From the Michigan Engineer Entrepreneurship program:
“The Entrepreneurship Hours is a weekly series of lectures featuring high-profile entrepreneurs who speak about different aspects of entrepreneurship. The event began as a modest presentation to 140 people, but popular demand forced the CFE to move Entrepreneurship Hours to a venue that seats more than 400.”
Watch Carolyn’s speech online (beginning at the 10 minute mark) via engin.umich.edu
Text of the speech:
Hello, I’m Carolyn Coquillette, owner and lead technician of Luscious Garage.
My thanks to all of you for coming and to Thomas and the Center for inviting me to speak. I’ve reviewed the website, watched some of the videos of previous speakers, and I must say I’m honored to be a member of this distinguished group. One thing clear is that there are many kinds of entrepreneurs.
My business, Luscious Garage, is in fixing cars. I have one employee, another technician. We constitute a small, two-lift shop in downtown San Francisco. Cars come in, we service them, the owners pay and the cars leave. Big deal, right?
But, as the name implies, Luscious Garage is a very special place. It is unlike any auto repair business on the face of the earth, and even though we’re still trying hard to turn a profit, we have been featured in countless media outlets, from Wired to Autoweek, CNN to PBS, the Wall Street Journal to the New York Times, and we’ve only been open 20 months.
[SLIDE] Over the next 30 minutes I’ll explain:
– how I got from being a wayward graduate of U of M to the “Prius Whisperer” that my customers call me
– the business of being “luscious” and my target market
– the trends in hybrids and EVs (depending on time)
– idealism versus economic reality
A little bit about me:
I’m 30 years old, I graduated from UofM nine years ago, in 2000, with a bachelors in Physics and English from LS&Play. Any time in the classroom since then has pertained to cars. I am Master ASE certified along with a pile of miscellaneous credentials.
I’m only two years old when it comes to owning a business. I have no formal training in business. In case it wasn’t obvious, starting a business and sustaining one are two different things. When the Center for Staying In Business asks me to speak, I’ll be sure to let you know.
[SLIDE] That said, here’s what I have discovered since *opening* LG:
1.) There is more to business than making money
2.) I’ve learned the fastest working hands-on
3.) My unique qualities as an individual are my biggest, and exclusive, advantage over the competition
I’ll return to these later.
[SLIDE] Michigan to fixing hybrids
So how the heck did I becoming a mechanic?
A lot people ask me if my dad was into cars. In fact I come from a white-collar background, where tools in the family garage consist mostly of cheap screwdrivers (you know the kind, the ones all worn down and just destroy the thing you’re trying to turn).
So when I graduated from Michigan I didn’t know a single thing about auto repair. I mean nothing. I loved to drive—especially 120 mph through Canada on the way to the east coast—but I never once checked the oil, let alone changed it. It’s a miracle I didn’t kill myself. When I did finally have a problem shortly after graduating (my dome light wouldn’t turn off), I had no idea what to do. I was helpless. This made me think that all the time I spent in college didn’t actually teach me anything useful.
So I signed up for night classes in auto repair at Washtenaw community college (just a few miles from here), for fun mostly and basic skills (and it also helped boost my ego after those grueling classes in differential equations).
During the day I still needed to earn money and appease my parents, so I continued a path I had already started in non-profits.
I was going to save Detroit, help people out of poverty. I was thinking
– education
– community development
Instead a summer internship at a Detroit youth program went nowhere. While waiting on call backs, I drove a limo. (Holding the sign at the airport, the whole thing.) I was eventually hired as a long-term substitute English teacher in the Romulus Middle School, inheriting 150 8th graders who handed my ass to me. I quit, and tried to apply for an engineering job, but quickly realized that there was more to engineering than physics, and I didn’t have any job experience.
With the job hunt an utter failure after 8 months of trying, I was very depressed, and I surrendered trying to do something with my degree. The second semester at Washtenaw had just started, and one of my instructors was looking for a “porter”, a minimum-wage shop peon to mop the floor and pick up parts, and I decided to go for it.
Accepting this job, making auto repair my day-job, not just something fun at night, fully alienated me from friends and family, who were in shock. I had gone rogue into the trades, where things are dirty and seemingly have no future, no special importance.
