An "Overnight Business Success" Story - CarProof

Vince Kern  
Welcome to another Friends in Wonder podcast, a place where we invite you to wander with us about meaningful topics without judgment or limits, brought to you by two lifelong friends looking for insights through a lens of how can this help. I'm Joe Luthor, and I'm Vince Kern, and we're your hosts. Now let's wander and wander together. 

You know, Joe, when I was a young cub reporter, I remember thinking about the books I was going to write and all the things that I was going to go through. And then I read a quote from Mark Twain. And it went like this, it said, every journalist has a great novel inside of them. But that's exactly where it should stay. And, and then always stuck with me, Wayne, yeah. And it always stuck with me, because I thought, you know, I'm going to be this great storyteller, and I'm going to be up there on stage. It but there are a lot of great stories that each of us have. And whether it becomes a novel or not, if they're worth listening to, I think one of the benefits of being our age is that we can look back. And certainly we can look back with gratitude now, at at our career and all the challenges and, and I think the story of the business that you and your brother and two other partners or few other partners at the time founded, called CarProof is a great business story. But it's also a great story of perseverance, you know, optimism, the things that it takes. And looking back on it. I I hope you willing to talk a little bit about that today, Joe, because I think it's worth sharing.

Joe Luther  
Yeah, I appreciate that, Vince. And, and I agree there are a lot of stories that through the benefit of old age are worth looking back on and deciding whether it's a story that that journalist should tell, or if it's a, if it's a book that needs to be written. And I don't know, over the years at cocktail parties, or you know, whenever I've people have asked me about, you know, my career arc, and the story of CarProof tends to be an interesting one. It's a long one. And I hope we can kind of streamline it today. But it is interesting, because it weaves a lot of similar stories for any really successful or maybe even not so successful business story, because there are a lot of dynamics when it comes to taking an idea and turning it into a business and in it becoming successful. And certainly CarProof became a financially successful business. But it's an interesting story. So I'm happy to tell it with you today.

Vince Kern  
Well, I'm glad I'm glad and you know, there's always a beginning somewhere so I mean, let's let's just back up a little bit you you gotta you're an attorney, you got a law degree and you practice law for a while and and then you left law and worked in. I don't know how you did the scrap yard industry, which is a big thing. But but somehow you got involved with your brother and cars, and maybe that's a good place to start.

Joe Luther  
Yeah, I was. After my my law career ended, I got involved in various Detroit based businesses, as you said it had to do with the scrap metal industry, which is a very big business in Detroit. But at some point, my brother needed help in the business that he was involved in, which was importing us cars from Canada, into the United States. We lived in the Detroit area, which is on the border of the Detroit Windsor border. And in Michigan, obviously we got a bridge and we got a tunnel. Yeah, yeah. And we have it up in Port Huron as well. And Saturnia and we, Michigan border is the most populated province in Canada and my brother took advantage of that by buying cars in Ontario, the Toronto area and bringing them into the United States and taking advantage really of the strong US dollar. And then it morphed into something really big. They were like the pioneers of that industry. And as it got bigger and bigger and and hundreds of car dealers in in Canada and the United States knew of the opportunity. They decided that they needed to create a business that would involve a lawyer. And so I I took the opportunity and and we created a partnership that was involved was in in moving vehicles for large fleet owners of vehicles in Canada and marketing them in the United States, and letting those fleet owners reap the rewards of selling them in the United States. So these would be

Vince Kern  
like rental car companies in Canada that they turn over their their fleet every year every two years. So, so Bill, your brother would and his partners would would buy them wholesale, bring them to the United States, and then they would ultimately be retailed so. So this business was happening and things were going along pretty well, I guess. And what what happened to cause you to begin the adventure of CarProof?

Joe Luther  
Well, yeah, so then, like any good business, usually, a new business is launched because of a need. And what happened with us is some of these cars that we were importing, were coming from Canada to the United States with problems. And they had history problems. They were either vehicles that had been in bad accidents, and unscrupulous dealer was trying to take it into a new market. Where that can we say dumb history? Yeah, they were basically washing. It's called Title washing, and you're taking a vehicle with a bad history and putting it into a new market where it doesn't have that history. And there's really no database, we're talking, you know, this all was going on in the late 1990s, like 9099 is when we when we decided to start this business, because there were cars coming across that had bad histories, and there was no service available to protect unsuspecting buyers and

Vince Kern  
Wait a minute....couldn't you just do....Just do a CarFax.

