Automotive Repair News Today

Braxton Critcher [00:00:05]:
Well, Kathleen Long from Yelp. How are you?

Kathleen Long [00:00:09]:
Good, how are you? It still feels weird to hear that.

Braxton Critcher [00:00:13]:
Yeah, I know. Right. So where were you previously?

Kathleen Long [00:00:18]:
So, Repair Pal, and I still work for Repair Pal.

Braxton Critcher [00:00:21]:
Right, but you have a Yelp address now.

Kathleen Long [00:00:24]:
Yes, but it's a wholly owned subsidiary of Yelp, and so they'll be keeping the brand, especially for now.

Braxton Critcher [00:00:30]:
Okay. How has that been for you, the transition?

Kathleen Long [00:00:34]:
Well, the transition. I will tell you this. The transition is easier than the process of acquisition. So, you know, we were literally working round the clock for the last couple months. And so, by virtue of, like, comparison, the transition feels easy.

Braxton Critcher [00:00:50]:
Right, right. You're glad that other part's over.

Kathleen Long [00:00:53]:
Yes, absolutely.

Braxton Critcher [00:00:56]:
So how involved were you?

Kathleen Long [00:00:58]:
So I was very involved, and that's fortunate for me because I've been through an acquisition before, and I got brought in a little bit early on that acquisition just to provide some, you know, additional things that were needed or whatnot. But I've never ridden along from the very beginning. So for me, as a professional, something that I wanted to do so I could learn. And so, from that perspective, it was amazing. And I had to remind myself of that at moments where I was like, why? Why? Because, you know, you've got. When it's a company as large as Yelp acquiring a company the size of Repair Pal, the thing is, they have teams of, like, 30 people that do stuff that, like, one person does at Repair Pal, so then trying to generate, you know, all of the documentation needed or answer all the questions or whatever, you know, that's the hard part.

Braxton Critcher [00:01:51]:
Yeah, it's all about perspective, you know, like. Like, moving. It's going to be worth it. It's going to be worth it. This sucks, but one day we're going to look back and be thankful.

Kathleen Long [00:02:05]:
Exactly.

Braxton Critcher [00:02:05]:
Yeah. Yeah. So this is. This is pretty crazy. So you said for the past few months, you were working on this. How long has it been in talks? How long has this been an idea? And then when did you announce it?

Kathleen Long [00:02:22]:
Yeah, so we. We actually went on the market just to kind of poke our heads around, see what was going on earlier this year. So, like, February, I think maybe you started it. Yeah, we started a process, and then we. And we talked to Yelp, among many others, at that time, and then we got some feedback, we got some input. We decided to pull back from that strategy probably, you know, mid year, and we were going to think about going back on the market in 2025. So we were done. We were moving on with life.

Kathleen Long [00:02:56]:
We had these plans. We were implementing them, you know, in a growth phase of the company, that sort of thing. And then they came back and we're, you know, we're interested again. They had announced a strategy like mid year, which they publicly announced, saying, you know, we're going to acquire companies of particular sizes and areas that, you know, we have a strategic focus, one of those areas being automotive. And so they came back and said, you know, we learned a lot about you earlier this year, but, you know, let's get more serious. And so we did a little bit of work around that. Ultimately, then you go into, like, a loi letter of intent phase. You go from LOI to signing.

Kathleen Long [00:03:38]:
That took probably about a month and a half, and then the signing was public. So it got announced actually when we were at Apex. And then about two and a half weeks later, we went from sign to close, which is actually, you know, in M and A terms, that's extremely rapid because we did have a, you know, a staggered sign close. There were some conditions we needed to meet in order to do closing after signing, one of which was something that I think is very important for any deal that we would have wanted to do as repair pal, which was a certain percentage of our employees needed to sign and say, yeah, we're willing to go to work for Yelp. They didn't just want the technology or whatever. They wanted the people, the sort of zeitgeist, the culture that is repair Palm. And I think that's important not just for us, but for our consumers, our partners, and the shops that are an important part of our platform.

Braxton Critcher [00:04:39]:
Right, so you started the conversation, Yelp was interested, and then Yelp backed out, or you backed out, and then Yelp restarted.

