Instamotor is the closest thing to your car selling itself (update)

Update: It has come to our attention that a very similar service, Carlypso, has been operating since August 2013, and according to a comment thread in Hacker News, Instamotor’s founders have previously interacted with it.

Startups have already begun to solve some “real” and “difficult” problems — laundry, selfies, underwear delivery — but a new company is now taking on a new problem: Selling your car.

Bay Area-based Instamotor, which quietly launched eight weeks ago, wants to make selling a car painless and fruitful by taking care of the entire process and leaving sellers with a nice chunk of change at the end.

Oh, and technology is involved too, but we’ll get to that later.

The problem and the solution

The bottom line is that selling one’s car “sucks,” as the company puts it.

The idea for Instamotor sprung out of cofounder Sy Bohy’s awful experience last summer when he needed to see his car. The private-selling route (i.e., Craigslist) was a long and inconvenient process (scheduling car showings, coordinating with various interested buyers, negotiating, and so on). Selling it to a dealership would have left him with much less money in his pocket than desired.

In fact, used car dealerships normally purchase the cars for only 70-80 percent of the price a seller could get in a private sale, according to Bohy.

As a solution, Instamotor takes care of the entire process. It photographs and makes a pricing recommendation for the vehicle, schedules a wash and mechanical inspection, keeps the listing active across multiple marketplaces, vets and schedules test-drives with potential buyers, and even handles the ownership transfer paperwork — all while the seller continues to use their car.

Their cut? Only five percent of the final sale price.

Unlike dealerships and consignment lots, Instamotor has very low overhead costs (no real estate or full-time staff to employ even when there no customers).

“We come sort of in the middle,” said Bohy in an interview with VentureBeat.

And luckily for them, that five percent cut still represents a huge opportunity: 40 million used cars are sold every year in the U.S., roughly a $600 billion market and a $30 billion opportunity at a five-percent commission, according to the company.

The teammates found each other serendipitously. Bohy connected with Val Gui, a former car salesman, on Hacker News after posting some ponderings about the car selling industry, and Gui happened to already be friends with experience iOS developer and entrepreneur Enea Gjoka.

“The average person buys or sells about nine or ten cars in a lifetime,” said Gui. “They don’t know how to do this. Dealers know what they’re doing and can take advantage of that situation.”

Instamotor 2.0

On the tech side of things, Instamotor is mainly building algorithms to model the car prices it suggests to sellers (Bohy’s background is in computer science and back-end software). It gathers data through crawling and indexing websites such as Craigslist and AutoTrader.

“We [also] built a lot of code around listing the cars on multiple places,” said Bohy, “and making sure cars get continued exposure,” though the team assured us they carefully obey the terms of service of the sites they work with.

Inventory management is another aspect they’ve built software in order to operate better.

However, what’s even more interesting and intriguing about Instamotor’s technology is the next phase in their product — which the team firmly declined to share details about.

But it’s not hard to speculate about: We’d guess it will like start using mobile technologies to help it scale its business, largely because it’s already received numerous seller requests from outside the Bay Area.

“Humans don’t scale,” Bohy said. “One of the biggest advantages for [our model] is that people people can still continue to use their vehicles [while we sell them],” he later added during the interview.

Gjoka’s background is in iOS development, so putting two and two together gives us the likely release of a mobile app (easy to scale) that would guide sellers through an easy and templated process to get their vehicle ready and listed through Instamotor’s service.

GPS tracking built into the app or solutions such as those used by Zipcar to track (and even unlock) cars could also easily come into play in the company’s product roadmap.

Car washes, houses, and cars

While the above is all speculation, Instamotor does (and would) fit into several recent trends.

For example, earlier this month, Keith Rabois revealed his new project, HomeRun, which will similarly handle the entire sale process of a person’s house. The only difference is that HomeRun will first purchase the house from the owner before selling it to a buyer. The buying price is determined through a whole lot of data science . But again, it’s using data to price a commodity and take away as much pain (and time spent!) as possible from the seller.

Cherry, the now-defunct car-wash-on-demand service, is another product that has paved the way for and has created a category for Instamotor. Cherry’s app enabled car owners to request and pay for a car wash, which the company would perform wherever the owner’s car was parked at the requested time. Again, it was a service provided at the time and location convenient to the car owner.

In fact, Instamotor’s team admitted having already spoken with Cherry’s former chief executive about the company and how Cherry’s team operated.

And of course, there are the myriad mobile shopping and selling apps, including Poshmark, Vinted, and Etsy, which offer simple steps for sellers to upload pictures of their items and input key information right through the app.

Though make no mistake: Unlike these shopping apps, Instamotor is a service, not a marketplace.

The team revealed that it had already applied to be part of Y Combinator’s accelerator program (Gui was the actually the first employee of MobileWorks, a Summer 2011 participant), though it also said that it’s exploring other possible sources of funding.