a city about an hour east, and I was actually working in deep tech. And I'd started my career as a venture associate and eventually look at VP of a very small venture fund in Rochester, culturally in group. And then when it was apparent, we weren't doing another fund, and there was no track for me to continue to move up. I kind of broke out on my own. And so, immediately before ACV, I was just trying to find interesting opportunities and figure out what I really wanted to concentrate on. I think I was, a lot of times I was functioning as the co-lead on these projects and these early businesses, but on the business side, was usually a highly technical founder. And I think at the time, I was, I usually take the Monica CFO in these organizations, there's a lot of times what I was doing was around the strategy, the finance, it allowed me to get into a room of something to eat, to get sold, or something to eat, to be discussed. I was working in, currently I was working in, I was working in personal diagnostics, and with a woman, there was one of the principles in the human genome. I was working with the sneaker company out of Boston, some people that were making metallikings for print electronics at a Rochester, and a couple other smaller projects. And when I kind of stumbled upon one of my co-founders, Joan Eman, who had this idea, it just kind of clicked with me, right? For my 20s, we started ACV when I was 30, and it was right after my, actually I was 31 technically, right after my 31st birthday. My entire life, I have been around my dad, who was an antique dealer, and with that, I was around a lot of auctions. So I even took an unconventional access point into this automotive auction space, right? The industry was just full of car people, and typically an auction was one of the necessary evils that was part of that process to pull the value back out of a vehicle you took in on trade. I took a completely different angle, which was from the auction side. I just found cars a really unique thing. It had high volume, high velocity product. It was highly valuable, and it was something that people needed to discard. It wasn't an optional choice. So when I met Joe, and I kind of heard the idea he had, which was a much earlier manifestation ACV, I said, I love running businesses like Eman. So, and we actually triangulated through the third co-founder, Dan Magnechevsky, who was ultimately into becoming the CTO of the business, who was at the time running an incubator. So I was really just hostile, right? I was single, I was trying to figure out where I wanted to be and what I wanted to do. I kind of had a job that was taking me all over the world, and then all of a sudden, concurrently with this idea, I want to focus on something, I also started a family. So I found out I was having my son in November of 2014, and we started ACV November of 2014. So it gives you an idea that one may have influenced the other to some degree. I think it's as all good things, it's as much calculated decisions as luck, maybe even more luck. And that's really, for the first time in my life, that I, instead of doing a lot of different things, or being more on the advisory side, I kind of jumped in when we started ACV. That's awesome. And I've heard you say before that your kind of internals slogan at ACV auctions was every car is a used car, and I think that doesn't necessarily sink in for the average consumer in terms of how big this market is, and probably for a lot of early investors as well. So for anyone listening, definitely let that sink in for a second. I'm a big fan of this kind of business, a massive market and a dusted over industry with a ton of utility that we all kind of unconsciously interact with. So can you tell us a little bit more about how the auto auction space even works? Absolutely. So just so you know, when I got approached with this opportunity, all I had known about auto auctions is when I was a teenager, we used to sneak into them to see like where all the action was. You know, I grew up in like I said outside Rochester, and there was a very rural, very small auto auction in town called Dan'sville, where literally we would hop offense, you know, put two in tobacco and or something that made us look older and we would walk around for time to be dealers just to be able to get in the cars because it was fun. So when this all came about, it was brand new for me too, you know, and when you start to look at the numbers, I am a numbers oriented person, you realize, you know, 30 plus million vehicles a year in the United States are trading hand between dealers. Excuse me, they're being traded into a dealer. So this is, you know, when you buy a new car and you decide to trade your old car in, this could be an off lease car, this could be a repossessed car, but in the whole car space, so basically anything that's not salvage or just use for parts, somehow enters this wholesale system. And the wholesale system, as you could imagine, prior to ACV and our contemporaries was really in a, like a draconic system. You know, somebody would have to, the car would be localized somewhere, it then had to get transported to another place, which then it had to wait its turn in order for everybody to make their own decision on what it was worth and potentially in like a 60 second window, decide to buy it or be, excuse me, bid on it or not bid on it. And if you miss that window, that car had to sit sometimes a week to two more weeks until another event presented itself. So it was slow. The fact that cars had to logistically move these, you know, one in two ton pieces of metal, of which were somebody else's ownership and somebody else's responsibility. It just seemed like a really, I mean, valuing it very much as an outsider, I was like, okay, we can definitely make this easier. If we can move the auction to where the car already is, and we can instead of having this run on a set schedule, like once a week because it was a vent base, but run it any time, this should give us a competitive advantage. It should allow us to move upstream ahead of the competition and just get access to the inventory, right? I mean, I find, look, there are supply- constrained demand-constrating marketplaces. If you own the supply in the wholesale automotive space, then you own the business, right? The first person that sells it is the person that gets to capture. And if you don't, then not only does that car end up going somewhere else, but so does the interest and the attention of whoever owns that vehicle. And again, this is a dealer to dealer space. Cars are chance acting in 60 seconds, typically on the block. That's not what the average consumer would normally do. But again, when you think about used car dealers, which at the time we launched ACV, there were 120,000 in U.S. registered used car dealers. There was no factory for them to call up and descend them more. They had the source of their inventory from somewhere, and the wholesale market was it. Besides buying on the curb, it was the only way to acquire inventory. No inventory, no business for a used