VP Marketing & Alliances at Ridecell, Mark Thomas
Apr 4, 2019
EP005 - VP Marketing & Alliances at Ridecell, Mark Thomas
http://www.vehicle2.getspiffy.com
Episode 5 is an interview with VP Marketing & Alliances at Ridecell, Mark Thomas; recorded on March 29th, 2019. Mark and Scot discuss a variety of topics, including:
- His career path through corporate technology companies to the startup world with Ridecell.
- Defining the history of Ridecell, their mobility platform, and the companies who use their technology.
- The evolution of station-based and free-floating ride sharing, specifically with companies like GIG and Zipcar.
- Shifting from private car ownership to public options and how the impact will be felt across the industry.
- Realistic use cases for autonomous vehicles, such as ride hailing, fleet rebalancing, or nighttime trucking.
- The importance of software in vehicles that are becoming increasingly connected.
Be sure to follow Mark on LinkedIn!
If you enjoyed this episode, please write us a review on iTunes!
The four pillars of Vehicle 2.0 are electrification, connectivity, autonomy, and changing ownership models. In the Vehicle 2.0 Podcast, we will look at the future of the auto industry through guest expert interviews, deep dives into specific topics, news coverage, and hot takes with instant analysis on what the latest breaking news means for today and in time to come.
This episode was produced and sound engineered by Jackson Balling, and hosted by Scot Wingo.
Transcript:
Scot:
[00:51] Welcome to the Vehicle 2.0 Podcast. This is Episode 5 and it's being recorded Friday, March 29th, 2019. About a year ago, someone I knew in the industry was texting me feverishly. He was at the Center for Auto Research trade show in Detroit and he kept saying, “Scot, there's a speaker here and you have got to talk to this guy. He is saying a lot of the same stuff that you are pretty passionate about, and he has great sites.” So here we are, a year later, and I'm really excited to welcome to the show, the VP of Marketing and Alliances at Ridecell, Mark Thomas. Welcome Mark.
Mark:
[01:28] Thanks Scot.
Scot:
[01:29] Cool. So Mark, let's start off by going over your career path. How did you end up in the world of mobility?
Mark:
[01:36] It's a interesting, My career has been pretty much full time in silicon valley and just starting off with the desktop revolution and apple, the Internet revolution with Netscape, and the mobile revolution for many years at Nokia. And my last few years at Nokia I was part of the, the here division, the maps division where automotive was a really big part of it and realized that this is a chance to really connect some of my passions, which are leading edge technology and my love for vehicles. So after some time at Cisco heading up their connected car initiatives within the marketing organization, I joined Ridecell as the head of marketing and alliances.
Scot:
[02:23] Cool. So you're a hardcore consumer electronics guy. I always like to ask, how many CESs have you gone to?
Mark:
[02:30] You know, they do tend to blur, but probably over the course of several decades.
Scot:
[02:35] Cool.
Mark:
[02:35] I love how CES though has become car electronics show. It's great. It has really out there. Yeah. They're having to move the Detroit auto show, from the week after to sometime in the summer because it was just to becoming too competitive.
Scot:
[02:52] Yeah, it is funny. So we've had, you know, I don't think 20 years ago we would have guessed that cs is the one show that would survive all the, you know, we used to have the computer shows and then the software shows and we even had internet shows and a CES is been kind of the, the, the survivor of all. That's pretty amazing.
Mark:
[03:11] Yeah. I've got to say I don't miss COMDEX.
Scot:
[03:14] Yeah. Yeah. Me either. Standing in lines for like eight hours to see Bill Gates give a 10 minute little thing about some, some new gadget.
Mark:
[03:23] Hey, I think I was there.
Scot:
[03:25] Cool. So let's, let's, let's learn more about Ridecell. Obviously it was you saw something really amazing there to come from a lot of these really big brands and do a startup. Tell us a little bit of the history of the company and, and what Ridecell does.
Mark:
[03:40] We were founded in 2009 in the Atlanta area, a great place to find wonderful tech engineers, great talent. Definitely though there was a shortage of capital out there, when the company was looking to raise some VC money, so they uprooted the founding team and moved out here to San Francisco. About two years later started one of the first ride hailing companies called summon. Right up there in the beginning days with, with Uber and Lyft. I think that the company had about 2,500 drivers, working in the San Francisco Bay area. And you know, as the company was looking at, you know, where this market's going to go and think there's the understanding that this is going to be massive race to raise capital and expands. And rather than being, you know, the third company pushing in, ride hailing, the intent was to become the first company to offer a white labeled end to end platform or other companies that needed to get into the ride hailing or in the future car sharing businesses.
