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Turo's mission, and ultimately its business model, is to put the world’s one billion cars to better use. And the company is leveraging a classic sharing economy model to help make that happen.
Back in 2010, when Turo was called "RelayRides" and made it as a top 10 finalist in Vator's first startup competition, the company focused on hourly, on-demand car rentals. Today, Turo has pivoted away from that model by following the rental car industry standard of charging by the day. But the similarities with rental car companies largely end there.
As one of an army of tech startups capitalizing on the sharing economy, Turo populates its marketplace with vehicles offered by ordinary car owners. The draw for these car owners is that they can generate revenue from an asset that they're not usually using. In this sense, Turo can very much be considered an "Airbnb for your car."
Pricing for the renter is calculated based on a few criteria:
- Trip Price: This is the amount based on the car's rate. So, for this GMC Sierra 1500 renting at $84 per day, the one-week trip price will be $589. In the Bay Area, I found a Toyota Yaris renting for as low as $16 per day and, on the other end of the spectrum, a Tesla Model X renting for $591 per day.
- Trip Fee: This fee, which is 10 percent of the "trip price" above covers costs like roadside assistance.
- Protection Fee: Premium (40 percent of the trip price) offers liability coverage up to $1 million, Basic (15 percent of the trip price) offers liability coverage based on the minimum required by the state, and Decline (no cost) basically means you better have your own insurance. (The company also offers various protection plans for car owners.)
- Young Driver Fee: Renters under the age of 25 pay an additional fee (20 percent of the Trip Price). Most traditional rental car companies don't let anyone in that age group rent cars.
- Delivery Fee: If the renter picks up the car at the owner's location, this fee doesn't apply.
- Airport Fee: Finally, Turo adds on this fee (10 percent of the Trip Price) if the renter picks up the vehicle at a Turo Airport Lot.
The trip price, which makes up the bulk of what renters pay, can be calculated in two ways. First, the car owner can set their own price along with discounted rates for longer trips. Or the owner can opt into Turo's dynamic pricing, which uses data insights based on vehicle type, location, etc. to calculate rates.
So where does Turo make its money?
This is the sharing economy, so while the car owners are sharing their vehicle with travelers, they're also sharing the revenue they generate with Turo. The company tells me it takes a 25 percent cut from the trip price: returning to the example of that weeklong GMC truck rental, the car owner would earn $441.75 and Turo would earn $147.25.
Today, the average car owner actively offering their car through Turo makes $600 per month. Using that figure, we can estimate that Turo makes about $200 per car owner per month.
I asked Turo if it would share figures around revenue or number of members today, but they declined to disclose. However, according to Steve Webb (Director of Communications & Community at Turo), the company has doubled its fleet of vehicles since last November, indicating very strong traction. Today, Turo offers over 800 different makes and models, so its customers have a much wider variety of vehicles to choose from versus what a typical rental car company offers.
On that note, the spokesperson also told me that renting through Turo costs (on average) 30 percent less than what you'd pay at a traditional rental company.
The company last raised outside capital in November 2015, when it also announced its name would be changing from "RelayRides" to "Turo." The $47 million Series C round was led by Kleiner Perkins Caufield & Byers and—along with previous investments from August Capital, Canaan Partners, Google Ventures, Shasta Ventures, and Trinity Ventures—brought the company's total raised to nearly $101 million.
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RelayRides is the world's first peer-to-peer carsharing service. Our revolutionary service provides the technology, infrastructure and marketplace for car owners to securely and conveniently rent out their vehicles when they are not using them personally. This provides people seeking convenient transportation with a new option, and makes it easier for urban dwellers to enjoy mobility without owning a car.
As the average US car is driven only 66 minutes a day, RelayRides represents the first opportunity for car owners to monetize this underused asset. By providing the infrastructure, technology and marketplace for car owners to rent out their vehicles, RelayRides gives current car owners the means to monetize a largely underused asset. By enrolling in RelayRides, owners turn a car from an expense into a cash machine, with average profit of approximately $3,550 annually (net of depreciation costs).
How RelayRides Works:
Car owners list their vehicle on the RelayRides website, designate availability, rental price, and who may rent the vehicle (via Facebook and other social networks). Car renters browse available vehicles on RelayRides.com, reserve a car by the hour or day, and swipe an issued card over a card reader sensor on the vehicle for access during rental.
To streamline the rental experience, gas and insurance are included.