car dealer. So we saw this as the utmost importance to take the used car dealers point of view into considerations when we built things. A lot of times they were thought of as this carper, this bottom feeder that just, you know, suck things up and people really didn't concentrate on it. So most of the traditional auctions really cater to the new car dealer who typically were selling the vehicle. We took a different approach. Joe was a used car dealer. So obviously we hit his first player point of view, and we incorporated it into the system. Yeah, no, that's super fascinating. Actually, really recently, one of my friends, husband's mentioned that he bought a used land cruiser on an online site. I need to ask him whether it was ACV options or like some other one. And he basically came in and was like, "Oh, I accidentally now own another land cruiser." I was like, "How did you accidentally own one?" Because he bid on it. He didn't think he was in a win the bid because of the timing and everything. And then he actually did. So you mentioned that you were building this again for the dealers probably. Was it for the average consumer or was it really primarily for dealers? Just dealers, you know. Got it. The dealer part of this, the market was pretty simple. 30 million vehicles, average value between $15,000 and $20,000, depending on the year where the average moves. So it's a lot of money. You know, a third of those a dealer would get traded in and they would keep it. They would clean it up and they would sell it on their own. You know, a third of it, the dealers would transact, it would call somebody. I'm a Chevy store. I just got a Ford F-150 on my lot. I don't want that sitting next to my Silverado's. I have somebody that has a Ford dealership. I'd probably buy back and forth with them. And then a third of it went to these traditional auctions. And these traditional auctions, again, they were cars that didn't get retail. And I didn't have a friend that I could call. So it was typically the bottom of the bottom, you know. And yeah, it was primarily a deal or two dealers. Your friend's husband or boyfriend, if you said like, if he has a dealer's license, he could buy an ACV, but there are. Look, I mean, it's a little bit like gambling, right? I mean, on your phone, right? You know, you pick your phone up and all of a sudden, an alert goes off and you press a button, you know, it's kind of, if you've ever been shopped on Amazon, like two in the morning, it's like that, except with like tens of thousands of dollars. - Like tender for cars. - Yeah, except there's no-- - Like, oh, this is the one that you wanted. - Yeah, yeah, the only problem is you don't get to return them, right? You know, there's no-- - Yeah, that's what he said. (laughs) That was the thing that he said. He's like, well, now I own it and he had to figure out how to pick it up because I think it was based in Georgia or something like that. So he was like, okay, I have to go figure out the ship, all of this stuff. So it was pretty funny. So yeah, definitely not to check out like where he bought it from. But getting back to kind of like the early days of building ACP auctions and you know, you mentioned how it was on the dealer to dealer side, what was the most challenging about it for you, especially building in an industry that just hasn't really seen a lot of those changes in decades? - Sure, we had to remember that we weren't a tech company, right? We weren't supposed to be growing and having headlines like the other startups, right? So we took Venture Funding, which puts you in this cohort of every single type of company under the sun. But we were really a service-based business. You know, we were, ACV even to this day is not really, we're called Buffalo's tech unicorn, right? And there's technology involved, don't get me wrong, but this is a thin layer of technology as a membrane wrapped around a really well-run services business. So to not forget that the same kind of fundamental practices that keep the best restaurants in business, they keep the best retail stores in business, they keep the best barbershops in business, right? Like we had to keep telling ourselves our customer comes first, second and third and the relationship with the customer really needed to be with us. So when you have a buyer and a seller and they're transacting together, there's a lot of opportunity if one's not good, both are upset and I have a problem. Versus if we decoupled that process and actually said the buyer has a direct relationship with us, the seller has a direct relationship with us and that is really what we measure the business on. I always said we don't sell, we don't buy and sell cars, we build relationships and we build them directly with us. So we constantly had to maintain that we are the hub and nothing should really be going outside of what we do. It was a great business if you were a control freak to say like I have to control everything but it allowed us to really manage expectations on both sides. You know, when somebody gave us paid us money for a vehicle and that vehicle ultimately had an issue they would deal with us. Or when somebody was selling a vehicle and maybe somebody had a paid on the other side, we still had to make good on it and then we would handle that relationship individually. So by breaking those spokes off of the hub, we were able to evaluate the spoke for what it was, throw it away and keep it from being a negative contagion. And so we had to constantly remember network effects are real, the customer comes first, second and third and this is very much a human business. Those are the fundamentals that we really built the business on. That's awesome. And then let's chat a little bit about the early team. Like what were the co-founding team dynamics and with three co-founders did everyone kind of settle into their permanent roles immediately or was that sometimes I'll see pitches where it's like they're three co-founders and people haven't figured out yet where they're slotting in. We had very different, very specific skill sets. So Joe and I had run businesses before. Joe was an industry guy. I was the one that I always like to say my N, like the number of times I'd gone through the cycle had been the most. And Dan, I mean Dan was the tech dude. He was always the tech dude, right? Was great with people, was great talking but he kind of always fit in that role. So Joe and I had seen the beginning yet. I mean there was friction. I think it was, I call it competitive growth, you know, you let something grow on its own. It goes gnarly. It makes it compete against something and makes it go up faster. But I would say pretty quick we realized we always respected the experience that we brought into it. And that was one of the big things. I give Joe credit for really speaking about this a lot too. Was, you know, he harped on like, we're this team because of what we're capable of doing today. You know, what we've done got us to this point. You know, but we did, we brought in an outside CEO pretty early. We brought them in, you