Sep 25, 2019
EP020 - CEO of MuvMe, Inc., Steven Messino, and SeniorCarsharing Consultant, Dave Brook
http://www.vehicle2.getspiffy.com
Episode 20 is an interview withSteven Messino, CEO of MuvMe,Inc., and Dave Brook,Senior Carsharing Consultant for Carsharing.US; recorded on Thursday, September 12th, 2019.Scot, Steven, and Dave discuss a variety of topics,including...
- Steven and Dave’s individual career paths inthe automotive industry, and how they first met eachother
- Theseven primary ownership models, such as leasing, financing,ridesharing, carsharing, and subscriptions
- Apresent-day look at the carsharing space and the potential for atipping point for more car-sharing miles driven than ownedvehicles
- Thekey differences between gated and ungated carsharing
- Steven and Dave’s thoughts on the potential forautonomy, both in the carsharing space and the industry as awhole
Be sure to followSteven Messino and Dave Brook on LinkedIn. If you enjoyed this episode,please write us a review on iTunes!
The four pillars of Vehicle 2.0are electrification, connectivity, autonomy, and changing ownershipmodels. In the Vehicle 2.0 Podcast, we will look at the future ofthe auto industry through guest expert interviews, deep dives intospecific topics, news coverage, and hot takes with instant analysison what the latest breaking news means for today and in time tocome.
This episode was produced andsound engineered by Jackson Balling, and hosted by ScotWingo.
Transcript:
Scot: Welcome to the Vehicle 2.0 Podcast! This isepisode 20 and it's being recorded, September 12th, 2019. In thisepisode, we are excited to have two guests from the car sharingindustry. First we have Steve Messino CEO of move me and he'sjoined by Dave Brook senior car sharing consultant. Welcome to theshow guys.
Dave: Thank you!
Steven: Thank you for inviting us.
Scot: Oh, Steve let's start off with you. Let's we,we like to take listeners through a everyone's career path. So, sohow did you get into the exciting world of automotive and carsharing?
Steven: Okay. Basically I was consulting in SiliconValley for various companies, so I came across a car share thatstarted around the same time around 2011, 2012 as get around andwhat you now know is zero. And they were in a very similarbusiness. They were all doing peer to peer car sharing. Ended upworking with them for awhile. Them I went and did a project withprobably at the time was the biggest car sharing software providerin the world, which was not a vera out of Toronto. And during thatepisode, Oh, we need to be create demand. So he thought of doingwebinars because lots of people had an interest in car sharing butdid not know a lot about the business or the market. So I went anddid research and found out who were the leading experts in theindustry of which Dave Brook was one of them.
Steven: And the person who originally started theindustry in the United States. So we, Dave and I ran a series ofwebinars. Oh, format, Avera. And then after, and we ended upfinding a large number of people who wanted to get into thebusiness. But it's very similar to a large number of people whowant to start a laundry or a restaurant. Most of them didn't know alot about it. And this got tied with Metta. Vera sold toenterprise, so there was no longer a major provider in NorthAmerica. My phone rang constantly and I started talking to Dave andI said, we have all these people who want to do this. Why don't weoffer them a package of, we'll teach them how to run once you'vesuccessfully run one days and we'll put together the technology andget them operational. And from that point on, David has been doingthis or probably every major car share car company insurancecompany in the world, but I'm sure you'll be a little more humble.Dave, you want to give your additional background?
Dave: Sure. Thanks. I guess I'm a serial entrepreneurand in the mid nineties, I started reading about this a wacky ideacalled car sharing that was starting in Europe at the time. And itseemed like a, a, an interesting idea that would have someapplication here in the United States. So I talked to people inSwitzerland that had been involved in their very earliest carshares 10 years before in the late eighties. And it was sort ofrealize that, well, this wasn't rocket science. It was pretty, youknow, straight forward to moving parts. So I stepped off the cliffa couple of years ahead of anyone else and started car share inPortland, Oregon. I was financing it out on my own pocket to, itwas kind of before the VC and angel investor world sort of got tointerested in mobility and transportation things.
Dave: And after starting my company I wasapproached by another group of people from Seattle who wanted to dothe same thing, only they wanted to do it on a much better financescale than what I was doing. So I help them get going and after notto, after a couple of years it made sense for me to merge mycompany with what was flex car which had not only nationalaspirations, but did expand the in a 10 or 12 different cities allover the country. And they were going head to head with anothercompany out of Boston that started two years after mine calledZipcar. And eventually the two merged and you know, under theZipcar banner. And so that was the birth of you know, commercialcar sharing in the United States. It, after a couple of yearsworking for Flexcar, I decided that the corporate life was not, notfor me.
