CarBahn’s Steve Dinan on “Only The Strong Survive”
On this episode of the “Only The Strong Survive” podcast, Steve Dinan discusses his remarkable entrepreneurial journey with Dinan and CarBahn. Like Apple, Dinan started the company that bears his name in a small garage in Cupertino, California. Instead of personal computers, Dinan’s focus was on improving the performance of BMWs. Eventually, Dinan would go on to become one of the most respected and successful names in the BMW tuning industry.
The climb to the top of the BMW and German automobile tuning world wasn’t easy. After working at a car repair shop to help pay for college, Dinan decided to quit both and forge his own path. Starting with just $5,000, he rented a couple of bays from a local garage and installed turbo kits on BMWs. From those humble beginnings in 1979, Dinan transformed the business into a high-performance engineering powerhouse that could reliably extract every ounce of performance from a BMW.
After selling the company in 2013, Dinan eventually left it to start his latest venture, CarBahn. Click on the icon above to listen to Dinan’s in-depth conversation with host Dan Kahn about how he built his two innovative and well-regarded companies from the ground up. Here are our top five takeaways:
Wanting bigger results requires bold steps.
Building a better product is the best way to drive demand.
Hard decisions can lead to big rewards.
Investing in innovation is critical to success.
Budgets should be carefully constructed.
Take Bold Steps
Building excellent high-performance vehicles is great, but it doesn’t really matter if nobody hears about it. Dinan knew early on that marketing and the recognition that comes with it would be vital to his success. However, getting the major car magazines of the era to pay attention to the then-upstart company was a challenge. After making no progress in attempting to contact them, Dinan took the bold step of driving one of his cars straight to their office.
“Nobody answered the phone when I called because no one knew who I was. I took my race trailer at the end of race season, put my M6 in the back, drove to the Car and Driver office and knocked on the door,” says Dinan. “It was kind of a bold move, as I literally knocked on their door. They drove it around the block, thought the car was incredible and one of the best aftermarket cars they have seen and said to leave it. I flew home, and that was the start of my media.”
Make Good Stuff
There are builders and tuners that can extract lots of horsepower from cars. While those big power numbers might grab attention, Dinan takes a different approach. His focus has always been on building well-balanced vehicles that are properly engineered to improve all aspects of performance. Yes, Dinan’s cars make more power, but they are also extremely reliable and comfortable enough to be used as daily drivers. Paying attention to all aspects of performance and reliability takes a lot more effort but results in a better-finished product that people want.
“The easy thing to do is to make a car as fast as possible, and then it is miserable to drive and breaks all the time. When you are a young man and have a lot of testosterone, that is a natural place to gravitate to. But I like to drive my cars every day, and I like them to be reliable. I like them to not be overpowered so the handling matches or exceeds the power the car has,” says Dinan. “This is also one of the reasons I got so much press with Car and Driver and Road & Track. They were so used to tuner cars that would break during their road tests.”
Make Hard Decisions
There comes a time in almost every business when a difficult decision must be made. Dinan faced one of those when Chip Ganassi wanted to use Dinan’s engines for his legendary Chip Ganassi Racing team. While the move would open many doors for Dinan and his business, Ganassi wanted the engines for free. Agreeing to that arrangement would cost Dinan a significant sum of money but could also positively impact sales. Ultimately, Dinan decided the risk was worth the reward.
“It was a struggle for us financially, but it was one of the best decisions I ever made,” says Dinan. “We wound up winning nine out of 12 races. We came back the following year and won the 24 Hours of Daytona overall. We won the championship in the second year and then returned in 2013 and won the 24 Hours of Daytona and the championship again for a third year.”
Always Keep Innovating
Proper engineering and development of high-performance parts for BMWs are expensive endeavors. Creating a steady stream of those parts is even more cost-intensive. However, for Dinan, investing in innovation is an absolutely necessary expense that is vital to his business's success. If you are not innovating, chances are your competitors are, and they will quickly surpass you.
“When I sold the company, we had 52 employees, and 14 of those were in the engineering department between fabricators, engine development people, CAD people and software engineers,” says Dinan. “Fourteen out of 52 people is almost 30% of the staff in development. But that is why our products were so good and why we always had the best products. We led the marketplace because we were outspending everyone three to one (on product development).”
Make a Budget for Everything
Just as important as spending money on innovation is knowing how much you can actually spend. Blowing through most of your revenue in pursuit of the best products is a surefire way to sink a company. The trials and tribulations of multiple recessions taught Dinan the importance of carefully creating budgets for every department and sticking to them. That budgeting process also taught him how to run a leaner company.
“I wound up becoming a budget freak. My wife says I probably have thousands of Excel sheets on my computer now,” says Dinan. “If I am going to do anything, I am going to make a budget. I am going to calculate every cost, every person and every amount of time. I think it is fun to budget, but most people probably don’t think it is fun. I get up every morning at 5 a.m. and look at my budgets for an hour while having breakfast.”
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