In retrospect it turns out to be the best decision I made.
[SLIDE] Four months later, at the end of my 2nd semester at Washtenaw, I saw a hiring notice on marquee at Weaver’s Marathon, the gas station on the corner of Packard and Stadium, applied and was hired.
It was the kind of shop where the guy at the counter took down your info and took your keys, and the rest was up to the mechanic. I was one of the two technicians on duty, making me half the business, and I performed the repairs, order the parts, talked to the customers, and sold the work.
**got to know a business top to bottom
**fell in love with the trade
– I had tangible skills, I could help people, I could see clear progress (cars came in broken and left fixed) not something you could say in non-profits
– Fascinated the work as applied physics
– casual, non-political work environment
There were very few rules, from other people or myself, which opened my mind. My oddness as a mechanic—both as a female and a former academic—made me outstanding in the repair industry, where I could excel, vastly outpacing customers and employers expectations.
At the time I felt like I had totally abandoned the rigor and mental challenges of my studies at Michigan, working instead with my hands. But as I continued classes at Washtenaw at night and learned quickly on the job, I became drawn to technical challenges and the changes I observed in modern cars. Looking back I see this was the genesis of my interest in hybrids, which were just coming out at the time.
After two years at Weaver’s, pursuit of hybrids and better weather took me to the San Francisco Bay Area. There I worked in two more shops, got to know several more, and cultivated a community of like-minded colleagues. I pursued training specific to hybrids to the point that I knew as much as anybody else out there.
[SLIDE] I also spent a good deal of time doing independent study of automotive trends, specifically in regards to computer technology on-board the car and environmental regulation. I took a year off working on a book (called “check engine”), which is a whole other conversation. Though it’s not published, I think of the manuscript as something of a master’s thesis on how our relationship with cars is changing.
The culmination of that study—both on the cars themselves and the trends in those cars—was the decision to open my own shop, Luscious Garage.
[SLIDE] “Luscious” and my target market
So what is a Luscious Garage?
The primary impetus for opening my own shop was that I was sick of working on regular cars. There were no hybrid dedicated shops, and I thought that if I opened an exclusive space, I could stake out a niche, compete with the dealer on expertise, and therefore get jobs that I would never experience at a regular shop, a kind of “if you build it, they will come”. Being out first and early also gave me certain advantages:
[SLIDE]
1. ability to learn as the cars break and seeing those failures first
2. ability to expand as hybrids grow in number
3. ability to capitalize on the publicity surrounding hybrids
Note that each of these entails unproven assumptions:
1. that hybrids will break
2. that there will be enough to support an exclusive space
3. that people will be interested
At the time I didn’t know. This was going to be an experiment, and if I turned out to be right, there would be real money and social impact.
As mentioned, LG is unlike any other place on the planet. Specializing in a particular kind of car isn’t a big deal; there are all kinds of specialty shops, corvette shops to Porsche shops, you name it.
[SLIDE] LG stands out for reasons beyond the hybrid. In fact, hybrids function as a springboard to a new kind of customer. I had already witnessed trends in automotive, in tech, and in green that I wanted to tap into, and the first departure into hybrids was the perfect opportunity to make other departures.
So let’s go over each of these trends:
1. Hybrid: a new kind of driver/consumer
2. Internet: web-based lives and communication
3. Green: environmental mandate
New Consumer
The Prius isn’t popular because it’s sexy or powerful or inexpensive. It’s none of those things.
The Prius is popular because it represents new priorities: voting for tech, voting for the environment, voting for a new energy policy—namely AGAINST oil and its political consequences. Hybrid owners are mindful of their driving. They accept their need to drive but are also aware that their driving has inherent negative consequences.
Hybrid owners are also more technically aware. They embrace new technology. They are computer savvy. They want to talk about how their car works, how it’s different, even if they don’t care to work on it themselves. At the same time, they also consider the car as an appliance, a kind of gigantic rolling computer, and no longer maintain a deep emotional connection with it.
Compare that with regular drivers. Other drivers are aloof, to the technology (like me in college) and to the car’s impacts. Historically we’ve associated the car with other things—sex, power, money. The hybrid owner marks a cultural shift in how and why we drive.