know, the company was formed in 2014. We sold our first car June 1st of 2015. We closed our pre-seed round with Ray some of the money before and some of the money after in August of 2015. My son was born August of 2015. Joe's daughter was born October of 2015. Like it was a lot going out at once. But we brought an outside CEO in really. George had come out as like a consultant for a little while because he was still phasing out of his, the company he started, Cinecore a while back. And that was in late 16 early 17. I think he formally came out as CEO, you know. And I would say there was respect amongst the co-founders for what we were good at. We probably could have been more communicative. Like we probably could have been more buying each other's input. But I think we each knew what part of the process we had to do and we did it. And then when George came out and that helped kind of coagulate things a little bit more. And it ended up being, ended up being a good team. That's awesome. And credit to you guys, I feel like a lot of founders would have trouble with that decision to bring in an outside CEO. Even at later stages, you see that. So it's also helpful when it's, you know, a decision that they're all aligned with. And that person can maybe help it grow to the next level too. Yeah. George definitely did that. You know, I give him credit. We would not have had the success that we had. Had it just been the three of us. Yeah. But clearly, I mean, you had a really big impact, of course, like on the success as well, because you stayed on the company for four years, I think, as it scaled over to Series D. I'm helped it raise, you know, over $100 million. Did you know that this was something like very, like just worthwhile pouring your life into when you kind of first went in or did it build over time? Well, I knew was worth putting my time into on day one because it was something I really enjoyed. Like, enjoyed it. I really enjoyed being able to build a team, seeing the success that that team was having and how proud it made them and continuing to really can still that sense of ownership. Every single employee at ACB had stock. You know, our first employees who, if they told you how much they made when we brought them on is now they're fine with it because they got stock and everything went well. It was kind of a humbling number. You know, but it was really exciting. Did I think it was gonna get as big as it got? No. And I think if I was in an alternative world where I was running it, I don't think it would have gotten that big. Like, I think ACB made a decision. It had a manifest destiny. It wanted across the United States. That was a strategy. It leads to big numbers. Maybe it's why you have ads podcasts because we sold for billions and not hundreds of millions. Yeah, it shouldn't be real. There was a lot of costs associated with that. I think ACB ultimately raised like $400 and something million. People all made a return on their money. So they got back more than $400 and something million. But I knew that it was, I actually don't think what we did was that special at all. I don't. I think it was practical. It made sense. It was just the next evolutionary step. Like it wasn't a revolutionary thing. I see AI and blockchain and cold fusion and Kirin Cancer. Like that stuff's like really hard to do. Like what we did is we said, "Hey, you want to press a button on your phone instead of raise your hand at auction?" Yeah, okay. We're just gonna keep doing that same thing really, really good. And since I've got out ACB outside the community work and the investment stuff that I've done and the philanthropic stuff, like when I focus with founders, I primarily focus on these. What seemed to be pretty simple, pretty pragmatic business models, primarily marketplaces, where I don't try and instill the exact same recipe 'cause everybody's different. But I do try and make sure they realize, this is not, this is executionally hard. It's not difficult by design. And I think complexity ends up being one of your worst enemies when you think things are too easy and other people can maybe copy them or it's not clever enough in order to get to where you need to. Like simplicity is really what I look for. And it was nice. I mean, ACB was a simple business. We do the company, I can't even say we because I've sold almost all my ownership, but the company, I guess I can't. They always say, I remember I was reading an article from Lord of the Rings and they always said, "Goblins said the owner of something is that who creates it not the one who possesses it." So it's still mine, even though I don't own anymore, right? The architecture and the go-to business model is still mine. But yeah, it was elegant in its simplicity. And I think if you really dig into and pour into ACB versus its contemporaries, versus trade rev, backlog cars, car wave, car gurus, or not car gurus, car offer, they got acquired by car gurus, you know, Ola Lane, like a bunch of these other guys. They didn't chose to go that way. They ended up going amazingly deep in where they are. A bunch of those ended up getting acquired by our biggest competitor. And what's unique about ACV is like, it doesn't dominate the world. It doesn't dominate the United States. The place where we were a first mover in is still where the majority of the business is done. And the place where other people were first movers is the majority of the business they were done. It was kind of like a colonization effort. And once the lines were drawn, it was really hard to take territory. Just so it was for geographic based marketplace. I've seen a repeated time and time again, but obviously experiencing it first time first hand was interesting, though. - That's awesome. And you were a COO and CFO during that rocket ship base. So that's a wild combo. I'm curious to hear more about that and how that worked together. - So I ran operations finance strategy and data, which is why I didn't make it to the IPO. - It's a lot. - No, it was too much. I was in a new city. I had a young child that I wasn't spending the time with I wanted to. It was way from my family. I'm a battalion and that's kind of like hard. It was really hard for me. And why? I'll tell you why I left. Maybe they'll describe it. We had talked about internally, me not wearing all those hats for a long time, a long time before I left. And we just, we weren't able to. to hire for them. I don't know if my presence was some combination of, you know, terrifying and pleasing to the point where people like, well, they aren't better than Jack. Or, oh my god, we can't lose him. Maybe they thought it was too much of a keystone player. I don't know. But I had wanted to just really kind of roll back and do the strategy. That's what I enjoyed the most. I mean, I loved building a model. I mean, I think I think ACV still runs on my model somewhere. Right. People talk about AI. I'm like, I built a model. It was kind of like AI once. It literally was a brain. But, you know, I, it was a lot. It was in a lot of self-reflecting on myself. I realized I asked