CarWoo

Overview

CarWoo was a Burlingame, California-based online marketplace that let consumers buy new cars through an anonymous reverse auction.Founded in 2008 and launched in October 2010, the company raised $12 million across two rounds led by InterWest Partners and built a dealer network of over 11,000 franchises before shutting down in January 2014.

The core thesis was sound — car buying was broken for both consumers and dealers — but the execution required simultaneous, capital-intensive acquisition on both sides of a two-sided marketplace at national scale.CarWoo ran out of runway before achieving the density needed to generate self-sustaining unit economics.

Its better-capitalized rival TrueCar converged on a structurally simpler model — price transparency rather than live auctions — and won the market.TrueCar subsequently acquired CarWoo's assets and hired nine of its approximately forty employees, including CEO Tommy McClung.

Founding Story

Tommy McClung, Erik Landerholm, and Michael Young founded CarWoo in 2008 in Burlingame, California. ^[1] McClung, who served as President and CEO, was a serial entrepreneur who had previously co-founded IMSafer, a teen driver safety platform. ^[2] Landerholm served as CTO. ^[3] By their own admission, the founding team had no prior experience in the automotive industry when they started the company. ^[4]

The founding insight was personal. McClung's own car-buying experience had generated spam and harassment rather than competitive offers — a frustration familiar to nearly every American who has shopped for a vehicle. As McClung described it at launch: "when I bought my last car, the experience was horrible. I did my research online...but when it came time to actually locate and buy the car all I got was spam email and phone calls from dealers." ^[5]

Landerholm contributed a complementary insight from the dealer side. He recognized that dealers were equally frustrated with the status quo: "We found that dealers were frustrated too. They are burdened with outdated systems that don't work any better for them than they do for the buyers." ^[6] This bilateral framing — that the problem was genuinely two-sided — shaped the product architecture from the start.

CarWoo joined Y Combinator's Summer 2009 batch, receiving seed capital and mentorship that provided early validation and access to the Bay Area startup network. ^[4] The company assembled an unusually credentialed advisory board for a pre-launch startup: Rob Chesney (former VP/GM of eBay Motors), Dillon McDonald (former COO of Jumpstart Automotive), Tom Taira (CEO of Honk.com and co-founder of TrueCar), Jeff Fluhr (founder and former CEO of StubHub), and Michael Yang (former VP/GM of Yahoo Autos). ^[7] The presence of a TrueCar co-founder on CarWoo's advisory board is a notable irony given how the story ended. Early employees were recruited from automotive internet companies including CarsDirect. ^[8]

The company spent approximately two years in development before its public launch in October 2010, though no detail has surfaced about what was built or tested during that pre-launch period.

Timeline

• 2008 — CarWoo founded by Tommy McClung, Erik Landerholm, and Michael Young in Burlingame, CA. ^[1]

• June 2009 — CarWoo accepted into Y Combinator Summer 2009 batch. ^[4]

• October 13, 2010 — CarWoo officially launches its reverse-auction marketplace for new cars. ^[9]

• October 13, 2010 — CarWoo closes $6M Series A led by InterWest Partners, with participation from Comcast Interactive Capital, Blumberg Capital, Accelerator Ventures, Raymond Tonsing, and Dillon McDonald. ^[10]