Joe Luther  
Funny you say that Carfax did exist, but it only existed in the United States. And really, they were just getting started in the late 1990s. And there was no such service in Canada and quite frankly, in Canada, they needed it more because the provinces and territories of Canada were all very autonomous. And so data from one province did not really follow the vehicle if it if it moved to a new province. And in fact, that was what caused some of the problems that we were having as these cars were making it into the United States.

Vince Kern  
So if I bought a car in Ontario, it had been in an accident in Vancouver, which I guess is British Columbia, it wouldn't necessarily, I wouldn't necessarily know about

Joe Luther  
it. Yeah, that end, there were liens. So if you bought a car that had a loan on it, and it was now in Ontario, but it had a lien on it in British Columbia, you would be in danger of buying a car that could be repossessed by a lien holder in another province. So yeah, there was a there was a real need to to kind of unify the databases. And because, in fact, my brother had bought some vehicles from a car dealer in Ontario that had liens on them, and they were sold in the United States. And then repossessed from the retail the ultimate retail buyer in Ohio. They were starting to be repossessed by the lien holders.

Vince Kern  
Wait a minute, wait a minute, I'm a guy in Ohio, and I go to my local dealer and he's got a used these were nice cars to these weren't all like, Yeah, whatever Denali. Cuz I remember them talking about Denalis at the time. And so I bought this Denali and I'm driving it along for whatever, three or four months and the next thing I know it's getting repossessed.

Joe Luther  
Yeah. Well, that's what was happening with these cars that my brother bought is that they were like you said they were Denalis. They were six months to a year old vehicles. And they were worth 10s of 1000s of dollars. And they had liens on them. In Canada, unbeknownst to my brother, unbeknownst to the dealer, he bought them from in Ontario, they had liens on them in Quebec. And so that's when the idea was hatched, that we needed a service to provide this data so that these cars could continue coming from Canada in the United States. And we were doing it mostly as a protection airy

Vince Kern  
right your business and keep the business going. Right?

Joe Luther  
Yeah. And then it actually it started to morph into this idea that it was going to be a mandated product for all cars coming from Canada into the United States. And we actually got very close to that becoming a reality. Because there were associations for the the motor vehicle dealers in the United States that were concerned about Canadian cars coming in with liens on them, and so they were concerned about it, and then similar li there were all the factions, the lending institutions and insurance agency in Canada that were concerned about these vehicles going out of Canada with these liens on them. So we had a, we had industry very interested in, in in creating a mandate for a product that we were going to create the solution.

Vince Kern  
Did you bring that? How did you how did you address that? Did you guys take the initiative to bring these people together? Is that Is that what happened?

Joe Luther  
Yeah, we created a an association, or it really was a task force, with multiple parties from both sides of the of the border, that were interested in making sure that this fraud didn't continue with these vehicles coming from Canada into the United States. And, and so we created the product. And we also were creating, we were involved in trying to truly create the solution to the problem. And, and sadly, it was we put a lot of time and money into this naively thinking that this was going to be my mandate. And we were very close. But then. And then we had a little bit of a curveball thrown at us. What could that be 911 911 2001 happened and and then all bets were off in terms of anything having to do with border enforcement, we were no longer able to get anybody in the government of the United States are really, for that matter, the Canadian government to concentrate on anything other than protecting against terrorism. And so this idea that we had hatched to create a mandated product for our vehicles being imported from Canada, the United States was pretty much mothballed. And so, at that point, we had to, we had to pivot really, and that was, that was really an interesting time, because that's like, probably any business where you have an idea, you put a lot of time and energy into it, and then a curveball gets thrown at you. And in this case, we had the curveball of 911. And, and that really threatened this whole idea that we had been working on.

Vince Kern  
So you had spent you guys had spent a lot of time a lot of money bringing these people together these, I mean, you said that, you know, this task force but but getting a task group together from a border patrol agents and insurance companies. It was a pretty diverse family, but also use the word business side, our friend is going to chastise me for that, but But you know, you guys were trying to get these people. Yeah, that's a lot of time, a lot of money, and then boom, it's gone. So this was gotta be a seminal moment. Scary. I mean, yeah, we stopped at that point, right, we had

Joe Luther  
put hundreds of 1000s of dollars and 1000s of hours into this company called Lean West, which was going to be responsible for providing lien data for vehicles coming from Canada into the United States, and in really cleaning up the process of turning these vehicles into, you know, properly titled, vehicles in the United States. And then suddenly, that was off the board. That was off gobble. Yeah. And, and then what?