for help once. If I don't get it, I do it. That makes me great for a startup. Tough to be married to. I am married now. So actually, I'm, I don't know when this is going to get released, but I am expecting a child in November. So which if you ask me why I'm not starting running another company right now, that's why I'm not doing it again at the same time. But, you know, when it comes to why I did that, I just had to get done. I mean, Buffalo was not flush with talent by any means. You know, it was a, and it wasn't, I mean, again, we're like a used car marketplace in a place that people just think of as snow and losing super balls. You know, one of those, we will change this year and it won't be the snow. But, you know, it was, it was difficult to recruit it. And I think there was also some fraternal nature between Dan, Joe, George and myself. And also, I would say, like Mike Waterman, who's our head of sales, like he came out very quickly after George, a huge amount of success is owed to him. I love Mike, you know, and we just kind of said, we, we can do this. We're all people that some type of a chip on our shoulder, you know, George was a CEO of us startup in Buffalo that ended up merging with other ones. He got knocked down a couple of rungs. I think that was his chip. Mike was not our first choice. We tried to hire his boss. He likes straight up rejected us. So we ended up bringing on Mike. That was his chip. Joe had a dealership that grew too much and he ended up having to close an Albany. Dan was working at a, you know, a, a, an incubator. He was making like a third of what he should have been making. That was his chip. And I had like the Rodney danger field. I get no respect from anybody chip. So it was something to them. We said, well, this is what we got. If we can't find number six, seven and eight, then I guess we just got to fill those rolls. And maybe I am too much of a control freak. So I took too much of it. So I've gotten better in old age. Totally. And then you talked a little bit about your decision to leave. And you were already four years in at that point. The company had already experienced incredible growth. I think I looked it up. I think it was around like 30 million in annual revenue around the time that you left. Yeah, it might be a little more, but yeah. Yeah. Which is amazing. I mean, you started at zero, but the ride wasn't over yet. So later the company went through an IPO. And then even today, it's now over 600 million in annual revenue. So curious like what advice you might have for founders that are considering that. And you know, there's almost always a temptation to stay longer and just keep grinding at it, especially when you see that things are working. So curious if you have any advice or thoughts on that. Yeah. So I can tell you this, you have to remember when you start a company, you are only as like you can only really think about yourself to the percentage you are on the cap table. And I hate to make it that calculated. But I guess what I'm trying to say is you make promises to people. You make promises to your employees. You make promises to your investors. You make promises to the people you acquire. You make promises to your customers. And you have to realize that you are you are running like it's almost like a team and everybody's rooting for you. And you can't let them down. So for me, when I made the decision step away, it was this is what's best for the team. You know, we're not able to hire around me. Like, and I knew the company had outgrown, especially one person doing all those things. So I said, if I had to step back and do none of those things and create a void for everything to then give it because it wasn't going to go without anybody doing that. You know, they ended up hiring four guys to fill my spot. You know, it took a two of them they had on when I left, two of them they hired within like the next year and a half afterwards. You know, and some of them didn't last very long. But you just have to do what's best for them. And then then you can think about you separately and say, okay, now for me and my family, what's the right thing? At the time I had a son was really young and I said he's becoming he's getting to that cognitive age where like he's going to start having memories that last the rest of his life. And I don't want to be of his dad working. I was keep track of my hours. I mean, I was working a hundred hours a week. You know, I remember I would keep it just because I was used to I'm had a consulting mindset from my 20s. And I was just like, whatever I was doing, I would incrementally write it out. And I would go back and look at him be like, I'm starting at four in the morning. I put in two and a half hours with a work before people's alarm goes off at 630, right? Like, and that was a lot of the data stuff. And then, you know, you have the business during the day and then at night, I was pouring over the models and it was just too much, you know, and you do realize at some point, if you would ask me at the time I left what my stock was worth, I would have said zero. I have this mentality unless unless I cash it out, you know, I don't count my chips at the table. And so I just left because I said, I just can't do this anymore. I got to optimize for my family. I'd saved up, I think like 40 grand. And at the time I was like $40,000, I lived like a bomb. I could live two years on this, you know, not really two years, but you give it. I mean, you know, so for founders, look, you shouldn't be thinking about the exit by any means. Like, you know, that company was also in a good place with a good team that were empowered. I mean, the people that I got to work with, especially in operations and finance were strong people that I think were empowered to make the decisions they need to. I think they were a little worried when I left, but like I told them there's nothing to be worried about. You're great at what you do. You know, it's kind of like I kind of had that hallmark moment of like you could do it on your own. I'd let go of the bicycle already. Like you're already riding on your own, you know. And it's I don't know why I always think of myself as like an elderly man in these situations, but I do. But like the truth is you shouldn't dwell on it, right? Like a business is an entity that I think has a beginning and an end. Some of them die young, a lot of them die young, and some make it a long time. But you know, you only be along for the ride as long as you choose to and just make sure you structure it in a way where all those promises you made can be kept. You know, and be careful. The promises you make along the way. So yeah, definitely. I it sounds like you have a really great like framework. And I don't know if it's like now looking back at you or saying like the self refuction or you kind of like knew this along the way too. But it's it's just really great to kind of hear like that framework of how to mentally kind of prepare yourself for that situation, which I'm sure a lot of like founders would definitely appreciate hearing that as