Dave: So kind of weighted out mynoncompete agreement and then started consulting and I had beenapproached by a fellow Shelby Clark who had this idea of usingprivate cars, privately owned cars, your, your car, my car, andbeing a platform to rent out those cars to other people. The samecar sharing concept. And so the big challenge for any car sharestarting is finding insurance. Cause most people don't understand.Most insurance companies don't understand the special requirementsof, of car sharing. But so get around Shelby's company was a relayrides, which is now called we're o, t,U , R, o. And m. Again,almost at the same time another company was starting, which is getaround know, which is the other peer to peer company. And they'vegrown. And so for the last 10 plus years I've been working withthey're startups. I've been working with auto manufacturers,insurance companies, helping them understand the, the, the carsharing space where it fits into overall mobility and okay. Andhaving a good time at it. And then it's, that's how I met Steve ashe, as he said.
Scot: Very cool. So we definitely wanna digmore into that d what I find interesting is you guys were so earlywith the zipcars flex car you know, and then the f the iPhone camealong, which really seems to have enabled these models to, to be alot easier or at least more consumer friendly, right? Because withZipcar, you'd have to Kinda go to your desktop, see what cars arethere, run over there and hope that no one rented them out. Whereaswith the phone now you have it all in your pocket and you can getmore real time from a consumer's perspective, you know, know wherethe cars are.
Steven: Yeah. Right. That technology shiftactually happened about June, 2012 if you watch that, nobody reallybought applications on iPhones and android and all of a sudden inthat period it just jumped. And then everybody wanted an app ontheir mobile phone.
Dave: Yeah, yeah. It it really did changethings quite a bit. It, you know, the better, the more convenientyou can make access to a shared car, the easier it will be for anindividual to decide, well, this is so easy. I don't really need toown the car, spend all that money owning a car just to have itwaiting for me out front. So it's a challenge for the operator tomake it as convenient as possible. And you know, there's kind ofmultiple levels of convenience. One is finding the car and beingable to reserve it. The next challenges, being able to kind ofunlocked the car, you know, without having to go through a big alot of steps and then taking the trip, returning the car andlocking it up. And you know, that, so conveniences is what it's allabout. And of course, keeping the car clean is the challenge forthe for the car sharing operator.
Scot: Yeah, we're, we're learning a lotabout that here, here on our side. So that's super helpful. Thanksfor given the backgrounds. I feel like you guys are elder statesmanof, of the industry. So it's going to be a fun discussion. And hereon our podcast we call it the vehicle 2.0 podcast cause we've comeup with this framework where we talk about the four of innovationthat are just kinda crashing through the automotive industry. Wetalk about connected car electrification, autonomy, and thenchanging ownership models. Since you guys are really steeped inthat, that, you know, car sharing side, we want to spend the bulkof our time there today. So, so let's start, you know, kind of thehistory is really good to know. And here we are, 2019. Steve, we'llstart with you.
Scot: How do you feel, how do you thinkabout the car sharing space? I'll look into it a little bit.There's you know, dug into this, there's some data points out therethat say by 20, 30, maybe 10% of cars will be kind of, you knowshared or not individually owned ownership. If that's a word andthen a, I've seen another one that's the exact opposite wherethey'll say, you know, some kind of amazing thing, like 80% of carswill, will be you know, outside of the ownership as we know ittoday. Do you have a point of view on where we're going to be inkind of the next 10 years or so?
Steven: Well, this is actually a great question becauseI spend a lot of time, usually in the summertime thinking aboutwhere the market's going since I build technologies for it. And youalways have to anticipate three to five years in advance of what'sgoing to be coming. Dave and I, when we speak, we frequently getasked this question, the big mover and shaker here, we'll be theautonomous car as it comes along. But it's going to take awhile.Everyone likes to say it's going to be here next year, but it'sonly in trial. Car sharing is going to be here for quite awhileeasily and now 20 years and it just gets convenient if you spendmuch time talking to millennials, they are not really fans of carsas the previous generation, so they're, they're more inclined to docar sharing, which has already proven out in all the demographicsand still approves out today.