Kathleen Long [00:04:49]:
Yeah, so neither one really. Like, when you're acquiring interest from, you know, a variety of different players, then you sort of, you know, you're just like, casting lines and having conversations. And we did that with a variety of different companies ultimately, you know, in that process. And this part's, you know, confidential, so I can't say who there was a company that was interested. And we had said, okay, like, let's try to move forward with them. But then ultimately, you know, that deal ended up, you know, not making sense. And so, you know, both parties kind of walked away from that. And like I said, we had just sort of learned some lessons about, you know, what it might take to be, you know, have a higher valuation, the ways in which we wanted to grow the company.

Kathleen Long [00:05:35]:
So we had some really good input, and, you know, ultimately we had some great advisors throughout this process, our. Both our legal team and our bankers were great advisors to us. And so we said, okay, like, let's just do this again next year once we have fulfilled some of our plans and things like that. So we kind of weren't ready, and we told Yelp that we said, you know, we were going to go out again next year. Like, you know, this wasn't the timing that we preferred this kind of thing, but they were really serious about it. You know, like I said, after getting that kind of probably strategic alignment internally with them about what their priorities were and what they wanted to do and, you know, getting their M and A budget together and all of that. And so, you know, look, we're happy. I think there are probably.

Kathleen Long [00:06:23]:
And I'm not privy to these plans in any way, but I think they're probably going to be more acquisitions by Yelp, you know, in the coming months, year or so, you know, as they fulfill that strategic, you know, mandate that they put forward in. I think it was like a July press release that they talked about it. So I think that they will be having other acquisitions. I'm proud that we were the first. So when they looked out and they said, who do we want to acquire and in what area? They decided it was Automotive one and Repair Pal one, which is kind of beautiful because they have, you know, a priority in home services, health and beauty, some other areas. Right. So it's not just about automotive, but automotive was first and with Repair Pal, so I'm excited.

Braxton Critcher [00:07:08]:
Yeah, yeah, yeah. So, you know, obviously with any sort of big news like this, there's always speculation, there's always opinions, and that's a dangerous thing, you know, when you try and figure out why things happen. So that's why one of the reasons why I do this podcast, to get the facts, tell them straight, without opinions, you know. So from your perspective, tell me the. The whys, why, why from Yelp's perspective, you've shared a little bit of that, but also why from Repair Pal, and how did this make sense for both of you?

Kathleen Long [00:07:45]:
Yeah. So for Repair Pal, I'll start with us, because that's what I know best. For Repair Pal, we've been doing what we've been doing with, you know, limited staff and a limited number of resources. We've been funding our own growth for years now. So we were cash flow break even for a few years, and then we had just started to kind of turn a profit. Not a gigantic one, but a profit nonetheless. And so, you know, but it's very slow going when you're trying to build a three sided marketplace with, you know, fewer than 100 employees. Right.

Kathleen Long [00:08:20]:
So, and then, you know, when you think about all of the time and energy it takes to manage, you know, really large partnerships, as well as, you know, approaching 4,000 shops on the platform, as well as, you know, thinking about how you're going to build out your direct to consumer website and all of these things. So our growth has always been limited not by our ideas or our desire, our passion or any of that, but really literally by our resources. So we've known for a while that a likely outcome was a merger or acquisition of some kind for the company. And that we had hoped that when we did that we would be acquired by a company who desired to keep our mission intact and to be able to just grow and scale the business. There's a lot of places we want to invest in from a technology perspective that we simply have the idea, but not the resourcing to actually get it done. And so development has always moved slower than I and others at the company would like. So this accelerates that and it allows us to accomplish our goals with a wider scale set of technology product resources in particular. And so I think that part is going to be really helpful to us.

Kathleen Long [00:09:36]:
And we would have looked for that as part of any acquisition that we were a part of because we didn't build. You know, I devoted the last decade of my life to this. The CEO has been on board for almost 13 years himself. We didn't do that or devote this much of our lives to it. To watch somebody kind of dismantle it or just take little pieces.

Braxton Critcher [00:09:58]:
You take pride in that.

