When you think of best performing stocks over the past three decades, Microsoft, Nvidia, Apple, Monster Energy would be the easy picks. While that is true, you would be scratching your head knowing a junkyard company sits comfortably with them. Yep, this damaged car and salvage specialist managed to pull off an average annual return of 22% and a jaw-dropping total stock return of 3,900%. An investment exactly 30 years ago would be a 150-bagger today.

In this letter, We’ll be pulling back the curtain on the founder’s life Willis Johnson, from his time in the Vietnam War to his various business endeavors, and how these experiences molded his approach to business and ultimately, Copart’s triumph.

Today, Copart is still a family affair, with Willis’s son-in-law, Jay Adair, steering the ship as CEO. The company’s continued strong insider ownership ensures that the management’s goals are tightly knit with those of the shareholders.

The stories in “Junk to Gold” are more than just about Copart’s savvy market moves; they are a testament to the power of integrity, innovation, and smart risk-taking in carving out a successful niche in business.

Through Adversity

Willis quickly went from being an 18-year-old with freedom to serving in the Vietnam War. He excelled in basic training and was assigned to the infantry, where he learned to tear down weapons and throw grenades. Only about half of the 130 men in his infantry survived. As a forward observer, Willis walked ahead to check for ambushes and booby traps, one of the most dangerous duties. He learned to trust his senses, including his gut, to warn of trouble ahead. During one incident, mortars came down around him and his troops, trapping them in a foxhole. When they were dug out, he was covered in blood and thought he was dead, but thankfully his wound was able to be patched up.

The Vietnam War gave those who were drafted or enlisted a newfound appreciation for how precious life is. At 18 years old, those who survived had their whole lives ahead of them. Willis’s best friend David Flower, who had enlisted, was killed. Leaving the war in the summer of 1967 after a year of service was one of the greatest reliefs imaginable. The war taught Willis the power and responsibility of his decisions, as many soldiers’ lives relied on him. This sense of responsibility carried over into his later business ventures, where he realized people relied on his decisions to put food on the table for their families. He came to understand that life wasn’t just about him.

Willis called the war the best education he could get, instilling in him leadership, order, efficiency, teamwork and discipline. Though he didn’t go to college, the skills and perspective he gained were invaluable. Moving on from the terrible experience was crucial for him. Unlike many others who understandably relived it over and over, he wouldn’t watch the news or talk about the war for years afterwards, determined to make the most of his life. He said once,

“[The military] taught me cleanliness and order. Keeping things lined up makes for efficiency. In the military, we were told to face right and line everything up shoulder to nose. I bought that back to the dismantling business, lining up the cars in the yard in a perfect row. I also learned that a coat of paint helped cover up a lot of bad stuff and was the cheapest way to make something bad look good.”

Scraps and Shreds

After returning home, Willis quickly married his girlfriend Joyce Cox, proposing after just 10 dates so she would come with him as he left to finish his military duty. Back home, he worked with his dad in the wrecking yard business. They got involved in an auction of a yard filled with a thousand old cars, having just 90 days to clear the lot. At the auction, Willis’s dad won with a $15,000 sealed bid. Businessmen in fancy clothes who bid against them offered an additional $5,000 to take over the deal, but Willis’s dad declined, surprising Willis since it was a huge amount of easy money at the time.

Another man then offered $5,000 for just 15 cars from the lot. They made that deal, getting back a third of their initial investment. The first businessman returned, giving them $10,000 plus 15 cars of their choice to take over. So they got their full $15,000 back plus 15 cars. Willis explained they got such a good deal because they were the only ones willing to put in the dirty work to truly assess the value of the lot, while the businessmen weren’t sure what it was worth.

Eager to go out on his own, Willis and his wife moved to try to gain some independence, but ended up returning home. His dad offered him 10% ownership in the business and he worked to rapidly expand it, tripling the income. But continued disagreements over how to run things led Willis and his dad to go their separate ways. Willis took away the lesson to always keep his word and do what he promised.