Steven: The, yeah, as they, as they getolder they are gonna start buying cars because they're going to endup having families and that's going to be in cars so, but if theycould get away with not having a second car, I think they'll do itin a nanosecond and it's easy to just spiral a second car to takekids to soccer practice on Tuesdays and Thursdays. If that's theonly time you need the car or you needed a third time on Saturdayto go shut up. I see this business being solid for 20 years. Theprimary technology change is as of 2018, 25% of all cars now havetheir telematics devices, which is what the smartphone shock tobuilt into the cars. So probably in four or five years I'll, thoseof us who build technologies, well we'll be using the car is builtin devices in order to talk to them.
Dave: I I would, I'm not sure how much or theyare going to be the car's built-in devices because I think themanufacturers are going to keep that information to themselves incase their, to start their own business. So I think that the, thisis the market for you should third party after market typetelematics devices is going to continue for quite a while. Okay. AsSteve and I differ slightly about the, how quickly autonomousvehicles are going to be a major factor, I think that they willstart happening quite soon. I mean without, without 'em a driverwithout a, whatever you call it, the person sitting in the driver'sseat. But I think there are going to be specialized applications.You know, Tesla's clearly shown there's a lot of that apossibility, but there may be autonomous taxis going in, you know,10 years on a, on a fairly large scale and you know, some,something really basic to to sort of keep in mind.
Dave: There's no difference betweenautonomous Uber and autonomous Zipcar. There is just who, you know,what's the origin of the company?
Scot: Yeah, yeah. I think Travis a thefounder of Uber, Travis Kalanick is famous for saying that theyhave a good business today, but they'll have a great business oncethey can get rid of the drivers. But you know, I mean, justbecause, you know, at that point he had like 2 million drivers.He's kind of a PR oopsies there that he was famous for. So cool. Sothat's good. Let's, let's kind of dive in a little bit. In peelthat onion, there's, I kind kinda track, I call it seven differentways that people own cars. You've got your traditional ownership.You can obviously finance, most people do. You can lease a, andthen we start to get into the newer models. You can rent acar.
Scot: So we've got the traditionalrental car models out there. And then you've got ride sharing,which is kind of what Uber and Lyft represent today. And then carsharing when you've got peer-to-peer and then you've got, I call itB to c, but you guys probably have another name and then theirsubscriptions. First of all, I know you guys probably have whatI've found in this industry. Everyone's got a little bit of adifferent vocabulary. So does that jive with what you car stop youguys call stuff or would you dispute and say no, there's differentwords.
Dave: This is Dave. I would I agree. I meantraditional ownership leasing or financing, you know, strategiesfor traditional ownership. Then you got rentals. There's daily, Imean we think of daily rentals, but a car sharing is, shall we say,hourly rentals and subscriptions is basically monthly or, or sixmonths. You could call it a rental or lease and it really dependson how it's structured. But all of those are, are where you'redoing the driving. When you get into taxis and when you get intowhat you're calling ride sharing you've got somebody else doing thedriving and arguably autonomous vehicles are the machine is doingthe driving. So the just basic, when when car sharing started inEurope, they started calling it self-drive taxi which is not quiteaccurate but a sort of make it captures that distinction. And youScot alluded to the, to the distinctions of different ownershipmodels of car sharing. The ease of the business owns the carsharing business owns the vehicles or leases, the vehicles. That'smost common or it's the what in the industry we call peer-to-peerwhere it's private, it's a privately owned car that is being, youknow, rent it out covered by the insurance of the platform thathandles the rental.
Scot: Steve, any other input on the, on the modelsthat we're talking about?
Steven: Yeah, I think w the up and comer thateveryone's been talking to mine for the last year has been thesubscriptions and that was, that was actually heavily driven byUber and Lyft drivers and eating vehicles. All right. Actually it'sexisted for over about 15 years. It just became popular. We have acustomer in Long Beach who's been doing it and provides cars undera subscription model. So if you want to drive a Ferrari, you canhave a Ferrari for a week. If you want to afford C-max, you canhave that for, and he just basically allows everybody whoparticipates to have access to any kind of vehicle they want aslong as they pay the fees.
