August 22, 2022 – On today’s show we welcome special guest, Getaround Founder and CEO, Sam Zaid. Getaround is the world’s leading fully digital and global carsharing marketplace.
On the show, Sam discusses:
- His entrepreneurial journey from Ottawa to San Francisco
- The main benefits of carsharing for both hosts and guests
- What it’s like being a Softbank portfolio company
- His favourite productivity hack
- And more
Welcome investors to The Absolute Return Podcast. Your source for stock market analysis, global macro musings and hedge fund investment strategies, your hosts, Julian Klymochko, and Michael Kesslering aim to bring you the knowledge and analysis you need to become a more intelligent and wealthier investor. This episode is brought to you by Accelerate Financial Technologies. Accelerate because performance matters. Find out more at accelerateshares.com.
Julian Klymochko: Welcoming Sam from Getaround to the show today, calling in from San Francisco, Sam, how are you today?
Sam Zaid: I’m doing very well. Thank you I could joined. How are you doing?
Julian Klymochko: Not too bad. How’s the weather in San Francisco these days?
Sam Zaid: Yeah, it’s summer in San Francisco. I think it’s, you know, the coolest part of the year, every year.
Julian Klymochko: [Laugh] perfect. So, I want to kick things off, getting into your background now, prior to starting Getaround a while back, over 10 years ago, you founded a couple other startups in Ottawa, Canada. How was the experience of launching a startup in Ottawa versus San Francisco and ultimately what led you to kickoff Getaround in California?
Sam Zaid: Yeah, that was a long time ago now. Yeah, but I think, you know, founding a couple startups in Ottawa, you know, it’s really a fantastic experience. It was sort of in that first Renaissance of the web post, the .com bust. So really a lot of interesting things happening back then, like web [Inaudible 00:1:08] big data, cloud computing, AI, mobile. But you know, Ottawa was a very small, very small, but still a vibrant startup community. So, it was a good place to you know, I think, meet a lot of up-and-coming young entrepreneurs and really got to you know, I think we were very close and shared a lot of lessons, learned a lot of things together. Some great companies came out of that, probably the most well-known being Shopify.
And my transition to San Francisco was interesting. I had actually started my second company called 360pi, which was like early cloud, big data and AI. And we actually became the market leader in a space that was called retail price intelligence with customers, like Best Buy and Overstock. Anyway, I ended up in San Francisco by way of attending the inaugural class of singularity university. And it was the school started by Peter Diamandis, Ray Kurzweil, Larry Page, and others. And, you know, while I was there at Singularity and SU, I lived with 39 other students on the NASA Ames Space in Mount View. And it was really from there up, I ended up, you know, sticking around San Francisco, starting get around with my co-founders
Julian Klymochko: Makes a lot of sense. Now with the founding of Getaround at that time. What was the idea back then? And has it changed? Has it evolved as you went from startup to operating company to now revenue generating business on the verge of growing public? How has that transition over time?
Sam Zaid: Yeah, yeah, yeah. I guess on the first thing, I mean, we started Getaround because, you know, we have a world problem at the time. I think we called it car over population. Just because we have way too many cars that, you know, way more cars than we need. I mean, if you add it up, we have something like 1.2 billion cars globally. And on a daily basis we waste about 30 billion car hours. So, you know, we felt that was really inefficient. We also felt that people would share cars more often if like many things technology made it easier. So, what does that mean? That means if you had a fully digital experience where you could just book a car from your phone and be gone in 60 seconds you know, if there was technology in the car, so it was connected, so you didn’t have to meet someone to pick up the keys or arrange, you know, just getting into the car.
