Episode #330: Guillermo Cornejo, Riders Share, “Riders Share Is Like An AirBnB, But For Renting Motorcycles”
Guest: Guillermo Cornejo is the co-founder of Riders Share, the first & largest motorcycle peer-to-peer rentals platform in the United States.
Date Recorded: 6/29/2021 | Run-Time: 45:40
Summary: In today’s episode, we hear why peer to peer rentals for motorcycles works even better than for cars! Guillermo walks us through what it’s been like to build out the marketplace and get both supply and demand. Throughout the entire conversation, he focuses on the importance of risk management, whether it’s through insurance, verifying renters have motorcycle licenses, or avoiding theft of the bikes.
As we wind down, we hear what the future of the company looks like as Guillermo considers expanding to Europe.
Sponsor: Today’s episode is sponsored by NordVPN. NordVPN strives to make the internet better than it is today. It can be free from online threats, censorship, and surveillance. What started with a single VPN server is now one of the most trusted internet security providers in the market, serving over 14 million users worldwide. Visit www.nordvpn.com/meb for 73% off on a 2-year plan plus four months free.
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Links from the Episode:
- 0:00 – Sponsor: NordVPN – use code MEB to get 73% off a 2-year plan plus 4 months for free
- 0:52 – Intro
- 2:30 – Welcome to our guest, Guillermo Cornejo
- 5:42 – How Riders Share works
- 6:25 – Jim Roger’s Book | Investment Biker: Around the World with Jim Rogers
- 6:55 – Overview of the motorcycle rental market
- 10:37 – Guillermo’s inspiration for Riders Share
- 12:46 – Building a motorcycle rental marketplace
- 13:55 – Sponsor: NordVPN
- 15:27 – Riders Share’s main use cases
- 16:58 – Mitigating risk and managing insurance
- 20:09 – Riders Share’s response to the pandemic
- 21:31 – Expanding into other regions
- 22:51 – Why Riders Share’s introduced a new subscription model
- 24:27 – Creating content around riding experiences
- 26:55 – Top motorcycle brands
- 32:45 – Expanding into off-road
- 34:28 – Guillermo’s favorite places to ride
- 36:27 – Feedback on electric bikes
- 38:11 – Challenges on the Riders Share journey so far
- 40:19 – Guillermo’s memorable moments with Riders Share
- 42:29 – Learn more about Riders Share
Transcript of Episode 330:
Welcome Message: Welcome to the “Meb Faber Show” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.
Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.
Meb: Welcome podcast listeners. Today we have another episode on our Podcast Founder series, where we invite kick-ass entrepreneurs to chat about their experiences from the frontlines of starting a company. We cover everything from newly minted startups still struggling to make it out of their garage all the way to the elusive unicorns that are either transforming traditional business sectors with innovative ideas or creating entirely new ones through cutting-edge technologies. Either way, the result will be total catastrophic failure and bankruptcy, or hundreds of millions of dollars of revenue and evaluation worth north of a billion dollars.
Listen in to hear the tales of blood, sweat, and tears as these founders try to change the world. As a disclosure reminder, I’ve invested in most if not all of these startups and will look to invest more as they continue their startup journey. Please enjoy the next episode in our Founder series.
What’s up everybody, get your engine started we got a great show. Our guest is the founder and CEO of Riders Share, the first and largest motorcycle peer-to-peer rental platform in the United States. In today’s episode, we hear why peer-to-peer rentals for motorcycles works even better than for cars. Our guest walks us through what it’s been like to build out the marketplace and get both supply and demand.
Throughout the entire conversation, our guests focus on the importance of risk management, whether it’s through insurance, verifying renters have motorcycle licenses, or avoiding the theft of the bikes themselves. As we wind down, we hear what the future for the company looks like as they continue expanding into Europe. Please enjoy this episode with Riders Share, Guillermo Cornejo. Guillermo, welcome to the show.
Guillermo: Thank you. Very nice to meet you.
Meb: Where in the world do we find you today?
Guillermo: Austin, Texas.
Meb: How many San Francisco, Los Angeles, New Yorkers have arrived? Where are they all coming from? Is it all New York? San Fran?
Guillermo: No. Yeah, most of them came from big cities. A lot of people…I mean, everyone knows that California is invading Texas. But there’s a lot of people coming from Chicago because of that severely cold weather they had a couple of years ago. A lot of people got traumatised by that and flocking to Austin, Texas instead.
Meb: How long you’ve been there?
Guillermo: I’ve been here for a year and a half now.
Meb: Oh, sweet. Well, we’ll be there probably at some point in the fall. I said I was gonna come in September and a bunch of local awesome people said no, wait till October. So maybe not till then. So listeners, we’ll have to plan a meet-up. Guillermo, what was your first motorcycle? We’re gonna talk all things surfing, motorcycles, startups, entrepreneurship. What was your first motorcycle, do you remember?
