What Is Riders Share? What Is The Mission And How Does The Business Model Work?

Riders Share is an online marketplace for peer to peer motorcycle rentals. This means that people list their bikes for rent, and we then find vetted riders that want to rent them. To make this possible, we provide not just the platform but also insurance, roadside assistance and a system to check motorcycle endorsements. We are pretty good at predicting the probability that a rider will crash, and finding ways to mitigate it. To monetize, we take a cut of each transaction and sell damage waivers.

Our mission is to make safe, fun rides widely accessible. We are accomplishing this by increasing the availability and variety of motorcycles and locations, and by significantly reducing costs and prices to rent them. We are still wordsmithing the mission statement to make it sound cooler, so expect it to change soon. We are thinking along the lines of “unplug”, “experiences” and somehow include fun. “Unplug into the Ride”. My team hates every idea I run at them, so I’ll get back to you on this.

What Is Your Background? What Led You To Starting Your Own Company, And How Did You Choose This Space?

I was born in Texas (my parents met at school in UTEP), and I grew up in Lima, Peru. I moved back for college, where I attended Texas Christian University. I also got an MBA from the UCLA Anderson School of Management while starting Riders Share.

Prior to starting Riders Share, I worked for 7 years in analytics on the finance side of the automotive industry: Nissan Motors, General Motors and Hyundai. While I worked at GM Financial, I discovered they were the only company to securitize subprime auto loans successfully during the Great Recession. How did they do it? Incredible discipline, analytics and cost control. Because other companies weren’t as strict or analytical, they got burnt during the financial crisis. Those that managed risks properly got rewarded: subprime auto loans represented approximately 20% of all auto loans, but 60% of the profits. Subprime gets a lot of bad press, but it helps many honest individuals get a second chance at rebuilding their credit and their financial future.

Around the same time, about 7 years ago, I was learning how to ride motorcycles. Twenty three years old and full of overconfidence, I crashed a Kawasaki Ninja 250 going 80mph on a short trip from Dallas to Fort Worth, TX. I broke my hand, and my bike was a total loss. I learned leather pants protect you a lot better than jeans, and that road rash hurts a lot more than a broken bone. Also, painkillers don’t help with pain, but they feel great - no wonder people get addicted to them!

A few months later, my hand healed and I got over the fear of riding (crashing will do that to you) and wanted to experience the adrenaline rush again. For me, riding a motorcycle is like riding a roller coaster, except you have control of where it goes. Now, I didn’t want to blow another $3,000 on a vehicle that I mostly used on weekends, and not every weekend at that. So I looked into renting motorcycles. To my surprise, it cost over $200 and the selection was very poor. Often, you’d show up and there would be no inventory available at all! 

With the peer to peer rental model, you eliminate 60% of the cost of renting a motorcycle (depreciation, brick and mortar, etc.). You expand the choices and locations. Finally, with modern technology, you can make it not just viable but also find additional ways to reduce cost and provide superior experiences. Now, motorcycles are riskier than other assets in the sharing economy like RVs or cars, but with my background in risk management I knew exactly what we needed to do to manage the risk and even turn it into a competitive advantage.  And that’s how Riders Share was born.

Back then, “on demand” was all the rage amongst the tech industry. They didn’t realize the most important reason why Uber succeeded early on was cost, not convenience. It’s why we need diversity in Silicon Valley: when you have been wealthy your whole life, it’s easy to value convenience over cost. Most humans, unfortunately, are not wealthy. Similarly, many people thought bikers are too possessive of their bikes and that they wouldn’t share them - again, ignoring the reality that most Americans struggle with cash. If you study Economics, you will see that people respond to economic incentives no matter their background, so with that framework in mind I knew the great ROI of renting out a motorcycle would make the idea possible.

What Have Been Both Your Favorite And Least-Liked Parts Of Your Entrepreneurial Journey? What Have Been Your Most Challenging And Most Exciting Moments For You And The Company?

The favorite parts are the incredible highs. Our first customer spent $500 to rent a motorcycle...imagine the thrill! Somebody used our website and spent their money on it! Other perks are making my own schedule, and that feeling that you are not working, you are having fun. It’s so awesome when you spend hours coding and doing analytics, then you make a change, and suddenly you double your revenue. Every time the Google algorithm bumps us up, it seems like an IPO is inevitable. 

