You receive a link from a seller to pay for the car you are about to buy. Should you trust it?
Seattle startup KeySavvy wants to help by tackling fraud and simplifying private party vehicle transactions.
Co-founder and CEO Andrew Crowell started his career as a software engineer and worked at various automotive companies, drawing on his passion for cars. In 2015, Crowell was CTO at TRED, a Seattle-based peer-to-peer online vehicle marketplace and transaction platform, where he met his co-founder Jason Hoetger, previously head of engineering at TRED. Before TRED, Hoetger was a software engineer at REI and OfferUp.
While at TRED, Crowell and Hoetger learned about the prevalence of fraud in the private car sales market, where buyers and sellers interact directly. They founded KeySavvy in June to create a safer way for buyers and sellers to handle vehicle transactions so that both parties can focus on getting the best price, according to Crowell.
KeySavvy is a peer-to-peer vehicle payment platform that aims to eliminate the risk of title fraud for buyers and payment fraud for sellers. It is targeted for consumers hoping to maximize value through the private market but hesitant due to the risk of fraud.
After the buyer and seller have independently agreed on the vehicle price, the seller sends a KeySavvy payment link to the buyer. After the buyer accepts the price, both sides electronically sign the necessary documents and “handshake” to accept the deal. This kicks off KeySavvy’s verification process.
As a licensed auto dealer, KeySavvy pulls records directly from state DMVs along with other third party sources to verify the identity of the seller and buyer, and ascertain the vehicle’s ownership history. If no red flags are raised, the buyer can pick up the car and the seller receives payment through KeySavvy.
Buyers are charged a flat transaction fee of $49, and sellers pay no fees unless they have a lien. According to Crowell, in under 30 minutes, KeySavvy guarantees buyers with a clear title and registration, and sellers with a verified payment.
According to Crowell, KeySavvy’s biggest challenge has been overcoming the consumer trust barrier with a business model based on an online payment link.
“I think we can lower that trust barrier by being the educator,” said Crowell. “Not everyone knows that they could buy a car that they end up not being able to register, and they illegally drive this car and they just get stuck with it.”
The KeySavvy blog has articles on tips for buyers and sellers on vehicle transactions, and also includes a compilation of Reddit posts of people getting scammed in the car buying process.
KeySavvy is bootstrapped and currently has two full-time employees.
We caught up with Crowell for this Startup Spotlight. Continue reading for his answers to our questionnaire. Answers edited for brevity and clarity.
Our strategy to grow our customer base: Our primary source of customer acquisition is partners. They’re very eager to partner with us because they recognize that, by referring their customers to KeySavvy, their customers are going to have a better experience. We eliminate so much of the potential risk and just make this easier for them to get a better value.
The smartest move we’ve made so far: Positioning KeySavvy to partner with other great companies that our customers are already using. By not being a marketplace, we can just focus on that primary pain point, which is the transaction. There’s already a bunch of great websites — Tred, CarGurus, Craigslist, Facebook — that are all fantastic sites for listing your car for sale and finding a buyer. But regardless of which marketplace you choose, KeySavvy is the safest and easiest way to complete your sale.
How the turbulent economy has affected our business: When you’re starting with zero market share, it doesn’t really matter. At a macro level, this is a very good business to get into. Typically the automotive industry is pretty resilient to economic downturns because a lot of people just need a car.
The automotive market has been really weird lately. It’s pushed prices up. I don’t think that really affects us too much, other than people looking for better deals, trying to extract the most value from their car. And that does drive people toward the private market, which is great.
The biggest mistake we’ve made so far: We not only have to acquire buyers, but we also have to acquire a seller and one of those parties learned of us through the other party, which they don’t most likely trust. So, how do we gain that consumer trust? We underestimated that — we haven’t been operating long enough to make too many mistakes but that’s one where we underestimated how high it would be.