Part 1: The Grandfather of Automotive YouTube

Doug DeMuro is one of the largest automotive content creators on YouTube with more than 4.8 million subscribers. After seven years of creating content, Doug launched an online car auction platform in 2020 that has sold more than $490 million worth of cars. He recently landed a $37 million investment from The Chernin Group, valuing the business at $80 million. Doug is a great example of how a creator can build a business with an unfair advantage by combining expertise with direct access to a large, engaged audience.

Happy Tuesday Friends,

Doug Demuro is one of the OG automotive creators. Some call him the grandfather of automotive YouTube. In today’s piece we break down Doug’s journey over the past seven years and provide a few key takeaways. If you are a creator or working with creators at any level, this piece is relevant for you.

The Early Days 🪜 

Doug DeMuro got his first job in the car industry at the age of 19. He worked at Porsche as a vehicle allocation manager. Although he enjoyed working in the industry, his job at Porsche didn’t give him the fulfillment he was searching for.

So, he quit in 2013 and started writing blogs for a car website called AutoTrader. That same year, DeMuro was approached by a reader who suggested that he should try making videos instead of writing blog posts. He gave it a chance and shot his first video, ‘A Farewell to his Cadillac Station Wagon,’ at the end of 2013. While blogging was still his primary format, DeMuro started creating more videos. He took a rather unique approach than other car reviewers at the time. Most reviewers focused on how the car drove, but DeMuro’s videos focused on the quirks and features of each vehicle. He even created his own car rating system, the Doug Score, where he judges cars on 10 separate categories. Doug found his inner nerd and went deep on it.

DeMuro made a conscious choice from the start to focus on creating videos that are appealing to a mass audience instead of starting with a niche. Doug was fortunate as he started in 2013 and had the benefit of 1) riding the wave of YouTube’s explosive audience growth of YouTube and 2) a much smaller number of creators and amount of content competing for eyeballs. This strategy is much more difficult to pull off in today’s world due to the sheer amount of content being produced and uploaded every day.

Doug also takes a very different approach when it comes to production. DeMuro isn’t focused on creating highly-visual edited content. He keeps it simple - providing useful information. Doug shoots his videos on an iPhone with very little editing. His thumbnails are a good example - most of them are basic pictures of him behind a car. An added benefit to this approach is that he has a lower-cost, more efficient content production process than most other large creators.

Slow and Steady Wins the Race 🐢 

DeMuro has slowly grown his channel over the past decade to close to 5 million subscribers, and his videos receive approximately 20 million views each month. Another interesting point is that Doug does not offer paid product promotions. It’s very common for creators the size of DeMuro to start to sell ad integrations into their videos, but DeMuro made a conscious choice not to do that. He believed that getting paid to promote products would have challenged his credibility and influenced his ability to remain independent and objective in his reviews. In a recent interview, Doug shared that the only revenue that comes directly from his videos is about $15,000 - $20,000 through AdSense. As DeMuro started to realize how dependent his business was on the YouTube algorithm, and he did not want to litter the channel with paid promotions; he wanted to control his own destiny. Doug started to think about ways to create his own business versus YouTube, being able to turn his channel and revenue on or off at any given time.

The Launch of Cars & Bids 🚗 

As Doug was thinking about different business ideas, he realized there wasn’t an online platform dedicated to buying and selling the modern enthusiast cars he was reviewing. That’s why he decided to create one himself. He called Blake Machado, one of his earliest followers to have dinner and see if was interested in partnering up. Blake was a tech entrepreneur, a skill DeMuro was missing. The two decided to partner up and Cars & Bids was born in 2020.

Cars & Bids is an auction platform featuring cars from the 1980s to the 2020s. Consistent with DeMuro’s style, he announced it with a simple video to his 4.8 million subscribers. The positive response made it clear to him that there was demand from his audience. But, for the marketplace to work he also needed supply. So, DeMuro announced the following incentives to his audience to auction their cars on the platform:

• $1,000 cash to the first 50 people who signed up

• $500 cash to the 51-100 people who signed up

Within one day, they had 1,000 applications and had to pay out $75,000. But, according to DeMuro it was some of the best money spent at Cars & Bids.

DeMuro’s built-in audience of modern car enthusiasts represented a big sea of potential buyers. This created a big advantage for Cars & Bids to attract sellers to the platform more buyers = more competition = higher bid prices. No other car auction platform was able to offer direct access to this type and size of audience.

