Junk to Gold in 10 Hot Takes
Lessons from Willis Johnson, founder of Copart, the world’s largest online auto auction site
This is one of the greatest rags-to-riches tech stories ever told, and it was done with junk.
Today, Copart is the world’s largest online auto auction site, selling more than 3 million vehicles annually. The company is incredibly successful, with impressive tech and decades of massive and sustainable growth, so it’s mind-blowing to find out that Copart was founded in the 1980s as a junkyard. What??!?! 🤯
This is a fascinating story with so many great business lessons for product people. So we’re breaking it down, as told by Copart’s founder, Willis Johnson, in his book Junk to Gold.
Here are ten big lessons we can learn from Copart’s founder, Willis Johnson.
Lesson 1: Unwavering determination
The most popular highlight from the book is this:
“He taught me that you have to do your research and that if you don’t stay on top of reading about other people’s ideas, you never come up with ideas yourself. It’s good to learn from others.” - Willis Johnson
Willis is talking about his father here, and what’s amazing is that his father didn’t know how to read. Willis’s mother would read him the newspaper each morning, and his father would find opportunities to make money as an entrepreneur. Yeah, you heard that right.
Willis is a billionaire businessman now, but unlike many billionaires, he didn’t get money from his parents to start his enterprises. Willis’ father didn’t have money to give him, but he gave him something better: determination. That’s lesson one, have unwavering determination. He never stopped.
Lesson 2: Specialize
When Willis returned from Vietnam, he got a loan for a junkyard lot, which included a small building, basically a shed, where he’d live with his new family. When he started the business, he struggled to compete with other junkyards, so here’s what he did:
“At the time Chrysler, Dodge, and Plymouth were not cars dismantlers wanted to have because they weren't hot-selling items. So we made a decision to specialize in Chrysler, Dodge, and Plymouth. All the other dismantlers thought I was crazy.” - Willis Johnson
He went from selling $3,500 of junk—car parts—a month to $3,500 per day. Niches too small for big business can be big business for little startups to specialize in. Specialization helped Willis find an initial market that he could serve and excel in.
Lesson 3: Struggle to make the customer not struggle
A theme in the book is Willis’ relentless focus on his customers. Here’s a great example of how he put customer needs first:
At the time, junkyards would sell an entire engine outside as a whole package. This made things easier for the junkyard operators but harder for customers to find specific parts. Putting the customer first, Willis decided to do things differently. He pulled out all the parts, cleaned them, and sold parts individually indoors. This was like the Apple store of junkyards. It was more work for him, but it improved the customer experience.
Lesson 4: Let me find that for you
Junkyards were like treasure hunts. There were parts from thousands of car makes and models, different years, condition of parts, and missing parts. People just searched and hoped they’d find the parts they needed because junkyards hold an incredibly complex inventory.
So, Willis became one of the first businesses to computerize inventory.
“I spent $110,000 on a large reel-to-reel computer—about double the amount most people spent on a house at the time… [Other junkyards] thought I was crazy (or stupid–or maybe both)...” - Willis Johnson
But it was magic for customers to have instant access to parts from all over California. As Willis expanded, he had a mesh network of shared data, the power of data analytics, and you know what that is. It’s gold. The more data, the more gold. Junk to gold.
Lesson 5: Open source for progress
Willis started selling so many cars that the DMV ran out of car title books. Not good. Plus, the whole process of handwritten title paperwork created a nightmare of problems for his customers and his business.
“I spent about $40,000 building the computerized system for the state of California. Now we could go to the computer and fill out all the paperwork needed and didn't have to wait for books. It sped up the whole process and was an example of how it pays to fix something yourself instead of waiting for someone else to solve the problem for you.” - Willis Johnson
Willis decided to fix the problem for everyone by building the solution himself.
Ok, ok, technically, this isn’t open source because I don’t think he made the code freely available to everyone. Still, he provided a solution that benefited everyone in California, so it’s the same spirit. The point is that he didn’t wait around for someone else to fix his problems, and he was willing to make a solution available to everyone rather than hoarding the benefits for just his company. He doesn’t complain about problems; he just fixes them and makes the whole industry better as a result.