well. Yeah. Well, I mean, get a good therapist, get a good wife or husband or whatever you get. And make sure you don't lose like a support system, right? Like I think you hear me, you know, I rebounded heavy off feeling like I didn't have much of a support system around there. And you know, that's I just get the feeling just with the amount of boards I sit on the amount of founders I work with now that there's almost like an over indexing to mental health. Like this is hard. It's going to stock deal with it. Otherwise don't start a company. You know, I'm not in any of these. I just built a PCI and so my company for 80 million in nine months. Like I'm not in those like I'm in real businesses not like gimmicky stuff that idiots buy for too much. No offense. If you have any of those in the portfolio. That's that but not that we know of. Yeah. That's just that's not me. But you know, I do think it's important to for founders to reflect back on like, you know, where am I right now and where am I going and how am I continuing to manage, especially if you're a CEO or a high ranking. Like I was a I was not CEO, but I I carried the heart of the company with me, which was the hardest thing. But you know, you have to think through what are the long term ramifications of everything you think saying to do like there's so many times where I would just say something without thinking because I don't work off a script or anything at a meeting. And then people later I would be like, well, I was really worried when you said this or wow, I really I've been working so hard because you told me this and was like, oh my god, the impact's huge. And I think that's what founders should be thinking about is like, people, if you are a strong founder, especially if you were a dominant voice, I'm an eight on the anyogram. Like I'm your stereotypic type A type guy. After remember, you have to I mean, who said that it's like Thomas Aquinas. Sometimes the quiet is it was like, there's nothing as strong as gentleness. There's nothing as gentle as strength, right? Like, you have to realize the amount of strength you will net organization. You have to be an equal part gentle to the situation. I'm not saying like let people be cry babies and you know, work from home, you know, every single day because they don't want to come in an office. I'm saying, just think through the promises you're making the kind of team you're building. Yeah, I know, I definitely love that. And you know, kind of going back to like the even the business side, right? Like obviously here we focus on the legacy industries at the council. And occasionally we do have like a marketplace layer. I'm within the portfolio companies as well. But we've seen firsthand, it's really, really challenging to build and scale that marketplace. So why do you think it worked the way that it did for ACV? And what do you look for when you're actually now building or investing in startups with a marketplace angle today? So ACV was easy because people had to get rid of this stuff. It was not optional, right? They couldn't time was real money. If you look at the way the balance sheet of dealerships, you see exactly how much of other people's money they're playing with. And once you recognize that, you realize like, okay, I have a car for 35,000. I took this other thing in 12 grand on trade. There is actually $12,000 of their money sitting in that thing that they have to liquidate when they can. Those are the ideal state for marketplaces. If that's a wholesale marketplace, you know, I used to joke that, and I'm not an investor in a cattle company like this, right? You know, it's a marketplace and it's like, yeah, guess what? Like you don't sell the cow at the right plan. The cow dies, right? Like you goes away. Marketplaces ultimately work when you have some type of amazingly fierce differentiator when it comes to one aspect of the marketplace. Sometimes it's supply, sometimes it's [BLANK_AUDIO] man, all marketplaces aren't the same. But I think you really have to like, I mean, there were the cool thing about the car industry, the people from it love it. And they live it, right? These are people that have a tasmaidian devil with like a NASCAR thing on their arm, right? And you know, they're like Chevy suck for sure. I mean, like there's, there's just such this like tribal kind of competitive visceral reaction to stuff, but they are also educated people too. So it's really hard. I mean, do you find that in HVAC? I don't know. All right. Or do you find it in some of these other more more esoteric or more like real world-shrish businesses sometimes? But the car marketplace is great because people had to move things. It was high volume. It was high value. You had to develop high trust. I really like geographically based one. So like, I don't really touch businesses that don't have human involvement. The marketplace aspect of what we do in any of the, the boards I sound or any of the companies I'm part of, like, there's always a real human element. I think you have to master that human element. For us, it was we realized we had to be the one that said what the car was because we were representing all the buyers eyes and ears and noses sometimes when they sniffed them, right? Like we had to be there for all of them. So the human component really and the secret ACV was that we had a VCI vehicle condition specter coin that we created. I remember the first day when I told Joe, like, go out there see what it's like, dude, right? You know, I'm sitting here trying to get people to pay as I'm we're all doing whatever it is. And you know, it was like that was the piece of it. They really made a tick as all the sudden buyers are like, okay, the seller's not trying to screw me. CV is saying, this is what it is. If it's not, they're going to pay me. And all the sudden we alleviated that major concern. I always told people like buying things online is not what was special about ACV as a marketplace. The fact we decoupled that relationship and said, well, you're buying act like you're buying from us. You got a problem. You come to us. I mean, the number of times Joe and I gave out our phone numbers still get probably like 20 or 30 unknown calls a day. You know, I don't think it's all from ACV. We all get the political ones that I'm getting. No, no, no, no, no. Thank God I've stayed off those and I have two degrees from U of R and they still haven't got my number. So it's not from there either. But I know, you know, I think that's really what made it clicks. I have a marketplace and really close with a Toronto called Octo, right? They do auctions. It's an auction based platform. It's for it's for the residual used or outdated equipment and manufacturing processes. They're it's different. Their problem is we need to get this stuff gone. We need to make sure that you're not just going to sell it for us. How's it going to move? How's it going to disappear? How do you get out wheels? One of the companies that I'm really close with and I actually fill up fractional C level rolling right now is a company called Pesher. This