Scot:
[04:54] So I've made a career of building companies that sell pickaxes and not, not, you know, doing the digging. So, so I think that's a good strategy. So if we flash forward to the day, I kind of think of you guys as mobility in a box. So, obviously if I wanted to start a ride sharing company, I could use your software but, but I think there's a lot more interesting use cases there. Can you share with us some of the ways people are using the platform that, that maybe you didn't think of it originally?
Mark:
[05:19] Yeah. Let's, let me take the first part of that, which is Ridecell provides. we, we have a full shared mobility cloud. And in the same way that, you know, back in the day since we're reminiscing, people would create their websites by buying sandboxes and getting some rack mount space and screwing them in with load balancers and really have to take control of the entire hosting and domain as a differentiator. Now nobody does that. Everybody just uses AWS or Google cloud or Microsoft Azure. We're the equivalent for that. And the shared mobility space, you know, having the benefit of having been in a pure play software company since 2009, we focused on building a complete share mobility clouds so that if somebody wants to create a ride hailing service or a car sharing service or a dealer based test drive service or you know, a hotel, car rental service, all of those things can be easily started using the Ridecell mobility cloud and then, you know, then the companies can, can focus on building their differentiation on top of what we offer.
Mark:
[06:44] So it's very much all of the underlying bits and pieces that really allow you to create a service which, you know, it's taken us years of expertise to, to form. We've got about 150 people working on the company and over a hundred of them are engineering and QA teams. So it's it's a bit of an undertaking to really make it easy to use and easy to launch a service.
Scot:
[07:11] Awesome. Are there any examples you can share of companies and how they've used the cloud?
Mark:
[07:16] Absolutely. Companies that, that like to work with us are those companies that realize they will need to transform or risk becoming the next Blockbuster Video. And so the, for instance, the Automobile Club. If private vehicle ownership goes away, then do we really need an automobile club? And I think that their view is maybe not. So the AAA of northern California, I came to us and said, look, we'd like to have a product relevant to millennials, people who don't own cars.
Mark:
[07:56] And so they, within six months they were able to launch a new brand called Gig. Sort of stands for, you know, they marketed as "get in and go." It's a car sharing service and it's the modern kind of car sharing service. I think in North America when we think of car share, we think of Zipcar and the little signs behind it. It says Zipcar lives here and you reserve it ahead of time and you walk down to it and then use it for your errands. But you always have to bring it back to the station and you have to bring it back on time or subject to those potential late fees. The modern style of car sharing is one which is called free floating or some time in people call it one way car sharing so that you can walk to the car, get in it, drive to your destination, park it and park it in a residential zone, parking in a meter.
Mark:
[08:51] Typically it doesn't matter because these cars generally have all access parking passes for a city. And so with Gig, they have the ability to you know, walk up to a car, unlock it, get in, drive, park it. They can even park it in a metered spot as long as it's not one of those like, you know, 20 minutes green meter zones and then leave the car and the next person that's downtown shopping and see is it pops in it and takes it and drives it. So it's a much more convenient way to use use car sharing. and you know, it's something that's really allowed them to create a product line that, has become very successful. They started with 250 cars, now they're up to 600 cars in the San Francisco Bay area. Then you know, they've gone from two cities, Berkeley and Oakland to five, now they're alive and Berkeley, Oakland, Alameda, and then San Francisco as well. The first free floating car sharing company to get a permit for San Francisco. So it's, you know, this is really exciting times is the city governments or figuring out the real value of using car share services. Then of course the next horizon is in creating services that aren't for internal combustion engine cars, but for EVs and it's really the electric vehicle may become the real hero use case for carshare fleets.
Scot:
[10:21] Very cool. I'm curious. So if you, you're really good at kind of branding some of these things. So, if what Gig has built is a one way car sharing, what do you kind of think of Zipcar? What does that kind of like traditional or old school ridesharing? How are you, how are you thinking about that?
Mark:
[10:37] So in North America, many of the zip cars are still using a model called station-based car-sharing and that's where it has a station and lives and, and there's definitely some benefits to a station-based. You can reserve a car ahead of time, free floating car sharing where the cars could be anywhere at any time. It's a very hard to reserve a car. Normally it's an on demand. I need a car, find me the nearest one, put a hold on it for up to 30 minutes so I can walk there. The station-based, which we support both station-based and free floating. We believe there's actually, if you have a fleet of vehicles, it's best to have some of each that you know, in apartment buildings where people move in and they see maybe there's eight or 10 cars parked in the garage that permanently or station there.