Guillermo: Yeah, my first motorcycle was a Kawasaki Ninja 250. it’s like a learning sports bike.
Meb: Well, mine…wasn’t mine, was my brother’s, was a Yamaha 80. And I used to ride it as a kid in the neighborhood in Colorado. And every single time I rode it, the neighbors have called the cops on me. And I don’t know how old I was. I wasn’t 16. But every single time the cops would show up and they’d just be, like, “Dude, you can’t be writing this on the streets in the suburbs.” After my brother wiped out on a moped I came home, my mom there’s like Band-Aids all in the house. He was fine, but later but that definitely put a damper on me getting to take that out.
But I come from a motorcycle family. My old man used to have like, a 1930s Harley in the garage for many years. The problem is I live in L.A. now. So I have my license. I just get the kibosh from my family on riding one anywhere. Did you start riding from an early age? I mean, what was the thing, you grew up in Peru, right?
Guillermo: Yeah, I grew up in Peru, but actually started riding when I was 23, in Texas, because you know, I miss the adrenaline from surfing in Peru. At the time in Dallas like, you know, I looked at skydiving, I look at finding things to do and I said I want to buy that Kawasaki Ninja motorcycle.
Meb: What was your surf break in Peru? That’s kind of a world-class spot. There’s one that’s like one of the longest is it lefts in the world, maybe right? I can’t remember.
Guillermo: Yeah, most of our surf breaks are left and the longest one it’s called Chicama. And it’s in the north of the country. And north has excellent surf spots and it’s also fairly warm, year-round. So like Mancora is a great surf spot and that area has just excellent. It’s also not very crowded compared to California or Hawaii. My spot outside of Lima is this beach called Bujama, probably never heard of it. And it only really has waves and when there are like swells, but when there are swells like it’s just a perfect view, and it’s just excellent.
Meb: We’ll hit you up for some travel agent ideas when we make a trip. It’s been high on my to-do list for a long time. So I’m excited you can be our tour guide. Let’s talk about startups. You guys, tell us a little bit about what Riders Share is, when did you guys get started?
Guillermo: Riders Share is like an Airbnb but for renting motorcycles. So people go on the website, lease their private motorcycles on there and other people rent them. To make it possible we provide insurance, we vet the riders, you know, make sure they have a motorcycle license, we check their credit, the driving records. And we also provide roadside assistance and basically make it as safe as possible. We launched it on February of 2018.
Meb: Some of these peer-to-peer sorts of automobile ideas. You know, I always think about automobile and motorcycle people it’s kind of like dogs and cats. They definitely, the Venn diagrams, they maybe overlap a little bit. But motorcycle friends are definitely a slightly different breed. I used to get excited about the world of investing in motorcycles combined with the old Jim Rogers book about “Investment Biker” where he would ride all around the world and look for investment opportunities everywhere. One of my favorite investing books, but…the freedom of it. But so it’s interesting, you guys came up with a motorcycle-only concept. Give us an overview of the motorcycle market in general, relative to cars. Is it similar? How is it different? What is the takeaways on a macro?
Guillermo: Yeah, when I decided to start a company, I couldn’t find a lot of research in the motorcycle rental market. It was basically a lot of mom-and-pop shops and one big brand at the time named EagleRider. Because of the lack of scale, EagleRider could not get the same fleet deals that car rental companies get. Car rental companies normally purchase cars at a strong discount from automakers. That way, you know, they can rent them out for a couple of years. And then when they sell them in the market, they don’t take a big hit on depreciation because they purchased them at a very low price to begin with.
So that doesn’t happen in the motorcycle space. Those brick and mortar companies, they had to take a huge depreciation hit when they sell the motorcycles every two years or so. And so that’s one of the reasons why renting motorcycles costs $200 per day, you know, compared to $30 for a car even though motorcycles are less expensive than cars.
The other reason is seasonality. Most people want to rent motorcycles during the summer when the weather is fine, and not during November and December. And so the utilization of these vehicles is a lot lower and to compensate for that they have to charge higher prices during the summer.
Those two factors are what I think made the peer-to-peer rental model superior specifically for motorcycles. Honestly, I’m not sure that it’s superior for regular car sharing for car rentals. But for motorcycles, because we eliminate the depreciation the asset is a sunk cost for the owner so they don’t care if it doesn’t get rented out during the winter. And so we can charge significantly lower prices, while at the same time allowing the owner to yield a very high ROI compared to say, renting out a car or an RV.
Renting out cars and RVs and homes is really popular and growing in popularity. Motorcycles is obviously a higher risk. So that’s why it took us a little longer to get it started. We have managed to mitigate the risk using machine learning and predicting the probability that the rider will crash the motorcycle. And this way everybody wins because we’re able to charge relatively high prices, the owners haven’t got high ROI. The renters are still saving like 50% compared to existing motorcycle rental options. We take a commission that is, in bigger transactions, prices are, really, higher, our commission is higher than say a car-sharing company like Turo. So everybody wins.
