WEBVTT 00:00:00.000 --> 00:00:02.060 When you hear the word auction, what's the first 00:00:02.060 --> 00:00:04.299 thing that comes to mind? For me, it's, you know, 00:00:04.320 --> 00:00:07.299 the sound of a gavel, a fast -talking auctioneer, 00:00:07.320 --> 00:00:10.240 maybe a dusty old warehouse. Yeah, that's the 00:00:10.240 --> 00:00:12.439 classic image, a very physical, very localized 00:00:12.439 --> 00:00:15.320 kind of event. The smell of old cars and maybe 00:00:15.320 --> 00:00:19.140 some spilled coffee. Exactly. But if that's still 00:00:19.140 --> 00:00:21.640 your picture of the salvage vehicle industry, 00:00:21.839 --> 00:00:25.500 you are... missing one of the biggest high -tech 00:00:25.500 --> 00:00:27.559 and, frankly, most profitable logistics stories 00:00:27.559 --> 00:00:29.500 of the last couple of decades. We are doing a 00:00:29.500 --> 00:00:31.739 deep dive today into a company called Copart. 00:00:31.839 --> 00:00:33.579 And they didn't just change that model. They 00:00:33.579 --> 00:00:36.380 completely shattered it. They took this... business 00:00:36.380 --> 00:00:40.039 of damaged, salvaged wholesale cars. Stuff most 00:00:40.039 --> 00:00:43.159 people would call junk. Right. Exactly. And they 00:00:43.159 --> 00:00:45.979 transformed it into this massive multinational 00:00:45.979 --> 00:00:48.960 digital empire. So our mission today is to really 00:00:48.960 --> 00:00:51.659 unpack that. How did this company, which started 00:00:51.659 --> 00:00:54.240 over 40 years ago, use technology to go from 00:00:54.240 --> 00:00:57.259 just four local lots to being the dominant global 00:00:57.259 --> 00:00:59.520 player? It's fascinating because Copart is so 00:00:59.520 --> 00:01:02.399 much more than a junkyard, for lack of a better 00:01:02.399 --> 00:01:05.579 word. Right. They are this. essential but almost 00:01:05.579 --> 00:01:08.299 invisible piece of the entire global automotive 00:01:08.299 --> 00:01:11.140 world. Totally. They're the machinery that deals 00:01:11.140 --> 00:01:13.400 with the inevitable friction of the industry, 00:01:13.560 --> 00:01:16.000 the accidents, the floods, the cars that just 00:01:16.000 --> 00:01:18.219 reach the end of their life. And before we go 00:01:18.219 --> 00:01:20.719 any further, we have to just wrap our heads around 00:01:20.719 --> 00:01:23.290 the scale of this operation. Because it's not 00:01:23.290 --> 00:01:25.730 a small niche company. Not at all. We're talking 00:01:25.730 --> 00:01:28.489 about a financial titan. If you look at the projected 00:01:28.489 --> 00:01:32.450 2025 data, Copart's annual revenue is a staggering 00:01:32.450 --> 00:01:37.650 $4 .65 billion. $4 .65 billion. Billion. And 00:01:37.650 --> 00:01:39.810 that's not even the whole story. Their net income 00:01:39.810 --> 00:01:43.569 is projected at $1 .55 billion, with total assets 00:01:43.569 --> 00:01:46.370 over $10 billion. Okay, just stop right there 00:01:46.370 --> 00:01:49.829 for a second. There is such a cognitive dissonance 00:01:49.829 --> 00:01:52.569 in those numbers. A multi -billion dollar company, 00:01:52.689 --> 00:01:55.109 right, that gets listed alongside giants we all 00:01:55.109 --> 00:01:57.329 know like Amazon or Microsoft. And their primary 00:01:57.329 --> 00:01:59.609 business is dealing in assets that, you know, 00:01:59.609 --> 00:02:01.870 the average person literally considers trash. 00:02:02.590 --> 00:02:05.530 Damaged cars, totaled vehicles. It just doesn't 00:02:05.530 --> 00:02:07.609 seem to fit. Well, that financial profile is 00:02:07.609 --> 00:02:09.310 so important because it's what tells us what 00:02:09.310 --> 00:02:12.150 Wall Street thinks. This isn't some quirky, overlooked 00:02:12.150 --> 00:02:15.090 stock. They've been on Fortune's 500 list, their 00:02:15.090 --> 00:02:17.169 100 fastest growing companies list. And they're 00:02:17.169 --> 00:02:19.310 a component of both the Nasdaq 100 and the S 00:02:19.310 --> 00:02:22.430 &P 500. Exactly. So their valuation, it reflects 00:02:22.430 --> 00:02:24.449 the power of their technology and their logistics 00:02:24.449 --> 00:02:27.069 platform. Yeah. It's not just about the scrap 00:02:27.069 --> 00:02:29.669 value of the cars they move. OK, so let's unpack 00:02:29.669 --> 00:02:31.370 this. That's the central question, right? Yeah. 00:02:31.490 --> 00:02:35.419 How does a company whose core product is... distressed 00:02:35.419 --> 00:02:38.780 physical property. How does it achieve the status 00:02:38.780 --> 00:02:43.259 of a major S &P 500 tech player? And the answer 00:02:43.259 --> 00:02:45.840 really is a disciplined two -phase strategy. 00:02:46.020 --> 00:02:48.199 It wasn't one single brilliant idea. Okay. What 00:02:48.199 --> 00:02:49.979 are the two phases? First, they had to establish 00:02:49.979 --> 00:02:53.259 unmatched physical scale, just pure brute force 00:02:53.259 --> 00:02:55.819 physical presence. And then second, they executed 00:02:55.819 --> 00:02:59.120 this complete uncompromising digital revolution 00:02:59.120 --> 00:03:01.520 that changed everything. So let's chart that 00:03:01.520 --> 00:03:03.240 path. We have to start with the concrete, literally. 00:03:03.639 --> 00:03:05.919 The foundation they laid back in the 1980s. Our 00:03:05.919 --> 00:03:09.599 store begins in 1982. The salvage market in California 00:03:09.599 --> 00:03:13.439 is highly competitive, but also incredibly fragmented. 