Mark:
[11:29] People who live in the buildings are able to, you know, check them out or rent them, or use them for their errands and it's natural for them to come back and park it back in the parking garage. So station-based is a great addition to a free floating car sharing base, which is kind of one of the first insights that I think we have four companies that are doing these shared mobility fleets, which is you need to be able to support multiple different kinds of business models to get the most out of your fleet. And you know, one way at the station-based or both in different business models that can be applied to one fleet of vehicles.
Scot:
[12:09] Very cool. so I think that's awesome and it gives us a really good idea of, of what you guys are building at Ridecell and definitely want to hit on more. I'm sure that's just the tip of the iceberg. But here on the podcast we have a framework where, you know, we call it the vehicle 2.0 framework and we talk about connectivity, new ownership models, electrification and autonomous. you're obviously really deep into the ownership world. How do you think, you know, one of the reasons, you know, my friend was texting me a year ago was that you, you have some interesting thoughts around, ownership and how that's going to change. What's your projections for when, you know, we start to feel in the industry, the, this move from the individual owner to kind of more of a fleet kind of ownership model.
Mark:
[12:56] If I could take this slightly off topic from the question for a minute.
Scot:
[12:56] Sure.
Mark:
[13:01] I think it's interesting. So just want to talk about the vehicle 2.0, I mean, the entire intent of your podcast. What's interesting is that this a combination of four things connected, shared, electric and autonomous, is ending up with a whole number of different acronyms. And I think there's, you know, CASE: connected, autonomous, shared, electric is one that's kind of leading the pack, but then you've got another form I think like the folks in Daimler or pushing ACES, which is you know, autonomous, shared, electric, connected. And, and in many ways, when I, when I was giving that speech, last year, traverse city. You know, my commentary on this is that, you know, if we try and label it as an acronym or a name, it almost makes these things, it doesn't do enough justice to what's happening in the industry.
Mark:
[14:09] And right now these, you know, connected is a foregone conclusion. I almost think that, yeah, vehicle connectivity done, we can check that one off the list. So it really comes down to these three major disruptions, any one of which is incredibly powerful. So it's, to me it's the triple disruption of shared mobility as as a massive way and shared mobility is disrupting, certainly. How people get around in cities, the ability for people to not have to own a car and you know, the downside of taking Uber's and lifts exclusively everywhere is that it's expensive because you're paying for the overhead of the driver. You know, electric is this transformational change in how we build a vehicle that will dramatically disrupt the value chain? these vehicles barely need to be maintained. certainly no, you know, lube jobs that go in here, and there are so much better for the environment yet the, you know, the whole difficulty associated with electric vehicles is that you have to have a charger.
Mark:
[15:30] You know, we're either where you live or where you work or where you shop. And that's a whole massive, expensive, difficult infrastructure. You know, my friends who live in apartment buildings are like, there's no, I'd love an E-vehicle, but there's just no charges and how am I going to get the building per person to put it in. The pudding shared E-vehicle fleets is really cuts the whole Gordian knot of having to solve, putting infrastructure where people live and own their vehicles. Because these vehicles can now free float around in the city and when their battery levels get low, they can be taken offsite and can be used, can be cleaned and charge. And with the range of you know, the new leaf or the Chevy bolt or the ring, no Zoe vehicles, these, you know, we're in the 200 plus mile range, which means for a typical car sharing customer, they're able to take the cars out of service probably once every three days.
Mark:
[16:35] I usually in the middle of the night, and you know, bring them to a depot, recharge them and get them back on the streets. And then, you know, when you look at these shared, the fleets having, you know, if to put them to use in ride hailing scenario, it's still means there is a driver in there. And if autonomous without sharing, if we really think about it, it's, you know, primarily a really fancy cruise control for rich people because these cars are going to be very expensive. So the autonomous revolution doesn't actually change many people's lines until the technology becomes adopted and shared, shared mobility. And that's the point at which rather than offering a ride for $2 a mile, when you take the cost of the driver out of the equation, and they're generally about 70% of the total cost of offering a ride, you could get the price per mile down to say 40 cents a mile.
