The story and background of entrepreneurs Anthony, Juan, and Steve, is incredibly inspirational. They are on the path to building an impactful and world-changing business, while enduring seemingly endless adversaries, and overcoming countless obstacles along their journey.
How They Started
In the light, looking at the three friends, it is worthy to note that they have always been passionate about cars. After hearing about it from a family friend, Steve and Anthony came up with the idea to export cars to auto dealers in the Dominican Republic. They thought it would be a good way to build a consistent and profitable business. Steve decided to contact his close friend Juan Villagrana; a world traveler with a B.A. in International Business.
Juan had been traveling to the Dominican Republic for the past 8 years and was very well connected with the local community. In December of 2015, the three entrepreneurs traveled there and met with dozens of auto dealers. They realized that these auto dealers in the Dominican Republic faced much bigger problems than they had previously imagined. They struggled with getting competitive pricing on vehicles, U.S. based logistics after the vehicle was purchased, and transparency and honesty with the people they worked within the U.S.
To them, this meant that the business opportunity was much bigger than they had expected. These dealers were all facing the same problems, and because of the geographical distance, and cultural differences, they didn’t have any scalable solution to fix them.
The Birth of Pierpont Global
And thus, came the birth of their new company: Pierpont Global.
The current process for importing vehicles was massively complicated and completely unscalable. Way too many moving pieces along the way, more people than necessary involved, no way for the dealers to know their true cost and the whole process was solely based on trust. Which in business, is never a good idea.
So the trio came up with an idea to take a seemingly complicated process and make it drastically easier; using technology.
Their idea was to create an online platform that integrated with major U.S. auto auctions and would manage all of the post-purchase logistics to get the car exported. They would build a digital proxy bidding solution that allows the dealers to input their maximum bid prices, so the system could bid on their behalf winning the vehicle at the highest bid increment.
More importantly, this solution solves the inherent geographical issues that come with working with one person from the U.S. Now, from their computer, dealers can purchase inventory from all over the United States, without having to know somebody within each specific auction location.
The team knew that if they were going to provide this solution for dealers, they would have to learn to think like dealers. After returning home in 2015, they did just that.
“I sold my motorcycle, and that was all the money we had. We took $800 and bought our first car, a faded burgundy 1998 Honda Accord. It had a bad transmission, and we fought for weeks to break even on it. We ran it back through the auction and finally got our $800 back, but that was one of our most important lessons… we saw just how difficult this business was.” Says company co-founder Steve Solomon
Over the next 18 months, they worked relentlessly to grow the business. They reinvested every penny back into the business, and never once took any outside investments. The only time funds were ever taken out, were to pay for food and basic living expenses.
Within 8 months, they went from selling cars outside of their house, up to a 3 car warehouse, then eventually on to a 6,000 sq ft warehouse lot on South Florida’s coveted Funston, St. A warehouse which Anthony and Juan would end up moving into, and calling their home.
“An opportunity came up to upgrade our warehouse to a nicer and bigger location. We only had around $27k of capital liquid and in inventory at the time, the move to a bigger warehouse would cost us $14k. The business was so young at the time that I knew that we couldn’t afford to do the move and still take out $500/month to pay rent. So we put the business first, Anthony and I moved into the 2nd office in the warehouse. It was only 150 sq ft and had no AC, but we made it work” Says co-founder Juan Villagrana
Living out of a glorified box, and showering at the local Planet Fitness, the trio went from having a net loss the first month, to just under $2,000 profit the next month, to then generating $15k/month by the end of month 3. Maintaining the same work ethic, a year later they built a business generating a consistent sell $25k-$30k/month in profit.
“We sold cars faster than everyone else on the block. Our average hold time was 2 weeks and we averaged just over $1,000 profit on each car. We didn’t have set business hours, instead, we focused on innovative online marketing and qualifying leads so we didn’t waste time with customers who weren’t buying.
