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RSG155: Ezra Goldman on Fractional Car Leasing with Upshift
·
Dec 22, 2020
Listen to this episode on your phone here. Rideshare, car share, bike share - there's a lot of shared models in cities, b...
Problem
A car in the city
is a waste of time and money
124 million Americans drive less than 10,000 miles/year. They are spending ~ $10,000/year on car payments, maintenance, insurance and parking to have a car on standby.
You are locked into years of payments for a depreciating asset you hardly even use while contributing to ruining the planet. You are saddled with the burdens of dealing with car repairs, maintenance, and insurance claims.
Sources: https://newsroom.aaa.com/asset/your-driving-costs-fact-sheet-august-2021/ and https://www.metromile.com/blog/metromile-auto-insurance-2020/
Solution
Fractional car subscriptions
Upshift is a flexible, convenient, and affordable alternative to leasing a car.
Subscribe to a plan that you can upgrade, downgrade, cancel, or pause anytime and only pay for the days you drive. A hybrid or electric car will be seamlessly delivered and parked next to your doorstep on the days you need it. It will be waiting for you with your own driver profile already set up, clean, and fueled/charged.
At the end of your use just park it and walk away. We'll take it from there.
Product
Easy to use,
complex under the hood
We've built a full technology stack to support members and operations:
Member app: available on the App Store and Google Play. App enables members to book, set preferences, locate, unlock and drive their car.
Delivery app: supports logistics, including tracking damage, parking, cleanliness, and members’ personal car preferences.
Vehicle telematics integration: allows real time vehicle data and ability to locate, unlock, lock, and enable vehicle from apps or backend.
Dispatch and fleet management software: manages delivery job assignments, damage reporting, trip data, and real time fleet and delivery status.
Backend: handles billing, reservations, accounts, and day credit accounting.
Traction
3x revenue growth YoY
We are currently operating in San Francisco. Our quarterly revenue is growing as follows:
Quarterly Revenues:
| 2021 | 2022 |
|
|
Current Snapshot & Projections:*
* Click here for important information regarding Financial Projections which are not guaranteed.
Customers
Urbanites seeking simplicity
Our members are 28–43 year old urban professionals without kids, and 55–65 year old urban empty nesters who drive less than 10,000 miles/year.
They are frequent renters on carshare and rental car who find those options expensive, unreliable, and unpredictable. They are considering leasing a car and looking for flexibility, without all the headaches.
Our average member spends $442/month over 13.5 months for $5,967 lifetime value. Some have spent up to $19,000 or been members 5.5 years. 10% of Upshift members have invested $105,000 in the company.
Our growth is solidified with 95% retention and solid 5 star reviews. Our members love us. Read our recent Yelp and Google reviews below, it will make you smile!
Glowing customer reviews
Business model
Fractional car subscriptions with simple, transparent pricing
Our simple, transparent, all-inclusive monthly pricing means no big down payment, no hidden fees and no long term commitments. Subscribers drive any days they like and days roll over 1 month before expiring.
On day one every new member pays $499 one-time activation fee, with 3 available subscriptions:
$279/month for 4 days/month
$479/month for 8 days/month
$679/month for 12 days/month
i.e: Every new subscriber, on day one, is worth at least $758.
Additional revenue streams:
$89-109/day charge for days beyond your plan.
$49/month: share your plan with a significant other.
$49/month: pause your plan and retain your days.
Market
Unlocking a $19B market
- In the top 10 US cities, we see an opportunity to replace 3.5M cars being driven <10,000 miles/year.
- $442/month per account. Average 13.5 month retention. Average LTV of $5,967 per account.
- 3.5M cars x $442/member/month is a $19B market opportunity for fractional car subscriptions in the top 10 US markets.
- Based on our expansion requests, we see further opportunity to expand internationally and into smaller cities and suburbs as an alternative to having a second or third car.
Expanding the market, big opportunity
Current demographic represents ~½ of cars in cities (~3.5m cars in top 10 US markets). Developing our unmanned delivery tech will enable our expansion to lower density markets (smaller cities, suburbs) to replace 2nd and 3rd cars, and address an additional 120M cars driven <10,000 miles/year segment.
Trend: Post-COVID behavior change
“Two years into the COVID-19 pandemic, roughly six-in-ten U.S. workers who say their jobs can mainly be done from home (59%) are working from home all or most of the time.”
This study from Pew Research Center (Feb 16, 2022) shows that "hybrid work" is here to stay. People no longer need a car to commute every day.
Trend: High demand for green cars
- Vehicle supply constraints are driving up the cost of cars
- $5/gallon gas is driving demand for hybrid and electric cars
Trend: The world is unstable
- traditional car financing locks you into expensive 6 year terms
- no one knows what the world will be like in 6 months
People need an affordable, flexible, green alternative to car leasing. A car when you need it, that's gone when you don't. That's Upshift.