00:03:13.500 --> 00:03:16.500 Lots of small local players. Right. And this 00:03:16.500 --> 00:03:18.379 is where the founder, Willis J. Johnson, comes 00:03:18.379 --> 00:03:22.039 in. He's 34 years old and he starts Copart in 00:03:22.039 --> 00:03:24.490 Vallejo, California. And from what the sources 00:03:24.490 --> 00:03:26.949 say, Johnson's approach was, you know, classic 00:03:26.949 --> 00:03:29.969 entrepreneurial aggression. He saw the huge limitations 00:03:29.969 --> 00:03:32.610 of that existing regional model. Let's talk about 00:03:32.610 --> 00:03:34.930 what that model was. If you're an insurance company 00:03:34.930 --> 00:03:37.729 back then and you have a totaled car in, say, 00:03:37.830 --> 00:03:41.110 Sacramento, what happens? Your local claims department 00:03:41.110 --> 00:03:43.250 has to call around to a bunch of local independent 00:03:43.250 --> 00:03:46.389 salvage yards. The buyer pool for that car is 00:03:46.389 --> 00:03:49.169 basically anyone who can drive there. So dismantlers, 00:03:49.189 --> 00:03:52.240 rebuilders. but only within, what, a 50 -mile 00:03:52.240 --> 00:03:54.139 radius maybe? That's it. It's incredibly inefficient. 00:03:54.319 --> 00:03:56.319 So Johnson immediately focused on staling up. 00:03:56.400 --> 00:03:59.240 He used private loans and equity to finance this 00:03:59.240 --> 00:04:01.759 really aggressive but still geographically focused 00:04:01.759 --> 00:04:04.460 expansion. And that capital strategy is so key 00:04:04.460 --> 00:04:07.539 here. In this business, land is everything. Storage 00:04:07.539 --> 00:04:10.419 capacity is the physical bottleneck. It is. If 00:04:10.419 --> 00:04:12.629 you want to grow fast, you need cash. You need 00:04:12.629 --> 00:04:15.189 liquidity right now to buy up huge pieces of 00:04:15.189 --> 00:04:17.269 land that are suitable for storing thousands 00:04:17.269 --> 00:04:20.370 of cars and holding options. So he uses these 00:04:20.370 --> 00:04:23.050 private funds to lay the groundwork. And by the 00:04:23.050 --> 00:04:25.610 early 1990s, he's grown from one location to 00:04:25.610 --> 00:04:27.910 four, all strategically placed across Northern 00:04:27.910 --> 00:04:30.029 California. And that concentration is important. 00:04:30.209 --> 00:04:32.069 It let them maximize their regional efficiency, 00:04:32.389 --> 00:04:35.709 streamline their operations. It was the base 00:04:35.709 --> 00:04:38.170 camp for the national assault. And that national 00:04:38.170 --> 00:04:41.689 acceleration really kicks into high gear in 1990. 00:04:41.709 --> 00:04:44.449 That seems to be the watershed year for them 00:04:44.449 --> 00:04:46.529 breaking out of California. It was. They started 00:04:46.529 --> 00:04:48.670 adding eight new facilities outside of their 00:04:48.670 --> 00:04:51.329 home state, pushing into Oregon, Washington, 00:04:51.490 --> 00:04:54.189 and most importantly, they made a really big 00:04:54.189 --> 00:04:57.170 concerted push into Texas. Why Texas? It's a 00:04:57.170 --> 00:04:59.329 big market. A huge market, but the move wasn't 00:04:59.329 --> 00:05:02.189 arbitrary. It all culminated in one critical 00:05:02.189 --> 00:05:04.790 acquisition that just redefined their ambition. 00:05:05.410 --> 00:05:08.709 They bought the North Texas salvage pool of Dallas. 00:05:09.069 --> 00:05:11.149 And that was a big deal at the time. It was the 00:05:11.149 --> 00:05:13.089 biggest deal. The source material is very clear 00:05:13.089 --> 00:05:15.790 about this. It was the largest volume seller 00:05:15.790 --> 00:05:18.610 of salvage vehicles in the entire US at the time. 00:05:18.670 --> 00:05:20.670 So this wasn't just buying another lot. This 00:05:20.670 --> 00:05:23.269 was like... Buying the grand central station 00:05:23.269 --> 00:05:26.009 of salvaged cars. Exactly. They were buying the 00:05:26.009 --> 00:05:28.730 industry leader's inventory flow in a critical 00:05:28.730 --> 00:05:32.170 geographic hub. By absorbing the biggest player, 00:05:32.490 --> 00:05:34.230 they weren't just expanding their footprint. 00:05:34.389 --> 00:05:37.269 They were immediately rocketing their profile 00:05:37.269 --> 00:05:39.649 to a national level. It's like a signal flare 00:05:39.649 --> 00:05:42.110 to all the major insurance carriers. A huge one. 00:05:42.149 --> 00:05:45.480 It tells them, hey. We are the primary serious 00:05:45.480 --> 00:05:48.639 alternative to this broken, fractured local auction 00:05:48.639 --> 00:05:51.019 model you've been dealing with for decades. But 00:05:51.019 --> 00:05:53.879 that kind of move, buying up all that land, buying 00:05:53.879 --> 00:05:56.139 your biggest competitor's entire book of business. 00:05:57.040 --> 00:05:59.459 That takes a level of capital that you probably 00:05:59.459 --> 00:06:01.860 can't get from private equity or bank loans alone. 00:06:02.100 --> 00:06:04.279 And that is precisely what drove them to the 00:06:04.279 --> 00:06:07.779 IPO, the initial public offering. On March 17th, 00:06:07.779 --> 00:06:11.480 1994, Copart goes public on the Nasdaq, ticker 00:06:11.480 --> 00:06:14.800 symbol CPRT. Do we know the details of the offering? 00:06:14.959 --> 00:06:18.920 We do. They offered 2 .3 million shares of stock 00:06:18.920 --> 00:06:23.180 at $12 per share. And that event, that infusion 00:06:23.180 --> 00:06:26.019 of public cash, gave them the war chests they 00:06:26.019 --> 00:06:28.500 needed. Not just to pay for the recent expansion, 00:06:28.660 --> 00:06:31.660 but to fund this multi -year strategy of just 00:06:31.660 --> 00:06:34.839 total national dominance. And once they had that 00:06:34.839 --> 00:06:38.759 liquidity, the growth just exploded. In May of 00:06:38.759 --> 00:06:42.560 1995, so just over a year after the IPO, Copart 00:06:42.560 --> 00:06:45.120 makes another massive acquisition. They buy the 00:06:45.120 --> 00:06:47.639 NER Auction Group. And the impact of that deal? 00:06:47.720 --> 00:06:49.680 It instantly doubled their number of facilities 00:06:49.680 --> 00:06:52.639 across the country. Doubled overnight. So we're 00:06:52.639 --> 00:06:54.259 seeing a clear pattern here. They're not just 00:06:54.259 --> 00:06:55.939 building from scratch. They're buying established 00:06:55.939 --> 00:06:59.139 volume, existing infrastructure to just shorten 00:06:59.139 --> 00:07:01.199 the timeline to get nationwide coverage. That 00:07:01.199 --> 00:07:04.079 one acquisition, NER, catapulted them from a 00:07:04.079 --> 00:07:06.639 regional player to a sprawling national competitor. 