The flip side are the incredible lows. If you are going to start a company, I recommend you do it in an area where you are the foremost expert (or your team), or else you will make dumb mistakes. We’ve made so many, and are here only by sheer perseverance. The worst feeling is when people use stolen credit cards and stolen identities to rent vehicles. While we now have a myriad of APIs and processes to prevent fraud, at the beginning we lost a lot of money. When you are $40,000 in credit card debt and you see a $1,200 chargeback on a transaction where the motorcycle, to top it all, was damaged... you get a bit of anxiety. I once waited 4 hours for this fraudster to return from a rental to be able to see his face. With some research and the help of the defrauded, I was able to identify the guy who had a prior record of fraud in Florida, as the culprit. The worst feeling is the police in California wouldn’t even move a finger to try to find the guy. “He will get 3 months in jail and get out, so it’s not worth it”, they told me over the phone. I was furious. The guy kept trying to defraud us (keeps trying?). I hate him with passion.

What Was The Fundraising Process Like For You? Tell Us What You Can About The Money You’ve Raised.

It was extremely, extremely hard. 

It took more than 5 years before it became clear that Airbnb’s travel network effects were significantly more defensible than Uber’s local network effects; and even then, most VCs I spoke to were not sophisticated enough to understand the difference. By the time I started raising money, appetite for online marketplaces had subsided. It’s very difficult to serve two types of customers, and to find a balance between serving their needs. Moreso, it became increasingly evident that network effects are not enough of a moat. Uber’s IPO was a disappointment…

When we first launched in 2018, we were losing $100 per transaction. We needed to do this to gather data and prove insurers our business model was viable. I accumulated $40,000 in personal debt to fund this. After six months, we were able to renegotiate and cut our losses to…$50 or so. After a year, we were able to obtain a policy that allows us a small profit margin.

It is very difficult to raise money with negative unit economics. It was just me and my cofounder Brendon, so our execution was not polished. I did everything from customer service to marketing to fundraising, and so I sucked at everything - I was spread too thin. My cofounder, Brendon, built our website in a few months, but he was compared to those of established companies with 10 years of experience and multimillion dollar budgets. Don’t assume people will have empathy for you, or believe your assumptions. It was particularly difficult to talk about motorcycles in the liberal Los Angeles or San Francisco markets, where motorcycle usage is very low compared to other areas of the country, particularly rural areas.

On one occasion, I had the opportunity to pitch to Jason Calacanis. I explained during my pitch how 10% of Americans have a motorcycle license, how motorcycles outsell scooters by 100 to 1. Him and the other panelist seemed to be completely unaware of the fact that over a million motorcycle riders gather every year at Sturgis; that Harley Davidson is an American identity symbol to many, and in fact he suggested we pivot into scooters. It was insulting that he flat out ignored the metrics displayed on a screen in front of him: did he think I was dishonest? Most VCs I encountered trusted their gut feeling more than data. I was wrong to think that traction, margins and good market size data would be all we needed to convince non-riders that motorcycles are indeed a thing. Again, I think most VCs in California don’t have enough diversity to understand the other half of America.

Luckily for me, there are other investors in the country. One of them, also native to Texas, had a motorcycle listed on our platform and was making really good money. Because I did all of the customer service, we had spoken a few times and he was very pleased with the way I treated him (I think!). Texas HALO fund then led a small $300k round in September 2018. Additionally, a Santa Monica hedge fund, Edgebrook Partners, decided to make their first private investment on us because of our metrics. This round allowed us to purchase the insurance policy that moved our margins into the positive...and helped me repay some of the credit card debt. 

A few months later, we were growing incredibly fast. We had won a $30k award and a $20k convertible note from Pritzker Group Venture Capital in pitch competitions. I thought this time raising would be a no-brainer….I was wrong again. Instead, I tapped into HALO fund again, and they helped us put together a convertible note for $500,000 to keep going. We also were barely accepted into Techstars Los Angeles, as the wild card. 

I learned so much from Techstars. A very large reason why we weren’t fundable was our lack of experience or verified talent. I also was terrible at fundraising strategy, and generating FOMO (fear of missing out).

This time, we went all in and started a captive insurance cell to really control insurance costs. Paired with our machine learning to manage risk, our margins improved dramatically: they were now elite among marketplaces. With the help of the Techstars network, I was able to get warm intros to every single marketplace  seed  investor in the world, as well as every VC in Los Angeles.

