In this episode of Product Bytes we interview Toby Russell, co-CEO of Shift (NASDAQ: SFT), who shares product leadership lessons from building Shift. This is an excerpt from the interview, published in our Product Bytes channel.
Toby: I am Toby Russell. I am the co-CEO of Shift. We run a company that essentially sells cars online and we are the first, truly omnichannel, e-commerce player, for used auto, which allows customers to buy a car right there on the website or have a car driven to their home to test drive and buy it right there in the driveway. We are really looking to create a situation where buying a car by using technology is simple and accessible to everybody which obviously it is not today if you look at the traditional experience.
I have followed Shift since the beginning. It was a start-up and now it is almost a unicorn, and listed on the NASDAQ. It was quite a journey. And of course, to be this successful, you have solved a very clear problem. What is the problem you are solving for the customers?
Toby: So, not to make this too complicated, but I think most great product problems are taking on an area where customers face a fundamental trade-off. I want one thing, but I have to give up this. I want this, but I have to give up that. In the case of cars, people want reliability and want to know that they can trust the vehicle but they also do not want to overpay for it and get taken advantage of it.
There is a paradox there because if you go to buy a new car, you can trust that it is going to be reasonably good quality because it is brand new and it will usually come with a manufacturer warranty, but the second you drive that thing off the lot, because you have taken it from being new to used, you lose not tens, not hundreds, but thousands of dollars in value, and part of that has to do with the logistic system that delivers these vehicles. We believe that technology can break that trade-off. And so, our goal is to allow customers to access the best cars or used cars that have been typically one-owner, no accidents, strong options package, driven by 10,000 miles a year but are less expensive because that depreciation has already happened. And to be able to do that with a sense of reliability that you would get with a new car.
That is a trade-off break. That is what I want, and Shift is about a better thing for less. We use technology and logistics to enable that.
And of course, you started from somewhere, right? You had the idea and then you said, “Okay, how do we build this?”
Toby: Yes, at the very beginning is was having a bad experience in the space. I was actually working in a large bank – Capital One Financial, and I thought, “Hey, I want to start using our products”. And one of the things I was planning on doing was buying a car. So, I reached out and I said, “Hey, I want to buy a car. Can I get a loan and go buy a car?” And the high-level answer was, “No. Hey, you got to go to a dealer to do that, and then maybe they will choose Capital One or maybe they will not.” I thought, “That is kind of weird. I should be able to choose my bank and then go get the car.” At that time, it was not an easy thing to do. You could not do that. So, that was the first head-scratcher like, “Wait. What is going on?”
Later, as we began working on our product, I discovered that half of the used car sales in the US are person to person, somebody that sells a car directly to somebody else. It does not go through a dealer. It does not go through a software platform. It is literally – think like Craigslist or classified ads. That struck me as a bit of head-scratcher, “What is going on there? That is very odd that people would choose to do this.” It is actually a difficult transaction on their own with no structure or support including no financing. Most people do not walk around with like twenty thousand dollars in their pocket, and those peer-to-peer transactions turn out that are disproportionately low-cost, older cars and I think in part because financing is not available in that case. I thought, “That is kind of odd.” and “Something is broken here.”
And so, one of our first products at Shift was the consigned car where we would guarantee the customers a certain amount and then split the difference on the upside, and then pay the customer when it cleared. That was sort of the beginning MVP product, running around sort of like asking customers, “Hey, can we offer you the ability to sell your car? Can we offer you the ability to sell your car with financing? Can we make it easier for you as a seller of cars to do the thing and not get taken advantage of?” And make it easier for buyers to get access to financing because it was crazy that buyers could not get financing unless it was like through a captive dealer kind of thing. And so, we began with a lot of concepts in that space like enable a seller to get an inspection report, enable a seller to sell with financing. But the feedback that came back from sellers is, “Look, this is all great. But what I really want you to do is just take the car and sell it for me.”
And then over time what we got was, “This is all great, but what I really want is just cash right now to make it simple for me.” And that is not everybody, that is like 80% of the market, but 80% is a lot. And so, what we slowly but surely did was build out pieces of the puzzle to essentially work back from what sellers of cars needed and then buyers of cars needed to connect people like an individual seller to an individual buyer in terms of making that car exchange happen. And we just built each piece of the puzzle along the way as we received the feedback of, “Hey, this could be better and this could improve.”
So, thinking about the minimum viable product and then getting something to market to validate the idea, how did you get started?
Toby: I was not with the team at this moment, but in the very early days, it was like parking cars outside of people’s houses and apartments doing total prototyping. And we started out basically with little to no website at all and really just learning and doing the thing because as much as you can test the thing manually and figure out if it works, then add software to scale it, there is goodness there. I do not know if you have read Eric Ries’s book “The Lean Startup”, but there is a lot of applicability to that concept, and that is if you cannot make a thing work end-to-end once, it is unlikely that software is going to make it work end-to-end hundreds of thousands of times. So, you want to start lean, get to the real insight of what are we really solving here, work back from customer needs, and build just really minimalist prototypes to learn your way forward. That is the one piece of advice that I would offer, it is prototype first and scale next.
So, instead of spending a ton of time and tons of resources in building a complex system, and do it all… Focus on the core hypothesis of your business, the core user experience you want to deliver, and figure out a way to deliver it quickly, validate that and then build the system.
Toby: That is exactly right. I have found too often that product folks frequently fall prey to what I call the “Swiss army knife trap”, and that is, “Wait a minute. My product will be good enough if it has the scissors, the magnifying glass, the knife, and this and that.” And so, again, only if it has all those things then it would be good. And I usually encourage people to say, “Look, if the knife, literally the blade itself, is not good enough to compete with other knives, probably you are not on to something.” It is possible that sometimes there is truly a Swiss army knife play where only with all the stuff can it be better, but usually, you want to be able to say, “No, each piece of the puzzle adds value.” And when I add one plus one, I get four because you get added value, but each thing has got to be independently valuable. Because it is rare that you take something of no value and no value and no value, and end up with a lot of value. Usually, each piece of the puzzle has to be a value-add, useful and competitive on its own before you can then piece them together and create even greater value.