Mark:
[17:42] And that is the point at which it's considerably cheaper than using your own vehicle. Most statistics are that it's between 65 and 70 cents a mile to drive your own car somewhere. And that includes your licensing, your insurance keeping, you know, obviously the fuel, you know, keeping it clean, parking, huge expenses in urban areas, paying for parking. And so, you know, when it's okay if I'm going to spend 75 cents a mile on my own car or 40 cents a mile on, on a ride and I can do something other than drive on my way there, this is, that's the tipping point. That's the inflection point that we'll have people deciding not to renew their leases will have people in urban centers selling their cars going, I can now depend on this. And it's, it's, it's dramatic how, how much this will not just change our lives, but how transformative this will be to the entire value chain of businesses who depend upon private vehicle ownership as their primary source of value in the world.
Scot:
[18:53] Let's put some, so I kind of used the metaphor that it's kind of like four waves that, you know, individually, you know, their waves, but you know, like any wave form, they kind of stack on top of each other, right? So we've got connected car feels like, I think we agreed that's, that's coming. It's kind of here today. these new ownership models are kind of another wave that's rising. and then it feels like EV is kind of, you know, we're starting to see like, like Tesla is the top selling car in its category right now in China. You're starting to see EVs outsell a internal combustion vehicles. and then it feels like AV, that's the one that's harder to kind of know when that's coming because we kind of went through a hype cycle and now we're in like that trough of digital disillusionment a little bit at CES this year, there was a lot more very specific use cases versus the generic kind of use cases. What kind of timeframes do you put on these things kind of coming out and really impacting each other?
Mark:
[19:50] Yeah, great observations. I'm really, the long pole in the tent is is AV. When we, I think when we think about what's necessary in, in an Av, people tend to overstate what required for us to make this transformation. I think level five or the classic the car can do whatever a human driver can do is years and years and years off a level four, which really is within a geo fenced area. You know, some, you know, downtown part of the city. Ah, urban speeds. So the, the, the slower the car drives, the easier it is for the autonomous systems to work within, you know, predefined driving rules. Okay. Don't make any left turns or you're going to go ride all the time to get around that. That can be done and deployed, within probably within four years in cities that have very good clear road markings and, don't have a lot of inclement weather.
Mark:
[21:05] So we've already seen, you know, it's, it's essentially deployed now if you'll look at a Waymo and what they're doing to roll out their, their service, the Waymo one, but in terms of getting, you know, some other vehicles, crews, we have our own autonomous driving initiative called Aro. You know, at that point, once you get autonomous driving, the long pole in the tent won't be getting vehicles that can safely drive around. It will be getting permits from the cities to operate an autonomous ride hailing service. You saw this with the whole a scooter getting here in San Francisco were, you know, Lime and bird and everybody flooded the city with these scooters and there was chaos and the city, you know, this said, you have a week to take them all off the streets. We're going to have a process by which you're gonna, you're going to bid for one of these licenses.
Mark:
[22:04] And we're going to pick the winner. And they'd pick two, one of whom was a company which has already been operating and mopeds sharing in San Francisco. The city knew them. They were like, we want to reward you for being a company that collaborates with us. I mean, you know, the history of excellent cooperation and that that's going to pay off. So the are insight to companies that are looking to capitalize and prepare themselves. Four, the autonomous shared mobility revolution is to get into the business now with car sharing, establish the relationships with the cities, so that you are a great company to work with. And when those licenses come out that are going to be available to a limited number of companies to offer autonomous ride hailing, we think those companies are going to be first in line to be issued the permits to switch from, I'm driven to driverless.
Scot:
[23:04] It's interesting that you're taking kind of a regulatory regulatory approach versus a you can have the best technology, but if you're not going to be permitted, what does it matter? I hadn't thought through that.
Mark:
[23:14] You know. And the other piece that I think, most people haven't thought about is there are applications or autonomous that don't involve driving people around. And in particular, you know, one of the, one of the big expenses of operating a car sharing fleet. These vehicles, you know, don't have a driver like an Uber or Lyft driver that's responsible for them. And so when they're parked and something, you know, the check engine light comes on, they're low on gas, they need to be recharged. Typically what happens is the company has to send out and pay for a driver to go to the car and move it in. Those con those can cost, you know, 20, $25 for each time the car needs to have somebody get in it and move it around. The, the test driving permits, can probably be used for late night operations where there was no passenger inside the cars, you know, driving itself from two to four in the morning, you know, drives itself out through a supercharger, you know, the car gets wiped out.