Lesson 6: Be your customer’s most valuable partner
“Be your customer’s most valuable partner.” - Willis Johnson
When Willis started auctioning junked cars for insurance companies, he knew they were losing money. They (the insurance companies, who were his customers) didn’t want to pay full price to shine up junk cars. So, instead of charging them fees, he proposed a partnership: He would take a small commission on cars they sold, with no upfront costs.
Throughout the book, he constantly finds ways to make every process more efficient and make his customers more money. Again, there’s that hyper-focus on customers. He knew that when your customer wins, you win, too.
Lesson 7: Continuous improvement
By 1998, Copart upgraded to a nationwide computer system called CAS (Copart Auction Systems). But people were still bidding in person, and you needed to be a licensed rep to bid, so people (his customers) were waiting around all day and had to pay reps $150 just to bid on cars. The process was ridiculous.
So, Jay, Willis’s son-in-law and now Copart’s CEO, asked customers, Hey, what if you could bid online? They all told him, No thanks, that’s a dumb idea. (Not a direct quote; we’re just telling a story here.)
There’s a product lesson here, don’t ask customers if they would use technology they don’t understand. It’s easier for them to tell you “No” than to admit they don’t know.
So Jay walked them through the process: first look at the cars, now instead of paying that dude $150 and waiting all day, you bid on this computer for $35 and go home.
That brings us to the next lesson…
Lesson 8: Do things that don’t scale
Walking each customer through the process was time-consuming, but sometimes, you need a concierge service to show buyers how to buy. Jay was doing things that didn’t scale, and it paid off. Customers started to use Copart’s new online bidding service, and word spread. They made $1 million in sales in their first quarter online.
However, Jay noticed someone from out of state had bought a car, and he was shocked because every customer he spoke with told him they would never buy a car without seeing it first. So he called the guy from out-of-state to ask about his experience, and the guy said, Yeah, I know what I’m doing, so I don’t need to see the car, but yeah, some pictures would be nice.
So Copart added pictures to the online auction, and suddenly, they were doing $10 million in sales from bids worldwide.
Lesson 9: Cannibalize gracefully
Just adding “gracefully” here to make the word cannibalize sound nicer. 😜
Copart’s online bidding became so popular that it started cannibalizing the company’s in-person auctions. Things got really messy when they introduced live bidding, where people could instantly bid against each other.
Just imagine a live auction with an auctioneer pushing up the bids while a computer moves even faster, instantly ticking up the price. It’s just too much. You can’t mix the rapid mumbling of an auctioneer with computers; that’s a recipe for chaos. Willis’ employees were ready to quit.
So, they set up computer kiosks at a few locations and showed people how to bid online, to convert in-person auctions to fully online auctions. Once they tested it on a small scale, doing things that don’t scale, they rolled it out to more locations. People loved it and naturally taught others how to do it. More people bid, and insurance companies made more and more money. And I don’t know about you, but that’s what I live for, making insurance companies more money.
They would then slowly roll the idea out to more yards. Slowly, Copart became the global leader in online vehicle auctions, selling over 175,000 vehicles daily. They are incredibly successful, the Nvidia of Junk.
Lesson 10: Losers focus on competition
I left out that this was a rivalry story, and Copart was the underdog. However, their much larger competitor, IAA, was focused on things like revenue and the number of auction sites—we call those vanity metrics. They were constantly trying to sabotage Copart’s acquisition of junkyards.
But Copart didn’t focus on short-term revenue. They were concerned about continuous improvement for their customers and employees. Willis believed that if he took care of his employees, especially the talent from new acquisitions, they would, in turn, take better care of customers.
Junk to Gold is a great book, and there are so many more business lessons I didn’t get to cover here.
Copart won because losers focus on the competition, and winners focus on the customer.
You got this.
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