Vince Kern  
Yeah, so what happened? I mean, what did you guys do? Well,

Joe Luther  
we decided that we were very close to having a great product that could be really beneficial to the Canadian Car Dealer market, since it was no longer gonna be a product necessary for the car importing industry in the United States. We thought, well, maybe we can salvage something out of this and make a more robust product. That would be a value to the Canadian marketplace, US car marketplace. And so

Vince Kern  
hence CarProof became into existence is that when Yeah, proof was born,

Joe Luther  
yeah, we decided that we weren't just going to be a lean vehicle report company for Canada, we decided to turn it into something bigger than that. And so we came up with the idea of CarProof certainly helped us because most people didn't know if leading Quest was spelled e l, e i n or li e n. And CarProof just had a better name to it. And quite frankly, we started to really ride on the coattails of the efforts of Carfax in the United States because they were becoming quite popular and in most of the population of Canada is along the border of the US market. And so they knew about this idea of a vehicle history report because of car care. And we decided to fill the need because there was no Carfax in Canada. So we came up with this car proof idea. And it really created a much more robust product for the Canadian market than Carfax had created for the US market.

Vince Kern  
This this is to me where the story gets really, really fascinating. Because, you know, here, you guys were with a great product, and certainly a need for it. And then you were dealt this uncontrollable blow of 911. And instead of, you know, throwing it in and, and calling it quits, you decided to do something different, which actually kind of has a, you said, it's a more robust report. And, you know, for instance, you guys were doing things like live pinging databases in real time back in in the early 2000s, which wasn't really the standard for, you know, consumer services. So I could, you know, buy a car and get a report on it from, you know, a week ago. And so that's, that's all great for the for the consumer. And Carfax was doing a lot of advertising and like you said, you know, people in Ontario would see that and on TV, because, you know, they're watching hockey games from Detroit or whatever, or just knowing about it in general. So, so what was what happened with CarProof? I mean, it sounds like this kind of revolutionize the Canadian car industry in a lot of ways. Well, it

Joe Luther  
did, because what we did is we had an opportunity to create a product that was really like nothing else that you know, preceded it, there was no, there was nothing else. There were like, provincial reports. So if the vehicle was in one province and state in one province, you could find out some data about it in that province. But what we did is we went to national and in some cases, international databases, we got industry, data from the insurance industry having to do with whether there were insurance claims, on a particular vehicle, we did the same thing for the collision estimating software, we found data points that were very robust. And and as you said, we've we bring them live. So if there was an accident on a vehicle, from a couple of days ago, we would be able to tell the consumer or the buyer could have been a dealer or a consumer in real time about that information. And in that was completely different than what Carfax had been doing in the United States, Carfax would go out and buy data and put it into their own database. But it would only be as good as how, how recently they bought that data on the car. And so ours was live. And it was very different. And it was it really, to make a long story short, it revolutionized the used car industry, buying practices, because once our product got out there, and people began to know about it, it became an opportunity for them, it was like a hot potato almost if you if you were a dealer who bought a car but didn't do a car proof report, you were running the risk of now having a vehicle that had a bad history on it, and somebody else found out about it, now you're responsible for it, in fact,

Vince Kern  
would be liable for that. Yeah,

Joe Luther  
yeah. Yeah. Oh, yeah. If you if you sell a vehicle, and say that it hasn't been in an accident, but you don't really know if it's been in an accident, or if you have a vehicle and, and now the consumer finds out that it had been in a major accident and you didn't disclose it. You couldn't be, you know, the complaints can be filed against you and, and you can find yourself in a lot of trouble for that for not having disclosed that data. And so when our report came out, we basically created transparency, the opportunity for transparency. And what ultimately happened, Vince is that the regulatory agencies in four of the, of the major Canadian provinces in in Canada, in effect, mandated our product here we have we got back to this idea of mandating. But once our product was out there, they started requiring car dealers to provide this information or a report that provided information like ours as part of the retail sales process. So in Ontario, Manitoba, British Columbia. I'm trying to think there was another one, Alberta they all require For a product like ours as part of the retail sales process, it was really gratifying. Obviously, we sold a lot of reports and made a good amount of money. But at the same time, we also brought transparency to the used car market in Canada.

