Hardware to human: An interview with the CEO of Turo

Andre Haddad, formerly of eBay and Shopping.com, talks P2P marketplaces and self-driving cars

Editor's note: Our 6th Annual Vator Splash LA conference is coming up on October 13 at the Loews Hotel in Santa Monica. Speakers include Mark Cuban (one of the hosts of Shark Tank and owner of the Dallas Mavericks); Brian Lee (Founder & CEO, Honest Company); Leura Fine (Founder & CEO, Laurel & Wolf ); Nick Green (Co-Founder and Co-CEO, Thrive Market); Tri Tran (CEO & Co-founder, Munchery); Adam Goldenberg (Founder & CEO, JustFab); Andre Haddad (CEO, Turo); Mike Jones (Founder, Science) and many more. Join us! REGISTER HERE.

Owning a car ain’t what it used to be.

Thanks to a wide range of technologies, from sharing models introduced by Zipcar and Turo (originally known as RelayRides) to ridesharing services provided by Uber and Lyft to the rapidly approaching self-driving future, our traditional relationship to the car is changing every day.

With over 260 million cars in the U.S. alone and over one billion worldwide, Turo recognized that many vehicles are underutilized. Car ownership can be a major drain given the initial cost of the vehicle, leasing, financing, insurance, parking, fuel, taxes, and other expenses.

So Turo built a platform enabling people to share their cars.

Now eight years old, the company has raised nearly $100 million from Kleiner Perkins Caufield & Byers, August Capital, GV, Shasta Ventures and others. In my piece on Turo's business model, I tried asking about the company's revenues and profitability, but they're not disclosing at this time.

Next week we’ll be hearing from Turo CEO Andre Haddad (right) at Vator Splash LA 2016 in a fireside discussion of the sharing economy, driverless cars, and technology in the transportation industry. Ahead of that conversation, I spoke with Haddad over the phone—coincidentally on the fifth anniversary of his joining the company—to learn a bit more about his background and Turo’s vision.

A marketplace by any other name…

Haddad has been involved with online marketplaces since 1999, when he helped start iBazar, one of the first online marketplace businesses in Europe. In 2001, the company was purchased by eBay in stock (valued between $66 million and $112 million), and Haddad was tapped to run eBay’s operations in Europe.

A couple years later, Haddad joined eBay’s global team in California, where he managed everything from product and UX/design to marketing and international expansion. His last position at the company was as CEO of Shopping.com, which eBay acquired in June 2005 for approximately $634 million.

“I’m a big fan and enthusiast of the platform and marketplace model,” said Haddad. “We used to call it 'consumer-to-consumer commerce' and now we call it 'peer-to-peer' or 'the sharing economy.' Different names in a different era, but the essence is the same: it’s building platforms that connect people, enabling them to drive economic value from assets they own or skills they have and connecting them with others that are interested in buying, accessing, renting, or benefitting from those skills or assets.”

In this light, Haddad’s joining Turo as CEO in 2011 makes a lot of sense. While eBay (and its various acquisitions) represented one of the earliest incarnations of a Web-based, people-powered marketplace, Turo represented the next generation. For Haddad, it was also a new opportunity to meld his personal passion for cars with a decade of experience building those platforms.

More than a name change

In 2015, the company rebranded from “RelayRides” to “Turo,” but deeper changes had been afoot for years.

One of the biggest changes instituted after he joined the company, according to Haddad, was the transition from a “hardware-enabled” platform to a “human-enabled” model. When Turo first launched, it required hardware to be installed in every vehicle. The idea was to make it seamless for owners to rent their vehicles, meaning travelers could book the car through an app and find it on the street without ever meeting the owner.

It was like booking a Zipcar—except you were renting somebody’s car.

“That was the initial iteration of the model, and we thought that was the way people were going to like to share their cars,” said Haddad. “As it turned out, that was a big mistake.”

“People did not enjoy the notion of a complete stranger coming into their car and driving it out without knowing anything about them. And people were very reluctant to install a custom piece of hardware on top of their car equipment to enable that sharing.”

So in 2012 the company set aside the hardware and focused on developing the people side of the platform. That meant enabling car owners and renters to have their own identity, complete with names and profile photos, and to connect through messages. Instead of a fully automated system where everyone was completely anonymous, the company's new approach connected people.

In other words, Turo traded in its Zipcar model for something more akin to Airbnb for cars.

Haddad says the switch from hardware to human was powerful, eliminating some of the reluctance to rent on the part of car owners and building trust in renters. He believes the new approach makes renters more inclined to take care of the vehicles.

Will people rent cars in a self-driving future?

When I spoke with Haddad, exciting stories were swirling about self-driving cars.

That week, Lyft President John Zimmer published an in-depth piece predicting that the majority of Lyft rides would be self-driving by 2021. A week earlier, Uber had officially kicked off its autonomous car pilot in Pittsburgh with a dozen self-driving Ford Fusions roaming the city streets. And a week later, California legalized testing of self-driving cars within the state, a major win for tech companies in the space, like Uber and Google.

One tidbit from Zimmer’s piece is the most relevant to Turo's future: he believes private car ownership will end in U.S. cities by 2025.

But when I asked Haddad for his thoughts around this, he remains positive: “We’re very excited about cars becoming more intelligent.”

Putting full autonomy aside, that excitement stems from a lot of the other changes that will come to consumer vehicles, like the ability to connect to the internet and the vast amounts of data that can be tracked around car utilization. Haddad believes all this data will help companies “innovate and deliver amazing experiences” in future cars.

In the grand scheme, the CEO of Turo sees car ownership splitting into three segments.

The first segment will continue to own cars for a variety of reasons “related to convenience, geographic location, lifestyle, work habits, etc.” But he points out these cars will be smarter, self-drive when the owner wants them to, and connect to the internet.

As we move from this “one-dimensional approach,” Haddad says that another segment of the population will forego car ownership completely as they access cars exclusively on demand, and more likely than not these cars will be autonomous. This is the ambitious future fueled by Uber and Lyft.

Finally, there’s a hybrid model, which is where Haddad sees Turo operating. For this segment of the population, owning a car or even multiple cars will still be a part of life, but it won’t be the traditional ownership model. Instead of using the vehicle all the time and paying for all its costs, the car owner gets the advantages and conveniences of owning a car while splitting the costs with other people who want to rent the vehicle.

“I think that segment of users will probably be the savviest of all because they will get the car they want, including cars they couldn’t afford if they had to pay 100% of the cost,” said Haddad. “Because of that sharing, they can get the car practically for free, use it when they need it, and share it when they don’t need it.”

It’s not farfetched: at least one guy has already bought a Tesla Model S with the plan to have short-term renters help fund his purchase.

If Haddad’s vision of the future car ownership market comes to fruition, the lingering question is how big each of those segments will be. How many people will own cars in the traditional sense? How many people will not own cars at all? And how many people will actually embrace the hybrid model, owning cars and renting them out through platforms like Turo?

I look forward to hearing more from Haddad at Vator Splash LA next week.

Ed. note: Our 6th Annual Vator Splash LA conference is coming up on October 13 at the Loews Hotel in Santa Monica. Speakers include Mark Cuban (one of the hosts of Shark Tank and owner of the Dallas Mavericks); Brian Lee (Founder & CEO, Honest Company); Leura Fine (Founder & CEO, Laurel & Wolf ); Nick Green (Co-Founder and Co-CEO, Thrive Market); Tri Tran (CEO & Co-founder, Munchery); Adam Goldenberg (Founder & CEO, JustFab); Andre Haddad (CEO, Turo); Mike Jones (Founder, Science) and many more. Join us! REGISTER HERE.