Kathleen Long [00:09:59]:
Yeah, we want to grow and expand the mission. So that was our thought going on the market. That was our thought. And looking at companies that, that wanted to acquire us, obviously, you know, we wanted to get a reasonable price for the company, given what we've built. And we wanted good outcomes for our employees because that's super important to us. We wanted to make sure that our partnerships and our shops would be valued and valuable to the acquirer. So we looked for things like that for Yelp. They don't have a very strong reputation with shops in particular, but in the automotive industry in general, and they understand that, so they wanted somebody, you know, who's closer to the shops.

Kathleen Long [00:10:41]:
Our partnerships were also very interesting to them. Mostly most of their business in this area is just direct to consumer or direct to shop. So shop pays to advertise on the platform. Yelp's got, you know, millions of consumers that both come to the website and transact on the website every month. Those consumers come, they introduce them and that's it. They don't have large scale partners in automotive that are saying, well, create a program specifically for me. So the fact that we're bringing partners like USA and CarMax and you know, all of the different partners that we have to the table was pretty interesting to them strategically. And look, they do understand the consumer because they have many millions more consumers on Yelp every month than we were able to get, you know, as repair pal.

Kathleen Long [00:11:26]:
So we were pretty proud of our, you know, 3 to 5 million consumers a month that we've done over the years and that was big for us. But that's nothing like 74 million, right? @ scale, there's just many more consumers. And what I've said to our shops, because we do have an approach that's based on the shops being high quality. So it's not just any shop that can be part of repair pal. And so, you know what I say to our certified shops all the time is I want to introduce to you every customer who needs an auto repair in the entire country because you deserve to have that introduction. And we're able to do that so much more easily over time with these millions of consumers that are on Yelp. And having said that, figuring out how to take that traffic that's on Yelp and put it into a repair pal like funnel over time so that it's not just any consumer, it's an educated consumer who understands it's quality repair, who understands that a quality repair costs a certain amount of money. This kind of stuff that we do today, that's going to really be the goal is figuring out how to do that.

Kathleen Long [00:12:33]:
It's not going to be, you know, the same experience. You know, Yelp's got a kind of very basic request, a quote process on their site that doesn't really work that well for auto repair. We know that, you know, we're, we've integrated scheduling capabilities at this point. So many of our shops are doing real time scheduling and we're continuing to build that out. We've got our own native scheduling system for other shops. We're trying to make those connections when we're introducing a consumer to a shop as easy and streamlined as possible so the shop doesn't have to go to a bunch of work or engage in some kind of bidding system or something that's bad for the industry or that doesn't work. So we'll be introducing those concepts and I Think having those capabilities and really understanding what it takes to get a consumer into an auto repair shop, we tend to bill on a pay for performance basis. So it's not on a click or on an impression or whatever.

Kathleen Long [00:13:31]:
It's either per referral or per repair that we've been able to send to a shop which is, you know, a named customer oftentimes who's spending money or transacting at a shop. And a shop's in charge of, you know, which monetization method they want to use with the repair pal, whether they want to pay per referral or pay per repair. That works out much better than paying for impressions or clicks. It's, it's more friendly to the industry, it's more based on actual performance and actual people spending dollars at shops. So I think all of that is important as is, you know, the concept of choice. Like, we don't force shops to participate in all our partnerships. They can choose which ones they do or don't want to, you know, participate in that kind of thing. So all of that stuff is going to be part of the learning that we've had over the years that we plan to sort of bring in the front door with us.

Braxton Critcher [00:14:23]:
To start with, it seems like a very mutually, mutually beneficial merger. Now, you know, you said you're not, you're not going to release who that was, but the other buyer, that would that have been a difficult decision between the two? Like, to me it seems like Yelp is a no brainer, but would that have provided some hesitancy in the decision you wound up making?

Kathleen Long [00:14:50]:
Yeah, I mean, look, the best scenario you can be in as a company is if multiple people want to acquire your business.

Braxton Critcher [00:14:56]:
Yeah, that's great.

Kathleen Long [00:14:57]:
You know, what do we want to choose? And I think the other player was in more of a traditional player in the industry. And so the synergies were different. And likely some of the things that we would have worked on together would have been different. I think either outcome would have been good for our shops, you know, but it would have been a different culture, different movement. I think Yelp is much more of a technology player. Ultimately, I'm excited by sort of what I call big tech. Although in this space, you know, with 5,000 ish employees, Yelp is actually medium sized. It just feels big to me because I'm coming from a company with fewer than 100 employees.