Meb: I mean, it’s interesting that you’ve hit upon this dynamic and I wonder how much of this did you know at the start? Because like there is no Hertz for motorcycle riding. Is EagleRider a Harley brand or do they combine?
Guillermo: They signed a partnership with Harley-Davidson to take over the Harley-Davidsons rental program, most, 200 Harley dealers offer EagleRider rentals. Hertz recently entered the motorcycle rental market but they’re not doing very well.
Meb: I mean, to me, you’ve hit upon essentially like a bit of a structural inefficiency, where you mentioned the prices and the fleet dynamics of the traditional incumbents on the car side. But also you have this massive inventory on the peer-to-peer side where the last truck I bought was from a guy that had like 12 motorcycles, you know. And if you’re motorcycle person you tend to be a motorcycle person, but you’re also it’s like almost like part of the big club. Oh, my God, look at that Hartley meetup in. where’s it, South Dakota? It attracts a big cult following.
And so did you guys kind of know a lot of these insights in the beginning? Did you do, like, a case study or were like, let me look into this? Or how did you get started? Because I mean, building a marketplace is classically really hard, lining up the supply and the demand and getting it all figured out. What was sort of the inspiration idea and how did you put it into motion?
Guillermo: It all started because of that Kawasaki Ninja, I crashed it within two months of buying it. And that’s when I discovered that renting a motorcycle is very expensive. And at the time, I work in managing subprime risk for General Motors. And so we would use these advanced techniques to turn the subprime auto loans into, from what people normally perceive as the worst segment of auto loans. It was actually GM’s most profitable segment, even during that great recession, they had a really good culture of managing risk and being disciplined. We allow, and using technology like machine learning to predict the risk.
So I figured, hey, you know, I could use it same concept, right? Like motorcycles are very high risk, I thought that the biggest cost would be the insurance part in these motorcycle rentals. That’s not the case. I spent six months doing research, and I figured out the market inefficiencies. But also that I could use my background in risk management to additionally, in relation to marketing deficiencies, I could use this to further cut the cost of renting a motorcycle.
There wasn’t a lot of research available. So I had to use other logistics, like, hey, you know, the car rental market is $50 billion. And motorcycles represent 3% of all vehicles out there, so 2% of all cars. So basically, I can assume that the motorcycle rental market is barely 3% of that 50 billion nationally today, or even smaller, because it’s not very developed.
I looked at every single news article on EagleRider, their CEO revealed a lot of information on…you know. And so I knew the revenue, the number of motorcycles they owned. And so I was able to estimate a lot of things like, you know, the gross margins, and yeah, so I thought, you know, this is the business. And initially, I didn’t want to pursue venture capital, I wanted to fund it all by myself, but I underestimated how difficult it is to launch a marketplace. I ended up taking massive amounts of debt. And then when that wasn’t enough, I took on outside investors.
Meb: So tell me about the build-out, what was the kind of vision, in the beginning, is it the same as today? And how did you guys get started? Was your motorcycle fleet, personal fleet the initial supply? How did you guys get the marketplace going?
Guillermo: Well, the first motorcycle was mine. I bought a Harley Street 750 at the time. And then to get launched, I emailed every single motorcycle journalist out there and got a lot of press corps as we were the first. And that helped us land our first 100 motorcycles, but also start coming up on organic rankings. And that was very important, right? Because then now when people search for a motorcycle rental on Google, they would find our website, and that alone just helped spread word-of-mouth.
From there it was mainly advertising and paid acquisition. There’s no way around it. Because Google is a feeble god, you don’t know how to search for anything, I would just want to go to next. So we tried to do the best that we can. And we’ve gotten to a point where we rely mostly on paid advertising.
Meb: What’s the experience been like there? What’s worked, what hasn’t worked? You just got a picture of somebody riding off into the sunset or what?
Guillermo: Yeah, we’ve tried all kinds of things, you know, from sending physical fliers, to online ads to sponsoring magazines. You know, what works best for us is social media ads and Google ads, we haven’t been able to find anything that has been particularly interesting.
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Meb: What’s the use case? Is the target demo, is it someone that wants to travel somewhere and rent one? Or is it someone trying to try out new bikes, both, something else?
Guillermo: So before the pandemic, 90% of our customers were people traveling, so they don’t have their own motorcycle with them. You go to beautiful scenery, it’s just so much better to experience it on a motorcycle. And then another segment is people that are out to try motorcycles before they buy. And then a third segment is people that have a motorcycle license but don’t currently own a motorcycle.
