Our guest this month on the Good Money podcast is Chen Wang, CFO of Car Next Door, the car-sharing startup that connects rented cars to drivers across Australia. We spoke to Chen about his career, running a car-sharing business during a pandemic, how he approaches money from a business perspective, and what kept him and Car Next Door going for the past 18 months. Below are some of our highlights from the show. You can listen to the full episode here. Friday, 23 July 2021
When Chen started his career all the usual corporate suspects wanted him to work for them, investment banks and law firms but none of them could capture his interest the way he wanted. Then he found Car Next Door, joined as their part-time bookkeeper and the rest is history. Now he’s CFO and helping to chart the company’s course and strategy on a day-to-day basis.
the car next door
The startup is, like most great businesses, simple at its core. It’s peer to peer car renting, if you own a car and have blocked out time where you don’t need it you can list it on Car Next Door to be rented by one of the company’s customers. It was made with convenience in mind as there’s no need for a rental company to act as a middleman, the renter simply goes to where the car is parked and starts driving. Car Next Door don’t own any of the cars, they capitalise on regular people owning cars who want to make money out of the car when it’s not in use. The company has been active in Australia since 2013 and started in Bondi. It has 200,000 members with 4000 cars available across the nation and Car Next Door is looking to open up across Southern Australia and Northern territories soon. Mission focus is key to the success of any business. Without a clear goal of what you’re setting out to achieve it can be difficult to attract talent and accelerate growth. For Chen the Car Next Door focus of offsetting carbon emissions was a major plus point. It was a way of reframing how we view cars, rather than one person owning one car, people are now able to share their assets with the car owner making money through rent and the driver not needing to make a full car purchase to make one journey. This approach also means we’re making use of resources for a lot longer, Car Next Door discovered that for every single shared car, seven to eight cars are taken off the road. That multiplier mentality has since taken root in Chen’s approach to work. Rather than having one employee providing one unit of output, why not give them scope to grow beyond their role, give them the trust to bring everything they are to the table and create multiples of value in output. This approach has helped a lot given that the company is a startup, no-one has time to babysit anyone else and there’s always a need for trust. Showing that trust by letting employees be all that they are rather than stuffing them into a narrow scope of work means that they’re able to get a lot more done.
grow, grow, grow
Some CFOs are focused on tax exposure and finding the optimal way to achieve that. But for a startup or any small business that shouldn’t be the first thing that CFOs look at. Focusing on top line growth is the best thing for your company. First you need to make money before you figure out how to optimise the set up for success and after all that is done then you can look at tax exposure. Making money, commercialising your product, finding product-market fit, all of these things are more important than any tax issues. Once you’ve done all that and your staff is happy and you have a good enough product for people to be happy to pay for it then you need to market it. Audiences are part of your company’s growth journey, they’re the ones who are engaged with your company and will want to purchase your product. If you can’t do that then the company will struggle. Figuring out your marketing, and understanding how a single dollar impacts how a customer is onboarded means you can more easily create a strategy for the business as a whole and how marketing can make the business more attractive to customers. It’s also important to make sure that you’re measuring the right things. For a long time Chen was obsessed with how many borrowers were getting onto the platform. But what really mattered was how many transactions were being made on the platform. Looking at how your users generate money for your business is more important than how many users you have. Optimising your funnel to get users who regularly transact ended up being one of the more important aspects of marketing the business. Getting business information as early as possible and understanding how money is moving is one of the most important aspects of the business.
Pricing was a huge point of fear for Chen. Part of this was because his information was only coming from a dashboard that didn’t measure metrics early on. But also the fear that increasing the price by a dollar would see a loss in customers. This fear was because initially they hadn’t dug into the customer base and figured out what the quantitative and qualitative thresholds were for customers when it came to opting out of the service. This is why staying in communication with customers is so important and why A/B testing everything is a fundamental business practice. But beyond that look at customer data, what are the trends telling you, if customers are using your service on a daily basis maybe they’ll be happy to pay a little more. There’s no singular way of forecasting business activity, you need to test often and figure out what works for your business. We’ve barely scratched the surface of our talk with Chen Wang, CFO of Car Next Door, click the link to listen to the full podcast now.