Kathleen Long [00:15:38]:
But even so, having names, household names that people recognize, really engaging in the auto repair space and devoting resources to understanding it, it's good for right to Repair. It's good for the industry. More technology players need to be interested in playing and not just the same folks that are already in the industry sort of cycling around and combining, which look, that has its own value. Because then you're saying, well, I'm meeting with somebody who, you know, or merging with somebody who really understands certain aspects of the industry already. There's a shortcut there that's really kind of beautiful, you know, particularly for people like me, because then I spend less time, you know, talking about that, more time doing what we're going to do together. Having said that, I don't think they were as technologically adept or forward. So some of the plans of, like, building, you know, new experiences together or really focusing on the consumer, which is what Yelp understands or brings to the table, you know, this other company didn't have 74 million consumers a month coming and that kind of thing. So, like I say, the synergies would have been different.

Kathleen Long [00:16:50]:
Interesting. Still to me, I've met a lot of great folks as a result of this, you know, process that ultimately there were other companies we had exploratory conversations with that really didn't go anywhere as well. It gave me a really. Me personally gave me a really unique view of the industry and some of the different players in it and what they're doing or thinking about as. As they think about their businesses. That was all extremely valuable to me. I feel like I'm a smarter person, maybe a little bit tireder as well, but definitely smarter person. And I think ultimately now the task for me is to bring all of that to bear on what we're going to do next and make sure I make good use of all those learnings.

Kathleen Long [00:17:37]:
But, yeah, ultimately I think this makes all the sense in the world and I'm happy to be part of it.

Braxton Critcher [00:17:43]:
Anything you want to share about those learnings?

Kathleen Long [00:17:46]:
Yeah, look, I mean, it is not the greatest market for M and A activity in general, but there are definitely a lot of companies out there that are thinking about, like, what's next. So, like, if you want to talk about, for example, shop management systems as a category, there's so many of them. Right. Especially. And I've never been able to really make sense of that because there's. If you look at shops that do mid to major mechanical repairs, there's so few of them in comparison to how many systems there are. And when you think about shop groups, many of them have built their own proprietary systems. And so the marketplace seems pretty small and there seems to be quite a Lot of systems and things like that.

Kathleen Long [00:18:28]:
So shop management systems absolutely are looking for ways of differentiating themselves in a crowded market and saying, you know, how do we rise to the top? How do we bring, you know, other kinds of value, you know, into the transaction? The same time you've got parts suppliers looking to differentiate themselves, there was, you know, some news. Unfortunately, many of our friends at advance no longer work there and they've closed down their west coast. We were looking strategically at, you know, can we do more of an alignment with some of the, the parts providers and things like that, just in general outside of M and A. But, but, you know, parts providers too are looking at ways of getting creative about the channels that they're able to push parts through. Like, might make some sense for somebody to partner with somebody like, you know, repair pal. Because if you're able to drive, you know, business and send that business through with a requirement that the parts get sourced through somebody as like a primary provider, for instance, that's a pretty interesting play for, for some folks to at least think about or put on the table. So I think, you know, based on the signals that I'm seeing, that regardless of what the market is doing, the interesting thing about automotive is it's been pretty recession proof. And I think, you know, it's been, there's still activity, there's signs of life going on in automotive as a marketplace.

Kathleen Long [00:19:55]:
Even thinking through, like, okay, well, what is the additional value that we could provide? How do we combine with other companies or other players, whether that's, you know, strategic partnerships or whether that's actual merger and acquisition activity, to kind of come together and bring those things together. And then by the same token, there's a lot of just, you know, technologically we have challenges as an industry. I think, you know, this. But, you know, like part suppliers, for instance, maybe they have like five or six or seven different channels for shops to purchase parts. And some of those are still shops calling over the phone or whatever. So how do they create programs that are more digital without alienating their, you know, their customer base? I think there's still a big challenge around that. And automotive, for as sophisticated as the car is as a piece of equipment, our back offices in the automotive aftermarket are not nearly as streamlined or as well organized as many other industries are. Which represents opportunities for players who are thinking about, you know, technology and what they want to do there and how to really make things easier, better for shops.

