Before Turo, there was RelayRides, started by Shelby Clark (former CEO), cofounded with his classmates Nabeel Al-Kady and Tara Reeves. The name was changed to Turo in Nov 2015, a blend of the words “tour” and “turbo”, suggesting a fast, fun way to travel and explore new places.
The Problem: As described in Anonymous (2020)[1], the “lightbulb moment” came when Shelby was visiting a family outside of Boston, where he was living, and struggled to find a close-by short-term rental car during Christmas in 2009. Juxtaposed with his struggle to find a rental car were the innumerable private cars parked on the street, likely remaining vacant throughout the holiday.
According to Anonymous (2011)[2]: “I was passing all these cars parked along the road, and I wanted to just get off my bike and get one. They looked like they hadn’t been used in weeks,” said Clark, now 28. “It was like, ‘Why can’t I?’ That was sort of the light-bulb moment.”
To summarize — the customer experience around renting a car has historically been subpar — mired in paperwork, opaque pricing, high fees, and a very limited choice in available options of cars to rent. Car rental services typically require customers to visit an airport or office during business hours. They must wait in line to complete paperwork before receiving and returning keys in person. 1 in 6 people have changed or canceled vacation plans because of high prices or lack of availability of rental cars. 69% of people renting cars say they have had some kind of negative experience.
Solution: Turo aspires to become the “Airbnb for cars”. It is a car-sharing marketplace that allows car owners to rent out their vehicles when not in use, increasing the utilization of vehicles by unlocking latent supply while providing a new source of income for car owners. Turo gives car renters access to a diverse selection of vehicles they can book at their convenience on an app, with greater flexibility and less paperwork than typically experienced with legacy car rental companies.
Mission Statement: According to Pereira (2023)[3], its mission statement is “to reinvent the car rental experience and put the world’s one billion cars to better use.”
The Challenge: The biggest hurdle, however, was insurance. There were some only a limited few non-profit car sharing services permitted. So, Shelby teamed up with Bill Curtis, a de facto insurance guru. They spent months meeting and convincing insurance underwriters to insure car sharing, but because of the status quo bias/first-mover disadvantage, most said no. Eventually, through their persistence, one underwriter agreed, allowing them to initiate the business.
Value Proposition: Its key value proposition, summarized by Pereira (2023)[4], is twofold. First, it rents a wider variety of vehicles by at least 35% cheaper than regular rental services. Second, it makes $500/month on average for those who rent out their car that would otherwise be depreciating.
Business Model: According to Wang (2023)[5], Turo generates revenue by charging fees to both hosts and guests. The company’s primary revenue streams stem from marketplace fees and value-added service fees charged to both parties involved in a booking. The company takes a percentage of the vehicle price, which may range anywhere from 15 to 45 percent but is usually 25 percent, a marketplace fee, and (3) a value-added services fee for optional services like protection plans. This is a similar structure with Airbnb.
Growth, Management and Funding Chronology:
·In 2004, Shelby graduated from Northwestern University with a degree in Biomedical Engineering.
· Between 2004 to 2007, he spent the first three years in consulting.
· In 2008, he moved to Boston to pursue his MBA at Harvard Business School.
· During Christmas 2008, the lightbulb moment occurred.
· In Nov 2009, According to Hendelmann (n.d.)[6], to get the business off the ground, he raised $600,000 from various angel investors. He also participated in multiple pitching competitions.
· 7 months later, in June 2010, RelayRides was first launched in Boston.
· By the end of the year 2010, three things happened:
First, it had grown to a community of 50 cars and over 1,000 borrowers in Boston. Then, RelayRides found an enthusiastic partner — Howard Hartenbaum, partner at August Capital, who thought this idea happened to be coinciding with the movement of collaborative consumption, and led the Series A. It raised $4.5 million. Lastly, this allowed it to expand to San Francisco, where it is now headquartered.
· Around Aug 2011, to remain competitive with platforms like Getaround, it raised additional rounds, extended its Series A to $10 million and added $3 million two months later.
· In September 2011, Clark stepped down and the company hired Andrew Haddad as the CEO.
· In October 2011, it announced a partnership with General Motors, enabling GM owners to rent out their idle vehicles.
· In 2012, it launched nationwide in the U.S.
· In July 2019, IAC invested $250 million in Turo and valued the company at $1 billion.
· By 2020, Turo reached $1 billion in cumulative global gross revenue.
· As of 2023, it has a valuation of $1.28 billion, with an estimated 11 million users worldwide.
[1] Anonymous. (2020, Aug 18). “Reflecting on the early days of Turo”. https://turo.com/blog/news/reflecting-on-the-early-days-of-turo/
[2] Anonymous. (2011, May 10). “RelayRides redesigns car sharing”. Automotive News. https://www.cnet.com/roadshow/news/relayrides-redesigns-car-sharing/
[3] Pereira, D. (2023, July 14). “Turo Business Model”. The Business Model Analyst. https://businessmodelanalyst.com/turo-business-model/
[4] Pereira, D. (2023, July 14). “Turo Business Model”. The Business Model Analyst. https://businessmodelanalyst.com/turo-business-model/
[5] Wang, C. (2023, May 24). “Turo”. Contrary Research. https://research.contrary.com/company/turo
[6] Hendelmann, V. (n.a.) “The Turo Business Model — How Does Turo Make Money”. ProductMint. https://productmint.com/turo-business-model-how-does-turo-make-money/