Mark:
[24:26] Yes, recharge and then, you know, move back onto the streets in a place where the customer demand is likely to be highest. We call that fleet rebalancing. When you've got a car that's parked in a and a zone that we think, wow, there's not a lot of demand there. History will show it's going to be cars. Gonna wait there eight hours until somebody needs it. We can move it right by the train station, right by one of the subway stations. And we find that this car is going to pick it up within the next 45 minutes. So being able to automate, you know, fleet rebalancing, cleaning maintenance runs and use the autonomous technology for that purpose, is a great first step into getting experience with autonomous technology for these fleet owners without having to go straight from a fleet of cars that drivers drive to suddenly now you're using them. Live for eponymous ride sharing.
Mark:
[25:22] We call that autonomous car sharing. And at some point, even if there is no license for autonomous ride hailing, we think that the autonomous technology could be used for per car hailing. You know one of the drawbacks of car sharing is you've got to walk to the car and then when you're done, you've got to find parking. If you were to apply autonomous technology and let the car drive itself to where the customer is, and then that person gets in, gets behind the wheel and drives wherever they're going, then they get out in the car and goes and parks itself or it goes on to the next customer. You're not doing autonomous ride hailing, you're just automating the delivery of the vehicle. So this is a new category of, of service called car hailing. And we think that this is one which is again, probably another interim phase, but you know, life is made by identifying the interim phases and being the, the customer who best adapts to where we are in the cycle.
Scot:
[26:26] It's like when I go to the grocery store now frequently on instacart, people in there or Postmates people. So I'm envisioning I'm driving around at night and all the cars that are driving around, they don't have drivers. It's going to be going to be a fun and exciting world to live in, in the future. so when do you, so do you have a point of view on when we can get, a lot of people think one of the first phases is going to be trucking, right? So, so AVs doing some of these long haul routes that you really don't need a person, therefore, do you agree that's going to be another one of the first uses of AVs. And you think that's also kind of in that three to four year horizon?
Mark:
[27:05] I think companies like telecon and others really focused on a very specialized use case. I don't see that is replacing the driver. I see that as being able to offer, more efficient driving because the platooning and the ability to talk in very closely, you know, behind another truck really allows you to draft and save a considerable amount of fuel expenses. You know, those use cases are things that people have been working on for quite some time. The, you know, the, the use of autonomous, almost like a tram where it has its own protected lanes and it, it's an unattended brain if you were driving and stopping for two minutes at everyone. I think those types of shuttles are also some of the near term, use cases that take away the issues of having to deal with, you know, making decisions on how to reroute itself during, you know, traffic jams and how to avoid pedestrians and the like, because it's a much simpler model where it just runs on a track and it goes around in circles. so we think when we, we see, we hear a may mobility and they've got, you know, deployment and Detroit where it goes, you know, six city blocks, around that, around those are also, I think relatively straight forward. compared to the where we think the end goal is, which is having cars be able to drive, not just on a fixed route but point the point. use it for pooling and really replace a human driver.
Scot:
[28:59] Even kind of more near term. I've seen projections, we saw about 17 million cars a year in the US right now and it's kind of, you know, pretty flat and then a lot of projections are for this year, that we're going to be down for the first time due to some of these changing ownership models is that. Do agree with that or do you think it's going to take the AV innovation to really get to where we see the, the whole thing flip?
Mark:
[29:25] Well, it really depends upon who's a model that you're referencing there. I've seen it anywhere from being flat to a flight growth to, to the diminishing growth. The thing that nobody reports on is not the total projected vehicle sales year by year for the next 10 years. It's the customer mix of the vehicle sales over the next 10 years. And what, when you really inspect who's going to be buying these cars somewhere between 20, 25 and 20, 30 in north American urban areas, more than half of the cars sold. Well we sold to mobility service providers. That is the transformative change. And you know, 10 years from now, it'll be 80% of those vehicles are going to be sold into mobility service providers, which means that those are the companies that are going to have huge buying power. there'll be the ones that'll be ordering the vehicles bespoke for their, their business purpose and, and the brands will start to become much less relevant to customers. In the same way that when you order an Uber or Lyft, you're identifying as an Uber or a Lyft person, not a Prius passenger because you have no control over what that vehicle is. So the, the relevance of, of car brands diminishes greatly once, like customers choosing which a mobility service to youth as opposed to which vehicle brand to buy.
