Playing Inventory Defense with Len Short | 2024 NADA Show

Paul J Daly: 0:06

All right, we're here with Len Short founder and chairman of Lotlinx chief bottle washer expert, and you probably have all kinds of free time on your hands.

‍Len Short: 0:14

I do. I do, you know, in between working 24/7 365 For what have we been at those 14 years? Wow. But it's starting to pay off, right,

Kyle Mountsier: 0:25

take us back into momentum because a LotLinx is is a big data company at this point, what led you what was the impetus for 14 years ago saying, I'm got to create this thing,

Len Short: 0:36

you know, we got lucky we the the original business concept of the company, which is more, you started out thinking is going in one direction and the kind of more we were, we were actually rebuilding Windows stickers for us cars really, like, you know, you got a new car and know exactly what's on it, but a used car, not so much, you know, and so what we're doing is, so we started to actually aggregate all of the information, and we were just data junkies. So we started to put together all the information about, alright, here's a car, here's how it's built, here's what stocked around it on that lot. Here's what you know, it's like that another lot. You know, here's the initial price, here's all the price movements, here's the weather, this car is sitting under, you know, us unit and 30 days, you're gonna back a couple of weekends, it's gonna slow you down. Right? So we started to actually get very fascinated. Yeah, literally all of the factors that will impact whether car sells on time or not. And we've got it down to a refined set of 196 things and input super

Kyle Mountsier: 1:44

refined 196. Yeah. Well,

Len Short: 1:48

I mean, every GM knows it. Yeah, they know, hey, let's, I'm gonna trouble this because it is, you know, and so we don't ever listed it out, yeah, started measuring and organized it in a massive data set. And in the end, that's the secret sauce. That's the core value is, you know, technology becomes ubiquitous, it's the data, that's the golden, you know, and so it's put us in a position where we can now predict within three days and 300 bucks, when a car is going to actually sell. So you've got operators, what if you knew what was going to carry out? Before it carried over? I did, yeah. Because dealers, you know, often you're chasing your problems, right? You buy something boarded by days, you start hitting the markdowns, you know, so you're reacting to a bad situation, you know, this is allows you to kind of get up ahead of it, nip it in the bud before it becomes a problem. So big data is the key. And it's it's the core of our business. You've

Kyle Mountsier: 2:51

seen obviously, over the last shoot 90 120 days, a dramatic shift in the market and the speed of retail, especially the speed of turn, both the new and us, right, and entering into, you know that we're fully into q1. Now. How is that data moving? And what should dealers be paying attention to when it comes to their inventories? Yeah.

Len Short: 3:15

So you know, it's no secret we're in a bit of a changing market is a headwind. So we're seeing day supply. Luckily, inventories came back. Now it's kind of keep coming back.

Paul J Daly: 3:30

Remember, when we were like, You know what, maybe this is really finally how to reset everyone.

Len Short: 3:35

We're like, no, why human nature? Yeah, make money when they wholesale vehicles? Yeah, not gonna happen. So I'm marking space. Yeah. So. So I think, you know, we had a market where you can make a mistake, and it wasn't that punishing. You buy the wrong thing at auction. The market was failing. A lot of operators that will not anymore. Yeah. And so we're back to the basics of boring about carryover inventory. Right, that's, you know, the bigger half of the retail equation isn't what you sell on time. And that's great. That's where you make all your money and make money, but it's what you carry over and how you dispose of that risk. So you know, we're talking to dealers, they're seeing this happen in their lives, more supply, deeper discounts, tighter margins, and yeah, higher interest rates. The carryover is really kind of dragging them down. So you know, we're all about getting back to the discipline of managing that side of the business, the defense side of the business, right? We were all on offense. Yep. It was a great business. So we're chasing the top line. Now. You got to actually manage the defense side, but you have

Kyle Mountsier: 4:45

to start playing defense at the start. Like if you only play defense in the second half, you're done. You're gonna run up a score on the first time. I'm

Len Short: 4:52

not a football guy, but I use football analogies. It's a perfect one. It's true. Yeah.

Kyle Mountsier: 4:56

So you got to start playing defense on day one with your inventory. And I think that's what you're saying is like, expose the data to be able to play defense on day one with your inventory and know, Hey, is that car potentially going to not make it into the bucket that I wanted to sell in? And it's going to extend past that? What do I do now to make sure that car gets sold?

Len Short: 5:16

Because the truth is, and every dealer knows this, listen, if I'm stocked, right, I have a great business. Right? Right. If I got the stuff everybody wants, I'm moving. I'm making great, great,

Kyle Mountsier: 5:25

great restaurant that has the right the right well, and the right app shell.

Len Short: 5:29

Yeah. Right. So So you know, largely, that's, you know, that's the core of the business, but it's what spills over that can either make or break you, you know, and so yeah, getting on top of that, the truth is, I have the utmost respect for this business and the the operators in this business. I've never seen a more resilient set of business people, right, have more stuff thrown at them, and they figure it out. Right. It's a great, but, you know, a lot of operators lost discipline, in the, in the Go garments. Hell right now, yeah, absolutely. And so, you know, we're back to the basics. I had lunch with an owner 23 stores, he was telling me, some of his guys are starting to ask him, well, when are we going back to normal? And he says, I never say this, I just smile, but like, we are going to normal. Never seen normal. The normal car business is a, you know, Doggy Dog top rate, you know, tight margins, you got to be a, you know, an excellent operator. And so I think we're, we're coming back to the core disciplines that made the great operators great. And, you know, some of the old guys like me are looking back, say that, finally, we're back to, you know, what we know. And, and the great thing is we've got, you know, a universe of dealers who are very tech savvy, they're adopting I've never seen anything like it was the other interest in in true machine learning. Yep. Yeah, there's, there's no barrier, nobody's pushing against. Everybody's open to know, they see it happening all around them. They know, they just flew I went

Kyle Mountsier: 7:09

out last year acting with their daily life. So why not? I went out last summer

Len Short: 7:13

met with over 100 owners, big groups, most of them nine customers to kind of preview what we were doing just to get feedback, like, Hey, can I sit down with you show you what we're doing? And, you know, they were all, you know, saying the same thing. You know, they're, they're, you know, they're, they're basically saying, hey, this market is gonna change. We're gonna go back to some of the core disciplines, you know, and you know, some of my people are going to have to learn a whole new way of

Paul J Daly: 7:40

operating. Yeah, absolutely. Yeah. Len has been so much. So great. Spending a little time with you today. It's great hearing about the history and what you're paying attention to now, I love the analogy with the defense. I think it's going to be helpful to a lot of people. Thanks so much for thanks for having me.

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