CEO Interview: Lessons from Bootstrapping an Idea to 15 Years of Profitability

Ah, the joys of networking…

After I ran a short piece in Fast Company a few weeks ago, I was introduced to the communications team working for Ernie Bray, founder and CEO of the San Diego-based Auto Claims Direct (ACD). Ernie’s team was looking for the name of someone to connect with at Fast Company, but I think before they fully knew what was happening they had committed Ernie to do an interview with me for Smart Like How instead. And so it was that Ernie found himself chatting on the phone with me earlier this week as he drove up the California coast to an industry conference.

Ernie has a way of making things sound easier than they are, which I suspect is part of his talent for motivating people. For instance, he breezily condensed his five years of painstaking work cultivating a nationwide network of vendors in the auto claims industry into half of one sentence. In an age where it’s easy to gawk at the latest unicorn funding rounds, Ernie is proud to have bootstrapped a company that is closing in on fifteen years in business, all of them profitable. Having struggled recently with the fundraise vs. bootstrap question with UserMuse As he prepares to expand his company’s headquarters for the second time and bring ever more companies onto the software platform his team has built, he was kind enough to answer a few of my questions.


There’s a lot of interesting stuff we could talk about, but your path to becoming a founder/CEO was perhaps more winding than usual. Are you surprised at all by where you are now, or did you in fact always see yourself running a company?

Well, when I was growing up, the mentality was kind of like, “You’re going to go to college and get a degree so that you can get a good job and then work your way up at a company.” I come from a family of educators, not business owners, so the importance of getting good grades was front-and-center – along with sports. I played college basketball and have always been a competitive person. When I got out of school though, I didn’t know what I wanted to do. I started at an inside sales job and then tried being a claims adjuster, but I kind of realized along the way that I wasn’t going to be happy as a worker unless I could solve the problems I could see right in front of me.

I didn’t know I wanted to run a business, but I knew I had that competitive fire in me when I could see opportunities to fix things that weren’t running right. That’s how I knew I had to run my own company, but it was another six or seven years before I found the right opportunity, and that’s when I started ACD.

What was it that finally made you put in your chips and bet on your idea?

It was that same impulse to fix things that were broken. I’d moved my way up in the insurance industry as a claims adjuster over several years and saw an opportunity. All the processes were very paper-centric, and the process that a consumer had to go through the get their claim resolved was just so antiquated. I knew that there was an opportunity to digitize things. I figured that if I could provide the insurance carriers and the local service providers a better workflow that lowered their costs and made them more efficient, I could own a valuable niche. So that’s when I decided to start the company.

You mentioned that part of your master plan was building the nationwide network of service providers on the auto repair side…you make that sound like it was easy, but how long did it actually take?

Ha! You’re right, it wasn’t easy at all. When we started out, the company was my wife and two other people. We were literally calling the auto body shops on the phone and asking for referrals to other service providers in their area. A lot of times they’d refer other friends of theirs in the industry. And of course there was a lot of research on the Internet. Doing this for all fifty states was incredibly tedious, but it gave us national coverage, which was key. We started in California, then gradually expanded out from there. All in all, it took about five years to go fully national.

So, ACD is a technology company with its own platform, but is it fair to say that the business’s core competency is actually building and managing this huge network of independent vendors?

I don’t know if I’d put it quite like that, but networking is a big, big part of it. We realized that insurance carriers were craving a platform that could unify a fragmented ecosystem such as parts networks, salvage networks, specialty parts providers and on and on. There are a lot of different kinds of businesses that have to get involved when someone gets into a car accident, believe it or not, and we bring them all together.

What about for you personally – is networking your biggest fallback skill?

Well, I’m a product guy first. I’m always looking for how we can improve a process by getting rid of paper, removing keystrokes – whatever. I love diagramming out how to make it easier to get from A to Z, so that’s really my biggest strength I think.

Do you think of yourself as a “disruptor” the way that term is used today?

