Carwoo
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
CarWoo was a Burlingame, California-based online marketplace for buying new cars, founded in 2008 by Tommy McClung and Erik Landerholm and launched in October 2010. Consumers entered details of the vehicle they wanted and dealers competed in an anonymous reverse auction, letting buyers negotiate without revealing their identity or facing high-pressure tactics — a 'pressure-free' car-buying service. It raised $12 million across two rounds led by InterWest Partners and built a network of over 11,000 dealer franchises nationwide. In January 2014, after running out of investment cash, it shut down; competitor TrueCar acquired its assets and hired nine of its roughly forty employees, including McClung, who later became TrueCar's Chief Technology and Product Officer.
02 / Carwoo FAILURE REASONS
Failure factors supported by the current evidence
CarBuyingTips (1 Feb 2014), citing CEO Tommy McClung after the Jan 2014 shutdown: CarWoo had run out of capital and could not raise new funds despite ~$12 million previously raised; McClung said the model needed $50–$100 million for growth and customer-care costs, while cash burn outpaced cash generation.
The article states CarWoo had run out of capital and that remaining cash was dwindling against a rising burn rate.
McClung was unable to secure new investment after spending 2013 trying to raise; he said the company needed $50–$100 million.
The article says cash flow did not offset rapidly rising operating/customer-care costs of the logistics-heavy model.
03 / EVENT HISTORY
Events in the structured record
- Founded
Founded in Burlingame, California by Tommy McClung and Erik Landerholm to reinvent new-car buying.
- Launched
Launched the anonymous reverse-auction marketplace in October 2010; raised $12 million across two rounds led by InterWest Partners and grew the dealer network to over 11,000 franchises.
- Shut down; assets acquired by TrueCar
On January 20, 2014, after running out of investment cash and failing to raise additional capital, CarWoo closed; TrueCar acquired its assets and hired nine employees including CEO Tommy McClung.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
January 20, 2014: CEO Tommy McClung announced that CarWoo was shutting its doors after attempts to raise additional capital repeatedly failed; the service ended its last business day and posted a shutdown notice on its website.
- 02
Immediately after closure, competitor TrueCar acquired CarWoo's assets and hired nine of its roughly forty employees, including McClung, into its product and technology teams.
- 03
McClung was later promoted to Chief Technology and Product Officer at TrueCar, the publicly traded negotiation-free car-buying platform.