A lot of people sell their bikes in their 30s when they have kids, and then they buy bikes again in their 50s and 60s. So we’re trying to fill that gap period by making it relatively affordable to go on a ride every now and then. That’s why I started a company, right? I crashed the bike, and I was like, “I don’t even use it that often.” I’d rather rent than buy and unfortunately renting is too expensive. So I’m trying to make it affordable enough that people just rent when they need to use a bike as opposed to owning one. And I get it, a lot of people would rather own their bike and they take a lot of pride on their Harleys. But for many others, bikes are adrenaline or experiences and fun, not being a poser.
Meb: You mentioned the classic fear and reality of every motorcycle rider. And I mean, most motorcycle friends have laid the bike down I know at some point. What does that create as far as challenges on the insurance side? I don’t know what the crash rate relative to cars is. But does it create additional headaches? Is it more expensive? Was it a huge gate to you guys launching the platform? How’d that factor in?
Guillermo: I’ve been trying to launch this company since 2014. It took me years before I convinced an insurance broker to convince an insurance carrier to insure us. And even then, when we launched, the prices went so high that we were losing $100 every time somebody rented a motorcycle.
I knew again from doing research that they were overestimating the risk, that in fact, insuring motorcycles is less expensive than insuring cars, because the underlying asset costs less. And when they do crash, like, cars can cost millions of dollars in damage and hurt other people. Whereas motorcycles when they hit a car, they usually scratch the bumper, and then the rider itself is damage, but they don’t cause a lot of third-party liability. And so accidents are more frequent, the average accident amount is significantly lower.
So overall, I think the insurance costs can be managed. We’re still working on it, we managed to cut it down significantly since we launched by cutting the accident rate, the severity of the accidents. And I’ll tell you, 99% of the accidents we see on Riders Share are caused by the rider, not by cars, not by the motorcycle, it’s almost always that the rider made a mistake. It’s two things, either they dropped the motorcycle at a parking lot while maneuvering. That’s the most common one. It’s costly, you know, because you have to replace the handlebar, the shifting lever, you know, like, usually like five parts when people drop it.
And then the other one is the person who’s a risk-taker and they were speeding, they just made a mistake. The drops are hard to prevent and I think it’s going the other way, they’re going to be a cost of doing business going forward. But the risky behavior is very predictable. And so we use credit scores, background checks, and all these other factors, age, to mitigate that. And we’ve been fairly successful at doing that. So now we don’t lose money every time somebody rents a motorcycle.
Meb: What’s the sort of cost, you know, if I go on there and I look up in L.A., I wanna rent a bike for the weekend? I assume there’s kind of a sweet spot distribution on with these costs.
Guillermo: The average transaction is three days, but the longer you rent, the lower the per day cost. Where we are most competitive compared to our rentals is on long-duration rentals. You know, if you wanna rent for two weeks, we are like 70% less expensive than brick and mortars. If you only wanna rent for one day, it’s usually about the same price. But the typical price people are paying including insurance and everything is around $120 per day, which is roughly $80 less than you would get at a brick and mortar shop.
Meb: Why is the brick and mortar so much more expensive?
Guillermo: Motorcycles require more maintenance, you only get about 150 days of utilization compared to a car rental. So they need to charge double the price in order to make the same amount of money as a car rental.
Meb: So you guys recently did a funding round that I participated in because it seems like such an obvious business model. There’s some pretty clear takeaways that you mentioned about what the pandemic was like. What has been sort of the reopening, looked like for you guys, kind of as expected? What was the sort of business plan you guys had last year? Did you focus on you know, certain ideas, execution, yada, yada?
Guillermo: Yeah. So last year, because of the pandemic, we stopped focusing on growth, and instead, we focused on this insurance risk, right? On making the business as close to profitable as possible. So that way, when things reopen, we could spend money on marketing and grow and not have to worry about losing money. And so we did that.
We got to a point that we started our own captive insurance company in order to cut insurance costs. We just had our best month ever three months in a row. I think in June, we more than doubled the volume than we did in 2020, as America reopens. And there’s a lot of upside because, in normal years, more than half of our customers are foreign tourists. And right now Europe remains blocked, you know, to the U.S. So I think 2022 is going to be even better.
Meb: That’s interesting. I hadn’t thought about that. That’s a big chunk. Is there something like what y’all offer, exists globally? You guys, I assume are outside the U.S. now? Or are you?
Guillermo: Not yet, we currently only operate in the United States. And the reason, again, is insurance. Each country has its own laws. And so we would need to buy an insurance policy in each country. And it’s really expensive. So we want to hit more scale in the U.S. before we go abroad, that we definitely plan to go abroad in the upcoming years.
Meb: What countries have a particularly big motorcycle culture, where would you guys look to operate next?
Guillermo: The biggest motorcycle market is India. But the motorcycle usage there is transportation mobility, and they use you know, less expensive motorcycles so that average transaction for a rental is like $8. Compared to India, every motorcycle in the U.S. is a luxury motorcycle. It’s more accurate to categorise our market as luxury motorcycle rentals. So for us, the next logical step is Europe. In Europe, excluding scooters, there are 2.5 more motorcycles than in the U.S. And so it’s a much larger market for motorcycle rentals. And a lot of European tourists travel to the U.S. and rent motorcycles. So if we build our brand there, it will help the business in the U.S.