remediation is a subscription. But on the back end, we have a marketplace of vendors and how do you make sure that each one gets fed because the one thing they love is it that they can't get is continuous revenue from business clients that can get them from consumers but not business. We figured out that piece of it, right? You know, it could be it could be anything. I could go on and on anecdotally, but but I think you ultimately need to figure out why this hasn't happened on its own without technology because again, technology just enhances human protocol, right? So like, why is this not happened anyways? Right? The problem with auctions is that they didn't have somebody go around and guarantee what every car was. Yeah, it was nice. You could bid on it from your phone, but that wasn't the secret of the thing. The secret thing is we were standing behind everything. So you just have to figure out what the underlying thing is on each one. My favorite part of it. That's why I did this much angel investing in LP investing for such a long period of time as I did. And now as I get older, I realize, I can't manage and remember the financials for 150 companies are everybody. I'm an angel in right now. And that's why I've kind of like run it back and I'm really, you know, focusing on like a dozen companies right now that I get almost operational with. That's awesome. Yeah. And thanks for sharing those insights with us. I love the anecdotes like cattle's cars, equipment, pests. Those are all urgent, urgent items that need to be done. Yeah. And I'm curious because you've backed a lot of these companies since like what do you look for in terms of like top founder traits that you back? I need people to be the founding team has they have some level of very acute industry expertise. Right. Like they need to understand like a deep wedge the industry. Right. I mean, I think you need to understand it like the ACV example. Like they need to understand what the financials of a use card dealership look like. If you're going to be able to help them procure inventory, you know, a good buddy of mine that I'm on the board of right. He's built a full autonomous technology and autonomous stack technology for off road equipment and machinery. Right. He grew up working on a farm. Right. Like he knows how hard it is and why there's a value to precision act and the effect of being able to, you know, take something and he also knows how hard it is like recruit labor that you can trust the drive of half million dollar piece of machinery quarter million dollar piece of machine. So it's like it's figuring out kind of that very deep, you know, knowledge set and that that if they can't articulate again as a layman, I think I'm pretty witty but and pretty clever. But like I'm still a layman in all these industries. If I can't get it really quick, then I don't know if I just assume they don't get it that well either. And then the question is like how do we elegantly, you know, just build a business model around that, you know, the older I get the more I realize, just focus on one thing. Right. Like it's okay to have channel partners. It's okay for them to eat. It's okay for them to take their margins. Right. It's okay to use software and technology to help you collect receivables faster. Just be good at what you are. And you just like if I was remodeling my kitchen or my home, you know, I wouldn't I could sit here pretend I'm a carpenter and a plumber and electrician and probably figured out, but it's not going to be good. It's not going to be fast and it's not going to be cheap. Like I lose, lose, lose. So if I just kill my pride in all these businesses and say, what's the one thing we're going to do? And let's ask for help around the rest and then decide what we need to own. When people start thinking with that mentality, that's when I get interested. I don't care if it's recycling and trash. I don't care if it's, you know, the way foreign, you know, exchange payments happens. I don't care if it's the way cars get refurbished dealerships. Like, you know, it doesn't, it, it, it, it, not it matters me. Like those are all referenceable examples of companies I say on boards. I don't care as long as you know it. And as long as like I think that you are kind of wacky and ahead enough to like believe these things can be huge. One of the longest standing angel investment I have, I started giving a part of my pay when I was at ACV in 2016. It's company I know chairman of the board. I've called it air expert. Not a huge company was very early. It was literally me and another guy in 20 really 2016, 2017. And he's trying to completely revolutionize the way aircraft maintenance is done. Which you don't think of as like a place you would initially go. But when you realize if we don't have aircraft aircraft technician, nobody moves anymore. All the sun people free. Yeah. Yeah. It's like it, it's like an apocalypse scenario. Like, oh my God. There's no planes. Right. You know, so and honestly, like I've been sold on Andy Hakes' name and the founder there. You know, people are like, why'd you back him? Because I literally did his entire, I did his entire pre-seater round. I did half of his seed round. We were lucky. Excuse me. I did a small part of his seed round that we were able to bring in other outside investor that kind of supplemented later on. And they're like, why? And I'm like, because Andy's never going to give up. Andy's the guy that will like cross the finish line with like an arm blown off and a leg dragging. It might take 20 years, but he will win, right? I gosh. So that's awesome. Yeah. I can tell you this. I don't care about the rate of return. I just care that there's going to be a return before I'm dead. It's kind of the way I think about, right? So I know that perspective, though, gives you a lot of like that kind of patient capital type of timing and timeframe horizon as well. Yeah. Because the world is not always linear. Like there could be a period of time where things are not going well. And then it could be huge. So you never know. I'd a mentor that said, the world is full of slopes and plateaus. So may your slopes be up and your plateaus be short, right? Yes. You know, and they aren't all, but you just got to keep thinking that way. You know, my business coach used to just wonderful ladies, Shavon, I had catapult. She used to say, you know, I want you to track. I want you to think back to last year, what are the major events happening in business and your real life and great on one to 10 and then you chart it. And you see it looks like a Richter scale, you know? And just these little exercises help so much to put things in frame and perspective. And you're like, yes, no part of business is up. And it's all based on your point of view and your perspective too. So back to all the founders that are on this, like, you know, you have to be able to take a step back and really understand how far you've come and not always be focused on like how much farther you have left to go. Like you have to appreciate that. It will be, it will be