I almost failed to raise capital in time. I spoke to 100 VCs in a span of 3 months (mistake: you should approach all of them at the same time so the later ones don’t feel they are getting leftovers). Finally, I learned of a new VC partner in another Texas fund with the most relevant experience possible for our startup. When David Stewart looked at our figures, he knew exactly what to look for; he admired that we had figured it all out without industry advisors; and he understood some counterintuitive decisions we made. For example, all marketplace “experts” will tell you to focus on local network effects. These experts can’t tell the difference between localized and global network effects, but David could. Having 10 listings in 50 cities is better than 500 bikes in one city, because people all over the US look for better alternatives to motorcycle rentals and if we only have them in one city, we’ll disappoint 95% of users. By spreading thin, we actually disappointed less users. We got a lot of users from free national PR from motorcycle media, and organic rankings as a result too. 

It was really lucky timing that David was one of the last VCs we spoke to. In doing so, I had been able to refine my pitch and memorize the 50 or so questions every VC asks. Seriously, no originality there; but if I had pitched to him 2 months earlier, he may have rejected us. 

To extend the runway until the round was closed, Riders Share ended up borrowing $300k backed by my personal credit. I was infuriated at my lawyer for taking so long. LiveOak was extremely diligent, it felt like they went over every single contract or invoice we had ever had. We eventually received the first deposit, in time to survive the COVID depression.

LiveOak Venture Partners has been incredible to us. They surrounded us with world class advisers for our vertical. They are worth way more than the money they invested, and we are very grateful. Not very many VCs are as talented as David and Venu.

How Has Growth Been Over The Past Couple Of Years? Anything Exciting That Will Be Launching Soon?

We launched in February 2018. Since then, over 10,000 motorcycles have been listed on Riders Share, and similarly we have served over 10,000 customers. We have over 14,000 reviews from both sides with an average of 4.97 stars. We are growing quickly. We are launching mobile apps and adding dirt bikes into the platform. Depending on that experience, we may expand into other off-road powersports.

What Is Your Marketing Strategy Like In Terms Of Onboarding Motorcycle Owners And Getting Them To List Their Bikes On Your Platform?

When we first launched, it was every growth hack you ever heard of, and then some we are not ready to reveal yet: approach people on Craigslist and similar websites, leave business cards on motorcycles, biker bars, attend motorcycle rallies and talk to people, etc. We got a lot of help from motorcycle media outlets too. Once we raised some money, we also ran paid ads online. For us, print ads en masse didn’t work. Word of mouth, as always, works best. 

We have very strong selling points. The ROI is huge. It is not uncommon for a renter to earn over $1,000 on a weeklong trip, on a motorcycle worth about $10,000 - and if you are financially inclined, do the math on a 10% weekly ROI. We charge relatively low fees to owners and mitigate risk very well too.

Who Are Your Cofounders Or People Who You Work Very Closely With? How Do Their Skills Supplement Yours?

Brendon Lamb joined late in 2017 and built the website from scratch. I owe him a lot. He also has a pet hog named Marco, ha. Another key executive is Jose Valera. He joined after a stint as CEO of Moovel. Moovel was a company owned by Damiler and BMW, and Jose helped sell it recently. He is also a lawyer. All of us are avid riders. Currently, the team is eight employees.

Can You Walk Us Through A Work Day? What Does A Typical Day For You Look Like From When You Wake Up Till You Go To Sleep?

I work from home. I don’t have a set schedule.

In 2018, a typical workday included attending the UCLA Anderson School of Management. I surpassed the million dollar revenue run rate while attending a full time MBA program. It gave me way more free time than my full time job; and it felt easier to escape class to take a customer service call, than to escape my cubicle.

Shortly after graduating, I started the Techstars program. It turns out the Techstars schedule was significantly more demanding than the MBA program’s, so we made our first hire -  a person that could take at least half the CS duties from me, and everything in between. I was about to burn out. Taking customer service calls is highly interruptive. It ruined plenty of dates too!

After Techstars, I spent most of my time fundraising. So really, I’ve only been working full time on Riders Share for a few months. 

Unless I have a meeting or call, I wake up whenever I wake up. Sleep is important. I am a night owl and prefer the peace of the night to work, so I often wake up at 10am. I get two cups of black coffee and no breakfast. I read the million emails in my inbox and address them all.