So at age 26, Willis and his wife Joyce purchased five acres for $75,000 to start their own business. This was a huge sum for them at the time. They sold their $115,000 house and borrowed money from family members just to afford the down payment. Willis chased his big dreams while living in a tiny trailer on the property.

The business, named MA Auto Dismantlers, started out buying old, non-drivable cars for $35–50 each and selling off whatever parts they could. Willis continually reinvested profits to purchase better cars with more valuable parts like motors, transmissions and rear ends. He made sure to do things better than competitors, like fully dismantling parts to give customers exactly what they needed, and always keeping a clean, organized shop. He built up a bigger facility and met with successful yard owners around the country to learn and get ideas.

Willis saw that the most profitable yards specialized in certain makes/models. Against the advice of others who thought he was crazy, he decided to specialize in Chrysler, Dodge and Plymouth parts, which no one else in his area focused on. It paid off — after specializing, monthly parts sales increased from $3500–5000 to $3500 per day, a 30x increase.

To fund further expansion, Willis took major risks, at one point signing over everything he owned as collateral for a $50,000 loan, which was an enormous amount for him then. But he had an unshakable belief in his vision and failure never crossed his mind. As the business rapidly scaled up, he spent $110,000, another huge sum, on an early computer inventory tracking system to manage it all. Although people called him crazy for that too, competitors soon copied him after seeing how effective it was. He pioneered other innovations as well, like taking out massive yellow pages ads when others went small to save money. He was an independent thinker, unafraid to do things differently than the norm if it made sense to him. At the same time, he wasn’t shy about cloning great ideas and best practices he picked up from other shops.

Business was booming and Willis said they “were sitting in high cotton.” But his brother and partner Curtis wanted to dial back his involvement. So Willis bought out his stake to take full control. He got involved buying up huge lots of leftover parts from Chrysler plant closings. He’d buy hundreds or sometimes thousands of things like carburetors for as little as $15 each, then turn around and resell them for $100 or more, making huge profit margins. Chrysler ended up regularly delivering him more parts on generous 90-day payment terms and he became their go-to guy for liquidating old stock.

Despite the success, Willis recognized the risk of relying so heavily on Chrysler long-term with many plants shutting down. So he diversified, opening another location specializing in fuel efficient vehicles and mini trucks that no yards focused on. He also acquired an auto auction company called BTS for $1 million. It was a very high price, but he saw the potential for it to greatly grow his existing business. He jumped on another innovative self-serve retail concept he saw called “You Pull It” where customers could browse a yard and pull their own parts. Opening his own version, it was an immediate hit.

Willis launched a publication called Copart (after “cooperative”) to market his own businesses and allow other specialty dismantlers to advertise. He renamed BTS “Copart” too. By the 1970s, his huge volume was overwhelming the DMV with title changes, so he pioneered computerizing the process and submitting the paperwork for them.

While Willis’ hard work meant he could now afford a nice lifestyle for his family, having known hard times, he wanted to instill those values in his kids too. So he had them buy wrecked vehicles from his yard and pay to fix them up themselves to learn the value of work and money. At his core, Willis’ driving force was always his family and his faith. Growing the business empire was all in service of providing for them.

Romeo and Junk

Jay Adair had just graduated high school and was dating Willis Johnson’s daughter. Initially, Willis found Jay annoying due to all the questions he asked. Jay was not impressed by Willis’s vehicle dismantling business at first, having never been to a wrecking yard before and wondering how one could make money from wrecked cars. But Willis admired Jay’s love for business, as Jay had focused on making money with his dad in high school instead of playing sports. Willis wrote,

“While my world was strange to Jay, he was fascinated by it, and I think he also fed into my passion for business. I have to admit, the wrecking business is infectious, and when you catch it, there is no cure. Jay caught it.”

Like Willis, Jay was an early riser. He started getting up at 4:30am to spend the day with Willis, which was impressive dedication and work ethic for someone only 19 years old. Through all the time they spent together, Jay served as an excellent sounding board for Willis’s new business ideas. Jay’s questions and fresh perspective sometimes led Willis to change his own views.

