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It's Called a Start-up for a Reason Featured

Everybody is so busy clapping their hands for Carvana's "triple-digit growth" that nobody seems to notice its second biggest increase was its loss, by 122 percent. yes, I know, losses don't matter, look at Amazon, blah blah blah. Also look at Pets.com, Webvan, etc. Whatever. gross profit apparently trumps net loss with the "smart" money on Wall Street.

But despite Carvana's net loss of $38.4 million, the pressure is on companies like CarMax. Many people can't seem to understand why companies like CarMax can't just do what Caravan does. This is the future, after all. Take "investor" and stand-up philosopher Stephen Green. He recently wrote: "Just like Sears did, Radio Shack had the catalog business and associated customer database available to put together a first-rate online business before Amazon sold its first book. Neither company’s management proved innovative enough to do so, and now both are failing." Ah, Greenie, if it were only that simple. Some of these problem comes from managerial stubbornness. But part of it is these companies have other pressures on them. They have rents to pay and pensions to fund. They also have investors who put their money in these companies for reasons other than why they put their money in Amazon and won't put up with the losses Bezos incurred in the early years.

Sometimes it is easier to start from scratch. And sometimes what seems like a brilliant idea, isn't. Only time will tell which category Caravan falls into, disruptor or noise. 

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Ted Craig

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