Then I review the company’s analytics, usually an hour a day. This way I can find if something is wrong, or working better than expected. After that, I work out for about an hour, usually at Orange Theory or lifting weights. Then I’ll tackle whatever I need to tackle, and it’s never the same. I do spend a lot more time than other CEOs in analytics. I am a huge data nerd. I coded a 100 page long dashboard that I am super proud of; at a Fortune 500, it would take a team of 10 and several years to build something like this. I constantly add more views to it: you find a bottleneck, you solve it, then you create a report on the next bottleneck.

Speaking of analytics, I should add that when I was 2 years old, I was diagnosed with severe autism. My mom tells me I stopped talking, wouldn’t let people touch me, and spent hours  at a time, sometimes days, repeating gestures. I actually remember clearly spending time in my imagination and ignoring people. A lot of therapy and love pulled me into the real world, but I was still a weird kid: I memorized the history of nearly every country by the age 10, for example….loved reading the encyclopedia instead of playing soccer. 

I bring this up because I still feel like I miss many social cues, but also that I am capable of listening to the data over my gut feeling - much better than better trained statisticians, in some cases.  I think modern leaders must have a deep understanding of causality to be able to make optimal decisions. If you are not a natural, and most aren’t, I strongly recommend “The Book of Why”.

The Sharing Economy Or Peer-To-Peer Marketplace Seems To Have Filtered Its Way Into Just About Every Industry. Do You Think This Business Model Is Here To Stay For The Long Term? Also, What Were Some Of The Legal Roadblocks (If Any) You Had To Work Through In Order To Launch And Scale Riders Share?

The internet unleashed a lot of value into the world by making information readily available and democratic. The next logical step was to use this information to improve the uneven allocation of resources in the world. Information allows enough trust to be built for this to happen.

In other words, peer-to-peer is here to stay, at least until AI takes over most forms of work. For example, self-driving cars will remove one of the peers from carsharing and ridesharing. Peer to peer, in its current form, is not appropriate for low cost assets due to the additional friction; but rentals over ownership will continue to grow.

We didn’t have many legal roadblocks to launch Riders Share. Our biggest roadblock was insurance. Peer to peer insurance was very hard to obtain at the time due to lack of data. Motorcycle peer to peer insurance? Good luck, buddy. I had to speak to dozens of brokers, befriend their kids and sign a pact with the devil to get our first insurance policy.

What Are The Top Three Most Important Skills A Modern Day Entrepreneur Needs In Order To Be Successful? What Advice Do You Have For Entrepreneurs Who Are Just Starting Out?

Advice: Don’t do it. It’s not glamorous. It’s not cool. You are (probably) not special enough to pull it off. It’s 99% luck. But they won’t listen (like me), sometimes you have to learn yourself. If you are incredibly stubborn and willing to get up and fight, then maybe you have a chance. You also need to be a subject matter expert, very good at selling, and good at decision science. Hopefully you can accomplish this as a team. Definitely seek experienced entrepreneurs to mentor you. If you must raise money, use every VC meeting to learn from that experienced executive across the desk - they often are successful operators themselves.

Skills:

• Fundamental principle thinking: this is the hardest one to obtain. Be logical.

• Sales: to customers, to investors, to prospective employees...sales means being empathetic, charming, understanding, etc.

• Grit: ok, if you are going to go on this insane journey, you must remember Elon Musk crashed lots of rockets before landing them properly; not giving up is important, but also being self-aware enough to pivot when necessary.

  
  
  
  

Tell Us A Story Of Something That Happened To You, Something You Heard, Or Something You Saw, That Either Made You Laugh Or Taught You An Important Lesson.

Prior to launching, I wanted to test if people were willing to rent out their motorcycles. I reached out to many motorcycle riding Meetups and Facebook groups. The only one interested was this guy that wanted to upgrade his bike (selling point!). His feedback: list your own damn bike for rent too, if you are going to ask other people to do it. I saved up and bought a Harley to replace my sportbike.

How Has COVID-19 Affected Your Business And What Have You Done To Adapt To Any Changes?

Most of our customers today are travelers, so it definitely had a negative impact on our business. To adapt, we lowered prices on scooters and started giving that segment of our business more love. We don’t want to compete with e-scooters (that’s a crowded market already), so we focus on highway capable scooters to help delivery drivers rent a more affordable alternative to cars. 

How Do You Think The World In General Will Change Post-COVID?

I think the media will begin to be dominated by a different scare early in 2021 and we’ll forget about COVID-19 very quickly. However, some trends have been accelerated and there is no going back, such as the shift to e-commerce over brick and mortar, and remote work. One  particularly scary thing is how global corporations are realizing how easy it is to outsource high paying technical jobs to other countries, now that everybody is working from home. Trump’s H1B VISA ban was a stupid move...it’s making corporations realize how easy it is to export the best jobs to other countries.