Competition
Redefining car leasing
—
Upshift vs leasing
Rental car delivery-services
Company Example(s): Kyte
Value: rental car company that provides the convenience of delivery of a car for the day
Missing: Car delivery-services do not provide vehicle personalization, consistency, or predictability (see reviews above for reference, our members tell it best). Upshift does.
Car subscription services
Company Example(s): Fair, Hertz My Car, Subscribe with Enterprise, Porsche Drive, Audi Select, etc.
Value: subscription services that offer flexibility to have a car month-to-month.
Missing: Car subscription services do not provide concierge services like handling parking, refueling/charging, cleaning, repairs, and maintenance when you are not using it. Upshift does
Carshare services
Company Example(s): Zipcar, Turo, Getaround
Value: easy access to a car by the hour, parked near you
Missing: Carshare services are not affordable and do not offer consistent availability in every location, especially during peak times. Cars are often dirty, unmaintained, or low on gas. Upshift cars are affordable, offer consistent availability and are clean, maintained, and fully fueled or charged.
Rental car
Company Example(s): Enterprise, Avis, Hertz
Value: rent a car by the day or week, mostly at airports
Missing: locations and hours are inconvenient, and cars tend to be generic and entry level.
—
These service providers could and might
pivot into our space but won't be able to easily do so, and it's not their business model either.
—
Vision and strategy
There when you need it,
gone when you don't—
scaled
We are now raising $3M to scale up in San Francisco, launch the DC market, integrate drive-by-wire vehicle delivery technology (teleoperations), and to electrify our fleet. Launching DC will give us an east-coast presence in another $1B addressable market.
The ability to deliver unmanned vehicles remotely will help us scale. We'll have remote-controlled fleets. A remote driver (drive-by-wire) will cut operational costs, shorten delivery times, and enable expansion into lower density markets (mentioned above in the market section) that are already signaling that they want our product with expansion requests.
Our fractional car subscription already:
- replaces 4 cars for every car we add (4 members per car)
- reduces vehicle miles traveled by 47% by incentivizing less driving (usage based pricing)
- cuts emissions in half with an all hybrid fleet (46 MPG fleet average)
Our driving is net zero, and we are making our cities more livable by reducing the number of cars sitting underutilized on our streets.
Electrifying our fleet will further reduce our carbon footprint as we scale making our operations net negative emissions. We plan to 5x the business in the next 12 months before raising a $10M Series A to launch 5 additional markets so we can scale our impact.*
* Click here for important information regarding Financial Projections which are not guaranteed.
Impact
Upshift is a vehicle for change
We believe that:
- We need a healthy planet. All our cars are hybrids and reduce gas consumption by 1/2, and we are transitioning to EVs. We have eliminated 655,877 pounds CO2 to date, equivalent to taking 70 vehicles off the road for 1 year.
- Streets are for people, not cars. Every shared car we put on the road takes 4 cars off the road.
- Everyone deserves dignity and respect. Our concierges are employees and we pay $25/hr+ with pathways to growth and equity in the business.
- Diversity is strength. Our team is 69% minority and/or women and we aim to grow that way.
Funding
$2.4M raised from investors including carmakers and VCs
We have raised $1.5M from MINI (BMW), Ford, Third Sphere, Climate Capital, previous Republic campaign (3007 investors), AngelList syndicate, and Jake Gibson (Nerdwallet cofounder).
The money was used for building our technology, proving product market fit and funded our go to market operations in San Francisco.
We have raised $900K in debt financing for purchasing the vehicles. Investors include HFCA and Toyota Financial Services.
We plan to incorporate a new Upshift, LLC to take on future debt financings to scale our fleet and create a firewall between debt and equity financings.
Equity funding
Republic campaign funds will be equity financing used for development of technology and go-to-market, not to buy cars.
Structure explained
Founders
Ezra Goldman
& Ayako Hiwasa
Background
Ezra co-founded a dockless bike-share in 1999 and helped design a shared folding electric scooter at the MIT Media Lab with Piaggio in 2006 while doing his Master's in City Planning. Ezra has consulted on innovation for HP and was managing director of a tech startup in Copenhagen, where he also was a PhD candidate studying why Danish people ride bicycles.
Ayako moved to Cambodia from Japan after college to launch a social enterprise when she could barely speak English, let alone Khmer. She now holds two Master's degrees, has consulted for the World Bank, and advised Stanford University students. She has a sharp mind for process improvement and a passion for creating delightful experiences.
Early days
Ezra drove for rideshare and Ayako did gig work to pay the rent while bootstrapping the company in the beginning. This inspired them to hire the Upshift concierge team as W2 employees, pay 1.5x minimum wage ($25/hr in SF), treat everyone with dignity and respect, and make concierges core team members.