Meb: You guys start building out a fleet of Vespas. I feel like Europe, that’s the bike of choice, a baby blue Vesper perhaps. Just reminded me of being in Greece, and my old man laying down a bike as a child. I definitely was under 16 riding one, but he definitely had a mild crash. But I was also talking to some family last weekend on the farm, and they had some memories of him riding an old Indian motorcycle going 90 down the highway…well highway, road in Kansas as well. That’s funny. You know, as you build out this platform, what have been some insights? I saw you guys recently introduced a new subscription model, do you want to tell us about it?
Guillermo: Before the pandemic, most of our customers were travelers. And we provide these discounts for long-term duration rentals because one of our largest costs is marketing. And so we pay these costs to acquire customers. But if the customer books a longer trip, then, you know, it’s more profitable for us, we have the ability to lower the price and to make it work for them and for us.
But then there are customers that want to run just one day that they want to do it 20 times a year. And so we thought, how do we make it work so that they can rent once a day, very inexpensively and then…but still multiple times a year so it works for us too and it pays for the marketing costs. So we reduced the subscription that is only $24 a month, gives them a 35% discount. On top of the already low prices that we charge, right?
It’s been fairly successful, roughly 5% of new customers are signing up for a subscription. And we’re not really advertising it heavily. Because we’re still learning from it, we want to see how it goes, we want to make sure we don’t get burnt.
Another perk of our subscription is that it includes free deliveries. So motorcycles can be delivered to your door. The end goal is to reach that audience that doesn’t own a motorcycle anymore because of responsibility for the cost. So basically, whenever the weather is nice and you want to go riding, you pay 100 bucks, 200 bucks, rent a motorcycle for one or two days instead of paying a monthly payment of $250 every month, having to worry about oil changes, insurance, all this stuff, all the responsibilities. Now, just use Riders Share and have fun when you want to have fun during the summer and forget about the motorcycle thing during the winter, right?
Meb: I like how you guys have on your website, a decent amount of content about where to go, you know, you click on it and it’s like, “Hey, you want to do L.A.? Here’s an awesome ride, Big Bear to Palm Springs.” That’s kind of a fun way to think about is actually say, “Look,” …you’re like almost a travel agency, where you’re gonna be like, “Look, here’s the itinerary. Here’s what you’re gonna do.” Because to me, that seems like that would be huge, particularly in the marketing and advertising side where you’re targeting these people and say, “Look, here’s your dream trip. You’ve always wanted to go through the mountains of Colorado or whatever it may be, and look at these bikes you could do it on.” Has that been a pretty good sort of landing page or idea marketing?
Guillermo: I guess I noticed that when I was renting out a motorcycle that people didn’t know where to go. I used to be based in L.A.. And we have beautiful mountain roads in L.A., right? And these people had no clue. They’re just gonna go ride on PCH by the ocean, you know, because that’s what the image you have in L.A., right? You don’t think mountains when you think L.A., they have excellent motorcycle roads I miss them so much. So yeah, we started writing blog articles for each of the top cities and routes nearby them. And I’m thinking in the future, we’re gonna start offering tours and allowing our owners to lead these tours because they probably know more router than we do.
Meb: It’s also like, you know, you have a local, fixer is the wrong word, but guide, where hey, look, you could say, “I wanna do this route.” But it’s way cooler to have this guide who’s like, “Look, this is where you got to stop for a burger at lunch. This is a cool hotel you wanna stay in.” And it’s a way to actually build a community around this entire audience. What are the most popular sort of locales? You mentioned L.A., is that the biggest or are there others? I guess Vegas would probably be one.
Guillermo: Yeah, L.A. is one of the biggest, Vegas, Hawaii, all the ones that have good weather.
Meb: Well, Hawaii, I feel like maybe because everyone’s traveling there and like it’s like apparently impossible to rent a car. Someone was talking about how they’re just like renting U-Hauls because there’s no car rentals. So you guys are probably like, the best way to get around and not pay $1,000 a day.
Guillermo: For now. But even before the pandemic started this, Hawaii has always been a top market because you cannot ride your motorcycle to Hawaii.
Meb: No, that’s obvious in retrospect, now that you mention it. What are the top brands? Could I guess them in order? Is Harley one or is it not?
Guillermo: Harley is still number one. And then it’s growing very fast though.
Meb: BMW number two or Ducati? Ooh, that’s a tough call. BMW, probably.
Guillermo: BMW. Yeah, and Ducati are, I think BMW is now number two, and Ducati number three. Most people don’t buy BMWs and Ducatis, but they love to rent them.
Meb: Why is that? I wonder.