Scot:
[31:20] That's interesting. And I'm sure scary for, for the brands up there. And, and, you know, I've been to this ecommerce change and, it, it's been quite disruptive as I'm sure you've seen there with retailers. you know, now the brands are kind of going around retailers. It's sometimes hard to predict how these things will shake out. But, let's, let's say it is 20, 30, and you know, we've got a majority of people in urban areas now not owning a car directly and they're using these different formats. It's, it seems like a lot of people are, obviously kind of trying to win that battle. You've got the rental car companies, they all kind of feel like they're going to have a role in that. And, and you know, their, their argument is they're already kind of doing it now, which is a fair argument. You've got the, the dealer OEMSs, you've got some of these other mobility players like a Cox in a car. you have some of these innovative new models, like obviously Uber, Lyft, but then there's Turo get around and then some of the subscription guys. W where do you think all this kind of shakes out? Like do all these companies survive and they have a role or, or is it, is it kind of a existential crisis time for some of them?
Mark:
[32:24] I think there is, that is not a mutually exclusive scenario. I think there's roles for companies that proactively work to transform themselves. if you look at like talk thought motive, who, who have a belief that, you know, their primary business is servicing dealers and you know, they, they formed their pivot division, which is now designed to offer services to shared mobility fleet providers and understanding, you know, when companies get into the business, we believe those that have a predisposition to action as opposed to kind of a wait and see approach are those who were going to be getting the most learnings and be able to, to put together the most relevant product. you know, I think that looking at the end state, most of the people I talked to when they think of, of shared mobility and, and these robo taxis kind of feel like, well, okay.
Mark:
[33:29] And in the future, it's going to be like it is today. There's going to be you know, an Uber, kind of the number one player in terms of market share and metal lift, the up and comer, you know, the Hertz and Avis, essentially offering, you know, undifferentiated experiences, which is what they have today. I mean the cars are driven by people in their private owners and you can't really judge one service of the other by the quality of the car. But in the future, once the autonomous vehicles have really become established and there isn't a need for a safety driver and, and the cabin is, is designed for sharing. I think what we'll see is that people, people will start to choose their, their ride based upon the experience that they look to get out of the time that they're in the vehicle.
Mark:
[34:28] If you take people that will be commuting in these cars, you'll first off the, you may want to choose WeWork branded car. You want to seek, that's got essentially a soundproof wall between you and the other passengers. A 5G connection with a video camera, a desk, you know, one 10 power if you're in North America, place to plug in. And so you can essentially turn that commute time. when you're, you know, sitting an hour in a car into a time where you can lead a conference call. do you know, do work at the desk. And then, maybe after a long day at work, you want to take the, the Netflix card home and you just jump in it, it's a comfy or see it, a little more relaxed position. You've got surround sound and you know, best of all the big screen that's in front of you turns itself on and, and starts where you left off.
Mark:
[35:27] When you were watching the Game of Thrones or Ozark, whatever it is you're currently binge watching. And so that, you know, these vehicles, become, a bit more focused on the, the experience that's in the car. I think that people then may choose it based upon a brand that they already know and love. And the idea that it's just the generic brand for getting around, you know, that may end up being the, you know, the people express, you know, the budget airline of, of autonomous travel. And I think, you know, looking at the airline industry is probably not a bad way to go either. There aren't that many airline manufacturers. There's a lot more airline brands and there's, you know, regional airlines and, business airlines have low cost airlines and upscale airlines, entertainment, airlines like virgin. Seeing all of how that's rolled out makes you also understand that the end game here is, is, there's not, one brand isn't going to envelop the world, knows that the world's winner, there's going to need to be some collaboration between the brands so that if one of them isn't available in a city that you traveled to, you can still use, use the APP to get a ride in the same way that when I traveled to Berlin, I'm on a United plane to Frankfurt, but then I'm on a Lufthansa plane to, to Berlin and, you know, but I'm still a United customer that whole way through.
Scot:
[37:05] Yeah. I like to CX view of things as this can be interesting. It reminds me a lot of, you know, so if kind of look at some of the things Amazon's done, they've, they've taken a lot of traditional brands, which the equivalent in this metaphor would be the car brands today. and then they've, they've kind of created a layer between them and the customer, and then they'd commoditize them. That the classic example is batteries. So you get energizer and Duracell, and then Amazon starts, you know, and then now Amazon has Amazon basics, which they went right to China and they make their own batteries. And it's the, now that battery, at least on Amazon, is dramatically outselling Duracell and energizer. So, so if we kind of ticked that metaphor to its conclusion, you could see some of these, these operators manufacturing their own cars because it really doesn't matter. It becomes commodity, right? And it's the interior that matters. So it's seems to all paint a picture that's not great for the current car manufacturers. Is that Kinda where you net out on things? Unless they, you know, and then they also have, they also remind me of the world of retail because they have this innovator's dilemma of this, this network of franchise dealers that, that really limit their dimensions of movement. what do you think happens to the traditional manufacturer?
