CARLYPSO

Nicholas Hinrichsen

San Carlos, California
Cofounder & CEO, CARLYPSO (Acquired by Carvana)

Originally a peer-to-peer platform for buying and selling used cars, Carlypso is an online platform that gives customers access to wholesale inventory and helps throughout the buying process by performing inspections and arranging delivery.

I came to the U.S. from Germany to go to business school at Stanford, where I met my cofounder, Chris. After we graduated, we started Carlypso—with the goal of building something like an Amazon of used cars. We went through Y Combinator, raised $10 million in venture capital funding and ran the company for about four years.

Our goal at the outset wasn’t necessarily to be acquired, but rather to build as big as we could. We discovered that running a car retailing company is really, really hard and capital intensive—particularly what we were building—because success required vertical integration, essentially being three companies in one: a logistics company, a bank, and a car dealership. We became very good at two of these pieces, i.e. the car dealership and the logistics company. But our inability to provide financing, especially to buyers with low credit scores, led us to sell our business to Carvana. Carvana had inherited the lending business from its parent company Drivetime, and so we decided selling to them seemed like a good option.

Venture investors have an expectation for a high exit multiple. Returning capital to investors was important. At the point of the sale, the intellectual property we had created had become very valuable. The technology, however, wasn’t as useful without the team that had built it. Therefore, ensuring the best deal for our team—making sure they had a job that paid well where they could apply what they learned and eventually move on—was 100% aligned with our investors’ financial interests. Everyone on our team of about a dozen were able to join Carvana.

Looking back, I wish we could have stayed independent and been the successful company in a position to acquire, but this was the second best possible outcome for us. We couldn’t have built what Carvana had inherited.

I worked at Carvana in a few leadership roles for a few years, in addition to advising and investing in startups. In 2020, my co-founder and I left to build a new startup, leveraging our deep knowledge of the industry to help consumers with their auto loans in particular and their consumer loans in general. Since then, we’ve raised $41M in venture funding from amongst others Andreessen Horowitz and our strategic partner CUNA Mutual Group. We’re on a mission to turn Credit Unions into FinTechs and help consumers with their financial well-being.