Scot: Yeah. Interesting to talk about the newermodels. It seems like we kind of had Uber and Lyft had their, theirday and now they've gone public and those are really big billiondollar businesses. And then it feels like the peer to peer carsharing is where there's a lot of action at least. You know, Ithink Touro between Turo and get around, they've each traced about500 million. So there's, you know, the big guys are playing,they're like the, the soft banks and the interactive corpse. Thesubscription one seems to be less popular with consumers.Especially, you know, the OEMs have these subscription programs andthey look good. Like the BMW one's interesting. I think it's calledaccess. And you look at it and you're like, this is pretty cool. Icould just kind of, you know, switch out the car based on my needs.And then you look at the price and I think it goes 900, 1,520 500 amonth and you're like, whoa. You know, that's, they, they feel likethey're 2x the cost of a lease of that, that type of a car, which,which seems to be the initial reaction or when I talked to you islike, holy cow, they're way too expensive right now. Is that, isthat what you guys see?
Dave: Yeah, it's a, I mean, you think of itfrom it. This is all kind of being done through dealerships. Youknow, the, the, the, the OEM might be trying to, to sort of testthe market with these, with these subscription programs. Volvo hasone as well. Oh, her has tried it, has tried it. But sort of whatare you going to do with all these cars? If, if, you know, if youhave your, your BMW, you know, seven series and you get tired ofit. Now this dealer has this used BMW seven that so you can put onthe lot or he can try to lease to somebody else. I think that'swhere, that's where they, the difficulty of that is coming from.Okay. Keeping the price so high.
Scot: Yeah, absolutely. Steve, do you agreesubscriptions are facing some challenges at the, at least at theOEM level?
Steven: Yes. I, this was when subscriptionstarted with the OEMs. This to them was a great way of try out ourBMWs, try our Mercedes, try out our general motors cars and seewhich one you like, drive it for a week and get them out there. ButI agree with Dave the price that, because would you try to do whenyou're making cars available is maximize your usage insubscription. If they're sitting on the lot, they're not makingmoney and then you have to charge a premium, you cover your costs.So I believe that's probably the challenge until they can getactivity up. But I don't see activity going up just to Uber andLyft drivers and people who are testing them. That's not going todrive it either. So subscription is going to be that. I don't thinkit's going to be a big player. I think it's definitely going to bethere and there'll, there'll be competitors out there trying to winpart of the business.
Scot: Cool. Let's talk about thepeer-to-peer side and it sounds like you guys were there, the birthof it, and I'm coming in kind of here in 2018. It feels like a twohorse race, Touro and get around get around, started really alittle slower start, but a better user experience because theyrequire, like they, they use this airbnb style English where youhave the host and the guests kind of a thing so that they requiretheir hosts, which is the car owner to have that device that allowsyou to remote your kind of remote control the vehicle or at leastroad access. And then and then so get around was really focused inthe U S in a couple cities and then Touro didn't have that deviceand it allowed them to get a lot of cars on faster and more cities.But in the, now they've gone and they have a similar device wherethey can optionally have that you know, phone controlled access.Everyday to I point I see shows Troy at 80% market share get aroundat percent is. Does all that jive with how you guys think about thepeer-to-peer space?
Dave: Yeah, I think, I think that's right. Aget around has, you know, has focused attention on, you know, kindof don shall we say, dominating our getting good market share in alimited number of cities. As you say, Touro made a decision earlyon not to do technical a in car technology, that telematics device,but did what, what you know, we call key exchange. And I think thatthey are serving somewhat different markets. The, because of thelack of technology, a Toros rental periods tend to be longer. Morelike car rental, you know, daily day and a half, couple of days ata time. Okay. And get around because it has the technology, it isable to two, not only have the longer term rentals but can supportthe more urban car sharing type of, of access to the car for acouple of hours at a time.
Dave: So there they're going slightlydifferently. Both both, I want to say both of them have nowexpanded into Europe or European companies. It may only be one ofthem. And a, like you said, a Touro now does have a, a in cartechnology, which would allow this more spontaneous use of thevehicle without having to meet the the owner. But it's not arequirement and a, the people who are going to be most interestedin it are people who I really anticipating, you know, renting theirvehicles a lot rather than somebody who, you know, just wants tomake a couple hundred extra dollars a month. So, you know I thinkit's a kind of a different strategy there. There clearly are peoplelike airbnb. There are people who have simply gone out and boughtused cars and put them on the, the P2P platforms. And you know, ifthey're in the right location and they price it right, they canmake pretty decent money.