Vince Kern  
Well, yeah, and, you know, we talked about things that happen that are out of your control that are, you know, bumps and challenges. And, you know, you almost lost the business was almost stopped because of 911. But then, in, on the other hand, 2005 came along, and Hurricane Katrina, and a lot of American people were trying to send flooded cars up to Canada. So by then your report was live, and the consumer service that that you provided to the Canadians who could get the report and say, oh, yeah, it was in Louisiana, in 2005. Well, that's a red flag.

Joe Luther  
Yeah. So that became one of the features of our report is, in fact, that was part of the transparency is that it didn't matter where that vehicle had been registered, we were providing the full host of information. And I report was a lot more expensive than the traditional vehicle history report, which was Carfax at the time, our report was a lot more expensive, in most people said that we weren't going to be successful, because it was going to be too expensive a report. But we always say that, you know, other than house the most, the biggest purchase a consumer ever makes is, is is a vehicle. And if you're gonna buy a used vehicle, which most vehicle transactions are used, you're going to want to know as much as you can about that. And certainly 10s of 1000s of dollars of a purchase would warrant the $100 price tag that our vehicle history report cost at the time. And it was, you know, we actually were able to kind of streamline it down to a $49 product. But people were very willing to pay that amount to get the peace of mind that our product offered. And and as I said, it got to the point where it became mandated. But yeah, if a vehicle, you're right, the bad luck of the hurricane of Hurricane Katrina, help bring more awareness to the need for a product that shone shined a light on on the history of it no matter where it had been.

Vince Kern  
Sure. And, you know, that would have happened, had there not been any car proof those cars would have just been used the word flooding into Canada. Yeah. And and so, you know, it's kind of a, I know, you guys have a quote about this. It's kind of a rags to riches story in a certain way. I mean, this didn't happen overnight. And I think that it's, it's, it's, you know, a great example, for people who are in the middle of their careers or beginning their careers, to, again, just points out that, you know, there's an adventure and a journey to everything and, and so, I know you guys like to say a quote about the rags to riches thing. But But talk about you know, what happened next in in, you know, as this thing got more popular in Canada? Well,

Joe Luther  
when you say rags to riches, I think the quote you're talking about is, we say that we're an overnight success. That took 15 long, hard years and in really, that's the difficulty when you talk about a story like this is how to how to do it in in an interesting and succinct way. There are a lot of details of bumps along the road, that some people might have considered bad luck, but ultimately turned into maybe being good luck. And without question, that is what happened in our story is we we had a lot of good luck, it was it was good fortune, that there was these these autonomous databases in Canada that did not speak with one another. And we happen to be coming up with this idea at a time when databases could be merged together through you know, unified languages, computer languages, and in really the, the crux of the of the product that we sold was was computer data being drawn together databases being drawn together through specific languages and turning it into a usable report for a consumer at a time when data was you know, just becoming a product. So we we started in in 1999, and ultimate We sold our company in 2015. But that happened to be the good fortune time that the data was turning into a product. And so we happen to be there at that time. But, you know, we

Vince Kern  
always say good luck follows good ideas, and, you know, karma and all, that's all related to, you know, good things, following other good things. And the mission was, was very heartfelt. And I know you personally took it as a mission to help others because that's, that's in your DNA. I remember, you know, just a personal observation being a little bit away from it. But I just remember, you know, you'd be calling on the phone a couple of times a week, you weren't, you're, you know, you're in Toronto, you were here, you were going to Port Huron to meet with these guys. You guys, were you guys were really working this thing around the clock, because that's what it took. So you put in the effort and good things happen. And you said, in in, you know, 2015 or so you wound up selling the company, talk a little bit about you know, so what was the ultimate? You guys had this product? It was going well, and and how did it get sold? And why?

Joe Luther  
Yeah, well, thanks. That's apart from the fact that we were able to make money on a product, we were very gratified that it was a product that helped consumers and helped really create comfort and transparency in in a market that was predominantly a good market, but there were a few unscrupulous characters, they could kind of cast a negative shadow on the

Vince Kern  
reason that used car salesmen is sort of mean back. Right. Right.