Braxton Critcher [00:21:09]:
So you've got all this information, you've learned a lot, you've Got new perspectives. You just got bought out. You're adjusting to that in the future. You know, with this, with this purchase Yelp and repair pal, what are some ways that you're going to be able to tackle some of those issues and move the industry forward?

Kathleen Long [00:21:31]:
Yeah, so it's a good question. And I think it's more important than ever for me to be out and about, as I like to say. So I go to a lot of different, you know, industry events. I'm pretty active in the industry and I think when you, you know, a lot of times when people get busy, what they tend to do is just hunker down so that they can try to get everything done. And as a result, they get smaller. And I think the challenge for me is to make sure that I stay present. So my relationships are more important than ever. It's really more important than ever that I be active and vocal in the industry, that I've got an ear to the ground that I'm listening to what's happening so that I can take that back and integrate it.

Kathleen Long [00:22:10]:
And you know, I've been the sort of face of repair pal for a while. We've had other people who also filled that role over the years, but the last several years in particular, and I think, you know, with the sort of responsibility of the face comes the voice. Right. So, and I can only be the voice for others in the industry if I'm also listening, you know, one mouth, two ears, that kind of thing.

Braxton Critcher [00:22:34]:
Right.

Kathleen Long [00:22:34]:
So I think that's going to be increasingly important so that I can bring that back and make sure that, you know, Yelp gets the value of what they just acquired. And part of that value is for me to really stay plugged into what the industry needs and wants and, you know, to make this acquisition super successful. Because then I think once it is, because I have confidence it will be once it is. I think what happens is other technology companies start looking at automotive as an interesting place where, you know, they can either put their investment dollars or where they can, you know, acquire or merge or, you know, whatever those outcomes might be. And I think that's going to be really, really healthy for automotive. So I think as we all think about what we're doing next, you know, financially and otherwise, you know, really making sure that this industry stays vibrant, which is something that I'm committed to on a number of different fronts anyways. It's actually what I'm passionate about over and above sort of the day to day job that I do is thinking about how this is a great industry for people to be in, and wanting it to be as diverse and inclusive as possible is super important to me. But as well as, you know, thinking about that diversity beyond just individuals, but also thinking about how other industries can participate in automotive, which we already do when we assemble or build a car.

Kathleen Long [00:23:59]:
Right. So we think about the whole industry that way. Then I think that gets a lot more interesting. And look, I'm just one person. I'm not going to do this by myself. But the great news is, is that, you know, I have friends, I get opportunities like this, I get introduced to interesting people like you. And then hopefully, as we think about these, you know, conversations and how these conversations can move the industry forward, you know, all together.

Braxton Critcher [00:24:25]:
Absolutely. Yeah. We're all on the same team. That's what I tell people from shop management to shops, people within the shop, to coaching to marketing to repair, pal to Yelp. I mean, we, in some ways, it's a competitive market, but for the most part, we're all on the same team here. There's a lot of cars out there that need to be repaired, and working together is so important. It just. It just really is.

Braxton Critcher [00:24:57]:
And I think that's the best way to see improvement is to pick each other up, share advice. Because you can't do it alone. Like you said, there's a lot of things that you want to see done, but you can't do it alone. So do what you can and then find other people that are talented in other areas and share things that they can help you with, you know, so I think that's good that you have that perspective.

Kathleen Long [00:25:22]:
Yeah, I think it's so important. And I just know there's so many things to learn or know about this industry. It's impossible to know everything and it's impossible to. To talk to everyone. And so that's really where, you know, if we stay connected, that's going to be the important part, you know, and as I move throughout my day, because I do work with partners, I have the advantage of, you know, I might talk to a shop first thing in the morning and then I might talk to a large insurance company, and then I, you know, might talk to somebody who works for a parts supplier or shop management system or whatever. And then, you know, I'm hearing common themes, but I'm also hearing unique challenges among all of these and then kind of bringing that together. You know, that's part of my job, or at least just, you know, hearing or understanding how, how we might fit in. And, you know, that's how we're able to build, you know, partnerships, obviously, that benefit the business as well, is, you know, is by thinking through those things.