00:07:06.860 --> 00:07:08.899 And they didn't even pause to catch their breath. 00:07:09.079 --> 00:07:11.639 Right. The sources say between July 95 and July 00:07:11.639 --> 00:07:14.300 96, they just kept going, founded six more new 00:07:14.300 --> 00:07:16.560 locations, plus a bunch of smaller acquisitions. 00:07:16.680 --> 00:07:18.959 Just strategically filling in all the gaps in 00:07:18.959 --> 00:07:21.259 their coast -to -coast network. And then once 00:07:21.259 --> 00:07:23.680 they had that physical presence everywhere, the 00:07:23.680 --> 00:07:25.600 strategic pivot happens. This is where it gets 00:07:25.600 --> 00:07:27.899 really interesting. They shift from just acquiring 00:07:27.899 --> 00:07:31.899 property. To securing regional and, much more 00:07:31.899 --> 00:07:34.100 importantly, national contracts with the big 00:07:34.100 --> 00:07:38.180 insurance carriers. Farm, JICO, Allstate, you 00:07:38.180 --> 00:07:41.230 name it. And this is the definitive move. This 00:07:41.230 --> 00:07:42.870 is what builds the moat around their business. 00:07:43.129 --> 00:07:45.329 It's everything. Because think about it. When 00:07:45.329 --> 00:07:48.550 an insurer declares a car a total loss from a 00:07:48.550 --> 00:07:51.889 wreck, a hailstorm, a flood, that process has 00:07:51.889 --> 00:07:54.430 to be instantaneous and frictionless for them. 00:07:54.589 --> 00:07:56.350 They'd want to make a dozen phone calls. Exactly. 00:07:56.670 --> 00:07:59.490 By securing these national contracts, Copart 00:07:59.490 --> 00:08:02.029 becomes the default destination. They're pre 00:08:02.029 --> 00:08:04.870 -contracted. The optimized choice for that distressed 00:08:04.870 --> 00:08:06.829 asset, no matter where in the country the accident 00:08:06.829 --> 00:08:09.199 happened. So if a guy... customer totals their 00:08:09.199 --> 00:08:11.819 car in Florida, Giaco doesn't have to call three 00:08:11.819 --> 00:08:15.139 local auction guys and get quotes. Nope. They 00:08:15.139 --> 00:08:18.220 have one partner, Copart. Standardized paperwork, 00:08:18.480 --> 00:08:21.000 standardized logistics, and a guaranteed facility 00:08:21.000 --> 00:08:24.519 nearby ready to pick up the vehicle. This consolidation 00:08:24.519 --> 00:08:27.399 of inventory flow is their true competitive advantage. 00:08:27.759 --> 00:08:30.199 This relentless growth. I mean, the acquisition 00:08:30.199 --> 00:08:33.929 -fueled, contract -driven strategy. It had to 00:08:33.929 --> 00:08:36.129 have a clear result. It did. A very measurable 00:08:36.129 --> 00:08:40.470 one. By 2003, Copart hit the 100 location mark 00:08:40.470 --> 00:08:43.029 across the country. 100. So they successfully 00:08:43.029 --> 00:08:46.470 built the massive physical giant first. The foundation 00:08:46.470 --> 00:08:49.500 was set. A giant built on acres of concrete and 00:08:49.500 --> 00:08:52.120 steel. But that was only the stage for the real 00:08:52.120 --> 00:08:53.799 revolution, the one that was about to happen 00:08:53.799 --> 00:08:55.980 online. And this is where it gets really interesting 00:08:55.980 --> 00:08:57.940 for me. This is where the story shifts from, 00:08:58.019 --> 00:09:01.379 you know, real estate and logistics to pure platform 00:09:01.379 --> 00:09:03.639 technology. It's a huge shift. You have this 00:09:03.639 --> 00:09:05.500 incredibly successful, geographically massive 00:09:05.500 --> 00:09:08.120 company, but it's still operating in a very traditional 00:09:08.120 --> 00:09:10.620 way. Physical auctions, bringing local buyers 00:09:10.620 --> 00:09:13.220 to look at local cars on local lots. But back 00:09:13.220 --> 00:09:16.500 in the late 1990s, Willis Johnson had this foresight. 00:09:16.940 --> 00:09:19.299 He recognized that their biggest limitation wasn't 00:09:19.299 --> 00:09:22.700 land anymore. They had 100 locations. It was 00:09:22.700 --> 00:09:24.940 the inefficiency of the physical auction process 00:09:24.940 --> 00:09:27.279 itself. It's a visionary move, really. Right. 00:09:27.360 --> 00:09:29.700 He understood that managing 100 different locations, 00:09:29.919 --> 00:09:32.720 hundreds of thousands of cars, with paper trails 00:09:32.720 --> 00:09:35.840 and different local systems, it was a huge cost 00:09:35.840 --> 00:09:38.759 center. A massive drag on efficiency. The bottleneck 00:09:38.759 --> 00:09:40.679 had shifted. It wasn't about getting the cars 00:09:40.679 --> 00:09:43.039 anymore. It was about processing the information 00:09:43.039 --> 00:09:45.980 about the cars. So in 1997, they make their first 00:09:45.980 --> 00:09:48.340 big tech move. They launch an internal system 00:09:48.340 --> 00:09:51.460 called the Copart Auction System or CAS. And 00:09:51.460 --> 00:09:53.940 we really can't overstate how foundational CAS 00:09:53.940 --> 00:09:56.779 was. It wasn't just some simple inventory database. 