[SLIDE] As a hybrid dedicated space, Luscious Garage needed to signal the same priorities to its customers. So the shop is designed to be inviting, to be a place where these customers feel they belong. That’s a bold statement for repair shops, where the only presence of culture is typically its own. It’s not the kind of place where customers normally feel welcome.
Luscious Garage is pleasing to the eye, not dirty or crowded with automotive hodgepodge. There is no sign that says “insurance prohibits us from letting customers past this line”. Besides performing service and repair, we share all the information about service and repair on our website and blog and leave lots of time to talk with people in person, encouraging their feedback and questions. It’s a place for human beings, not just cars.
[SLIDE] Of course we have cars too, and it also helps to have a lot of hybrids around. Though you see Prius all over SF, as an owner if you drive into a shop like this, you know you’re in the right place.
Being “Luscious” for us is returning pleasure to the automotive experience, but in a different way, emphasizing the needs of the user, the driver, not just those of the machine. It also means being online and green. See our customer interacting with our reception kiosk, which I’ll describe in a minute. Also notice the cleanliness and the plants. These are signals to the other trends I mentioned.
[SLIDE] Internet
So hybrid owners are internet savvy; they operate in an online world. But that’s increasingly true of all of us.
Fixing cars is certainly computer-based, for diagnostics and service info. Forget big manuals or massive diagnostic tools, even wrenches. Most of what I do vis-à-vis the car is on a laptop, and admittedly that’s true of more and more shops.
But looking at shop operations, when building LG I felt strongly about how totally out-of-date computer systems were for running the business. As a customer the work orders you get at shops, if they are even printouts, they’re so incomprehensible, often you can barely find the total. I can barely understand them. It makes you wonder if this deliberate.
And on the shop side there is all this duplication of writing up estimates and sorting between kinds of cars and customers, and you’re keeping these enormous files of all the service records. It’s inefficient and arcane. And the programs are based on site, on one computer or, if you really want to suffer, on an internal network.
Me, internet user like everyone else—I buy plane tickets online, I bank online—why would I accept this kind of system to run my business? There is no reason not to have all shop operations web-based, in part because this is where the trend in computers is heading, but also because it opens up a world of possibility for the customer to interact with their service themselves, empowering them, and making the documentation fully transparent. It would allow total communication electronically, via the web, email, and PDFs. Most importantly, it allows the shop to be entirely paper free.
The concept dawned on me as a kind of Myspace for cars. Each customer would have an account, a homepage. I named it Hyspace, a Myspace for hybrids. The monetary investment in the website, the public side and Hyspace, was as big as that for the brick and mortar shop itself.
[SLIDE] Here’s the homepage, a web 2.0 design, with blog etc.
[SLIDE] Here’s an example of a work order, on the backend “hyspace”
[SLIDE] We capture signatures electronically, using apple’s built-in software Photobooth, which customers love, even though they’re agreeing to spend money at this moment.
[SLIDE] Of course we use other online tools like merchant services and google calendar. Also allows customers to pay online if they like, and for us to provide service reminders via email.
The upshot is that our operating system is first of its kind—my little two-person shop uses the most cutting-edge administration software in the multi-billion dollar repair industry.
Naturally I’ve considered that Hyspace is fully scalable, for a LG franchise, and potentially sellable to other shops. For now, it saves personnel, impresses customers, and impresses the media. It is a tremendous advantage over the dealer and even bigger over other indie shops. There are many bad websites, and our visitors know immediately that we operate in the same world they do, an online one. Not only do hybrid owners accept this new operating paradigm, they’re highly attracted to it.
The professionalism of the site also lends credibility to our statement that we are cutting-edge and committed to the environment.
Green
Speaking of the environment, we’ve hit our third trend: green.
California culture is extremely green focused. The popularity of hybrid cars obviously represents an awareness for pollution, both conventional emissions and carbon, and the auto manufacturers have responded by building more and greening their image in other ways. But auto repair has not participated in the green movement, by and large; it’s very entrenched in old practices and it doesn’t want to bite the hand that feeds.
So it’s no surprise that there is enormous room for improvement, and thus an opportunity to capitalize on demand for green service.