Growth of Cars & Bids 🚀 

In less than four years, Cars & Bids has grown to 600k+ registered members, completed 21,500+ auctions, and sold $490M worth of cars through its platform by September 2024. A summary can be found below:

Cars & Bids’ earns a 4.5% commission on each sale that is paid by the buyer. Sellers pay nothing to list the car. They also introduced other paid services around the sale to help both the buyers and sellers such as inspections and logistics. DeMuro has proudly shared that the business has been profitable from day 1.

Investors started to reach out to DeMuro due to the impressive growth of Cars & Bids. Although Doug entertained a few conversations, he wasn’t interested in working with an investor who didn’t understand how YouTube worked and who wanted to try and change things inside the business. The one conversation that surprised him was with The Chernin Group (TCG), a private equity fund that specializes in content-to-commerce businesses and has worked with several other creator-led brands. After months of getting to know each other, TCG invested $37 million into Cars & Bids, valuing the company at $80M. As part of this investment, all businesses (including DeMuro’s content revenue) were put under one umbrella company.

At the time of investment Cars & Bids had turned into a full-time job for DeMuro. This caused him to slow down on the amount of content creation he was able to produce. As DeMuro believed his content is what gave Cars & Bids a unique advantage, he brought in a CEO to manage the day-to-day operations as part of the investment. DeMuro’s new title was Chief Car Enthusiast allowing him to go back to what he is best known for: being a content creator and reviewing cars.

DeMuro’s story is a great example of a creator who found a topic he truly enjoyed and through a decade of consistency and hard work, built a loyal following and entire world for modern car enthusiasts to enter. This allowed Doug to be in position to think about a product he could launch where he would have an unfair advantage. The performance of Cars & Bids speaks for itself and successfully illustrates creator content-commerce-fit.

Our Insights Looking into Doug’s World 🌎️

Below are a few insights we have from studying Doug as a creator. Some of these may seem obvious, but the more creators we speak with, it’s clear they don’t take the time to study the playbooks’ of other successful content creators.

• Finding your inner nerd - The only way to consistently create high quality, useful content for more than a decade is if you really enjoy the topic. We call it finding your inner nerd (shout out to Shaan Puri where we first heard the term). It’s clear Doug found his inner nerd with his detailed car reviews and he found a great way to package it with his, “Doug Score.” But something more profound happens when you cover a topic for a long-period of time - knowledge compounds and you become a true specialist. This, in turn, makes the content even more valuable, insightful, and defensible (difficult for others to replicate). It’s this process that ultimately creates: 1) trust with the audience; and 2) an ability to launch an adjacent business or product with an unfair advantage. This unfair advantage is created by combining deep domain expertise and having a direct relationship with a large, engaged audience.

• Focusing on high quality information - Doug’s audience follows him because his content is useful. Whether it’s someone looking to buy or sell a car, a car enthusiast looking to geek out, or a person simply looking for a bit of nostalgia by watching a video about the first car they owned to bring back cherished memories as a teenager, it serves real utility in their lives. High quality information is much more important than high quality production. This is evidenced by the fact that Doug shoots his videos on an iPhone with very little editing. If you provide useful content that people find valuable - they will find it and engage with it.

• Focusing on the long-term - As soon as creators start to get to ten thousand followers, many brands start approaching them to do brand deals and paid promotions. While this can help creators earn a few extra bucks or even allows them to go full-time, they don’t realize that it could also hurt their reputation with their audience. That’s why Doug has made a conscious choice to stay away from paid brand deals. It resulted in him missing out on extra income in the short term, but over the long-run this decision paid off exponentially as his audience knows he will never promote something just for the money. He has to really believe in it.

• Importance of knowing his strengths and letting go - Most creators are one-person shows for the first several years of content creation. They are used to doing everything on their own or operating with a very small team. But, launching a business and selling a product or service to a customer base is a completely different animal. Things like customer service, supply chain, logistics, and marketing are all functions that need to be addressed and requires an actual team to do it well. Many creators fail to let go and assemble the appropriate team when they expand beyond content. Doug did not make that mistake. Once he accepted the investment from the Chernin Group, they hired someone to run the company so Doug was able to focus on what he enjoys and does well, content creation.

Doug is a great example of the future of the creator economy. He built an engaged audience of car enthusiasts by going super deep and focusing on high quality, useful information. He then launched a business with an unfair advantage thanks to his subject matter expertise and large, engaged audience.

In our next piece we will dig deeper into Doug’s world. Have a good week and remember to Go Direct!

Jordan & Scott