A History of Innovation

Richmond-based CarMax, Inc., the nation’s largest used-car retailer, uses AI in its logistics and pricing tools to assist customers and employees.

Virginia has a long history as a site where revolutions can take root. In recent decades, that revolutionary spirit has attracted entrepreneurs and startups who see Virginia as a place where new ideas grow into powerful energy disruptors.

Today’s tech-driven innovation makes Virginia a particularly appealing locale due to the access it provides to the nation’s highest concentration of technology talent. Approximately 330,000 people work in the Commonwealth’s tech sector or tech-related occupations. This access to talent, and the leading educational institutions matriculating these professionals, is driving growth of a dense innovation ecosystem. Today’s investors are building upon a foundation first shaped by Virginia’s well-established innovators.

When CapTech Ventures was founded in 1997 with the goal of “capitalizing on technology,” its focus was on helping businesses leverage the newborn World Wide Web. Today, this Henrico County-based consultancy helps organizations identify opportunities to apply AI applications.

“Some people may say innovation is about the discovery of something new. We think it’s the application of that discovery to solve true business problems,” said Brian Bischoff, CapTech principal and chief technology officer.

MIT’s “State of AI in Business 2025” report indicates that as many as 95% of AI implementations fail to deliver results, echoing Bischoff’s point that a business’s ability to effectively use AI to transform business operations is the mark of modern innovation. CapTech works to help clients leverage these tools to unlock powerful new efficiencies within their operations.

Among recent clients was a logistics provider working to streamline order-taking. “Their very specialized orders were hard to build any automation around,” Bischoff said. “It is a very high-touch, white-glove service.” CapTech helped the client integrate a large language model solution capable of asking clarifying questions to requests made via email or phone. The result was a fully automated end-to-end order pipeline.

Better Information, More Informed Decisions

CarMax, Inc., is among the countless companies looking to leverage AI to better serve customers. The difference, according to Shamim Mohammad, executive vice president and chief information and technology officer, is that this retail disruptor has been using AI-powered applications over the past decade. Historically, CarMax has applied AI and machine learning intelligence applications to logistics and pricing tools. Today, as CarMax increases its omni-channel offerings, to buy a car online, in-store, or a combination of the two, an agentic AI assistant called Skye provides customers with round-the-clock support via web chat or text. Internal AI platform “Rhodes” provides employees with quick answers to questions. Together, these solutions speed the car-buying process while supporting customers and employees.

Being an early adopter has given CarMax room to experiment with AI, exploring use cases to home in on the most valuable applications.
“To remain relevant and to remain a market leader in our industry, we have to innovate,” Mohammad said. “It’s not optional. Innovation comes with risk, and you’ve got to manage it responsibly. We have very strong AI governance to make sure we’re not doing anything counter to our culture and our core values.”

That commitment is built into the company’s operational foundation. When CarMax opened its first store on Richmond’s Broad Street in 1993, it transformed car buying by eliminating the biggest consumer pain point — the negotiation process — through the introduction of no-haggle pricing. The automotive retailer swiftly moved to transform how customers finance their cars. Over the next three decades, CarMax grew to 255 stores and almost 30,000 associates, but retained a startup mindset.

“We recognized that we’ve got to work like a startup, no matter how big we get,” Mohammad said. About a decade ago, this mindset pushed the company to change its workflow. The company shifted from a project model for technology and digital projects and enhancements, where teams are built to accomplish a specific task over a finite period, to a product model. Within the product model, small cross-functional teams own a specific business challenge.

Each group builds on its knowledge of the core business challenge, continually improving the targeted experience in new ways. It’s an approach that is gaining traction in other companies, where AI’s rapid evolution demands a continuous improvement approach.

The Human Accountability Factor

Capital One takes a similar approach to product development. “We foster a DevOps culture where developers are responsible for the entire lifecycle of their code. This promotes accountability, improves supportability, and reduces time to recovery, ultimately leading to faster, more reliable, and higher-quality software delivery,” Capital One Head of Small Business Bank and Greater Washington Market President Jenn Flynn said.

For Capital One, this approach is part of the developer-first culture that drives in-house innovation. “Innovation has been in Capital One’s DNA since it was founded,” Flynn said. “From the beginning, we have been focused on finding new ways to leverage technology to address unmet needs across a broad spectrum of customers.”

The Richmond-founded, Fairfax County-based company disrupted the finance industry in 1994 through its use of data-driven customization to account for consumers’ individual risk. Technology has played a central role in the company’s growth as it moved from a credit card company to one of the country’s largest banks. This data-driven approach is one part of a strategy that has helped nearly 44 million customers who started as subprime or with no credit score to rise to prime or beyond.

“Today,” Flynn said, “our innovation is homegrown and powered by a modern tech stack that allows our teams to work on unique problems in ways that are new to the industry.”

AI plays a key role in this approach. The company is working to automate routine tasks to allow engineers more time to focus on creative problem-solving. “By offering generative and agentic AI coding tools, we’ve seen double-digit gains in productivity, helping our developers to get out of menial tasks and write code faster and more efficiently,” Flynn said.

Henrico County-based consultant CapTech Ventures works to help clients identify opportunities to apply AI applications.

Building a Community of Innovation

Company representatives also cultivate innovation outside the corporation, investing heavily in solutions that strengthen the small businesses’ capabilities. Through Capital One Software, the company has delivered data management tools, including Slingshot and Databolt, to help other organizations scale their data capabilities and harness AI’s power. And in 2018, the company opened the 1717 Innovation Center in Richmond as a startup incubator, offering over 40,000 square feet of space for entrepreneurs to learn, grow, and connect.

CarMax also invests in external startups. “We’re not just relying on our own innovation, but also creating an ecosystem of partners and companies that we can work with to drive company growth and remain competitive,” Mohammad said. These startups and innovative companies include Treehouse, an electric vehicle charging installer, and RepairPal, an online network of auto repair solutions. Mohammad pointed out that the Richmond area in particular provides a haven for innovation. He has found, “There’s a startup vibe within the Richmond Technology Zone.”

Representatives of these companies serve on the Richmond Technology Council and RVA757 Connects, an organization pushing for greater collaboration within the I-64 corridor from Richmond to Hampton Roads through partnerships and thoughtful infrastructure development.

“The connections we’re able to make with other businesses in the market, to understand what’s happening, have been very valuable,” Bischoff said.

Mohammad, who moved to Virginia from Boston in 2012, said Richmond is a place where innovation and people thrive. “Virginia, especially Richmond, offers a significantly better quality of life than many parts of the country, and that matters. We’ve been able to attract talent from all over the country, and sometimes different parts of the world,” he said.

“There’s a higher education piece that’s very beneficial,” Bischoff said. “We’ve [employed] alumni from a lot of the large or specialized state institutions inside Virginia.” In addition, CapTech team members serve as professors in technology classes, creating a two-way exchange of information that keeps CapTech ahead of industry trends and future graduates prepared to serve in a fast-changing industry.

Flynn added, “Virginia provides a unique ecosystem that serves as a competitive hub for innovation.” As she sees it, “The Commonwealth’s focus on fostering a cohesive business climate allows us to prioritize a world-class experience where we can increase the quality and speed of our breakthrough innovations while remaining well managed. This environment enables us to solve some of the biggest challenges in the financial services industry by providing our associates the opportunity to work on cutting-edge technology that has a meaningful, real-world impact.”