We recently reached our 5 year anniversary as a company. As we celebrate (our survival), here are 5 key lessons we have learnt about the car game.
1.) Business Model Pivot - the platform or shared economy business model is more scalable the car rental model! Initially starting with 8 cars that were fully financed through the company meant that there was a lot of pressure to sell memberships and get bookings to cover our high fixed costs and burn rate. We burnt through our initial capital, approximately $500,000 USD, in 9 months and had to shift the business model. The initial business model meant that 100% of the costs of the cars, including maintenance, loans, parking and insurance were coming out of our bank account. Whilst we received 100% of the revenue generated it was a lot of pressure to cover the burn rate and sell memberships quickly!
After pivoting to a car sharing platform model, we were able to reduce our fixed costs to a minimum, almost zero aside from operations and marketing costs. We could scale this by sharing revenue with individual car owners per booking, which made it a variable cost model. Switching to this model enabled us to remove the financial pressure, and reduce our burn rate. This was critical especially during COVID where traditional car rental companies suffered from ongoing fleet maintenance cost, parking, shop floor lease costs. It was like switching from a brick and mortar to a platform business model.
2.) Branding - We decided to separate into two distinct brands. One is called Tokyo Supercars, which represents our inbound guided tour business and is typically one off transactions. We are marketing this to the masses especially via social media. This suffered during COVID but will hopefully be back soon. Our other brand is Club Velocita, which is a subscription membership model based on trust and without supervision we hand over the keys to our members who share the cars as if they were their own with fees that cover the cost of ownership.
3.) Partnership marketing - Strategic partnerships have been crucial in building brand credibility, especially for Club Velocita which operates in the luxury segment. We've partnered with brands like Luxury Card (Mastercard), the Hilton Group including Conrad, UFC Gym, and more both in terms of co-branded digital campaigns and activation events.
4.) Concierge - Most shared economy platforms enable direct communication between the demand side users and the supply side businesses.Whilst this creates less operations for the platform and scalability, we decided to implement our own concierge service sitting in between the car owners and the users. They handle all of the communication with regards to booking enquiries, car delivery, disputes and maintenance. This has been critical in establishing a smooth user experience and process. Whilst there are independent services who partner with Airbnb, Turo or Anyca (in Japan) our C2C sharing model leverages this concierge to do all of the communication in between car owners and members who wish to drive.
5.) Source, Park and Deliver - we launched this service that enables us to fully manage an end to end experience for clients with a portfolio of cars, especially from overseas, who use their cars at a random frequency. This includes support in sourcing cars from trusted dealer partners, acquiring parking (or using some of our parking spots across Tokyo) and delivery when the partner needs to use the car themselves. This has helped us position the service as an asset management service for cars.
Finally, we've had a lot of fun and made a lot of people smile (usually in a convertible Lamborghini or Ferrari). We hosted events at Tesla, Poggenpohl, House of Aston Martin Aoyama, Yumenoshima Marina and a ton of other places. Thanks to all of our customers, partners, investors and of course, our great team, especially Marko Jeremic our general manager. It's been five years but hopefully we have a lot more to come. We currently have 25 cars, a small group of close, trusted members. Thank you to our investors, partners and customers!