Guillermo: Well, Ducatis are expensive. But if you had a chance to rent one for a day, and it’s only $10 more expensive than a regular sport bike, why not?
Meb: I’m totally gonna do this. My wife doesn’t listen to the podcast so I can say this without her losing her mind. I’m just sitting here scrolling and it’s like, drool-worthy some of these bikes, I’m gonna have to figure out where to go around here where I’m not gonna murder myself on the first try. But maybe up in Santa Barbara, it might be a good idea. Guillermo, when you come to L.A., you’re gonna have to take me around and we’ll do like training wheels. We’ll go surf, which is also training wheels for me. So I got a good, great foam top for you. And then ride around L.A..
All right, so we’re here in 2021 it’s summertime, things are probably picking up big time for you guys. What’s the plan for the rest of the year 2022 as you guys build this out? You got some funding in the bank, what are you gonna spend it all on?
Guillermo: For the next two months, we’re gonna spend it all on marketing. We need to grow as fast as possible to secure the next round of funding, at which point we’ll probably double the size of the team, and continue to grow. But yeah, right now our focus is just marketing and growth.
Meb: How many folks you all have?
Meb: What? That’s it?
Guillermo: Yeah, I know, right?
Meb: Amazing. Are you guys hiring out at all?
Guillermo: We are considering the head of marketing because none of the six of us has a background in marketing. And we’ve been working with marketing agencies, but they are not as in tune with our business and employees. It’s complicated because of the risk management component, right? So if you attract a customer that is age 50, it’s not the same as attracting a customer that is 25 in terms of profitability, because the 25-year-old’s gonna crash more.
And so the marketing people, they need to be in the loop with that, and the marketing agency, they manage five accounts, they don’t really pay attention that closely, right? So they don’t…there’s a lot of inefficiency because they’re not paying attention. We’re trying to bring that role in-house.
Meb: As we get past the summer. What’s the kind of bigger vision for what you guys are doing? We touched on abroad, what other ideas are you guys kicking around that you’re willing to talk about?
Guillermo: Ultimately, we want to become kind of like the Google of the motorcycle space. We figured out how to make money when people ride motorcycles. And so we kind of like Google, the idea is to give out everything for free and just monetize when people ride motorcycles. So basically, if we can offer not just tours, but also like motorcycle lessons. And those lessons and bringing new riders results in people renting more motorcycles, we’ll give that away for free or at cost. Right now, you want to buy or sell a motorcycle, there’s basically just one website to do it, costs money to lease your motorcycle. It’s a slow website. It’s terrible.
And so for us, we could learn something like that and only make money when people rent a motorcycle to test it out before they buy it. So our vision is basically in the same way that Google gives you a lot of free products in exchange for fueling their ad network. And we want to basically be the company that makes money when people ride. We’ll give stuff away for free if you ride motorcycles. It’s a lot to take on. I feel like we’re uniquely positioned to take that role and basically make motorcycles popular again with young people, you know.
Meb: The motorcycle community, are there some particularly noteworthy websites where people go today that are sort of like the home base of just motorcycle info? I mean, does it tend to surround the manufacturers of the bikes? Are there some like MotorWorld sort of type of websites that big aficionados frequent?
Guillermo: I think they mostly frequent motorcycle media outlets, you know, they cover new motorcycles and motorcycle news. They frequent forums, Facebook, Reddit. There is a social media app only for motorcyclists, but I don’t think it has a lot of traction. There are some apps like Rever for tracking your riding and I don’t think they built very large communities of motorcycle riders.
So right now, the riding community is kind of scattered on the internet. And some websites have been very successful at gathering them for one use case, you know, for selling motorcycles, for buying parts. Not as successful as bringing them together for events and experiences and making the community more fun to be a part of.
Meb: I feel like the clubs would be a natural, I don’t know if a partnership is the right word, but marketing angle to try to connect with like, you know, the various clubs and throughout the country. Is that reasonable? Or is it something y’all looked at or not looked at?
Guillermo: I tried reaching out, I don’t usually get a response. They tend to be older, more conservative, and they look at this and they think it’s crazy. It’s just a matter of time. The more we grow, the more mainstream it becomes, and hey, look, we’ve done 20,000 trips so far, it works. People are not stealing the motorcycle left and right, people are not crashing the motorcycle left and right. Like this business model works and it’s better than the alternative. Kind of like Airbnb, like who would rent their apartment to a total stranger, right? Sounds insane but it’s just, now it’s totally normal.
Meb: Well, it’s like the barriers that everyone assumed, you know, back in the day. It’s so obvious now. I mean, the two big ones, Airbnb, you’re gonna get your house trashed, Uber, you’re gonna get murdered and kidnapped. But it turns out people on average are not terrible human beings. And so for you guys, the extension would be everyone’s gonna crash, insurance, major liability risk, but you, kind of, it seems like you’ve figured it out. Is this all street bikes? Do you guys do anything off-road?