In a sense, I guess. That term is thrown around a lot these days, and I always tell people that, look, our business is auto claims. It’s insurance. You see the unicorns and the stories about the mega fundraising and the promises to upend this or that industry and turn conventional wisdom on its head. The hype can get over the top. What we’ve done is build a multi-million dollar company that’s been profitable every year since we created it. It’s not the biggest thing out there, but it’s very successful, and we’ve created a lot of jobs. I’m proud that through organic growth and smart decisions we’ve made that we haven’t needed to take on a penny of outside investment. I really am.

Switching gears a little bit, what were you the most naïve about when you started the company?

Probably in thinking that if you build a great product that the market is going to be as excited as you are about it. What you find out fast is that people have relationships that they aren’t going to ditch no matter how great your technology is. Or they might just be slow to adopt, even if they like your product. I joke about how there are people today who would still love to go back to manila file folders if they could, especially insurance executives. Back when we started, I just thought the clients were going to love everything we did because it solved their problems, and that wasn’t the case.

How about as a people manager? Was there anything that you were similarly naïve about or unprepared for as a leader?

Well, again this goes back a little bit to my sporting background. I played basketball growing up and through college; my dad was the varsity coach at my high school; I worked at Magic Johnson’s camp when I was in college and learned a lot of things about competitiveness from him. I was always around people who were coaching, and I developed the mindset that you have to bring that kind of enthusiasm to what you do in order to keep up. It was a wake-up call for me, having to learn how to motivate people who don’t naturally have the same kind of motivation that I do and getting them to work together. Often you think people are all on the same page, and they just aren’t. It’s your job to fix that, and it begins with the hiring process.

How have your views on the hiring process evolved over the years?

I used to care much more about people’s pedigree on paper, looking for a background that I thought made sense. What I’ve learned is that attitude and the ability to learn quickly matter more than anything else. I’ve met people with MBAs from great schools who look great on paper but have horrible people skills, and we’ve brought in people who didn’t finish college but had terrific attitudes and moved up lightning fast in our organization. I’ll still glance at a résumé, but I’ve learned that without attitude and the ability to learn fast nothing on that piece of paper matters. In general, I’m much less impressed by pedigree than I used to be.

Speaking of culture and people, you scaled your business up in a decentralized way with most employees remote. How do you build a culture with so many remote employees?

At first we created a virtual workforce out of necessity, because we didn’t have any money for office space. It wasn’t popular back in the early 2000s, but over time I realized that going with a virtual office meant that I could hire people with top skill sets from throughout the country without needing to be confined geographically. And it made us stronger as we grew. Now our headquarters has about fifteen people in it, but the bulk of our staff still work remotely. I’m in San Diego, our VP of corporate accounts is in Boise, one of our client care supervisors is in Central California, and so on.

Maintaining a sense of camaraderie is a challenge with virtual employees. You have to make a conscious effort to celebrate achievements, birthdays, and anything else that brings people together. We use Slack, Skype – whatever we can to up our communication. I’m big on video, and I really like being able to upload videos off the cuff onto a tool like Slack. Flying people in to headquarters regularly is important too. I try to make sure people are crossing paths with each other one way or another. You have to pay even more attention to the culture of communication than when employees are co-located, but it’s worked really well for us.

Last, as a serial tinkerer, I’m sure you’ve spotted all sorts of other industries that you think are ripe for someone to come in and streamline them you did auto claims. Are there any in particular that you’re itching to see someone take on?

You know, the real estate industry is one that really baffles me. Buying a house is so paper centric, the commissions are always around 5-6% for the agents, the process is really heavy…I just think there’s a huge opportunity for whomever can make that process smoother and remove a lot of the paper and other hoops you have to jump through. The car dealerships are another one – Tesla’s starting to do this with their direct sales model and avoiding the dealerships. I look at those two and just say, “Gosh, there’s so much opportunity out there for someone who wants to figure that out.”


This interview was lightly edited for clarity and organization.