Willis recognized the critical importance of properly aligning incentives, which is a key part of Copart’s business model today in working with insurance companies who need to liquidate total loss vehicles. Initially, Copart struggled to sell these cars for more than the cost of picking them up, storing them, and auctioning them off. This challenge led Willis to start the Percentage Incentive Program, known as PIP. Rather than charging insurance companies a flat fee per car, Copart took a 10% cut on the sale price for newer, high-value vehicles and 20% for older, more heavily damaged ones. This incentivized Copart to clean up and sell the cars for the highest price possible, making the insurers happy because they could now make money on total loss vehicles. Willis’s big lesson was to always strive to be your customer’s most valuable partner.

“Do the right thing. Through the [Katrina Hurricane] ordeal, Copart did not pass any of its added costs on to its customers. Copart chose to absorb costs because it was the right thing to do. Copart also absorbed costs because it wanted to prove to its customers it was not just a vendor but a business partner they could rely on even at the worst possible time.”

As Copart grew by acquiring other vehicle dismantling businesses, Willis recognized that company culture was vital. He personally worked to instill the “Copart Way” of doing things in each new operation they took over. Willis shifted Jay around to different parts of the business so he could learn all aspects of how it worked — driving forklifts in the yards, organizing the mechanic shops, improving the DMV processing, and so on. No matter where he was put, Jay excelled, finding better, more efficient methods for nearly any task or process. He was the perfect protégé for Willis, who knew that Copart’s continued growth would require constant innovation. Most managers struggle to put their ego aside and change methods that have been done the same way for a long time, but Willis welcomed Jay’s ideas and improvements.

As Jay put more and more time in at Copart, he began to consider what his own long-term future prospects looked like there. He was a very ambitious 21-year-old at this point and worried that the relatively small family business might not be able to support his grand aspirations. But then news broke that Copart’s main rival, Insurance Auto Auctions (IAA), had gone public and raised a large amount of capital to fund rapid nationwide expansion. Though the intricacies of the stock market were foreign to them, Willis and Jay, both only in their early 20s, instinctively knew that Copart was the better run company and needed to pursue the same path.

Open to Public

In meetings with potential Wall Street investors, Willis pitched Copart’s business model and the massive opportunity ahead. He argued that auto manufacturing and insurance were two of the biggest industries in the world, and Copart acted as the crucial middleman between them. “As long as we’ve got the land in the right places to put these cars, we can’t fail,” he told them. One investment banker, Barry, was so impressed after hearing Willis that he went home and told his wife that Willis was hands down the smartest businessman he’d ever met. Barry offered to help Copart raise $10 million in funding to prove out the business model and show it could scale rapidly with more capital, but he cautioned that 97% of companies that try to go public end up failing. But Willis was very selective about his business partnerships and deals. He always trusted his gut instinct about people, even if it meant leaving money on the table. He lived by the principle that if he didn’t feel he could truly trust someone after a single dinner conversation, he certainly shouldn’t trust them with his money or reputation.

As Copart diligently prepared for its IPO, IAA and an executive there named Bob Spence were aggressively trying to acquire or hamper Copart’s business. Willis actually came very close to striking a deal with Spence at one point to merge the companies together. But he backed out at the last minute based on a gut feeling that something wasn’t quite right. This proved to be a very wise decision when it was later revealed that Spence had been secretly working with IAA the whole time to undermine Copart. Learning of the deception only added more fuel to Willis’s burning drive to win and beat IAA.

With the $10 million in pre-IPO financing secured, Willis made the choice to sell off the still-successful “You-Pull-It” self-service used parts retail locations that Copart had started in order to focus wholly on rapidly scaling the core Copart salvage auction model. 23-year-old Jay was put in charge of growing the sales team, making the company’s first official sales hire. He laid out a grand vision of expanding from just 7 locations at the time to over 100 nationwide soon after going public. Willis took a very empathetic approach in convincing small, family-run vehicle dismantling yards to sell to Copart. He offered the owners stock in Copart so they could benefit from the upside, allowing him to quickly acquire many sites that may have otherwise sold to IAA. Willis’s reputation and relationships in the industry often sealed these deals over competing offers.

