You won’t find a PureCars office among its digital advertising peers clustered in New York’s Flatiron District or on Madison Ave. Though it has about 150 employees in three cities and national sales, you won’t see PureCars in Silicon Valley, either.
Instead, CEO Jeremy Anspach built his startup out of Charleston, South Carolina starting in 2009, then Atlanta and Milwaukee along the way. And that’s largely how PureCars has quietly grown several hundred percent each year (1401% over the past three years, to be exact), reached tens of millions in revenue and has now scored Anspach a $125 million exit to Raycom Media, all while staying under the radar.
One of seven preferred partners for Google’s advertising program in the automotive sector, PureCars uses paid advertising over Google search and its own display network to help match up its customers, typically auto dealers, with car-minded customers. The advertising tactics involved are straightforward and have been common for years: When someone conducts a search using a car-related search term, or goes to a site likely to be frequented by potential car buyers, PureCars puts a local dealership in front of them and tracks how frequently they convert into a potential sale.
“There’s a dirty data problem in the auto space,” says Anspach. “Could we drive people straight to a dealer’s site and know if they were looking at a vehicle that needed to be marketed?”
Perhaps the most important decision Anspach made was to charge for using PureCars on a subscription basis from the beginning. That allowed dealers to have a steadier sense of their budgets for the software, and flexibility when they wanted to advertise more or less. It also meant that PureCars could make real revenue from the beginning, with $21.3 million revenue in 2014 and likely more than an annualized $50 million today (PureCars declined to share its current revenue).
Ignoring the bicoastal hype
By staying in Charleston, Anspach was able to bootstrap PureCars for several years with just his own cofounding team’s cash reserves. After conceiving the idea for the company in 2007 and launching in 2009, the cofounder waited until 2013 to raise outside capital. Even then, he only took on a combined $10 million, from Gemini Ventures and Stage 1 Ventures. That put PureCars’ early employees in a position to need it to succeed, its founder says. “By using our own cash, it forced us to make decisions to have a good return with low odds of failure.”
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Bootstrapping also pushed the startup to become cash positive just two years after launch. “Too many folks are raising very serious dollars” in the startup world today, Anspach says. PureCars, on the other hand, followed a strict budget diet imposed by its board of directors, to only spend money on critical needs like its data and development teams. “If we spent anywhere aggressively, it was on the technology side.” That way, Anspach says, the company didn’t need to travel to the coasts to meet with investors for another raise.
The Detroit native, who says he loved cars since he was five years old, also avoided the lure of startup hubs like New York City and Silicon Valley, sticking to Charleston and then building out development and data science in Atlanta when PureCars acquired a smaller startup there and made its cofounders the combine company’s data science chief and CTO. (It would later add another small team in Milwaukee through acquisition.) Talent is abundant in the Atlanta area with its feeder universities, Anspach says, while product teams have been able to tap Charleston’s smaller startup community. PureCars has hired more than 100 people in the past year, mostly in Atlanta, with about 40 more on the way.
Following customers, not the market
PureCars also found success, its founder says, by focusing on flexibility for its customers, not to follow what was buzzy with out startups. The company focused on automotive and stuck to it, changing its advertising tactics to meet what dealers demanded, not move into other verticals. “It’s real easy to look at all the other things you can do and whiteboard all these great other ideas, but success comes from talking about what not to do,” Anspach says. Anspach’s advice to other founders: Don’t watch the market too much, as your startup’s success won’t usually be dictated by what your competitors do. PureCars’ closest competition are multi-billion giants that it bets won’t move as fast anyway, including Cox Enterprises unit AutoTrader.com and public companies CDK Global and Dealertrack.
If a product’s not perfect pre-development, it has to be fixed quickly. But the prompt should come from the people who are paying you. “The biggest thing that worked to our advantage was we always kept our ear to the ground to listen to the customers,” says the CEO. “Customers won’t always have the spirit to tell you what the fix is, but they’ll complain about the problem.”
That paid off for PureCars when its customers recommended the startup to Raycom Media as the best private digital player in automotive advertising. Raycom, a private conglomerate of 51 television stations covering more than 13% of U.S. television households (revenue is likely hundreds of millions, but the company doesn’t disclose its finances), approached PureCars as a potential strategic partner or investment. The potential to work with the car dealerships across those TV markets and match PureCars with Raycom’s more than 400 sales account executives just made too much sense, says Anspach. Offered $125 million all in cash and the promise to run PureCars as an independent subsidiary, Anspach and his investors scored.
“The risk we took was calculated, but we were all in,” PureCars’ CEO says. “We were cash positive and growing quickly, but we saw we could use a lot more fuel in the fire. And they wouldn’t have done this deal if they weren’t satisfied in how we perform.”