Kathleen Long [00:26:23]:
But a lot of people are starting to think beyond, you know, just the core confines of their job. So a lot of insurance companies are thinking about. And actually, I recently did an interview about this, like, how can we use the massive quantities of data that we have to really improve lives for car owners and to make them safer on the road, which, oh, by the way, as an insurance company, reduces the amount of money that you have to spend on claims because your drivers are driving safer cars that have been repaired properly. And all of these kinds. Right.

Braxton Critcher [00:26:52]:
It all works together. It does. It's all connected.

Kathleen Long [00:26:55]:
Yeah, it really does. So, you know, and at the same time, we've got this unbelievable amount of inflation going on and the pressure for consumers around how to just afford their lives outside of auto repair. I mean, groceries are crazy, right?

Braxton Critcher [00:27:10]:
Yeah.

Kathleen Long [00:27:11]:
So how do we understand the reality, too, that our consumers have and think through, you know, solutions for them also?

Braxton Critcher [00:27:19]:
So tell me what this Yelp buying Repair Pal means for the industry and how you see this affecting the industry in a way that shop owners and people inside will tangibly see and feel.

Kathleen Long [00:27:40]:
Yeah, So I think, you know, Repair Pal has been on a mission for a while to highlight quality and auto repair because there's still a lot of consumer mistrust. There's still a lack of understanding that consumers have around, you know, what's a fair price to pay. Prices are on the increase. So it seems wild. You know, I was just talking to someone in my family last night, and he's older, and he hasn't had to have a water pump replaced in a while. And he went in to do it, and he was like, oh, my gosh, the last time the water pump replaced is like 400 bucks. And he 1700 for it. And he doesn't feel like he was ripped off.

Kathleen Long [00:28:22]:
He was just astonished by the price and then not sure whether that was a good price or not or what.

Braxton Critcher [00:28:27]:
And so, yeah, and that price honestly hasn't really increased until the past year or two. Like, you know.

Kathleen Long [00:28:34]:
Yeah, really has. And so I'm like, okay, you know, let's go through it. Let's plug in your vehicle. Let's take a look. And, oh, by the way, did they, you know, replace your timing belt at the same time? And, like, was there anything else that got done on the car? And, you know, and so having that ability to educate consumers at scale is what I think the real Opportunity here is because, like I said, there's people on the Yelp platform. So, so that's one thing.

Braxton Critcher [00:29:02]:
But I also want to educate consumers.

Kathleen Long [00:29:04]:
Yeah. And I think on the advocacy piece, so when we talk about, you know, right to repair and having some of these, I think the larger opportunity, which I can't, you know, commit to specific action at this point, but I think having the name, you know, Kathleen at Repair Pal, signing this little thing that says, yes, let's do right to repair or whatever is one thing, you know, But Kathleen at Yelp and others at Yelp sort of participating in or thinking about the same thing, that's something different altogether. Right. So I think the opportunity is for other, you know, large scale public companies to sort of join the fray and to help, you know, so that consumers really do have choice. Ultimately, you know, Yelp's mission is connecting consumers with the best local businesses, which obviously spans well beyond auto repair. But if we think about that and how compatible that is with what Repair Pal has been doing over the years, specifically in auto repair, and then we think about how compatible that is with the mission on, you know, right to repair and having consumers have choice as to where they take their vehicles and making sure that the information that is needed in order to repair those vehicles is shared through the industry and things like that, I think there's a large part that we can all play in that and those additional resources don't hurt one bit.

Braxton Critcher [00:30:28]:
Yeah. So, you know, a lot of people use Repair Pal. There's a lot of people that enjoy their experience and some that don't. That's with everything. What kind of changes do you think this means? And you may not really know a lot about this yet. I'm sure you're in the process of learning these things, but what kind of changes do you think happen to Repair Palm for the users that haven't had the best experience? You know, what, what kind of deals are you working on now to, to change how that operates? I don't even know the right question to ask you. Fill me in on what, because I'm sure you, you're, you're looking at the data and you're, you're working with customers and all that kind of stuff. So what, what does this mean and what kind of things do we expect to change?