Copart officially went public on March 17, 1994 at a price of $12 per share, giving the company a market capitalization of around $75 million. Willis’s 3 million shares that he still owned were worth $36 million, representing nearly half the value of the entire company. Being publicly traded enabled Copart to grow much faster by using its stock as a currency to make acquisitions.

Willis later admitted that enduring the IPO process was one of the most difficult things he’s done in his entire career. He was suddenly thrust into the unfamiliar world of Wall Street, surrounded by suits and sharks, a huge change of pace from the salvage yards. He was eager to get the IPO done and get back to focusing on growing and operating the business. The key geographic markets Copart targeted for expansion early on were Texas and the East Coast.

IAA’s strategy was to grow as rapidly as possible at all costs, while Copart took a more patient, disciplined approach. Willis’s philosophy was slow, steady, strategic growth, taking the time to implement standardized systems, technology and a cohesive culture across all locations. He even discovered that IAA had resorted to underhanded tactics like hiring private investigators to track his travel and meetings, forcing him to maintain intense secrecy around Copart’s expansion plans. Willis had said,

“Be careful who you go into business with. [At the Copart IPO] Most investors thought it was all about them liking me. But in my case, I also had to like them. I wasn’t doing business with just anyone with a cheque book. I have to trust you — and you have have to be someone I feel good about being associated with.”

Clearly, Willis Johnson and Jay Adair’s vision, passion and relentless drive in the early days laid the groundwork for Copart to become the remarkably successful industry leader it is today. The IPO and focus on always doing what’s best for customers were key early inflection points that enabled the company to sustainably scale into a multi-billion dollar global enterprise.

The Junk on the Other Side

Willis Johnson and Copart took a very different approach to growth compared to their main rival Insurance Auto Auctions (IAA). While IAA pursued rapid expansion at all costs, buying up as many locations as possible, Copart was much more strategic and disciplined. Willis knew that chasing growth through overpriced or bad acquisitions was dangerous long-term. As a skilled capital allocator, his goal was to drive strong, sustainable returns on investment over time, not just growth for growth’s sake.

To avoid overpaying, Copart initially focused more on expanding to rural areas than big cities. Yards were much cheaper to acquire and operate in rural markets, often in the $1.5–2M range versus $5–9M in major metros. There was also less competition for vehicle supply.

Willis was determined to build a cohesive, unified brand as Copart expanded. No matter the location, every yard operated with the same standardized technology systems, pricing, employee treatment, and customer experience. This consistency built trust.

In convincing small yard owners to sell to them, Copart took a very different approach than IAA. While IAA attracted sellers with fancy suits and high price tags, Copart offered to take good care of the business and employees for the long-run. They provided sellers Copart stock so they could participate in future upside. This appealed to owners who saw their business as their life’s work and legacy, not just a short-term payday.

When Willis did identify areas of hidden value in an acquisition, he wasn’t afraid to pay up for them. To Wall Street, IAA initially seemed like the better business since they were growing faster and had higher revenue. But Willis knew that long-term business value and shareholder returns depended on margins and return on capital, not just top-line growth.

As an example, in 1995 Copart acquired a company called NER that had an nearly identical business model but focused on the East Coast. NER doubled Copart’s size overnight for $20M cash + $20M stock. The owner was looking to retire and valued how well his business would be treated by Copart.

In the late 1990s, Copart undertook the major initiative of combining the 3 separate computer systems from various acquisitions into a single, unified proprietary system. While it was costly and slowed growth in the short-term, Willis knew this strategic investment would pay off long-term. Wall Street punished the stock for the growth slowdown, but it was the right move. This experience reinforced the importance of long-term focused shareholders. Willis remarked,

“I learned an important lesson — not to grow too fast. You have to grow slow and steady or Wall Street will make you pay for it.”