Guillermo: Glad you asked. We recently launched the off-road option. And so for a motorcycle to be insured and registered, they need to be street legal. But now if the owner gives you permission, you can pay extra to take a motorcycle off-road. And this option is available obviously for motorcycles that are off-road capable, right, like adventure bikes, and dual sports and those types of bikes. The BMW GS, 200 GS is a very popular bike. It is a bike that you can take off-road as well, as well as being comfortable for long trips. We really offer this option with the BMW in mind.
Meb: I was just thinking about that. I mean, again, we’ve been talking about Kansas a bunch. But I was going out there to run around the farm and my brother had an ATV and I was like, “Oh, let’s ride it, I’m so excited.” He’s like, “No, it’s leaking differential fluid everywhere so no good.” Would have been a perfect opportunity to rent some bikes, I don’t know if you guys have any in Colby, Kansas, but maybe from Denver would have been a good spot. We’ve covered a lot of ground. Anything else on the company build out on what you guys are up to, resources, all that good stuff.
Guillermo: We want to go international, we want to add experiences into the platform and then down the road even other products, right. We would consider doing other power sports like snowmobiles and whatnot. The insurance risk is very different there, surprisingly. We’ll need a lot of investment to be able to crack overpower sports verticals, you know. But it’s certainly something we would love to be able to offer all in one platform, you know.
Meb: Yeah, you get some of the influencers to lead some rides, that would be cool. I don’t even know who the influencers in the motorcycle world are, but that would seem like an obvious or do a ginormous Harley meetup. What have been some of your favorite rides you’ve taken over the years, anything stands out in particular, as memorable?
Guillermo: Malibu near L.A., they’re the best that you can do. Like, the weather is always perfect. And there’s not a lot of traffic if you go during the weekdays.
Meb: So which way, are you talking about like up Mulholland or over toward Angeles or like Gorgonio? Where are you going?
Guillermo: Yeah, near Mulholland, but that one is like everyone knows that one, right. So there’s a lot of oiled roads, a lot of canyons that are lesser-known, but equally twisty. I forget the names. But you could just spend three hours there, exploring new canyons and shit and it’s just so much fun.
I also, really like Ortega on Orange County, great view of Lake Elsinore. I like that it has some, you know, really a couple of cool restaurants at the top to take a break from the ride. I feel those are the top for me. Hill country people say it’s great here in Texas but it doesn’t compare to California, man.
Meb: What’s on your bucket list? You got any, in particular, on your to-do list?
Guillermo: I’ve heard out the Tail of the Dragon obviously in Tennessee. I keep seeing all these pictures of crashed motorcycles at the Tail of the Dragon. And so, obviously, I wanna try that. I would love to go off-roading in the Andean mountains. You know, I had a lot of people do this route from Peru to the tip of Argentina or even crazier from Alaska to the tip of Argentina.
Meb: You know the show…I haven’t watched it yet, but, it’s called like, “Long Way Down” or something Ewan McGregor did I think it’s that trip that they did a documentary about. Do you know what I’m talking about?
Guillermo: They did it on an electric Harley, right.
Meb: Oh, is that right? You guys got any electrics on there?
Guillermo: We do have electrics and we also have the new Harley Pan America. But yeah, I have not seen it. It seems crazy. I wonder how many stops for electricity they needed to do the trip.
Meb: “Long Way Down” is the name but man it came out 10 years ago. It must have just come out I feel like but they produced it then That’s what the internet says so who knows?
Guillermo: I don’t think that LiveWire is that old so it might be I’m thinking of a different show I think.
Meb: I thought that they came out with a recent one. Anyway, what’s the feedback for the electric bikes? Is that something that’s pretty real, what sort of range they have?
Guillermo: So what I hear from most people that own them is that they’re great. They’re used in the city as a commuter if you don’t have a long commute. You know, I have a neighbor that owns a Zero Motorcycle, not the top end, still like, we were on rides that are like not even that long, and they had to stop for electricity and it’s just a pain in the ass. Like, I don’t think the range is there yet, the manufacturers they’re all building motorcycles to cater to the existing motorcycle community. And so they’re trying to make them sporty and stuff when in reality, they should be focusing on range and lowering the drag.
And personally, I wish they built an electric cruiser because then would have a lower riding profile. So it would have…potentially assign it with lower drag, a cruiser with fairings, essentially. And I think that your could probably get to 400 miles in range if you focus on reducing drag as opposed to sportiness. That’s what electric motorcycles are the most useful for, because you go on long trips, and you save on gas and maintenance that’s where they can excel and people that don’t ride motorcycles can start considering, “Oh shit, you know, this is like a Tesla for motorcycles like I’m gonna be green and look cool.”