When we looked at that, you know, we said, hey, like, we think that technology will change how people fundamentally view cars and use cars, and we should start, you know, start a company doing that. I don’t know that I would say it has evolved, although I would definitely say, you know, we’ve continued to refine it over time. You know, today we’re still a digital marketplace based around this idea of sharing connected cars. You know, we had started in one small part of San Francisco. We’re much bigger today. So, we’re global across the U.S. and we’ve expanded in seven countries in Europe. I’m just trying to think, like probably the biggest evolution to use that parlance has really been partnering and integrating with car companies. So, car companies like Toyota, are also an investor in Getaround you know, where we natively get to integrate into the vehicle. So, you no longer have to equip cars with technology. You can take advantage of all of the richness of data and connectivity that all these new cars already have.
Julian Klymochko: So, you created this digital marketplace for sharing connected cars. Now my dumb question of the day, why would someone want to share their car? Like, what are the main benefits in this marketplace? You have the hosts, and you have the guests. What’s in it for them?
Sam Zaid: Well, I guess Julian, are you saying you wouldn’t want to get your car for free?
Julian Klymochko: [Laugh].
Sam Zaid: No, it’s seriously. I mean, for hosts, I mean, people share it. They share their cars because they can make money, right? So, you get to turn, what’s typically a depreciating asset most of the time, except maybe in the past couple years into a money maker. It also means you could, you know, justify keeping your car rather than selling it. And then of course you get the benefits of still going to use your car when you need one. Another reason was interesting that we’ve discovered over time is why people share cars is because they want to upgrade their ride, right? Like they think, hey, I can buy better, newer, more expensive car and I can offset the cost of owning it by sharing it with other people. And so that gets you sort of like, hey, if I really wanted that nicer car, but I couldn’t justify it, you know, outright, but I can because I’m actually doing good and I’m making some money at the same time.
I’m going to go, you know, do that. And then, and probably, you know, the more recent you know, I guess evolution that we’ve seen to use that terminology in our marketplace is people share cars because you know, some of these users’ become entrepreneurs. And they begin sharing more than one car and do that either like as a side business or you know, their mainstay once they get big enough. And then I guess for guests to people who actually, you know, want to rent those cars. But if you live in a city, owning a car can be a real pain, right. And so, Getaround really unshackles you from the hassle of ownership. And again, because it’s such an easy digital experience where effectively your phone becomes like your car key you know, where you can really replace the need for having to own your own car. So, you can live car free or car light. And then you can also get the car you want for the type of trip you’re taking, right? So, like that could be an SUV for a weekend road trip or Prius if you’re just doing some, you know, errands or shopping on a Saturday or whatever. And finally, an important group for us and some of our users, you know, really just can’t afford a car. So, Getaround, helps them really live and work.
Michael Kesslering: Can you talk about what some of the considerations would be for a car owner in terms of car insurance if they’re using this?
Sam Zaid: Yeah, I mean, so we provide insurance. So as a car owner, you can keep your personal auto insurance. Most personal auto policies have an exclusion for any sort of like commercial or rental activity. And so, when you’re driving your car, your policies, you know, in full effect and when you share it on, Getaround, our policy comes into effect. And again, because we have all the data and GPS position and location information, we know, you know, when someone also driving your car, when it’s returned and, you know, during that period, then our policy would provide coverage as well as whether, you know, potentially if the guest has their own coverage, that also there as well. The most part is you don’t have to worry about that as a host share.
Julian Klymochko: Now, major theme for investors these days is ESG specifically focused on environmental benefits and, you know, investing in companies that either don’t pollute or reduce pollution and things of that nature. Now going through investor presentation, I noticed that car sharing does provide environmental benefits, such as reduction of CO2, emissions. Can you tell us, you know, how does this work? Do you have any numbers behind that to just exemplify what sort of effect it can have?