What’s ironic is that Copart went on to become one of the greatest compounding stocks of the past 30 years, vastly outperforming peers and the market. The key was steady, disciplined progress year after year, not erratic hypergrowth. Over time, this created an insurmountable competitive advantage.

.com

In 1996, Jay Adair first learned about the potential of the internet for Copart’s business. Even though they weren’t quite sure what a domain name was, Jay had the foresight to quickly secure Copart.com. Prior to the internet, Copart had to manually assemble and distribute an 8,000 page master vehicle sales list to buyers every day. Putting this online saved immense time, money and paper.

Jay also noticed that buyer representatives at physical auctions were making $2–3K per day placing bids for clients for $100+ each. He wanted to let buyers submit bids online directly to save them these fees. Despite buyer skepticism, it worked. In the first quarter it generated over $1M in sales.

Initially Jay assumed buyers would still want to inspect vehicles in-person the day before bidding online. But one customer made a purchase from Connecticut on a car in San Diego without seeing it first. When Jay called to inquire, the buyer said he knew what he was doing but that Copart should post photos of all the vehicles online. This was a lightbulb moment. Even though photographing every car was costly and labor-intensive, giving buyers what they were asking for unlocked immense growth. Online sales quickly soared to over $10M per quarter. It also opened up Copart to international bidders in Canada and Mexico.

Willis declared that Copart was no longer just a salvage company, but also a technology company. They continued physical yard expansion as well, growing from 42 in 1995 to 60 in 1998 and 76 by 2000. When entering colder Midwest markets like Chicago and Minnesota, Willis and Jay found that bad weather significantly reduced auction attendance. Rather than fight this, they pioneered huge indoor auction facilities.

The 9/11 attacks in 2001 reduced air travel and increased driving, which meant more accidents and vehicles for Copart. To fund this growth, they did a public offering aiming to raise $75M. Demand was so strong that it was upsized to $116M.

In 2003, Jay led Copart’s transition from physical auctions to an online-only model called VB2. Despite widespread industry skepticism, it was immensely successful. Buyers got better selection, sellers got better prices from increased bidding activity, and Copart’s costs plummeted since they no longer needed huge parking lots and staffing for physical auctions. Investors saw this through soaring profit margins and returns on capital. By 2003, Copart surpassed 100 total locations and expanded into Canada.

On the HR front, Copart put major emphasis on employee engagement as they scaled. In 2002, Jay called a yard and the employee answering asked if Jay worked at Copart, not recognizing the founder’s name. This was a wakeup call that Copart was no longer a small family business. They invested heavily in employee pay, benefits, and recognition to keep talent happy. The mantra was happy employees = happy customers.

Copart also instituted clear mission, vision and values. Their mission was to simplify and streamline the auction process. The vision was to continually innovate with new products and services to propel the industry forward. And the values spelled COPART: Committed, Ownership, Profitability, Adaptability, Relationships, Trust.

Trust was put to the test in 2005 when Hurricane Katrina devastated New Orleans. Copart processed tens of thousands of flood-damaged vehicles, on top of their usual 1M+ annual volume, without passing on any extra costs to insurance partners. It showcased Copart’s reliability during a crisis.

“Think of us like the local sewer system. We’re a utility. Nothing can get rid of us — nothing. Two of the biggest businesses in the world are car manufacturers and insurance companies. If insurance companies don’t write insurance policies on cars, then they’re out of business. If manufacturers don’t make cars, then they’re out of business. They’re always gonna make cars, and they’re always gonna insure them. We’re the guy in between. As long as we’ve got the land in the right place to put the cars on, we can’t fail. We are like the septic tanks of the sewer system. You can’t have the system without us.”

Cars Abroad Break Too

In the final chapter, Willis discusses Copart’s international expansion journey. Canada was the first market outside the US. It was a natural fit but still a learning curve to adapt to differences in currency, regulation, and salvage processes. From there, Willis and Jay set their sights on the UK and Europe. Acquiring a UK salvage company gave them a foothold to learn the market differences. They discovered that the UK model had salvagers buying and reselling vehicles themselves. Copart knew from experience this was less efficient than their auction model that maximized returns for insurance sellers. Once Copart demonstrated the superiority of its approach, UK insurers quickly signed on.

