The journey of WhizRides, the Airbnb for Cars.
WhizRides is a company my friend, Sahil Keval, and I started together beginning of 2014 till about mid-end of 2015. This blog post explains the journey we took.
How the idea was formed:
I was just finishing my freshman year of college, looking forward to intern in San Mateo, CA. At this time, I did not have a car that was mine, I would just use my mom’s or dad’s car whenever I needed it. Unfortunately, I wasn’t able to use it for the whole day, so I had to figure out another way to commute to work, from Cupertino to San Mateo ~25–30 miles each way. I started taking the Caltrain to work, which was not bad, but still annoying because I had to bother my parents to drop me off and pick me up every day during rush hour. Sahil, who eventually became my business partner, had 6 cars in his family, a couple that were just sitting there and not being put to much use. I used to think that I really wish I could use one of those cars, except I don’t know how much to compensate him to do so. I also did a bunch of research in buying used cars, leasing a car, etc, but nothing made financial sense for a student, especially because I only needed the car for a 3 month period. Researching into this more deeply, I wondered 2 things:
- Why can I only rent a car for a couple days OR for a couple years… why isn’t there something affordable in the middle?
- Why do I have to rent/lease a new car? I would much rather rent an older car for cheaper given my financial situation as a student.
Casually ranting about this and providing hypothetical solutions to Sahil, he said “I’m down.” This was surprising to me, because I often rant about things and provide hypothetical solutions; I wasn’t even 100% serious about these solutions or ready to commit to solving the problem. How quickly he was able to be willing to solve this made me very excited to actually try to take this to the next step.
The Early Stages:
We were both super excited about working on this together, and started brainstorming where to start off. The first thing few steps we did were:
- Figure out the financials of car ownership
- See if other people are interested in renting cars for ~2 months — 20 months (too long for car rental companies, too short to lease from dealership).
- Figure out the legal implications of car renting
We started off thinking of this as an investment, where we would own all the cars. We calculated buying used cars, and renting them out. We wanted to see what amount we can charge that will beat depreciation, insurance costs, maintenance, repairs, registration, etc. for the most economical cars. We calculated depreciation by looking up the KBB for a car, let’s say 2005 Toyota Corolla with 112K miles on it and subtracting that from a 2006 Toyota Corolla with 100K miles on it. The difference would be the annual expected depreciation with a 12K annual limit of miles allowed on the car. This was good enough to give us an idea, but then there were some cases where it wasn’t the most accurate, like when the car’s body style changes in between the 2 years, then this method does not work as accurately, because the KBB will change more than expected. Either way, we were able to put a number out there, we started at $100 for the most basic car. We advertised a waitlist to get a car on Facebook groups, and realized that interns really have a need for such a service. We created the Bay Area Summer Interns 2015 Facebook Group that had over 11K members, mainly to upsell our service that interns found very helpful. In this waitlist, we asked people what car they wanted, and gave price ranges for the types of cars based on how old, how luxury, etc. Surprisingly, after the first couples days, we got around 50–100 people requesting cars — they did not just request the cheapest cars, as they didn’t want to deal with cars breaking down and some wanted to enjoy luxury cars for a few months. We realized that we could not provide 50–100 cars so quickly, so we raised the price a few times to see what the sweet spot would be. After a few weeks, our cheapest car’s price went from $100/mo to $360/mo, and the demand was still high. We realized that the people that are requesting these cars are tech interns in the bay area that are paid very well; they just really need a car.
The data suggested an obvious pivot:
Because we can’t buy cars at any reasonable scale, we decided to think of ways of how we can convince other people to rent out their cars. That resonated very well with us — we would just be the marketplace that takes a transaction fee, the airbnb for cars. That sounded like a much more scalable approach to solving this. We brainstormed how we would convince people — would we go around the neighborhood looking for people who have “too many” cars on their driveway? Would we go to travel agencies and partner with them to help upsell this to their customers who are going out of town for >= 1 month? Would we go to investors to buy cars to lease out to us because we beat depreciation by far? Exploring all of these options, We realized that used car dealerships run on a very tight margin, and if we were to partner with a used car dealership, and beat depreciation cost by 300%, it would be a win-win-win (dealership, us, customer getting the car). We pitched it to our first used car dealership, and the owner was so interested, that he wanted to be an equity partner and provide us with other things (his lot, other dealership contacts, etc.). By summer of 2015, we had over 200 interns who wanted a car. We started auctioning out the cars, and a 1998 Honda Accord bid up all the way to $640/mo.
The dreaded insurance industry:
This was all very exciting, until the legal aspect came in to play. How can we as the middle man provide insurance on a car that we nor the drive own? We talked to numerous insurance company agents, who tried their best to help us, but were just unsure of how to calculate the risk. We weren’t worth their time to calculate the risk, bringing them ~50–200 customers isn’t worth their time calculating this. We started off manually connecting the lessor and lessee and having them figure out insurance on their own — turns out that I can get insurance on a friend’s car for a few months, but if a business for profit arranges that, I can’t do that. We went with the “we’re just friends” route for our first summer, successfully renting out ~10–15 cars to interns in the bay area and founders of companies in the YCombinator summer batch. This actually motivated us to apply to YC ourselves (https://www.youtube.com/watch?v=BP6Lk6E600E), but given that it’s the most prestigious startup incubator in silicon valley, the rejection wasn’t much of a surprise, after all, we had barely started getting traction. Till the next summer, we spent almost all of our time figuring out insurance, with no luck. After 1 year of trying something and seeing no progress, we lost hope and the business slowly faded away.
Our next move, if insurance didn’t get in the way:
We wanted to eventually partner with Lyft, Uber, or Sidecar. It would work something like, anyone can get a car, and instead of charging money, they would have to drive for one of those service for ~ 4 hours/week, and those services would pay us. This would again be a win-win-win. We get more customers, Lyft/Uber/Sidecar get more drivers, and the drivers get a car without having to pay money.
It was an amazing journey with lots of learnings. The image below is a few pictures of the journey. Most of the pictures are people who rented out cars who listed their name, where they work, and what school they go to. The second picture from the top is actually a construction worker who works in Cupertino and lives in Gilroy. He rented out 3 cars of his to us, and we paid him ~850/mo, which he said pretty much covers his rent, and he was very happy with this extra income. It felt pretty amazing to make something new from scratch that started getting traction, and help people at the same time. It’s unfortunate that it was insurance that ruined it, but excited for the next journey to come!