Meb: By the way, the McGregor, I looked it up there’s a sequel. The original was “Long Way Around” and this is “Long Way Down,” was the new one that came out on Apple TV. So he somehow gets people to fund his adventures. So there’s an opportunity for you. You got to get him on the cap table, say, “McGregor, Obi-Wan, come on, we’ll get you as an ambassador, I need you to get involved.”
Guillermo: How do you get in touch with people like that? How do you get access to them?
Meb: You call them, that’s what I learned about the podcast is the best thing is like you just ring him up. All those guys have agents. So reach out to their agent at CAA or wherever, let me know if you need some help, we’ll facilitate. What’s been the most challenging part of this journey?
Guillermo: COVID hit us, you know, at a very early stage in the company, it really hurt the demand for motorcycle rentals. And it hurt us all. So everyone has been, you know, getting more competitive with prices and stuff to try to attract customers. So it really threw a wrench into our plan. So we grew a lot slower than we anticipated. And now that things are coming back together, we’re starting to invest in marketing and growth again. We basically lost an entire year and we had to pay people’s salaries for a year and staff. So it really ate our marketing budget, 80% of our marketing budget is gone. And that’s just more recent.
When I was first starting out, I had no money, no contacts, no prior experience running companies. Nobody trusted me, right. So it was really, really, really difficult for me to raise money. I had to basically incur, at some point I incurred $200,000 in debt, but I grew the company really, really fast. And that allowed me to prove that I could manage insurance, that there’s a market for this that people are willing to share the motorcycles. But, you know, a lot of people raise money without any revenue and stuff. And for me, it took building one of the fastest-growing companies in the world before I was able to raise money. It was crazy.
And throughout this, I was like two weeks away from running out of money. And then this fraudster goes into our platform with a stolen credit card, a fake identity, and steals a motorcycle, you know, and takes one of those weeks away from me. It was super, super, super stressful, you know, and at the beginning, it was just me and my co-founder, I did customer service. I raised money, I did marketing, I did insurance, it’s gotten a lot better.
Meb: You just reminded me once, my buddy had a motorcycle stolen out of his garage in San Francisco. And the guy that stole it, one of our other friends sees him riding the motorcycle on the highway like two days later in San Francisco, and he’s like, “How much of a moron do you have to be, you steal this bike?” And then, of course, they caught him. It was so funny because he just saw the bike and he’s like, “Wait, that’s totally Chris’s bike. What are you doing?” What’s been the most memorable moment, anything come to mind? Where it could be good it could be bad, anything in between where it’s just seared in your brain.
Guillermo: That’s quite a few, man, like, all these experiences that, I wouldn’t have any experience, you don’t know how difficult it is to start a company until you do it. The first time somebody booked a motorcycle, they spent $500. I was so stoked. But I didn’t know how to use the payment processor. So I refunded them accidentally, and then I ended up giving them a free ride. And over time this fraudster stole a Vanderhall, a really nice $30,000 vehicle and I didn’t know what to do, and the police don’t help. And so I went and started trying to catch him, myself.
And me and the owner of that Vanderhall decided to try to ambush this guy and beat him up and take the motorcycle…you know, and take that Vanderwall from him. Unfortunately, it looks like the fraudster caught up on us and left the vehicle like, two blocks farther from when we told him to meet us up. He had done frame damage to the Vanderwall during his unpaid-for rental. It was so expensive, like it sucked. And then the insurance company didn’t cover it because it was fraud. So lesson learned, and then we started doing insurance in-house.
Meb: Well, look at the upside, at least you didn’t get shot.
Guillermo: Oh, yeah. No, we were gonna shoot him, man. We’re both dissed, it sucks. And so now we have because of this incident, now when somebody rents a motorcycle, we have them take a picture of their face, of their license, credit checks, background checks. Believe it or not, sometimes even with all these things, like some people are able to I guess they use fake IDs. And our system doesn’t recognise them and they’re able to rent a motorcycle without…you know, with a fake identity. But we’ve got it down to a point where it happens so infrequently that it’s not even a line on our accounting. We basically eliminated that risk but damn at the beginning it was hard.
Meb: You go through those use cases and you figure it out and then eventually you kind of iterate and it works. Guillermo, this has been a blast. I look forward to hopping back on the bike on the surfboard in Peru and everything else in between with you in-person or in Austin over barbecue and peers. Where do people go if they wanna find out more about what you guys wanna do rent a bike, all that good stuff.
Guillermo: Our website is riders-share.com. Or you can just google Riders Share Motorcycles.
Meb: Who’s sitting on ridersshare.com, do you guys own that too?
Guillermo: It’s one of those IP squatters, you know, they wanted 60 grand for that domain. When I bought this domain, it cost me $5. So that’s why it has a hyphen in the middle.
Meb: I like it. Guillermo, it’s been a lot of fun. Thanks for joining us today.
Guillermo: Thank you. Have a good one.
Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcast. If you love the show, if you hate it, shoot us feedback at email@example.com. We love to read the reviews, please review us on iTunes and subscribe to the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.