[VIDEO]
The video still needs some work, but the message at the end is really the most important, about how the word “green” is inappropriate.
A brief tanget:
When arguments started about seatbelts in cars, over 50 years ago, one of the conflicts for automakers was that by installing a seatbelt, they suggested that the car was unsafe. The same applies with a hybrid, it suggests that regular cars have a problem.
In business, though some consumers still take the word green at face value, many environmentalists are increasingly skeptical and hard to impress, and I am describing myself here, too. There is so much phoniness and self-congratulation in being “green”, which drives me nuts.
Just like seatbelts, with green business: once you open up to environmental critique, where do you stop? You struggle to compromise between how you make money and what aspects are detrimental. I’m working on new cars, and helping people continue to drive. It begs the question as to whether we are really green?
Another reason LG has received so much attention, apart from our focus on hybrids or that we’re not your typical repair shop, is that we’re not your typical green business either; we don’t make shampoo or organic baby clothes. We’re part of the problem.
LG has won the hearts of San Franciscans by being thoroughly mindful of our impact and not bragging about it. I would caution that in order to “go green” as a business, both you and your staff needs to understand the total picture of environmentalism and truly believe in it.
[SLIDE] Hybrids/Plug-Ins
So I’ve talked about Luscious Garage, now a bit about the trends in hybrids, and next steps towards plug-ins.
When we talked about hybrids, we’re not just talking about something new or high tech. All new cars are high tech. The hybrid is a cut above, it’s inherently more advanced. It’s automotive evolution. You no longer idle. Kinetic energy is recaptured. You push a button to start. The whole design of the car drastically reduces long term costs, both in fuel economy and lower maintenance.
However improved, it’s important to remember that today’s hybrids remain “gasoline dependent”, two motive sources (electric motor, internal combustion engine) but the only fuel being put into the car is gas. The hybrid components are only there to make ICE more efficient. That’s both good and bad.
On the good side, we’ll see more of them. hybrid electric principles allow every engine to be more efficient, no matter what fuel it uses, that as these fuels become scarce and therefore more valuable, hybrid powertrains will become common, just like automatic transmissions are now. They are not a flash in the pan.
But they don’t solve the problem of our oil dependency. For that, plug-in hybrids are the next logical step. They take a regular hybrid—where the battery is isolated—and connect it to the outside world. The technology to accomplish this is already here.
[SLIDE] Indeed we’re already provide plug-in conversions to the current Prius at Luscious Garage, our best known modification. We take a second generation Prius, the popular ones that look like a fish, and add a big box of batteries and a charger (along with a couple other things like a bumper plug, etc) which allows the car to travel up to 30 miles on electricity alone. The current price tag is 12 and a half thousand dollars, installed.
There’s lots of different ways of making a plug-in hybrid; another example is the Chevy Volt, a “series” hybrid that functions like a pure EV with an on-board genset to extend range. I can answer more questions about the Volt if you’re interested.
[SLIDE] What’s so great about plug-in hybrids? Briefly…
1. They don’t require any new infrastructure. Think about it: the only thing more prevalent than gas stations is the electric power grid. In your home, at work, in parking lots.
2. This allows the question of power generation to occur off-board the car, getting energy from whatever powers the socket. We don’t have to deal with storing hydrogen in the trunk, or making a nuclear reactor small enough to fit under the hood. It also allows cars to run on renewables, which are stationary.
3. For now, while we transition to more renewables, the emissions from power generation can be located outside of cities, improving air quality.
4. Even with the current power mix of coal and natural gas, we save in carbon emissions because electric drivetrains are inherently more efficient than internal combustion. This answers the question as to whether we’re simply displacing carbon emissions from gasoline with those from coal plants. Even on the national grid, which is 50% coal, an electrical mile emits 15% less carbon dioxide than a gasoline mile. And in California, with a cleaner grid, it emits 30% less. Note that these numbers will go up with renewables.
5. Unlike gasoline, electricity can be produced domestically.
6. Studies of the current grid show that it could handle it if 80% of the American fleet went to plug-ins tomorrow. Lots of excess capacity off-peak (at night, when you would plug-in). Nighttime is also best for wind power. Plugging-in during the day allows us to “borrow” a bit of energy stored in the car’s battery for peak times (called “vehicle-to-grid” or V2G).