Dave: Yeah. We see that a lot. They call it a,they call it their side hustle out there and it's really big in lawhere people, they'll experiment on one of the networks with theirdaily driver and then they'll, they'll like the extra income, butthey don't like having other people in their cars than they'll,they'll either, they're, they'll buy a new car and then they'redaily at their first car, becomes the, the rental car and then theybecome power hosts pretty quick. Where, you know, we found theseguys that have 10, 20, 30 up to hundreds of these cars that arejust kind of have built this little side business doing this ispretty fascinating. Yeah.
Steven: Three or four years ago when theseguys were growing we found a bunch of people in San Francisco who gwho would get pests lists because there were so hard to get andthey would post Teslas and they would charge one to $2,000 a dayjust to get access. Yeah.
Scot: At that level, it almostbecomes like a a payday pay, the test drive kind of a model orsomething.
Steven: Yeah, exactly. What is the market? Peoplewould take it for the weekend, drive it and then decide if theywanted one.
Scot: Yeah, I see.
Dave: I think that people, one of the thingsthat was surprising when, when relay rides with now Touro startedwas we expected that it would be cars would be a couple of yearsold before people would sit or be comfortable letting strangersdrive them, you know, drive them when they, when like you said,when they first got them, they really wanted to [inaudible] kind ofkeep it special. But almost immediately cars less than a year oldwere showing up on the, on the system. So it part of it is just a,shall we say the younger generation has a different relationship totheir cars then? Well maybe it's not only younger generation. Somepeople have a different relation to ship to their cars than others.You know, the people look at more functionally or they look at itas more of a personal, a personal statement, personalexpression.
Scot: Cool. so now that we've laid some goodgroundwork for car sharing in the, in the and both your experienceand everything let's dig in to move me. So Steve, tell us about youstarted talking a little bit about how you guys came up with theidea but give us kind of the overview of the company and, and whatyou guys do.
Steven: Well, good. So we're not,when we started it and I recruited Dave to give me some help, itwas because people wanted to get into car shares and they needed tolearn how to actually run a car, share what's involved in it. Howdo you start it with your business plan? How do you think throughbeing profitable? David Woods does an expert at it. So, so whensomebody's would come to us a look, we need the technology for somereason, first time people are interested, first thing they want isa technology and I'd say no, what you really needed to do was talkto David first and help you think through this business. Oh for theterritory. It's in the your constituency that you want to serve.What their demands are going to be, what the population density is.These are all things David is an expert at.
Steven: Once they get past that part, then we get them to what kindof cars, where they need to be. And one of the decisions they gettoo is what kind of car shirt and they actually want to operate.Most ones, if there's small start out stations station or roundtrip, they, they operate very similar to the rental car. In otherwords, you get it here driving anywhere you want, return it. Oncethey start to get larger and more mature, then they moved to freefloating because the capital costs of free floating are muchhigher. Instead of buying 10 the 50 cars, you're now buying 50 to200 cars. And that requires investors to go make happen. And it'sa, it's a more sophisticated approach and as time goes on, most ofthese companies, they tend, when one, these companies tend to doboth. They tend to do both free floating and they do round shrimpor station to station.
Steven: So the effect on us was how do you buildsoftware that has to do all this and anticipate technologies. Solet's even go look where things are going. From that point onceyou're starting to do a car share, some cars shares actually wantto rent seats in the car, especially senior citizens. Hey, I'mthinking for other people, I want to charge them all. So, so nowyou have a car share turning into a ride share. So you have toadapt your software to go the ride sharing. Once you do that, thenyou have, okay for example, you can take a car that's not heavilyrested, rented it and car share in the evenings, give it to Uberand Lyft drivers. Well, there's not just Uber and Lyft drivers. Youcan give it to doordash drivers. People are now delivering cargo,they can rent the car. And so you have to account for that in your,in your design so you're not just renting a car, your Hesta accountfor riders, cargo types of cargo and you can see it. And then ofcourse the world went to suitors, bicycles and the technologies.Basically the same technologies that started in car share reallytake care of all of this. And so those of us in this industry, allwe're trying to do is anticipate what the next move, what the nextmove is to make sure it's already prebuilt and ready for theoperators when they're ready to go.
Scot: Got It. So your software, it seemslike it's super flexible and it can provide all these differentoptions and probably even an intermingling of the options. Is thata good characterization?
Steven: That is a great characterizationand we had to do a complete redesign once we realize this industryis moving so fast and people are so creative that you have toadopt, adapt for them as quickly as you can.