00:09:56.980 --> 00:09:59.159 You have to think of it as an enterprise -wide 00:09:59.159 --> 00:10:01.759 resource planning system built from the ground 00:10:01.759 --> 00:10:04.440 up specifically for salvage logistics. So what 00:10:04.440 --> 00:10:07.250 did it do? practically speaking. It unified the 00:10:07.250 --> 00:10:09.350 entire business. It centralized all the essential 00:10:09.350 --> 00:10:11.730 functions, standardized vehicle intake forms, 00:10:11.990 --> 00:10:14.129 digital photos and condition reports, tracking 00:10:14.129 --> 00:10:16.629 the title processing, generating detailed financial 00:10:16.629 --> 00:10:19.389 reports. For both their own facilities and for 00:10:19.389 --> 00:10:22.370 the sellers, the insurance company. Yes. It fundamentally 00:10:22.370 --> 00:10:25.649 digitized the paper trail. It meant every single 00:10:25.649 --> 00:10:27.629 one of those hundred locations, no matter how 00:10:27.629 --> 00:10:30.769 remote, operated under the exact same measurable 00:10:30.769 --> 00:10:34.389 digital protocols. And by creating that centralized 00:10:34.389 --> 00:10:38.470 digital view of their massive physical inventory, 00:10:38.730 --> 00:10:42.029 that unlocks the next step. It's the only way 00:10:42.029 --> 00:10:44.929 the next step is possible. Without CAS, the data 00:10:44.929 --> 00:10:47.330 would have been too messy, too fragmented, too 00:10:47.330 --> 00:10:50.309 localized to ever support national, let alone 00:10:50.309 --> 00:10:53.429 global, virtual sales. And that next step came 00:10:53.429 --> 00:10:56.629 just a year later, 1998. They introduced remote 00:10:56.629 --> 00:10:59.289 Internet bidding. Which was revolutionary. I 00:10:59.289 --> 00:11:01.269 mean, the industry standard was you show up on 00:11:01.269 --> 00:11:03.110 a Tuesday morning, you walk the lot, you bid 00:11:03.110 --> 00:11:05.169 in person. The physical presence of the buyer 00:11:05.169 --> 00:11:08.389 was mandatory. But Internet bidding just shatters 00:11:08.389 --> 00:11:11.070 those barriers, both geographic and time. Think 00:11:11.070 --> 00:11:13.149 about the economics of it. If you have a specific 00:11:13.149 --> 00:11:15.950 high value totaled car, let's say a wrecked Porsche 00:11:15.950 --> 00:11:18.710 in a small market like Montana. The number of 00:11:18.710 --> 00:11:20.789 local buyers willing to pay top dollar for that 00:11:20.789 --> 00:11:24.340 is tiny. Maybe one or two. Right. But suddenly, 00:11:24.500 --> 00:11:27.539 with Internet bidding, that exact same car is 00:11:27.539 --> 00:11:31.159 visible to a specialist dismantler in Dubai or 00:11:31.159 --> 00:11:34.200 a parts broker in Poland who might pay a huge 00:11:34.200 --> 00:11:37.399 premium for one specific component off that car. 00:11:37.620 --> 00:11:40.100 It's the classic platform effect enabled by technology. 00:11:40.440 --> 00:11:42.700 Absolutely. It instantly expanded the buyer pool 00:11:42.700 --> 00:11:45.679 from regional to global. And the immediate result, 00:11:45.840 --> 00:11:48.639 the primary benefit for Coparts clients, is a 00:11:48.639 --> 00:11:51.580 much higher sale price for the seller. The insurance 00:11:51.580 --> 00:11:54.820 company. Exactly. A higher final sale price for 00:11:54.820 --> 00:11:57.419 that totaled car means a lower net loss for the 00:11:57.419 --> 00:11:59.940 insurer on that claim. And that is the ultimate 00:11:59.940 --> 00:12:01.960 key to getting and keeping those big national 00:12:01.960 --> 00:12:04.360 contracts. The better your platform performs, 00:12:04.559 --> 00:12:06.899 the more inventory they send you. But in 1998, 00:12:07.200 --> 00:12:09.039 they're probably just using third party Internet 00:12:09.039 --> 00:12:12.110 software. relying on existing infrastructure. 00:12:12.370 --> 00:12:15.029 That feels like a vulnerability. It was. And 00:12:15.029 --> 00:12:17.690 as Internet bidding grew and became more central 00:12:17.690 --> 00:12:19.830 to their business, they realized they needed 00:12:19.830 --> 00:12:22.629 to control the entire experience, the user interface, 00:12:22.889 --> 00:12:24.909 the data, the intellectual property. So they 00:12:24.909 --> 00:12:27.889 built their own. In 2003, they implemented their 00:12:27.889 --> 00:12:31.110 own proprietary, internally developed online 00:12:31.110 --> 00:12:35.980 auction platform, VB2. VB2. virtual bidding too 00:12:35.980 --> 00:12:39.940 and this was the true game changer this is where 00:12:39.940 --> 00:12:42.840 they perfected the live but purely virtual auction 00:12:42.840 --> 00:12:46.279 experience it opened the entire sales process 00:12:46.279 --> 00:12:48.240 to their registered buyers their members and 00:12:48.240 --> 00:12:51.679 sellers all over the world 24 7. it basically 00:12:51.679 --> 00:12:54.419 took their 100 plus physical yards and plugged 00:12:54.419 --> 00:12:57.019 them into a single global interface seamlessly 00:12:57.019 --> 00:13:00.159 they became distributed inventory centers all 00:13:00.159 --> 00:13:02.460 accessible from one website and this brings us 00:13:02.460 --> 00:13:04.809 to what might be the most pivotal most radical 00:13:04.809 --> 00:13:07.529 moment in the whole story. The point of no return. 00:13:07.690 --> 00:13:09.450 It's where they showed just this unbelievable 00:13:09.450 --> 00:13:11.789 confidence in their own technology and their 00:13:11.789 --> 00:13:13.769 strategic vision. They decided to get rid of 00:13:13.769 --> 00:13:16.190 live physical auctions entirely. The operational 00:13:16.190 --> 00:13:19.750 risk was immense. In fiscal year 2004, they discontinued 00:13:19.750 --> 00:13:22.149 all live physical auctions in North America. 00:13:22.450 --> 00:13:24.529 Let's just put that in perspective. Yeah. It's 00:13:24.529 --> 00:13:26.629 like a real estate company deciding to sell all 00:13:26.629 --> 00:13:28.389 their houses through a website that's only five 00:13:28.389 --> 00:13:30.929 years old without ever letting anyone visit in 00:13:30.929 --> 00:13:33.629 person again. It's an unprecedented move. They 00:13:33.629 --> 00:13:35.950 basically told a huge chunk of their buyer base, 00:13:36.129 --> 00:13:39.029 the old school guys, that they had to switch 00:13:39.029 --> 00:13:41.470 to digital or they were out. They weren't testing 00:13:41.470 --> 00:13:43.750 the waters. They dove in head first. And then 00:13:43.750 --> 00:13:46.149 they doubled down. In fiscal year 2008, they 00:13:46.149 --> 00:13:48.789 did the same thing in the UK. Discontinued all 00:13:48.789 --> 00:13:51.210 live auctions there, too. The implication is 00:13:51.210 --> 00:13:54.690 just staggering. Copart was now selling millions 00:13:54.690 --> 00:13:57.450 of vehicles exclusively through their own online 00:13:57.450 --> 00:14:00.629 platform. They created the first... completely 00:14:00.629 --> 00:14:03.549 online auction model in the industry. And in 00:14:03.549 --> 00:14:06.409 doing so, they forced every single one of their 00:14:06.409 --> 00:14:09.909 competitors globally to stop and completely reassess 00:14:09.909 --> 00:14:12.809 their own business models. That risk, it must 00:14:12.809 --> 00:14:14.710 have delivered some huge reward, right? Why do 00:14:14.710 --> 00:14:18.190 it? Unparalleled efficiency. By just eliminating 00:14:18.190 --> 00:14:20.809 the physical auction infrastructure, the auctioneer, 00:14:20.870 --> 00:14:23.070 the staff to manage the crowd, the overhead of 00:14:23.070 --> 00:14:25.990 hosting hundreds of people on site, they slashed 00:14:25.990 --> 00:14:27.769 their operational costs. And I imagine they could 00:14:27.769 --> 00:14:30.529 hold auctions more often. Way more often. They 00:14:30.529 --> 00:14:33.029 could move from maybe one or two physical auctions 00:14:33.029 --> 00:14:36.250 a week at a given yard to near continuous online 00:14:36.250 --> 00:14:39.070 sales. That speed of getting rid of the inventory 00:14:39.070 --> 00:14:42.129 is critical for the sellers. A car sitting on 00:14:42.129 --> 00:14:44.649 a lot is a depreciating asset that costs money 00:14:44.649 --> 00:14:46.950 to store. OK, but I want to push back on something 00:14:46.950 --> 00:14:48.590 here because this has to have been a point of 00:14:48.590 --> 00:14:53.590 massive friction. The 2004 decision to abandon 00:14:53.590 --> 00:14:56.879 physical inspection and bidding. It must have 00:14:56.879 --> 00:14:59.340 faced huge resistance from their core customers, 00:14:59.600 --> 00:15:02.220 the veteran dismantlers. The guys used to kicking 00:15:02.220 --> 00:15:05.340 the tires. Exactly. How did Copart manage the 00:15:05.340 --> 00:15:07.860 risk of just alienating their entire buyer base? 00:15:08.139 --> 00:15:09.919 It's a vital question, and they tackled it in 00:15:09.919 --> 00:15:13.799 two main ways, information superiority and financial 00:15:13.799 --> 00:15:15.639 necessity. Okay, what do you mean by information 00:15:15.639 --> 00:15:18.139 superiority? Their CAS system allowed them to 00:15:18.139 --> 00:15:20.440 provide way more data online than you could get 00:15:20.440 --> 00:15:22.940 in person. High resolution digital images from 00:15:22.940 --> 00:15:25.679 every angle, detailed condition reports, guaranteed 00:15:25.679 --> 00:15:28.059 information about the vehicle's title, status 00:15:28.059 --> 00:15:31.080 and location. They essentially digitized the 00:15:31.080 --> 00:15:33.200 inspection process to a degree that was better 00:15:33.200 --> 00:15:35.120 than being there. And the financial necessity 00:15:35.120 --> 00:15:37.620 part. Well, once they had those big national 00:15:37.620 --> 00:15:40.519 insurance contracts locked up, the inventory, 00:15:40.799 --> 00:15:43.720 the critical supply stream of cars, was flowing 00:15:43.720 --> 00:15:47.129 almost exclusively through their platform. So 00:15:47.129 --> 00:15:50.090 if you were a dismantler and you needed a consistent 00:15:50.090 --> 00:15:52.830 high volume of cars to run your business. You 00:15:52.830 --> 00:15:54.570 had no choice. You had no choice. You had to 00:15:54.570 --> 00:15:56.570 learn to use VB2 because the product you needed 00:15:56.570 --> 00:15:59.409 to buy simply wasn't being sold physically anywhere 00:15:59.409 --> 00:16:01.870 else anymore. They controlled the supply. So 00:16:01.870 --> 00:16:05.009 technology is always moving. And by 2013, the 00:16:05.009 --> 00:16:08.179 web had changed again. Mobile was becoming huge. 00:16:08.440 --> 00:16:11.100 Right. And Copart knew that VB2, as powerful 00:16:11.100 --> 00:16:13.519 as it was, was starting to show its age, especially 00:16:13.519 --> 00:16:16.580 in its architecture. So in 2013, they launched 00:16:16.580 --> 00:16:19.840 the next generation, VB3. And VB3 was more than 00:16:19.840 --> 00:16:21.860 just a new look. It was a complete replatforming, 00:16:21.899 --> 00:16:24.360 right? Designed for global scale. Totally. The 00:16:24.360 --> 00:16:27.039 older systems, including VB2, they often relied 00:16:27.039 --> 00:16:29.159 on these clunky plugins, you know, like Flash 00:16:29.159 --> 00:16:32.320 or old Java applets to handle the real time bidding. 00:16:32.460 --> 00:16:34.580 I remember those. They were a nightmare. Always 00:16:34.580 --> 00:16:37.529 needing updates, creating security risks. And 00:16:37.529 --> 00:16:40.149 they were a massive bottleneck for global users 00:16:40.149 --> 00:16:42.210 with different browsers or slower connections. 00:16:43.049 --> 00:16:46.169 VB3 got rid of all of that. It used modern web 00:16:46.169 --> 00:16:48.450 standards. It supported all the latest browsers 00:16:48.450 --> 00:16:51.169 natively. And crucially, it was built from the 00:16:51.169 --> 00:16:53.809 ground up for mobile. Which is essential now. 00:16:53.929 --> 00:16:56.389 Their buyer base is increasingly global and mobile 00:16:56.389 --> 00:17:00.139 first. A dismantler in Germany. or a parts broker 00:17:00.139 --> 00:17:02.620 in Brazil, needs to be able to place a bid from 00:17:02.620 --> 00:17:05.380 their smartphone reliably. VP3 made that possible. 00:17:05.519 --> 00:17:08.119 It overcame the issues like latency and bandwidth 00:17:08.119 --> 00:17:10.619 that plagued the earlier versions. And let's 00:17:10.619 --> 00:17:12.799 just emphasize the proprietary nature of this. 00:17:12.839 --> 00:17:14.900 This isn't off -the -shelf software. Not at all. 00:17:15.130 --> 00:17:17.950 Copart now sells over 1 million vehicles every 00:17:17.950 --> 00:17:20.690 single year using their patented VB3 technology. 00:17:21.190 --> 00:17:23.509 And that patent isn't just for the website's 00:17:23.509 --> 00:17:26.049 design. It covers their unique methodology for 00:17:26.049 --> 00:17:29.130 running these huge, complex virtual salvage options. 