motivated. Hopefully. And one thing you mentioned earlier, I'm just going to jump way back, but you mentioned philanthropy. So, you know, we have things going on outside of work, you know, family, philanthropy, now investing. Can you tell some of the things that really matter to you outside of, you know, ACV auctions and marketplace investing? So I'm kind of a sicko where everything kind of pipes back into the same thing somehow. So the things I cared about were like, think, I don't know what tomorrow is going to be like. We live in this world where there's robots that can do more than humans can and computers that can think faster and not some stuff like that. And I go, okay, what do I know for sure? I know that everybody should have an ability to live as healthy a life as possible. Right. So I care a lot about human health. I send the board of a hospital. I also recently just joined the board and put a bunch of money into a company called Akita Labs. That is the first, I remember showing it to you guys. Yeah. Yeah. Yeah. I ended up putting a million into that, which is a lot. It wasn't all mine, but, you know, that's, that's like a check, right? You know, that's like a, that's like a, yeah. That's like a first fun for some people. Love the company, love the founders. It is, we only have 25% of the doctors in the US we need. That technology means that we have two times the number that we actually need. Awesome. Love that. Yeah, I mean, I go down to, I give, I still have a dot in my arm. I gave blood last week, right? So I do full stack stuff, right? I do the stuff anybody can do. I do the stuff I can donate to. I do the stuff that only I can do. Same thing on the way people eat. I grew up doing part of my childhood. I worked on a farm and I grew up in a rural community, grew up in a place called Cannewa, which is a really nice lake, but I wasn't on the lake. I was where the couch it is, right? I said, okay, maybe there's more we can do. And so this isn't a non-for-profit, even though it has been a huge, it's been the biggest investment I've made to date. As I started a tech enabled vertical farm pilot in Buffalo. It's on the east side of Buffalo. Unfortunately, if you heard a couple of years ago, there was like a mass killing at a grocery store up here where somebody specifically came up and it was because it was the blackest zip code in New York state. I wanted to kill 20 people, it's horrible. And like, that made me mad. So what I do, I decided let's build a farm like right near there. I don't know why. I don't know how to build a farm. I certainly don't know how to build an indoor tech enabled farm out of shipping containers. So we put two and a half million bucks in the ground and build something that it's actually just going live the summer. And if it does, it should hopefully be a pilot prototype of how this indoor agriculture can work, but also support the local community. And then the group that I brought in to manage it, I basically said, look, if I break even on this, I'm happy. I'm thrilled at this one if I break even. But if you could build a prototype that we can do throughout upstate New York, I'm a tree hugger at heart, so we don't have to drive our food around. We're able to grow stuff where it's being eated. I'm a huge fan of like locally owned import substituting facilities. And if you can give people jobs that they can walk to and then eventually become like a wealth generation engine inside these improbable zip codes, awesome. You know, so like I care about that too. And yeah, I am a tree hugger, right? Like literally like I would be nothing would make me happier than sitting in my swim truck, sleeping outside under a tree in the mud, right? So I do try and do as much as I can on the conservation side. And I'm known to just randomly plant trees and people's front yards too. So that's how you know your friend of mine is you get one of them, right? You just see some little dwarf like digging a hole in five in the morning and I just go, you're going to need this and then that's amazing. Yeah, so so that kind of stuff, real, real, you know, real sophisticated things. That's awesome. I'm wrapping up. But if you had a magic wand, what's one thing that you'd fix for yourself for the startup ecosystem and for the next generation of founders? Okay. So let me do then reverse order. For the next generation of founders, wish there was a first wish would be a transparent platform where founders were seen for who they were and what drove them more than where they were and who they knew like, I can tell you being around the scene like, you know, when the companies I met earlier, right? Like nobody wanted to touch it. Octo. I put a quarter million bucks into it. No one still wanted to touch it. NFX came in, everybody wanted to touch it. And I was like, well, it's the same damn company, right? Same company of anything we haven't had money too long. So like the momentum slow down, right? And it just, it's a great company, but it just goes to show you like that's the same founder with the same grit, the same vision, same worth, but it is just kind of like who you know where you are. So like he was out of Toronto. It's not even a small place, but it ain't saying for any. So I wish it was a flattened playing field. I do. I wish that got flattened out for the startup ecosystem. I think I self-apporting myself like the Lorax of upstate New York, right? Like I speak for the trees. I wish the startup ecosystem re-contributed back to itself and really took that forest mentality, right? Like when things are good, look, I mean, I'm not. Right? So like I was single when ACV, when I took my first secondary, my second secondary and when the thing went public all three times I took money out. And I just kind of made a deal with God. I said, I'm going to put the solve back into the ecosystem. And I remember, you know, it's like you throw the money up there. If it's in the circle, it's fine. If it's out, somebody else's. I did the same thing except I did it with investing, right? So I think of it in some way all philanthropic, you know, and I wish, not to that same degree, but I wish there was more of that. I wish there was more. I wish that it just fed itself. I wish we wanted our employees and our teammates to have an idea and run with it and leave the nest, right? Like I wish that was the case. I wish we took more pride in the people around us in their success than, you know, the fear of losing them, right? And then for me personally, you know, it's a good question. I wish that I was, I wish I had the wisdom I got now in the past. So that at this point, I'd even be wiser when it comes to knowing when to shut up, knowing when to say no, knowing when to get out of something that wasn't for me. Like I've made those mistakes too many times, right? You know, I, I am probably at a million hour deficit in sleeping because, you know, I just, when I screwed something up, I would stay up until it got fixed every single time. Or I would say, okay, like I did it once it failed. Now I have to do it again instead of just letting