Scot: Got It. Give us an idea of how manycustomers,
Dave: Yeah, Scot, it's a, it's kind of worth notingthat there's a big overlap here between, you know, what we think ofas classic car sharing, commercial neighborhood car sharing in a,in a city and fleet fleets use or can use similar software.Traditionally, you know, a fleet, a corporate fleet or a governmentfleet, you know, has a whole bunch of keys hanging on a wall or ina, in a lockbox and you, you check out the [inaudible] and pick upthe key and take it back. But increasingly fleets are installingthe same telematics that you know, Steve and I have been talkingabout here. And so they're able to shrink the size of their fleet abuy and getting much higher utilization because somebody couldcheck out a car for a half a day. Somebody else could check it outthat afternoon, whereas before you basically could only do a dailyrental out of, out of that car.
Dave: So it saves money to the company or the agency.It allows them to manage it much more efficiently. It's the sametechnology and in particular with fleets you might want to youknow, that company might want to offer the option of, you know, ofsomebody going across town to a meeting. They could take otherpeople from the company with them. And so they need to not onlyrent the Co, you know, sort of access to car, but then assignedseats to two people. So it's in Europe they call it a corporate carsharing, but it's really just a fleet, a fleet system.
Steven: I think if you allow me to elaborate, what Ithink Dave is hit on is what was car sharing? One. Dot. Oh, and carsharing, one, two. Dot. O is kindly as is transmuting extremelyfast.
Scot: Interesting.
Steven: And because of it, when little challenges startto come up. And one of the things we look at, believe it or not, asthe technology is going to be autonomous cars, because these areones we need to bring backwards into car sharing. So we, so we canknow what's going on with people, cars, locations, making sure thatcars get things that are futuristic. We're already addressing likemaking sure cars talk to each other so they know the state ofwhat's going on or the vacant talk to the passengers so they knowthe state of the passengers. This is, you're going to see thisworld move as fast as a smartphone business.
Scot: Hm. Cool. give us an idea for a,the size of move me. Do you guys think about, about the number ofcars in your network or the number of, of car sharing companies?How, how, how big of an impact are you guys having rightnow?
Steven: Okay. There's two ways to look at it,number of operators and number of cars. The fact of the matter isif you have an operator with a thousand cars, you actually put inalmost the same amount of effort as somebody with 10 cars becauseeverybody likes it their way.
Scot: Yeah.
Steven: No matter what you think to use yourexperiences, they think it should be different. Yeah. So, so you,it doesn't matter who you choose, they all want a better in whatthey perceive to be a better user experience. And so you have tomeet
Dave: And in a way to differentiate themselves fromthe other guy. You know, it may not be better, it's just gotta bedifferent.
Steven: And so that's what ends up which weend up doing is making it, you look unique for them. Yeah. So theylook special in the market.
Scot: Cool. So how many cars does thatequate to? Or operators, I guess. Correct.
Steven: Well, W with the average number on opera.Oh my God, it's all over the place. Dave, why don't you answer thatbetter than me?
Dave: Sure. Well, I mean, thetypical car sharing company is in a, in a, in an individual city isgoing to have a, probably a couple of hundred cars so they won'tget there all at once. In the peer to peer, I'm sorry, in the thisa one way free floating car sharing that we've, we've mentioned acouple times. The cars don't have a fixed location, but they canpark in any legal, they can be parked in any legal parking placewithin a big zone, you know, kind of the inner part of the city andthe people find where the car is located by, like you were sayingat the beginning of the broadcast, you know, with, with a smartphone and they don't have a fixed reservation period. You don'tschedule it. You just find the nearest car and keep it for as longas you want.
Dave: And if you're just driving acrosstown, you might pay for that by the minute. And if you want to keepit longer than it ratchets up to by the hour and even longer by theday. Daimler and BMW have both have services that are now in thecode process of merging right now, and it's going to be under theshare now franchise. But these, you can't do this free floatingwith fewer than a couple of hundred cars because you, you've got tohave them reasonably close to where people live or they're notgoing to use them. But, but there are car share co-ops all over theworld and, and a bunch of them in Canada, you know, that they mighthave 40 or 50 cars. 50 is about the smallest you can do profitably.Otherwise you're, you're running it as a kind of a, a social, asocial service, you know, probably a nonprofit.
Scot: Okay. And do you feel like, so youknow, having experiment with these, it feels like the free floatingas a much user experience than kinda like what'd you guys callZipcars station to station? Or is that, I've heard some people usegated. Station to station?