Kathleen Long [00:31:17]:
Yeah, so you know, RepairPal has always been a three sided marketplace. So when we say users or customers. Right. Like there's different customers that we have depending on what side of the equation you're looking at. So our focus and Our is always the consumer. We want the consumer to have a good repair experience. And so in that sense if we have a dissatisfied consumer and we're going to because a nobody's perfect baby, sometimes consumers just don't understand what's going on or they have out and out not great intentions with their auto repair experience in the first place, or they're not able to be satisfied. There's all kinds of reasons why a consumer might or might not be happy with using the service.

Kathleen Long [00:32:03]:
And then we've got a partner layer. And so a consumer may or may not be happy with a partner. So for example, what if that partner is a third party payer and so they don't agree with what got covered or what didn't get covered for their specific repair, whatever. So we do our best to create winning outcomes for consumers as much as that's possible. And we and our shops have pretty high satisfaction scores around that and we have a satisfaction guarantee that we execute on. But having said that, it's never going to be 100%. So I think again at scale, you know, the opportunity there is for us to scale some of the ways in which we do that, which is very personal today and I think will continue to be personal. But I think there's ways we can expand, for example Q and a section on our website where we're, you know, answering consumers information.

Kathleen Long [00:32:55]:
We can expand the data that we use to equip consumers with answers to symptoms they might be seeing on their car, problems they might be having, etc. So I think that's one set of opportunities that we definitely have on the shop side, which is probably more ear to the ground what you're hearing about. Yes, we definitely have shops that are satisfied, not satisfied. So shops are either customers or partners of repair pal, depending on how you look at it. And with that we've had a record year of growth with signing shops to our network and to our platform. And there's been some downward pressure on the shops as well. Some of our partner referral relationships, some of our large ones are ones where a lot of the repairs are paid for by a third party payer. Because of the inflation that we already chatted about in auto repair.

Kathleen Long [00:33:49]:
What you're seeing is that those third party payers are getting upside down on the stuff that they're paying for. So the consumer buys an extended warranty at a particular price point and then auto repair shoots up by 24% as we saw in the first 18 months post pandemic. Then a lot of times those Third party payers are upside down and they start to think about how can we cost control and how can we still offer the consumer a completed repair at a certain level of quality but also not be upside down on every single one of these policies because then it doesn't make sense for them or, you know, it gets harder. By the same token, you're going to see more consumers pursuing these extended warranties in these plans because the reality is auto repair as well as many other consumer services and goods and products and everything in this inflationary period have increased beyond the consumer's ability to afford it all.

Braxton Critcher [00:34:49]:
Yeah.

Kathleen Long [00:34:50]:
And I think, you know, not to get political and I won't, I promise, but this is what happened in this last election is, yeah, absolutely reacting to, my gosh, like somebody please stop this inflation and please stop the bleeding and whatever. And a lot of people took it as a commentary on people's social values, which I don't think it is. I don't really think it is. I think it's just people looking at their lives and not being able to afford it. And I have a unique perspective on that. Sitting where I sit and talking to as many consumers as I do and seeing what's going on is that there's just, you know, people are just getting squeezed. Maybe they have a job, maybe they're even making more in their job than they ever did, but yet they're, you know, economically day to day poorer than they used to be because everything they have to pay for to afford their life is more expensive. And that is just, that's tough moment to be in.

Kathleen Long [00:35:44]:
And it's a tough moment for an industry where it's already expensive. Nobody enjoys getting their car repaired. They're like, oh yay, my car broke down. No matter how much you like your mechanic and you know, talking to your person there, that's not going to be something that you enjoy so, you know, having to pay for. So I think there's all of that kind of pressure and that has made quite frankly like repair pal less popular because as we work with partners then we're working to execute on those cost control measures that some of our partners want us to put in place. And that puts a squeeze on shops from what they're able to charge versus what they want to charge or what they might charge retail. I think, you know, the goal is, as always, is to diversify partnerships so that there's a variety of different sources of traffic that are coming in for shops and that some of those have cost constraints associated with them, which may or may not work for some shops and some don't. And so, you know, being in a larger environment and having a Yelp name doesn't hurt anything from a BD perspective.