00:17:29.430 --> 00:17:31.789 So they literally own the engine that revolutionized 00:17:31.789 --> 00:17:35.049 their own industry. They do. Okay, so we've established 00:17:35.049 --> 00:17:37.309 the physical growth and the proprietary digital 00:17:37.309 --> 00:17:40.670 engine. Now let's look at the current scope of 00:17:40.670 --> 00:17:44.369 their operations and the nuts and bolts of how 00:17:44.369 --> 00:17:47.809 they generate that $4 .65 billion in annual revenue. 00:17:48.130 --> 00:17:50.630 Right. We started with four locations in Northern 00:17:50.630 --> 00:17:53.599 California. Where are we today? Even though the 00:17:53.599 --> 00:17:56.400 sales are all online, that physical footprint 00:17:56.400 --> 00:17:59.839 is still massive and absolutely necessary. It's 00:17:59.839 --> 00:18:02.700 the backbone. Today, Copart maintains over 200 00:18:02.700 --> 00:18:06.480 physical locations around the world. 200. And 00:18:06.480 --> 00:18:09.039 the scale of the inventory they hold is just... 00:18:09.420 --> 00:18:11.920 It's hard to even visualize. It is. Those 200 00:18:11.920 --> 00:18:14.859 locations house more than 10 ,000 acres of vehicle 00:18:14.859 --> 00:18:17.579 inventory. 10 ,000 acres. To put that into perspective, 00:18:17.740 --> 00:18:19.880 that's thousands and thousands of football fields 00:18:19.880 --> 00:18:22.099 just dedicated to storing wrecked and wholesale 00:18:22.099 --> 00:18:24.420 cars that are waiting to be processed, titled, 00:18:24.539 --> 00:18:28.180 and sold online. That land is the physical manifestation 00:18:28.180 --> 00:18:30.960 of the entire insurance industry's total loss 00:18:30.960 --> 00:18:33.619 problem. And Copart manages it. And optimizes 00:18:33.619 --> 00:18:35.779 it. And because the U .S. digital model works 00:18:35.779 --> 00:18:38.119 so well, international expansion was the obvious 00:18:38.119 --> 00:18:40.839 next step. Their first move outside North America 00:18:40.839 --> 00:18:44.700 was Canada in 2003, right? Testing the VB2 tech. 00:18:44.880 --> 00:18:47.839 Right, and that Canadian test... proved the model 00:18:47.839 --> 00:18:50.099 was portable. It could work anywhere. So by 2007, 00:18:50.400 --> 00:18:52.920 they expanded overseas to the United Kingdom. 00:18:53.140 --> 00:18:55.619 Which is a very different market, highly regulated, 00:18:55.700 --> 00:18:58.359 high volume insurance market. And that UK operation 00:18:58.359 --> 00:19:01.200 was so crucial. It gave them the blueprint for 00:19:01.200 --> 00:19:03.940 how to deal with complex international regulations 00:19:03.940 --> 00:19:07.059 and title laws, which are often a huge barrier 00:19:07.059 --> 00:19:08.900 when you're trying to export salvage vehicles. 00:19:09.279 --> 00:19:12.099 And then starting around 2012, the sources show 00:19:12.099 --> 00:19:15.460 this rapid calculated global push into all these 00:19:15.460 --> 00:19:17.829 diverse markets. And it wasn't scattershot. It 00:19:17.829 --> 00:19:20.109 was very strategic. They expanded into places 00:19:20.109 --> 00:19:23.029 where vehicle density was high and logistical 00:19:23.029 --> 00:19:25.250 coordination was complex. So where did they go? 00:19:25.470 --> 00:19:27.970 They moved into the United Arab Emirates, which 00:19:27.970 --> 00:19:30.609 is a massive global hub for re -exporting vehicles. 00:19:31.150 --> 00:19:33.789 Brazil, a huge internal market. They went into 00:19:33.789 --> 00:19:37.630 Bahrain, Oman, Spain, Ireland, Germany. That 00:19:37.630 --> 00:19:39.450 diversity is fascinating. It really highlights 00:19:39.450 --> 00:19:42.730 that the core business model totaled cars sold 00:19:42.730 --> 00:19:45.569 quickly on an online platform. It's universally 00:19:45.569 --> 00:19:47.740 applicable. It doesn't matter what the local 00:19:47.740 --> 00:19:50.740 road laws are or the salvage regulations. The 00:19:50.740 --> 00:19:53.880 global platform adds value everywhere. And that 00:19:53.880 --> 00:19:56.059 expansion strategy is still a mix of building 00:19:56.059 --> 00:19:58.940 new locations and buying existing ones. Exactly. 00:19:59.099 --> 00:20:01.279 They still use strategic acquisitions to get 00:20:01.279 --> 00:20:03.920 immediate market share. For example, in 2018, 00:20:04.140 --> 00:20:06.279 they moved into Finland by acquiring the local 00:20:06.279 --> 00:20:09.319 leader, a company called Autovahinko Keskus or 00:20:09.319 --> 00:20:12.359 AVK. So today they're providing services in 11 00:20:12.359 --> 00:20:14.880 countries total. all managed and centralized 00:20:14.880 --> 00:20:17.099 through their corporate headquarters in Dallas. 00:20:17.660 --> 00:20:19.940 And that headquarters move in 2012 is worth mentioning. 00:20:20.140 --> 00:20:22.640 They moved from Fairfield, California, to Dallas, 00:20:22.779 --> 00:20:26.500 Texas. The new Copart Tower, 53 ,000 square feet 00:20:26.500 --> 00:20:29.319 of office space. It really cemented Dallas as 00:20:29.319 --> 00:20:31.539 the central hub for their tech, their logistics 00:20:31.539 --> 00:20:34.140 and their global governance. So beyond the main 00:20:34.140 --> 00:20:37.180 Copart brand and the VB3 platform, they've also 00:20:37.180 --> 00:20:39.559 built up this portfolio of specialized brands 00:20:39.559 --> 00:20:42.000 to capture every single corner of the market. 00:20:42.160 --> 00:20:44.059 Right. They want to make sure no vehicle type 00:20:44.059 --> 00:20:46.779 or sourcing channel gets ignored. So that portfolio 00:20:46.990 --> 00:20:49.450 includes brands like Crash Toys, which is specifically 00:20:49.450 --> 00:20:52.109 for motorcycles and recreational vehicles. So 00:20:52.109 --> 00:20:55.769 wrecked RVs, jet skis, that kind of thing. Exactly. 