Any Other Thoughts You Want To Share Relating To Current Events, The Economy, Or Political Climate?

Yes. Epidemiology is in its infancy compared to economics. It’s just incredible how bad their models are at predicting what’s going to happen. I recently read a couple of papers where they stumbled upon concepts that have been long known by economists, like for over 70 years. To make matters worse, they are not willing to admit the mistakes they made early on. Luckily, there is a growing trend in evidence-based medicine in epidemiology, so hopefully they will fix their inherent flaws.

For example, every media outlet quotes epidemiologists saying we need 50% - 70% of people infected to achieve herd immunity. This is despite the fact that the last two novel coronaviruses faded away before hitting 30%. In economics, we use the concept of “diminishing returns”. Extrapolated to epidemics, this means the first to be infected are also the most likely to transmit the disease; and so once the first 10% people are infected, the R0 of the virus will decrease by way over 10%.

To make matters worse, they issued impossible policy recommendations. To track and trace 20 million people, we’d need to 10x the number of testing capacity...impossible to do in such a short timeframe, given the nature of the supply chain. They didn’t partner with other disciplines to issue realistic policy recommendations. We spent $4 trillion - enough money to end world poverty! - shutting down businesses when there was clear evidence from the beginning, coming out of Japan, that all we needed was to wear masks. There was clear evidence that we needed to protect nursing homes, but nothing was done about it. We could have saved more lives with better science and less politics in science.

What Are Your Top Three Favorite Books, Or Three Books You Recommend?

I really recommend The Book of Why. It is a framework of thought very necessary to understand causality that many old school stats nerd are missing. Every journalist should read it before they write about the latest scientific research.

Sapiens: A Brief History of Humankind is also a fantastic read. It retells the history of humanity from a more rational lens than what you learned in highschool. It also makes scary predictions about the future based on what the author learned studying past patterns...I find many of them to be highly realistic. We are about to enter post-humanity.

I enjoy Malazan Book of the Fallen. Haven’t finished it, but it’s incredible high fantasy. The author’s ability to simulate and empathize with an eternal being is impressive. I still remember this line, where the ancient immortal was like “everything is futile”. And it’s true, as long as the universe is governed by entropy, it all sort of is. Sort of, not quite.

Who Is Your Role Model?

Is anyone really a role model? We are all flawed humans. For every positive trait, there is a negative one.

But if I had to choose, I’d go with Elon Musk. So basic, I know, but the man has courage and brains. I can’t be the only person he inspired to do more.  

What Is Your Favorite Quote?

“I hate quotes” -Guillermo Cornejo

What Do You Do In Your Free Time?

Guitar, writing songs like “Love me, love me, while your boyfriend is gone”, motorcycles, reading history and the news, Netflix, red wine, work out, soccer, watch TCU football...eclectic tastes, I prefer variety. Sometimes surfing, snowboarding, or anything new.

If You Can Have A One-Hour Meeting With Someone Famous Who Is Alive, Who Would It Be And Why?

Elon Musk, obviously. If he can run Space X and Tesla at the same time, then surely I can get a full time MBA at an elite school and start a company at the same time. Guys like him reframe your expectations and inspire you to aim higher. I have a design for a diesel powered flying motorcycle that I am 100% convinced will work. Thanks, Elon. Also, I want to talk physics with him, and how they impact the meaning of life.

What Does Success Mean To You?

Happiness. If you are not happy doing what you are doing, you are failing. I went through a lot of stress, lost a bunch of hair...but I enjoyed the thrills. Secondary to happiness is learning. Even if I had given up on my second failed launch of Riders Share, I had learned so much at that point that I would have been a much better executive for a Fortune 500 than I was before. So even if you don’t make millions of dollars, you still get something out of it.

We only have one shot at life, so I am going to take a big shot. I want to become wealthy enough to influence politics and eliminate poverty from the world. I don’t care about driving a luxury car or dating models. I just can’t be comfortable with myself knowing that billions of people out there are miserable, and we Americans just choose to ignore it. When studying Political Science and Economics, I learned billionaires are truly the only individuals powerful enough to change laws, and good laws bring prosperity. So that’s what I’ll do, and even if I fail, at least I am having a blast trying.