Because of this, we were able to sell a consistent 25-30 cars every month when other dealers struggled to sell 5-10. But it’s hard to tell a 50-year-old guy who’s been doing this for 30+ years what he can improve on when you’re just a 21-year-old kid.
But hey, these guys, especially in this industry, they’re stuck and focused on how business used to be, not where it’s going. I mean c’mon, sitting in a golf cart, with a bunch of small American flags on the cars, terribly marketed vehicles with a sign that says “Zero credit needed, everyone approved…” There’s a clear reason why we outperformed every dealer on our block.” Says company CEO Anthony Armada
So we asked the trio if you guys were doing so well, why did you stop? Why would you stop a profitable business that took so much effort to build?
“There’s a difference between doing something that makes good money, and doing something that you’re passionate about, something that has the long-term potential to impact an industry. We started with one $800 deposit and built what many would consider relative success, but that was never the vision.
The platform was always the vision, and because of the experience we got from running the dealer, there’s nothing that anyone can tell us about this industry that we don’t know, or that we haven’t experienced” – Steve Solomon
The trio officially stopped the dealer in May of 2018. Within the past 5 months alone, they have completed a full elicitation and outlined the technical scope for the new platform. They have closed a deal and signed a formal contract with Manheim and Cox Automotive – The world’s largest auto auction, to expand the marketing of their inventory to Latin America using their platform.
The team has also traveled to the Dominican Republic, opened a remote office and hired 2 full-time developers and one part-time developer/project manager. They’ve gone on to established strong relationships with the head of one of the largest Dominican dealer associations. And their most recent progress – getting signed commitments from 25 different Dominican dealers who want to sign up and pay to use their platform upon their launch – January 1st of 2019.
“I spent 8 hours a day going door to door to dealers selling the advantages of using our platform. Many owners weren’t in, but of all the owners I spoke with 72% of them signed our form to be one of our first customers.
It’s funny because almost 3 years ago I did the same thing. I had a dealer in Santiago tell me that we were young and had no idea what we were doing. I saw him last month and turns out he went out of business and is selling cars for some other guy.
I told him that my company is now an official partner of Manheim – the largest auction in the world. He looked over at our mutual friend Jose and said, “Sabía que iba a hacer grandes cosas” (“I knew he was going to do big things”). That’s when I knew for sure that we were on the right path. – Juan Villagrana.
But it has not always been easy for the guys. Their path to self-funding their platform has its pros and cons. Ideally, they would have loved to get to this point sooner, but because of their humble beginnings, they never saw outside investment as an option. In the recent months, they have made significant progress, but are now, more than aware of the significant opportunity cost.
“We started with nothing…we didn’t have a dad or a well-off uncle to give us a few thousand dollars, or help teach us the early lessons in business. We’ve sold over 500 cars, we’ve lost money on only 3, and broke even on 4. – And yes, we kept count. Your level of attentiveness in business is different when you’re working with your own money, when everything you have, you’ve built from nothing. Time, sweat equity, even sweat from sleeping in a warehouse office – it all adds up, and it forces you to create success with very limited resources. – Anthony Armada
What’s Next for Pierpont Global?
So we asked Anthony, what’s next for Pierpont Global?
“Right now we’re focused on raising funding. We’ve been living off of savings and a couple credit cards to do everything…eat, cover expenses, pay developers, etc. It’s not ideal, but the business has made more progress over the past 6 months then we’ve made over the past 3 years, and that’s all that matters. We spent a lot of valuable time, trying to figure out a way to self-fund everything, which has taught us a lot, but the ROI in terms of opportunity cost just doesn’t make sense.
We learned that the hard way and that’s why we’re now raising capital. We’ve proven ourselves in creating something out of nothing, but there’s nothing worse than selling a Civic to a super picky and annoying buyer when you really want to be building something to change the world. And that’s why we’re so excited about what we’re doing now.”
If you would like to learn more about Pierpont Global and would like to be a potential investor, you can contact them directly at [email protected], or explore their company investment page: https://gust.com/companies/pierpont-global-inc
After all, some of the greatest companies come from the most humble beginnings.