00:20:56.069 --> 00:20:58.750 And Drive Auto Auctions, which handles clean 00:20:58.750 --> 00:21:01.809 title or dealership trade -in vehicles. And in 00:21:01.809 --> 00:21:04.450 2017, they made a critical acquisition buying 00:21:04.450 --> 00:21:07.529 National Power Sport Auctions, or NPA, which 00:21:07.529 --> 00:21:10.069 cemented their dominance in things like snowmobiles, 00:21:10.069 --> 00:21:12.910 ATVs, and watercraft. And one of the most interesting 00:21:12.910 --> 00:21:15.759 brands, I think, is CashForCars .com. That one's 00:21:15.759 --> 00:21:18.440 really smart. It lets them source inventory directly 00:21:18.440 --> 00:21:21.119 from you, the consumer. They'll just buy your 00:21:21.119 --> 00:21:23.900 old or unwanted car for cash. Which expands their 00:21:23.900 --> 00:21:26.220 inventory sources way beyond their main institutional 00:21:26.220 --> 00:21:29.000 clients, the insurance companies. And that consumer 00:21:29.000 --> 00:21:31.059 brand has been a big part of their international 00:21:31.059 --> 00:21:33.519 strategy. They launched it in Canada in 2018, 00:21:33.839 --> 00:21:37.460 Germany in 2019, the UK in 2020. It's a way to 00:21:37.460 --> 00:21:39.660 keep inventory flowing, even if institutional 00:21:39.660 --> 00:21:42.700 contracts shift. But the real embedded value 00:21:42.700 --> 00:21:45.680 for their big clients, the insurers, has to be 00:21:45.680 --> 00:21:47.799 the ancillary services they offer. Oh, absolutely. 00:21:48.160 --> 00:21:50.940 Copart is a complete outsource solution for salvage 00:21:50.940 --> 00:21:53.660 recovery. They offer these complex value -add 00:21:53.660 --> 00:21:55.859 services that plug directly into the insurance 00:21:55.859 --> 00:21:58.420 company's claims workflow. And these are not 00:21:58.420 --> 00:22:01.140 trivial things. They are major friction reducers. 00:22:01.319 --> 00:22:04.119 Right. They include providing transport for the 00:22:04.119 --> 00:22:06.299 vehicle from the scene of the accident to their 00:22:06.299 --> 00:22:09.119 storage lot. A logistical nightmare that Copart's 00:22:09.119 --> 00:22:11.859 network just handles. And maybe most importantly, 00:22:12.119 --> 00:22:15.079 they assist with vehicle title processing. That 00:22:15.079 --> 00:22:18.180 title processing piece. It's so easy to overlook, 00:22:18.420 --> 00:22:21.500 but it's a legal and regulatory labyrinth. It 00:22:21.500 --> 00:22:24.559 is. When an insurer totals a car, the title has 00:22:24.559 --> 00:22:26.859 to be meticulously transferred and reclassified 00:22:26.859 --> 00:22:30.900 as salvage, total loss, sometimes junk. And every 00:22:30.900 --> 00:22:33.480 state, every country has different rules, different 00:22:33.480 --> 00:22:35.920 paperwork, different timelines. And Coupart manages 00:22:35.920 --> 00:22:38.359 all of that compliance for millions of transactions 00:22:38.359 --> 00:22:41.430 a year. ensuring that asset can be legally sold 00:22:41.430 --> 00:22:44.210 and exported anywhere in the world. And finally, 00:22:44.329 --> 00:22:47.029 they provide sale pricing estimates. This feeds 00:22:47.029 --> 00:22:49.450 crucial data back to the insurer, helping them 00:22:49.450 --> 00:22:51.690 accurately calculate their loss and close out 00:22:51.690 --> 00:22:54.589 the claim. It makes Copart indispensable. So 00:22:54.589 --> 00:22:57.950 let's get into the mechanics of that $4 .65 billion 00:22:57.950 --> 00:23:00.890 revenue stream. If we connect all this back to 00:23:00.890 --> 00:23:02.809 the money, where does the bulk of their income 00:23:02.809 --> 00:23:05.769 actually come from? This is the classic digital 00:23:05.769 --> 00:23:09.509 platform economy model. Copart gets most of its 00:23:09.509 --> 00:23:12.809 revenue over 80 % from service fees. Fees for 00:23:12.809 --> 00:23:15.470 using their online auction platform. So that 00:23:15.470 --> 00:23:18.049 confirms it. They're fundamentally a technology 00:23:18.049 --> 00:23:20.710 and logistics platform provider. Their value 00:23:20.710 --> 00:23:23.430 is in enabling the transaction, not just selling 00:23:23.430 --> 00:23:25.670 the asset. They're monetizing the efficiency 00:23:25.670 --> 00:23:28.269 of the transaction itself. And that fee structure 00:23:28.269 --> 00:23:32.019 has two sides. Seller fees and buyer fees. So 00:23:32.019 --> 00:23:34.019 the seller fees are charged to the insurance 00:23:34.019 --> 00:23:36.440 company. Right. For all those services, storage, 00:23:36.799 --> 00:23:39.440 logistics, title processing and access to the 00:23:39.440 --> 00:23:42.460 global auction. And the insurer is happy to pay 00:23:42.460 --> 00:23:45.279 that fee because Copart's global buyer pool gets 00:23:45.279 --> 00:23:47.279 them a much higher price for the salvage card 00:23:47.279 --> 00:23:49.440 than a local auction ever could. So they get 00:23:49.440 --> 00:23:52.069 a better net return even after the fee. Exactly. 00:23:52.150 --> 00:23:54.650 And then the buyer fees are charged to the dismantlers 00:23:54.650 --> 00:23:57.089 and the resellers for access to that incredible 00:23:57.089 --> 00:23:59.789 global inventory. And those fees cover the platform, 00:24:00.089 --> 00:24:03.150 the tech, the bidding software, and all the documentation 00:24:03.150 --> 00:24:06.069 needed for cross -border shipping. Buyers pay 00:24:06.069 --> 00:24:09.670 that premium for guaranteed, high -volume, efficiently 00:24:09.670 --> 00:24:12.750 categorized inventory from one single reliable 00:24:12.750 --> 00:24:15.509 source. What about the other 20 % of revenue? 