go of things. You know, I think it took me too long in life to realize you only give one of all. So I'm doing the best I can now. I'm 41. I got the grade here of like a 60 year old, but you know, it'll, you're doing great. That's very kind of you. Yeah. Well, what's the best way for founders to kind of keep up with what you're doing? And, and then is there anything you'd like to shamelessly plug while we have everybody's attention? Sure. So if people want to keep up with me, you can find me. I'm really not on social media. The only thing I'm on is LinkedIn and every day I debate like cutting that. But until I do, you can connect me with me there. But please don't connect with me if you're just trying to raise money, right? And give me a note because it makes it so easy to say, click this button because you might know this person. And I'll just say no, right? Just say I heard you on the council and something, some stupid thing that you said stuck with me or I hate something you said, I love detractors too, right? Like, you know, all publicity is good publicity, right? And for me, shamelessly plugging, I don't think it's a thing. I think it's if don't forget like in order for any of us to get to where we've gotten like somebody's helped us. And I think it's very easy even when, especially when we're having success to forget that like we need to continually pay it forward. Because when I got out of ACV, I both felt like I wanted to be the person we never had. I wanted to be the mentor that I never had. But also I was mad at all the people that could have been that and weren't. But I realized I wasn't that for anybody below me either. So very quickly that anger was redirected back at me and myself and I said, okay, now I really got to dig myself out of the hole. I feel it's maybe it's Catholic guilt, but I had like the social debt that I had to repay. And it's easier if you just make your payments the whole time. Trust me. It's nice. So. Yep. Awesome. Well, thank you so much for coming on. This has been an awesome conversation. Yeah, so great to meet you, Jack. Yeah. Likewise. Thank you very much. And good luck with what you guys are doing. I wish there were more people doing what you were doing. Thank you. Thank you. Yeah. That was such a fascinating conversation. I'm so glad that I got to meet Jack from this. But yeah, curious what I stood out to you from that conversation. Yeah. I think something that kept coming up again and again in different ways was the sort of duality of the founder experience that he and his co-founders together had. Not only had they had success in building prior businesses and that high slope environment that we look for at the council fund, but then they also had experience in the legacy industries that they were serving, which is another thing that we look for. And I think it's something that gets really discounted a lot of times. And so it can value when people are just looking for like, where's a huge market and an outdated industry and a piece of software you can apply to it. These were founders where it was like he was raised by somebody who was running an antique auction business. And then his co-founder was a car dealer himself. So they knew how to talk their customers language. They knew how to be like a tech enabled service for that sector and really scale it in a way that was going to resonate with customers. And so I think we've seen that time and again. And it was interesting to hear that, you know, seemed to be a really big differentiating factor for them, even though he was very humble about it. I'm talking about how simple it was. But I don't think it was that simple. I think they just understood their market very, very well and did something simple very, very well. And then the other one was we asked him, how do you evaluate a good marketplace company? And I thought his advice actually applies to a lot of the companies we look at, whether it's marketplace or SaaS or vertical AI. A lot of times we're looking at software for these sort of legacy industries. You know, customers aren't going to buy the product if there's not a level of urgency or there's not a hair on fire problem. They're not. When you're tech companies selling into other tech companies, it's possible you might be able to get an early stage startup or growth stage startup to buy your product just because it's cool and they want to help you in the ecosystem. But that's not going to work when you get outside of the tech world. And particularly in these like operationally complex industries where it's like, hey, if I roll out a piece, a new piece of software, whether it's a marketplace or the subscription service for our company, if it causes things to slow down, this could cost millions of dollars. Like shutting down production is a huge deal. And so I like that, you know, he's really going after these industries that have urgency. And I thought it was funny that he'd like cited pests and equipment and cars and cattle as all very urgent markets. And so that just felt very, it resonated with me a lot since we look for these sort of essential industries. Yeah. You could tell that he was very like focused on that piece of it and has a very pragmatic view in how he approaches investing now and looking back on his experience too. For me, that also like blood into how he thought about mental health as a founder or an early stage employee and really taking into consideration, you know, all the steps along the way, but also prioritizing what you want to take out of it from like a personal perspective. I think very kind of like tough love approach, right? Like yes, this is going to be hard. You need to know what it's going to take and then make sure that you take the steps along the way to protect yourself to achieve, you know, whatever it is that you yourself want to go towards. And then the last thing that he talked about, I think I like at the very last question that we had, when he talked really about like, you know, it's more incumbent on the startup ecosystem and the founders to continue putting back and giving back into the startup ecosystem to create those strong hubs and spoke models essentially, like outside of Silicon Valley, seemed like he didn't think there's enough of that happening in Buffalo and it's something that we've seen a lot of that kind of proliferation in, you know, the Bay Area, but it'll be cool to see more of that, you know, happen in other geographies and ecosystems as well. - Yep, totally. Well, thank you everybody for listening today or watching if you're on YouTube, but we're gonna link everything that Jack mentioned in the show today in the notes below. And if you want more first builder stories like this, tune in next week for our next guest. We've always got somebody exciting planned and hopefully you know about that by now. Yeah, and make sure to subscribe to First Builders wherever you get your podcasts. You can also sign up for our newsletter linked below and we'll have everything else linked in the show notes as well. Awesome, thanks for tuning in. We'll see you next time.