Dave: Yeah, station to station. It's, wecall it round trip because it's not, you can't take them betweenstations. You have to bring it back to the same station. With the,with the free floating there are no stations. You, you can justreturn them anywhere. It's, yeah, it's a, it's a different userexperience in the sense free-floating is a different userexperience in the sense of that you don't have to plan ahead. Youdon't have to make a reservation and you don't have to specify whenyou think you're going to bring the car back. Which is what youhave to do in the, in the zip car model. But by the same token,because it's so flexible, the company has to charge a lot more ofthe per hour price of the, a free floating almost double what, whata, a station to station would be.
Dave: And in some cases it's evenmore than double. I just so the user, so I think functionally whathappens is you, you satisfy a different type of trip. W the, thefree floating membership typically is a lot bigger than the same amembership, the membership in the same town of the, of the roundtrip type car share. And I think the reason is is that you're ableto do a type of trip with free floating that you can't do withround trip. And that's this one way trip where you can take itacross town or you can take it out of town and bring it back, butyou don't have to return it to the same place you started from. Andso even car owners are interested in this free floating because itlets them take a kind of a trip that they can't do with their owncar. So it's a different user experience and consequently it's asatisfying, a different mobility need than, you know, the classic,a round trip
Steven: To make it simple, free floating is really agreat convenience factor. So you pay a premium probably as much as49 cents a minute, but what you use car sharing, you're down tomaybe 7 cents per minute. And if you're starting to rent those bythe day, it gets down there one or 2 cents in there.
Scot: Yeah.
Steven: So it's really just a matter ofconvenience and, and that's the premium you pay for.
Scot: Yeah. Cause it's the operator freefloating is probably a nightmare, right? Cause you had cars kind ofwatering all over the place. You got to go find them. You mentionedscooters earlier and I see these people trying to find thesescooters that worked our way in all kinds of crazy places. And, andnot only
Dave: That to, to sort of maximize thereturns on the scooter, the companies have to spend a certainamount of time relocating the scooters because in the morningpeople, many people want to take the scooters and go to work. Andthen there might not be that much demand for the scooter during theday until the evening. And so they will relocate a certain numberof scooters constantly. You see it in the bike share and you see itin the free floating car sharing as well. Usually in the freefloating car sharing, it's a, they're relocating a car that isperhaps quite near the perimeter of the service area and thereisn't much demand out there. And so they're going to move that carback into more of the heart of the service area.
Scot: Cool. I do want to spend a couple minutes on some of theother areas here that we talk about on the podcast that I thinkdoes a really good deep dive in the car sharing side. How aboutSteve, you mentioned autonomy a little bit that you think it'scoming. It feels like for a long time it was like right around thecorner and then this year it seems like it got pushed out a littlebit. There was an incident with the one of the Uber vehiclesh*tting somebody and you know, even even the Waymo guys, the WaymoCEO said something like, I don't think we'll ever be at full ahundred percent autonomy. So there seems to be kind of, we're inthat, you know, that that coming, the expectations are coming downa bit. Where, where do you put that? We'll have some pretty good abpenetration.
Steven: Well, in fact, Dave and Iwere talking about this before this, cause we, we get asked thisall the time as the last numbers I thought that were reasonable isthat you would see them as a norm in major cities about2030
Scot: Yeah.
Steven: That, that would be the norm.I mean, are you going to use it to tow your boat in the suburbsnow? But so for major cities, endless slowly grow outwards.Probably from that I was mentioning the days, when would we get tosay 70% penetration? And it was purely my guests that maybe around2075 you know, but that's a long way out. And part of it isn't, isbecause when you buy a car, it's got an 11 year life. Yeah. So youbuy an asset like that, you're not going to dump it right awayunless something's really unbelievably convenient and it's lessexpensive. So autonomy has to be there in your neighborhood all thetime. And then whatever neighborhood you're going to, and that'sgonna take a while.
Scot: Yeah.
Steven: Dave, your opinion?
Dave: I think that 70% number is is a, animportant one to keep in mind because you know, there's lots ofdiscussion about the the safety benefits that autonomous cars youknow, are going to bring because they won't be acting irrationallylike drivers do. And those benefits don't, don't you know, startshowing up in insurance rates and, and a lower hospital admissionsand things like that until you get to 70, 80% penetration, the 70to 80% of the vehicles on the road are smart, are smarter thanhumans. And you know, if you look at the accident statistics ofautonomous cars to date a very high percentage of them are, werecaused by a, you know, kind of erratic behavior by somebody else onthe road that the autonomous vehicle couldn'tanticipate.