00:24:16.000 --> 00:24:18.559 That secondary stream comes from the actual sale 00:24:18.559 --> 00:24:20.839 of vehicles that Copart takes direct ownership 00:24:20.839 --> 00:24:23.799 of, usually through their consumer -facing brands 00:24:23.799 --> 00:24:26.839 like CashForCards .com, the traditional buy and 00:24:26.839 --> 00:24:28.799 resell model. Now, even though they're a global 00:24:28.799 --> 00:24:31.460 company, the financial engine is still primarily 00:24:31.460 --> 00:24:34.509 American, isn't it? Very much so. The sources 00:24:34.509 --> 00:24:37.230 show that about 88 % of their service fee revenue 00:24:37.230 --> 00:24:40.549 and 63 % of their vehicle sales revenue comes 00:24:40.549 --> 00:24:43.329 from right here in the United States. International 00:24:43.329 --> 00:24:45.789 growth is the future, but domestic dominance 00:24:45.789 --> 00:24:48.529 funds everything. And finally, let's just look 00:24:48.529 --> 00:24:50.849 at the two sides of that platform. The sellers 00:24:50.849 --> 00:24:53.009 are mostly the insurance companies with total 00:24:53.009 --> 00:24:55.950 loss vehicles. Who are the buyers? Who is providing 00:24:55.950 --> 00:24:58.049 all this liquidity? The largest single group 00:24:58.049 --> 00:25:00.430 of purchasers buying cars in Copart's auctions 00:25:00.430 --> 00:25:03.049 are vehicle dismantlers. And that's a key point. 00:25:03.130 --> 00:25:05.170 That connects Copart directly to the circular 00:25:05.170 --> 00:25:08.309 economy. It does. These buyers aren't just crushing 00:25:08.309 --> 00:25:10.390 the cars. They're looking for specific components, 00:25:10.789 --> 00:25:14.190 body parts, engines, transmissions, repairable 00:25:14.190 --> 00:25:17.130 vehicles for export. Copart isn't just selling 00:25:17.130 --> 00:25:19.829 scrap, it's facilitating the highly efficient 00:25:19.829 --> 00:25:22.789 global recycling and reuse of automotive parts, 00:25:23.029 --> 00:25:26.769 maximizing the economic life of everything. Okay, 00:25:26.829 --> 00:25:28.589 so let's try to synthesize this whole journey. 00:25:28.849 --> 00:25:31.410 We've charted the path from a single salvage 00:25:31.410 --> 00:25:35.210 lot in Vallejo, California in 1982. Through aggressive 00:25:35.210 --> 00:25:37.869 acquisition, a key IPO. All the way to becoming 00:25:37.869 --> 00:25:40.609 a multi -billion dollar tech and asset company 00:25:40.609 --> 00:25:43.009 listed on the S &P 500. And that first phase 00:25:43.009 --> 00:25:45.789 was all about physical scale and standardizing 00:25:45.789 --> 00:25:49.250 the logistics. The IPO funded those key acquisitions, 00:25:49.269 --> 00:25:51.589 like NER, that gave them the national footprint 00:25:51.589 --> 00:25:54.170 of 100 locations that allowed them to control 00:25:54.170 --> 00:25:56.130 the inventory flow through the national insurance 00:25:56.130 --> 00:25:58.950 contracts. They built a supply chain first. But 00:25:58.950 --> 00:26:00.849 the real leverage, the thing that created this 00:26:00.849 --> 00:26:03.750 massive valuation, was the technology. The foundational 00:26:03.750 --> 00:26:07.480 CAS system, remote bidding in 98. And of course, 00:26:07.559 --> 00:26:10.480 that decisive high risk switch to their own VB2 00:26:10.480 --> 00:26:14.279 and now VB3 platforms. The decision to just abandon 00:26:14.279 --> 00:26:16.880 all live auctions and go 100 percent online. 00:26:17.220 --> 00:26:19.619 That was the pivot that turned their national 00:26:19.619 --> 00:26:22.319 physical network into a global high liquidity 00:26:22.319 --> 00:26:25.079 marketplace. The so what here isn't just that 00:26:25.079 --> 00:26:27.599 they got big. It's about the specific economic 00:26:27.599 --> 00:26:30.240 problem they solved. I think so, too. Their online 00:26:30.240 --> 00:26:33.039 auction model took these previously illiquid 00:26:33.039 --> 00:26:35.680 regional assets, totaled cars that were hard 00:26:35.680 --> 00:26:38.319 to sell. and made them instantly available to 00:26:38.319 --> 00:26:41.200 a global pool of buyers. And that huge infusion 00:26:41.200 --> 00:26:43.599 of global demand into a localized supply chain 00:26:43.599 --> 00:26:46.259 just drives up the price. It drives up the residual 00:26:46.259 --> 00:26:48.339 value of that salvaged car. Creating massive 00:26:48.339 --> 00:26:51.160 efficiency for the entire auto insurance and 00:26:51.160 --> 00:26:53.500 recycling industries all over the world. And 00:26:53.500 --> 00:26:55.440 the fact that they're in major indices like the 00:26:55.440 --> 00:26:58.289 S &P 500. just confirms that Wall Street gets 00:26:58.289 --> 00:27:00.990 it. They see the technology platform as the real 00:27:00.990 --> 00:27:03.349 source of value. Right. They reduced friction, 00:27:03.650 --> 00:27:05.809 they increased the speed of disposition, and 00:27:05.809 --> 00:27:08.109 they engineered global liquidity for millions 00:27:08.109 --> 00:27:10.769 of distressed physical assets. They became a 00:27:10.769 --> 00:27:13.049 mission -critical utility for the insurance industry. 00:27:13.390 --> 00:27:15.609 Which brings us to our final provocative thought 00:27:15.609 --> 00:27:19.250 for you to think about. Consider the vast, often 00:27:19.250 --> 00:27:22.430 unseen, impact of this kind of digital logistics 00:27:22.430 --> 00:27:25.519 infrastructure on financial stability. The complex 00:27:25.519 --> 00:27:28.299 system that Copart built to handle these physical 00:27:28.299 --> 00:27:31.049 assets at the end of their life. It's fundamental 00:27:31.049 --> 00:27:33.470 to how things work. Their ability to process 00:27:33.470 --> 00:27:36.650 millions of total loss vehicles quickly and transparently 00:27:36.650 --> 00:27:39.069 online, converting them into cash for global 00:27:39.069 --> 00:27:41.650 buyers, that isn't just a good business story. 00:27:41.750 --> 00:27:44.609 It's a fundamental mechanism that actually underpins 00:27:44.609 --> 00:27:47.809 the viability and the cost of auto insurance 00:27:47.809 --> 00:27:50.150 for all of us. That's the real takeaway. Without 00:27:50.150 --> 00:27:52.730 that digital efficiency and asset recovery, the 00:27:52.730 --> 00:27:54.750 premium that you pay for your car insurance would 00:27:54.750 --> 00:27:56.390 most certainly be significantly higher.