Expanding to the UK and Europe added huge selection for buyers on Copart’s online platform. This created a virtuous cycle — more inventory attracted more buyers, which drove higher selling prices, which attracted more sellers to Copart. Network effects made the business better and better as it scaled.

Clearly, the remarkable success of Copart over the past 3 decades comes down to the combination of Willis Johnson’s entrepreneurial grit, real-world wisdom and long-term discipline, and Jay Adair’s operational, technology and growth initiatives. Cultural values like trust, innovation, and employee care created a firm foundation. Avoiding the siren song of rapid expansion in favor of strategic, steady progress built an unrivaled salvage industry leader. It’s a tremendous example of compounding business success through patient, customer-focused execution.

In 2010, Jay Adair became CEO of Copart as Willis Johnson stepped back to spend more time with his family, particularly his wife who had been diagnosed with breast cancer in 2008. Willis had full confidence in Jay’s ability to lead the company he had built. Around this time, Copart expanded its vehicle sourcing beyond insurance companies by creating two new divisions: Copart Direct and Copart Dealer Services.

Copart Direct allowed the public to sell cars directly on the VB2 platform, giving them access to Copart’s global buyer base in exchange for a fee, similar to Amazon’s FBA program for third-party sellers. Copart Dealer Services reached out to auto dealerships to auction off unwanted trade-in vehicles via VB2 as well.

To give Jay true control as CEO, Willis knew he had to distance himself from headquarters. In 2009, he and his wife Joyce bought a ranch in Tennessee and relocated.

Today

With the exception of only 3 years (1998, 2009, 2015), Copart has increased revenue every single year as a public company. In recent decades, growth has typically been in the 10% range annually, with occasional years of 20–30% gains.

In the trailing twelve months, Copart boasted revenues of $4.06b, close to 1,000% the revenue they had 2 decades years ago. The company now has two main revenue streams:

• Service Revenue — Copart’s fee for facilitating the sale of vehicles owned by others on its platform

• Purchased Vehicle Revenue — Sales of vehicles Copart itself buys and resells for a profit

Today, the salvage vehicle auction industry is essentially a duopoly between Copart and Insurance Auto Auctions (IAA), with Copart being the significantly stronger player. For one, Copart owns most of its land, largely purchased back in the 1990s. The difficulty and cost of acquiring suitable real estate today poses a huge barrier to new entrants. Ownership of the underlying real estate is a key advantage over rivals like IAA that primarily lease land. Scale also lets Copart serve insurance customers with nationwide contracts. Lastly, network effects tell us as Copart’s buyer and seller base grows, the platform becomes increasingly valuable and difficult to disrupt. As Willis himself expressed,

“While not all great businesses share the same characteristics, they often have at least a handful that unify them. In the case of Copart, those common themes include being close to the customer, win-win relationships, scale advantages, a large runway for growth, network effects (connecting more buyers and sellers), constant innovation, embracing technology, valuing employees, good culture, first mover advantages, sticking to the knitting and tone from the top. And let’s not forget the creative fanatic driving the whole process.”

The company also has an exceptionally strong, debt-averse balance sheet, a culture instilled by founder Willis Johnson to ensure resilience during crises like 9/11, Hurricane Katrina, Dixie Fire and the financial crisis.

One potential long-term risk is widespread autonomous vehicle adoption reducing accident frequency. Ironically, increased technology in vehicles today has been a boon for Copart — more expensive components mean higher repair costs, making heavily damaged vehicles more likely to be written off by insurers.

To close, “Junk to Gold” covers the remarkable story of Willis Johnson, Jay Adair and Copart, offering valuable insights into long-term focused leadership, disciplined growth through innovation and adversity, and the power of sustainable competitive advantages. While an element of fortune is always involved, Copart’s rise offers a compelling case study of a high-quality compounder built to last.