Mark:
[38:26] Let's say I, I, in my career, I spent 10 years at Nokia. You know, I saw what happens when a company that's known the world's best hardware, gets outflanked by companies that are software driven companies. And, the, the, you know, the strength becomes a weakness that the, you know, working at Nokia, I was always asked, as the software guy to provide a precise roadmap of what I was going to be shipping three years from now because that product managers designing his phone for, for something three years from now and the software teams, like, you know, that's nine generations away. I mean, that's not how software is designed. So the, you know, the vehicle manufacturers I think are coming to understand that there their DNA and what makes them great as they a safe vehicle manufacturer isn't necessarily what would make it great consumer services company. So you see BMW and Daimler spinning off there, their drive now reach now moovel and car goat businesses into a single business unit that has the charter to make this right.
Scot:
[39:46] Yeah. Software software's eating the world and Jason Horowitz has it right. so, you know, Spiffy is the first company I've started, which has its own fleet. We have about a hundred vans out there. and one of the things you talk about that's near and dear to my heart is that, that we've, we've kind of come at the same discovery is when you're operating a fleet of anything, the, at the end of the day to make it work, you have to keep that fleet busy. so at Spiffy, for example, we have three lines of business, and if we only had one of one of them, the whole thing wouldn't work. So we do consumers at home. We do consumers that office parks, and then we do fleet kind of operations. And what's Nice about that is consumers and office parks, they're busiest Tuesday, Wednesday, Thursday residential or weekends, and then fleets kind of our fill in there.
Scot:
[40:38] And I've, you know, the, the slides I've seen you talk about, you know, you have some really interesting insights into if we go to this world where there's all these people operating these fleets, there is a utilization channel challenge. And, you know, I think one of your, I don't want to put words in your mouth, but you talk about kind of operating a lot of different models as a way to optimize that. Share with listeners some of the things you guys are seeing there and your recommendations for fleet operators. Cause I think it's, it also ties into interesting consumer behaviors.
Mark:
[41:08] Absolutely. When you operate a consumer service, each business model or, or for each offering that you have, there's a natural demand curve for it. So we noticed that with, with car sharing, you know, the free floating car sharing those vehicles tend to get used in the middle of the day. People, people will use it to run their errands in the middle of the day. There's less concern about, finding parking, at night. Maybe people are going to restaurants and there's drinking involved in, you don't want to be driving yourself so that if you were just to have a free floating car sharing fleet, you can probably get into the 20 percentile, 25% utilization, which is really good. And you know better than just having a station-based fleet, which had, it gets about 15%. I mean it's meaning it's used about 15% of the time throughout the 24 hour clock.
Mark:
[42:10] If you can start to take those cars that you know, we're going to be sitting and unused in the evenings or early mornings and put, Uber and Lyft drivers in them, you can then start to reach more and you know, stack these demand curves so that the cars are now being used at night. They're being used early in the morning and they're being used in the middle of the day. But for different purposes. BMW's reach now service has, they found that when their fleet of beautiful, you know, pretty new BMW vehicles that they, they could start their own a ride hailing service where they would have one app. They built this app using the Ridecell Sdk. So they were able to create their own look and feel. And it was the first app that I think, that we know of in the world that allows you to raise a reserve, a car share vehicle, or press a different button and request a ride.
Mark:
[43:11] And that, you know, their chauffeurs shows up, with the white gloves and the hat and when they pull up, they, you know, get out and open the door for you. So they're offering a very high level of service, in a beautiful but understated vehicle. that might be priced competitive to say Uber Black, but you know, you're not showing up in a Cadillac Escalade. You're showing up in in a three series vehicle, which in an environmentally correct. A city like Seattle is, is definitely a feature over the, you know, the big gas guzzler. So it's the ability to use the fleets for the best and highest use at any given time is what lets these companies get utilization rates that are well into the, you know, 30 percentile and you know, even those that are stationed and apartment buildings can get into the 40 percentile, meaning that they are used 10 times more than a car gets used from a private vehicle owner.
Mark:
[44:15] You know, a privately owned car on average sits parked 96% of the time and so, and it's being used about 4% of the time. And that's really the power of the shared mobility revolution is that these are used by multiple people throughout the day, not just, you know, dedicated to a single person. When you think about some of these subscription services where you can change the car every month, that's not quite shared mobility because it's still one car, a one person. It's when the cars are able to be used, lots of different times of day is when that vehicle then starts to really get a multiple in terms of how much value it's getting extracted from it.