Kathleen Long [00:36:45]:
It increases the reach of our company and our ability to sit down, you know, at the table with large names, which, look, I'm proud of the companies that we've acquired and the names we've acquired as little old, you know, little old repair pal. Right. But it doesn't hurt to, you know, to have the Yelp name and to think about, you know, how that expands our ability to. To bring partners, to negotiate with partners and to try to strike deals that work for shops and also, like I said, to attract some more of that, you know, Yelp volume and to have more of a quality network focus at Yelp versus just, you know, more of an advertising or listing focus. To have that quality focus, to be able to bring that in and think about, you know, how do we acquire some of that additional, you know, customer pay traffic into shops? I think that's really going to be great for shops. Ultimately, you know, we are a business and we do charge for the referrals that we make to shops. And so some shops are gonna like that and some aren't. You know, we have work to also create different monetization models which might, you know, some shops still prefer, obviously, most of our shops still prefer to pay per repair because that's guaranteed value.

Kathleen Long [00:38:02]:
But if a shop would rather pay per referral, you know, we're now offering that. We're improving scheduling, I hope to improve some of the other tools that we use to more easily and flexibly connect consumers to shops. Because ultimately, like, if we can make it drop dead easy for the shop, you know, that's the goal. And we're still working on doing that, you know, bringing that educated, repeat customer back to shops. But I expect that there's always going to be noise in that and it's going to work for some shops and not others and all of that. And I think that critical thing for us is that we've always had a quality, you know, focus and emphasis and that we continue to have that moving forward, you know, and making our certification program more robust so that shops that are participating with us can continue to feel good about it. And then ultimately, the programs still have to meet whatever the partner's goals are in order for us to continue to attract partners and stuff. And so really, I and my team sit in the middle of that triangle, right? And we've got to make it Work or win for all three sides of the triangle.

Kathleen Long [00:39:09]:
Otherwise it doesn't.

Braxton Critcher [00:39:10]:
Right.

Kathleen Long [00:39:11]:
You know, we're a month to month service. So if shops don't love it, you know, then they'll cancel. And so I think grumblingly or not, many shops admit that we bring them significant value. So while they don't love all the cost constraints and things like that, they're finding a way to work with, with them and to continue to get the volume that we do bring, which is, you know, undeniable that we've improved the growth trajectory at a lot of shops by, you know, bringing that volume in.

Braxton Critcher [00:39:41]:
Yeah, well, you know, like I said earlier, there's always opinions and speculation and people that share stuff that is not fact or confirmed, it's just their opinions on stuff. And so I think this is really good for people to hear from you, your perspective on the acquisition, your goals for the future, even what you think the economy is doing to everything. I think this is really good for shop owners, even consumers, to hear from you about why this is important to the industry and why it matters. And you even gave, you didn't really give it step by step tips, but you kind of gave shop owners tips on best practices to use Repair Pal in the future. Because I just got off the phone with a Repair Pal user before you and I talked here and he loves Repair Pal. He says it makes him a good buck, a good chunk of change every year. But he was like, so many people in the industry don't use it effectively and so they have a negative view of Repair Pal. And he was like, they just don't know how to use it.

Braxton Critcher [00:40:46]:
And so I think you've kind of helped with some of that too, understanding just how to do that. So thanks, I guess that's the best way to put it, but thank you.

Kathleen Long [00:40:56]:
Yeah, absolutely. And you know, look, we'd be happy to work with shops who want to optimize or who want to learn from, you know, other shops that are really making the most of Repair Pal. So, you know, we'd be happy to do that. We have a lot of content that we've built over the years and that we'll continue doing a lot of education for shops. And it isn't one of those things where you just turn it on, walk away and don't think about it. There is a process, do it. And so you do have to engage with it. Now we're trying to make it easier and easier, of course, but you know, it still like anything you get into it, what you put what you put into it, you get out of it what you put into it.

Kathleen Long [00:41:34]:
I think I said that.

Braxton Critcher [00:41:34]:
Right, right. Absolutely. Yeah. 100%. Yeah. Well, thanks for chatting with me, Kathleen. I appreciate it.

Kathleen Long [00:41:41]:
Yeah, thank you. It's been great.

Braxton Critcher [00:41:47]:
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