Scot: Darn humans.
Steven: If you run a show, what I found fascinating iswhen they were designing these in silicon valley about six yearsago, I would attend all the sessions and listened to the PhDs talkabout how do you deal with these human problems?
Scot: Yeah.
Steven: Such as if four cars are all hit a stop sign atthe same time, who moves first? Well, the way humans do it ispeople start to nudge until somebody asserts themselves.
Dave: It's the guy in the test. It's the guy inthe Tesla who goes first.
Steven: So much what I've been doing is you have, youhave to teach the car to do the same thing, move a little bit, lookaround, see what everyone else does, move a little bit. And then ifit's free, you move. So well, a lot of it is teaching them the carsto deal with humans.
Scot: Yeah. Where do you, I'm often when I kindof play this forward, the one group, I kind of think, I don't knowwhat happens to them is the dealerships, you know, so, so it feelslike a lot of the OEMs are viewing some of these models as aninteresting way to almost go direct to the consumer. And then, youknow, in than if by default people aren't gonna be buying as manycars, the dealership may become a service center. But then Ialways, you know, you know, the, you ask people, you know, when'sthe last great service experience? You had a dealership and you,you don't get a lot of grave responses except maybe Lexus orsomething like that. Do you see those guys being the kind of the,you know, where, where do they fit into this kind of, you know,world of 2030 where, you know, the, we've, we've got pretty goodpenetration of these new models.
Steven: Well, part of this, you look at the statisticsright now, there's about one point $2 billion billion cars in theworld. And if you, and you can look at any of the major researchsites that is expected within a few years to drop down the 1billion. And the largest effect on this is the sharing communitycar sharing, ride sharing. It's just, it, it's expected by about2030 that it'll be 16 to 20% of the car market will be in thesharing industry.
Scot: Yup. What happens to that, do you think dealersare, that's a, that's a lot of hit for the dealers becausepresumably that's a 20% reduction, but it's going to be evenheavier on new car sales. Right?
Steven: Yes. And, and also you're gettingefficiency. If you start thinking on the autonomous car, could run22 hours a day continuously as opposed to most Dave probably knowsthe most recent numbers. What's the average amount of hours of carshirt is used per day, Dave?
Dave: Well, typically a eight to 10 hours perday average.
Steven: So as you get more efficiency, you drive downmeeting that number of assets in the world. Yeah.
Dave: See the, you know, I mean I thinkthe car dealers can see the handwriting on the wall. Yeah. Theyhave these longterm contracts with the manufacturers and they'restruggling too to sort of figure, retain their role in thedistribution a process.
Scot: Yeah. Interesting.
Dave: I wouldn't want to be a car dealer.
Scot: Okay. Yeah. I kind of come to the sameconclusion.
Steven: Well, and as consumers go less tothem you can, you can understand the challenge. Yup. Yup. You don'tneed as many in town. I mean, I'm Ford announced a reduction in thenumber of vehicles they're going to be producing. What is, whatdoes the market really need? And I think we're going, not only arewe going to see less dealerships, I think Ford made the right move.You're going to see less, less car types. Yeah. Cause you're notgonna need all these people competing. If you need a sedan, it's asedan. As long as it runs relatively well, you're happy.
Scot: Cool. Well guys, we're this hasbeen awesome. I could go a whole nother hour, but I know, I want tobe conscious of your time. So one last question. If folks want tofind follow, tweet, retweet, like whatever you guys online, wherecan they find your, your, how you're writing and thinking about theindustry?
Steven: Dave, want to go first?
Dave: Sure. I have a industry blog that I've beenwriting since 2005 called car sharing. Dot. U S is the, is the webaddress, car sharing. Dot. U S
Steven: In my case, where at? MuvMe Inc Dot com Muv m eI n c.com and we're going to be doing a lot of promotion about thenew technologies in the next few months that we're coming out with,and so we'll look forward to getting feedback from youraudience.
Dave: Yeah, Definitely.
Scot: Awesome. Yeah, maybe we canhave you back on and talk about that in a, but that's going to doit for today. We really appreciate you guys taking time out of yourbusy schedules, changing car ownership to come on the vehicle 2.0podcast.
Steven: Thank you.
Dave:Thank you, Scot.
