RelayRides
RelayRides was founded in 2009, the same year as Uber. At the time, no one knew how the business of monetizing people’s private vehicles was going to shake out. Would the winner be the RelayRides model, where everyone became their own rental car companies of one, lending out their vehicles to strangers? Or would it be the Uber model, where personal cars would become the new, mobile-summoned taxis?
Several billion dollars in Uber funding later, we have an answer—at least for the moment. When it comes to getting from place to place in a city on short notice, the Uber model has won. This summer, by comparison, RelayRides landed a modest-by-Silicon-Valley-standards $35 million in its latest financing round this summer.
But as Uber gets all the attention, the basic rationale for RelayRides is still worth considering. For so many of us, our cars spend most of their time parked, empty, going nowhere. And isn’t that a waste?
RelayRides CEO Andre Haddad RelayRides
There was a time back in those early days all of five years ago when it was harder to be cynical about the idea of the “sharing economy.” Assets like cars and rooms sat idle or empty. New technologies enabled connections between that fallow supply and demand that previously had nowhere to go. But many “sharing” marketplaces have turned out to be far less simple and far less pure.
RelayRides, on the other hand, seems to have stayed closer to that original sharing spirit, if only due to the economics and logistics of renting cars. Maintaining a fleet of rental cars seems far more high-maintenance than managing empty apartments. And even if it weren’t, the overall disruption seems less severe. Big rental car companies might feel the pressure, but it’s less likely to annoy the neighbors, or the neighborhood taxi driver. So far, with the exception of New York, RelayRides has also managed to avoid becoming embroiled in the kinds of regulatory controversies that have followed Uber every step of the way.
The Hassle Factor
Still, San Francisco-based RelayRides might not still be around to claim its piece of the future of transportation if its CEO, former eBay marketplaces executive Andre Haddad, hadn’t been willing to acknowledge that Uber’s ascendancy meant his company’s business had to change. Originally, RelayRides was working on an elaborate hardware solution that would let renters unlock and drive people’s private cars remotely, eliminating the need to meet in person at all. A few taps, drive the car for an hour or two, and bring it back to where you started. But the math just wasn’t working.
For one, he says, installing the hardware was a pain, which meant fewer people were making their cars available. For RelayRides itself, every hardware device cost between $500 and $700, all to meet the demand for the hourly car rental market, which Haddad says is just a tiny fraction of a business where the vast majority of rentals are still daily or weekly.
So a little more than a year ago, RelayRides dropped hourly rentals altogether, deciding to compete against the traditional rental car companies by focusing on airports and longer-term rentals of people’ personal vehicles. “You don’t want to be in the smallest niche of the market,” Haddad told WIRED in a recent interview.
He says the change has led to major growth for RelayRides. Daily and longer rentals mean more revenue for vehicle owners with less hassle. The average rental period is now five days, he says, and the average transaction value is $250, compared to a few bucks for an hourly rental that still means having to clean out the car afterward to get it ready for the next potential driver.
Haddad calls this return on hassle. Owners aren’t making a full-time living off of renting their cars, he says, which means RelayRides needs to make the process as easy as possible if it hopes to keep its marketplace stocked with available rentals. “Ease of use is all about how much earnings I can make divided by the hassle factor,” he says.
The Where And the How
Another benefit of RelayRides’ retooling, he says, is that longer-term rentals mean drivers and owners are more likely to be able to meet in person to hand off the keys. And when they meet face to face, Haddad explains, the rate of complaints afterward goes down.
To encourage that personal interaction—and to offer a feature that keeps it competitive with the major rental car players—RelayRides officially announced on Tuesday that it was rolling out an option for owners to deliver their cars straight to drivers. The pitch is that owners get to charge an extra fee if they wish, while drivers get the convenience of having a car brought to where they are, instead of having to arrange a random meetup point. As Haddad puts it, delivery eliminates any question around the where and the how of renting someone else’s car.
The added convenience still leaves RelayRides a long way to go before attaining a public profile comparable to Uber’s. “Push a button, get a ride” may always be more scalable than “push a button, get a rental.” Still, delivery brings RelayRides a little bit closer to that ideal, even though Haddad says he doesn’t see on-demand ride companies as competitors anymore. “We are miles away from the Uber or Lyft use case,” he says.
Instead, over the next few years, RelayRides and the rest of us will find out how much use we all have for keeping other people’s cars in motion rather than sitting by the curb, taking up space, doing nothing at all.
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