7. The plug-in hybrid is also like an electric-vehicle “light”, it doesn’t have to be a superstar to compete with current driving expectations—range, power, fueling time. 80% of American trips are less than 40 miles, which we can accomplish with current technology, and just use gas (or another liquid fuel) for long distance.
8. It provides a market for EV components to drive innovation.
In total, plug-in hybrids make a ton of sense, and as a result this area is getting a ton of attention in the media and R&D. If you’re looking for things to get into: I recommend plug-in hybrid platforms, battery/charger/other component development, and vehicle-to-grid applications. I’ve started to joke that the real money will be in extension cords, and if LG doesn’t make it that’s what I’m going into next. Luscious Cords.
That said, if the hybrid is cutting edge, then plug-ins are bleeding-edge. [SLIDE] I’ve seen it with conversions: non-functioning systems, fires, pissed off customers, people losing big money. Here’s a Prius battery that blew up in the owner’s garage. It’s been fascinating and educational, and I’ve witnessed a lot of the do’s and don’ts of manufacturing start-ups, along with the “Phantom-ware” tech and VC games people play.
[SLIDE] Just as an example, here is the unveiling of a “green vehicle showcase” that occurred in front of SF city hall three weeks ago. Here’s Gavin Newsom, about to make a speech. Though the effort is exciting and well intended, I happen to know that the system in this car right here will not last more than 6 months, and the charger it’s connected to, its unclear whether it will ever do everything they say it will.
To be sure, there is a big gap between proof of concept and production. Just look at Tesla Motors. Producing a successful automotive product is very hard to realize. This is another explanation why the Prius has been such a slam dunk while the other hybrids have floundered in the marketplace.
***Also, the bleeding edge is a dangerous, unstable place financially speaking. Though plug-ins have been a source of tremendous media attention over the last few years, now that the economy has tanked, the market for plug-in conversions has too. Who has an extra 12k to spend on a perfectly good Prius, especially with gas at $2/gallon? The California emissions regulators are starting to bear down too.
Needless to say, I am incredibly grateful to have solid repair business to fall back on.
[SLIDE] Idealism v. Economic Reality
Which brings me to the final discussion of idealism and this economy.
LG is a vulnerable start-up, not even two years old, and we’re still trying to maintain revenues that will break even, let alone turn a profit. Since fourth quarter of last year, the repair business has been unpredictable, despite enormous publicity and overwhelmingly positive customer feedback. Plug-in hybrid conversions are pretty much on hold. In response we have had to cut costs and diversify to all cars, not just hybrids, to get through, and the future remains uncertain.
That said, I did not open Luscious Garage to perform conventional repairs on regular gas-burning cars. If I wanted to do that, I would have just continued working as a tech for someone else. Yes, we do it green and online and with better customer service, but at bottom we are a vote for new automotive technology. With all my well-meaning departures from the status-quo—the various ways we attract customers and improve on the business model—the question remains whether my idealistic principles are viable.
Earning money, by which I mean consumer validation, has tremendous influence over my moods, whether I think I’m doing the right thing. It’s like a pendulum; when business is good, I swing to one side and think, “good job” and when business dwindles, I swing to the other and think “I’m naïve and foolish.” Sometimes, as the pendulum swings to the negative side, I feel like just cutting the rope and falling WAY to the extreme, moving into a yurt and living off the land, etc.
The tension of the pendulum, of the rope, is the burden of the entrepreneur: the excitement, the responsibility, and the risk.
Being asked here to speak, I feel like I’m supposed to have the answers, have it all figured out. That is certainly not the case.
But I have absolutely no regrets.
[SLIDE] I have learned so much in this process, and felt moments of deep satisfaction. This is what keeps me going, ultimately, getting out of bed, chasing that customer, which is why I say there’s more to business than making money.
I would encourage all of you, if you have a good idea that you’re passionate about, to go for it! Start wherever you can—even if it’s at the bottom—and grow exponentially with the experience. You’ll discover what you’re uniquely passionate about, which is where you’ll have the edge, to make the biggest social impact and perhaps some money too.
[SLIDE] Questions?