Scot:
[45:03] Very cool, so this is a really important point. I want to restate it and make sure I understand it. So, so we kind of have personal ownership is where we are today and that's kind of like a 4% utilization or or 96% idle, station-based, you kind of say around 15%. Then you layer in the free flowing, model, which you talked about that gets you to 20%. and then you know, that seems to be kind of weekday kind of utilization and then you can layer in evening and, and other off time with ride hailing. Now you're getting in, you know, maybe even some density on the apartment side and you get into that 30 to 40% layer. Is that kinda how you're thinking about that stacks up.
Mark:
[45:42] Exactly. So having a platform that allows you to do all these different business models is really the key that helps you unlock the maximum value, for any particular vehicle.
Scot:
[45:54] Cool. So if, if that version of the world is true, you guys are in a great spot.
Mark:
[46:00] I think the last piece too is just using today's insights to make sure that the consumer experience is up to par. making sure that these cars were made clean, that they remain and in the best possible spot for people to find discover them, to keep them well maintained with some predictive diagnostics. and then using the power of the crowd to operate and run these experiences more efficiently. Can we talked about, we have a predictive model. It shows for each vehicle how long before it gets rented and if it's, you know, 10, 12 hours then that there's an economic incentive to pay somebody to go there and move the car. But what we found is that we can also, change the color of that vehicles, pin on the map and offer it for 20% off and people will, you know, we can see where they pull the APP open.
Mark:
[47:03] They will, they will happily walk 10 blocks to that car that's probably not going to get used and use it for their trip in order to save money. So rather than paying $20 to move the card, $25, we're now essentially making 10, $12 on that vehicle rental and you know, have a very high likelihood of it ending up in a much better place. So being able to take and use, use these insights from the big data platform and get people, you know, kind of sharing the benefit of, hey, if you're willing to walk a little farther, we'll give you a nice discount that will make it worth your while. And we found that people are, you know, some people love a deal and we'll go happily go a long way to get that car that will really save them some money on their overall ride.
Scot:
[47:53] It's kind of funny cause that's the exact same decisions you make when you're selling a widget on Amazon. It's kind of funny. You can, you can move it faster if you lower the price or you could, you know, layers, some expense through ads or something on top of it. So it's kind of funny how these worlds collide in a lot of different ways. As things go digital, you start to see these patterns over and over again. Cool. Well, I know we're right up against time. Any last thoughts you want to share with listeners about where you see things going in the next five or 10 years?
Mark:
[48:21] Yeah, certainly. I think a lot of people today have a feeling that like, you know what, I'm not getting rid of my car and, and I don't expect very many people will get rid of their car, you know, in advance of the overall revolution. What I think probably it will happen is what's happened with me living here in San Francisco is that I, you know, between writing my electric bike everywhere and ticketing Uber's and lifts, I'm the evening and using, Gig car to get around that, you know, my car is sitting in my garage, you know, on a battery charger. And the other day I realized that I bought a box of CD's sitting right next to my car in the garage that don't get used either. And at some point you realize I'm just not using it and I'm still paying x dollars a year to insure it and licensed it and you know, as much as I would, I love, I'm a car guy.
Mark:
[49:28] I love owning cars. It's, it, it will creep up on you when you realize that it's been weeks since you've used the vehicle, maybe your lease is up. and, let's, let's try this share mobility thing out for real. So it's, you know, I don't think anybody's asking people to, to get rid of their cars and faith, but what will happen is they'll become like that box of cds. You just stopped using it and at some point you realize I should probably sell these or get rid of them before, say the value completely goes out of it.
Scot:
[50:01] It's usually after you've moved him a couple times when you have that very strong incentive to say like, why am I, why am I moving this physical media around? Yeah.
Mark:
[50:08] Exactly.
Scot:
[50:11] Cool.
Mark:
[50:11] All right, well thanks so much Scot, and this has been a good conversation.
Scot:
[50:14] Yeah. And if, you know, I think folks are going to really love your insights if they want to kind of follow your thinking online. do you, are you a big tweeter or on linkedin or where, where do you publish your, your thoughts on where we're going?
Mark:
[50:27] Yeah, just search Mark Thomas, Ridecell on Linkedin and follow me. I do, share quite a bit of news and occasionally write articles about how the future is shaping out.
Scot:
[50:40] Cool. Well thanks for coming on the podcast. you know, my year wait was well worth it and some really great insights and appreciate you coming on.
Mark:
[50:47] Thanks again, Scot.