Joe Luther  
But not anymore in Canada as a result of this product. And, and we're very grateful about that. But yeah, so what happened in terms of how we were able to cash in, if you will, is that in 2013? The company, the parent company that owned our fax in the United States, wanted to sell the RL poll company owned CarFax and I think because of legacy issues with the original owners they needed to sell. And in a big data company, I think they're one of the top companies in the world now. I ch s purchased Carfax in 2013. And during that process, there were other companies trying to purchase Carfax one because it was I mean, the RL Polk company, it was for sale at the time. And when they were doing due diligence, one of the companies, Hellman and Friedman, which is a big private equity firm in the United States, found out about us and did some due diligence on us as well, when they were looking into buying CarFax and so in 2013, IHS was the lucky winner of purchasing Carfax but Hellman and Friedman liked what they saw in us so much that they became a partner in our company and helped us really get into the big leagues in terms of what we were doing. We ended up selling a lot of our data in the United States, there was a competitor to Carfax, the United States that we were selling an awful lot of data to and we had an idea of really taking our robust product and competing with Carfax in the United States. And I think ultimately, that was probably of concern to the IHS company, that there was this other product out there that, you know, maybe could have been a competitive threat. We certainly weren't at the time, but we were also an opportunity for a market in Canada. So they ended up buying us a couple of years after they purchase Carfax. So in 2015, the same company that bought Carfax bought us and and that was on actually it was on Christmas Eve of 2015. And it was certainly a monumental moment for the four original partners that started naively thinking that they were going to create a allene information company that was going to be mandated for car importers in the United States and it ultimately turned into this robust vehicle history report company in Canada that ultimately sold to the same company that they bought Carfax the United States so yeah, it turned out a lot different than we originally thought but it's a really interesting I think story kind of difficult to tell in a half an hour because it spans so many years but yeah, that's pretty much it in a nutshell events.

Vince Kern  
It's a great story, it's a great story for anybody who is working hard to, you know, be an entrepreneur for one. I mean, as anybody who gets into the entrepreneurial realm knows that everything is now especially today, everything's now connected to data. And you guys came along at the right time for the right reason. And I just think it's a fascinating story. And the fact that you were doing it with your brother is a whole nother interesting story. That for another podcast, possibly, but that had to be have some interesting aspects to it. And yeah, I'm

Joe Luther  
glad you mentioned that, Vince. Because when we, when my brother and I became partners in business, one of the first things that we said before we agreed to even do that is there is no way we're going to let business interfere with our interpersonal relationship. And we were able to do that over the 10 or 20 years that he and I worked together, we were always brothers and friends first and never let business get in the way of that. And in fact, the two other partners from Canada, that became partners in the in the car proof project, we all we have remained brothers and friends throughout. And in your right, there's so many things that we could talk about, you know, the, I think we talked about it in our business coaching preamble that we needed business coaching at one point during our career in CarProof. And yeah, cuz, look at we went from an idea like, like all entrepreneurs, we went from an idea to a to a very large company, and there was a lot involved in doing that. But yeah, mostly proud that we stayed friends and never let it get in the way of our brotherhood. Both my brother and I, as well as the other two partners. And so we have a lot to be proud of. But as you said, a lot of it's just good old fashioned luck. And, and we were certainly the recipients of a lot of good luck. And in we are very grateful as a result.

Vince Kern  
So there's the short version of CarProof. And I know there's a lot more that went into it. And I want to thank you, Joe, for being willing to share your candid thoughts about it, because it's not easy to talk about one's own story, and especially a story like this that had a lot of twists and turns. And we could probably do a whole series of podcasts on that. But I just want to tell you, I'm proud of you. I'm proud of the way you and your brother, also, her now taking the opportunity to to pay it forward. And I know you have two sons and a daughter that you are mentoring, and one of them is a bit of an entrepreneur, so your experiences are valuable to him. And Bill has daughters who have started their own businesses. So I know you guys are paying it forward now with the wisdom. And I just think it's great that you're able to help others and pay it forward. Is there anything you'd like to add before we wrap this up and and get the outro nailed down?

Joe Luther  
No, Vince, I think that pretty much covers it. Obviously, it's not easy to talk about your business successes and do it in a way that doesn't sound a little braggy. And I'm hoping that this story is more of an inspiration to others, because it does cover so many of the twists and turns that can happen in any business endeavor. You know, you always start with a good idea. And where it ends up isn't always the way you think it will. And in our case we were we were fortunate enough that it ended up very well for us. So we're very grateful. And I appreciate talking about it with you today.

Vince Kern  
Right and you know, for those of you who will be listening to us next week, just remember that overnight success can sometimes take

Joe Luther  
a long time 15 years at least