That is what I usually coach from a product point of view, it is find independently valuable things and then couple them. Do not say, “My thing will only work if I do it all at the same time”, if that makes sense.
Can you share an example of how you keep aligned with what your customers want?
Toby: Along our journey in building out Shift, I tend to do two things. I tend to actually be a customer of the product, so I will go out and buy cars from us. And we have what we call “Concierge for a day” where you can act as our frontline employee concierge and actually serve customers, and experience working in serving customers directly. It would be like the Starbucks equivalent of the corporate team going and being a barista for a day, which I think is critically important and really valuable to always be interacting directly with customers and getting feedback.
Can you share maybe a couple of challenges from a product standpoint that you had to overcome?
Toby: In a weird way, I would almost describe the challenges I have experienced primarily in building a company are actually more around people than the products themselves. The challenge is making sure that you are getting great folks, highly talented and really capable folks, setting them up with the system where they can just run a test, learn and succeed. And that usually, when they are able to move quickly and iterate quickly, it is where you get goodness.
If you want to be a product leader, I actually encourage people to think about people first and then product, because where your best product is going to come from is your people talking to customers, learning. And then your engineers, your products designers, your product managers, and your data scientists riffing on how to solve those customer problems. And so, I would think first and foremost what is my system for building products? What are my philosophy and approach, and how do I get great people up against that? And then we are a little bit more about the specific tactical product problems. That is it. You definitely have to have a high-level vision. You got to be like, “There are these people with this problem and I want to solve it because it matters and I am going to do it.” If you do not have that, take two steps back to work on that, and from there, MVP, testing, validating, and then thinking about people is what I really would coach.
So, acting as a servant leader really empowers your people to be able to have the skillset, the experience, and the tools that they need to be successful.
Toby: Absolutely. That is where your highest leverage is going to be any day of the week. If you are watching a podcast and say, “Hey, I want to learn the great product insight.” You are not going to get the product insight. Your people are going to bring you the product insight, and they are going to do it by getting a signal from customers and they are going to do it by testing and just practically learning. Just grinding by putting out one prototype after another and then one MVP and then the next MVP, and then iteratively improving. Creating that system that enables strong capable people to do, that is your best bet for getting to a good product versus hoping to have like the abstract brilliant insight.
And not everybody probably has the personality and the traits to be successful in that environment. For example, you need to be able to fail quickly and learn from failure. So, what are the traits that you look for in people that you bring in as product people?
Toby: It changed actually over time. I have four pillars, and then I am going to talk about one important behavior that I did not really think about originally but I look for it now. The four pillars:
One is Customer-centricity like truly being thoughtful about what is a customer need and how I make sure that I can build a business on that because you got to have sustainability.
Two is Change the world. So, there are a lot of folks who are great at doing optimizations on large at-scale platforms, and that delivers a ton of value. But you got to have people who are willing to be bold enough to say, “Look, I actually want to change the world. I want to make a big difference, not like a 2% or 3% change but like a 5x change, and I am willing to run hard at making that,” and that energizes me.
The third part is what I call See it, solve it, ship it. It is about being a problem solver. Anybody can be a problem identifier, “Hey, that is a problem. That is a problem. That is a problem.” This is about saying, “No, I am not just going to identify the problem and I am not just going to just solve it on paper. I am going to solve it, and I am going to deploy a solution. I am going to ship a solution.” See it, solve it and ship it. Kind of just love and want to do that, to be a strong entrepreneurial product leader.
The last thing is Elevate each other, and it is like saying, “Hey, under almost no scenario I’m a sole player here, it is about me being able to work with others to be able to up their game and be able to win as a team.” Because really, it is when you bring together differential and really diverse backgrounds and skillsets that you get different outcomes, versus everybody being the same. Everybody knows this is a classic, like get engineering capabilities, design talent and product talent, potentially data science such as analytics talent, all coming from different points of view. But being able to bring that together and perform as a team is where breakaway magic happens.
How do you find the right people?
Toby: I actually test and interviews for comfort and the ability to engage in conflict. What does that mean? Amazon has the same “Disagree and Commit”. I did not understand that for quite a while and I did not appreciate just how important it is. I will literally ask people in interviews, “Hey, give me an example of the best person you worked with, the worst person you worked with, the best boss, the worst boss, the best peer, the worst peer, the best employee, and the worst employee.” And specifically ask them, “Tell me about a time when the two of you disagreed on a thing. How did you disagree? How did you resolve the conflict?”
Steve Jobs had a saying that great products are like polished gems. The polished gems come from friction, and friction is people disagreeing, having varying points of view, grabbing different data, defending, enabling, interacting, and that friction is what polishes and creates the beautiful gem. But to avoid it is to not be able to engage in the proper process. There are trade-offs. There are tensions. There are challenges. There is conflict in creating something new and different. And so, the ability to navigate and handle that conflict well is very important to elevate each other. So, those are the four things. 1. Customer-centricity, 2. See it, solve it, ship it, 3. Elevate each other, and 4. Change the world, because that is how you make the whole thing go around.
I want to thank you. I learned a lot from you just with this conversation. That was awesome.
Toby: Likewise. I am inspired by your entrepreneurial spirit and also by your gathering information from lots of different people, and then making sure people can get access to that. It is just a great way to learn and to give people access to the thoughts and experiences of others. So, I commend you on that and I appreciate you including me.
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