Sam Zaid: Yeah, yeah, yeah, for sure. I mean, the fascinating thing about car sharing is that households decide to go car free, actually reduce their overall driving and therefore their overall you know, [Inaudible 00:8:42] footprint by 34 to 41%. And so, this is something that’s actually been well studied over many years by the sustainability in transportation research center at UC Berkeley, where they estimate that this change in behavior means that roughly every shared car takes about 10 cars off the road. And it turns out that’s just because people are more rational in the use of cars when it’s paper use. You know, you don’t hop in your car to drive down the street for a cart of milk. In that scenario, on the other hand, when you’re paying 500,000 or $1,500 a month for your car, your logically reason that you should drive your car to get that car [Inaudible 00:9:19] because you’ve already paid for the car.
And so, you know, you might as well get some value for your dollar. And so, what you find is moving more and more people to living car free, living car light has a massive impact on environment. And so, for example, let’s say you had people sharing a million Getaround and those cars have the EPA average rate of emissions for a passenger car, which I think is around five metrics, tons per year. You know, you’ve got a million cars at five metric tons, each offsetting, 10 cars. And so, you do the math at, you know, I think it’s, a metric ton is 2200 pounds per metric tons. So, you’re looking at about a hundred billion pounds of CO2 eliminated each year for a million shared cars. Of course, a million shared cars actually is that not many cars compared to the 250 million cars we have just in the U.S. and so you can really have, you know, you can really offset a lot of pollution we’re facing today by shifting people towards sharing over ownership.
Julian Klymochko: Well, you definitely answered my dumb question on why users would want this, not just the monetary benefits, but also the environmental benefits as well. Now with respect to Getaround business model. Can you talk about how it works? I know that you describe it as asset light. You actually don’t own the cars; you just own the technology behind it and that network. Can you describe more in detail and how you guys generate revenue and gross margin?
Sam Zaid: Yep, yep. Yeah, sure. So, I mean, first Getaround sort of like you think of like an Airbnb for cars, but with like that technology twist. So like Airbnb, we have hosts that own and share cars, and then we have guests that rent those cars when they need them. You know that twist is really that Getaround is fully digital, right? So, it’s powered by our proprietary connect tech. And so that means cars on Getaround are connected and they’re communicating digitally with our cloud systems. Again, that means you don’t, you know, you can book a car, you can walk up to it, open to Getaround app, tap a button, unlock the doors and go. So that’s really that sort of fully digital experience. So like Airbnb, but with more advanced technology. So, you don’t have to meet the host or manually coordinate getting a car key. So very much, you know, true asset light marketplace. And the way we make money again, similar, we have a fee that we charge on every booking that’s charged to the guest. And then we take a commission from the reservation, which is charged to those. And that for us is, you know, that flows to us as what we call net marketplace value. And then, you know, what generates growth margin, our major cost is really just the cost of delivering the service, the technology, customer service, and the insurance, which we spoke about earlier.
Julian Klymochko: Yeah, it makes a lot of sense. And I don’t know if you’re planning on expanding into any other sorts of drivable vehicles or objects, but I could only use this at the lake as someone who enjoys driving a boat, but certainly doesn’t want to own one. That model would make sense for users there. Now with respect to the competitive landscape for Getaround, what’s it like for car sharing? You know, what’s your competitive advantage? What’s the total addressable market.
Sam Zaid: Yep, yeah. Great questions. I mean, car sharing’s been around first for a long time, right? It’s been in the U.S. since I think the year 2000, but really started with asset heavy models like Zipcar and others. You know but turns out it’s actually really hard to scale those models and make money. And so today the models really evolved to be asset light marketplaces, like we discussed you know, light get around that are really leading the way as the next generation. And our advantage there is our unique technology to creates that digital experience. So don’t have to meet the host, don’t have to collect a car key, everything is managed digitally. And it’s a big opportunity. You know, you’re looking at a global car rental disruption, which is $125 billion market globally. But more so than that, you’re really disrupting the fabric of car ownership, right. And that’s a multi-trillion-dollar opportunity whereas cars become more technology enabled, you know, they have more sensors, more data capabilities. You could imagine more and more people sharing cars and substituting out of car ownership, right. Which is that you know, 6 to 8 trillion opportunity every year. And so really that’s the end game that we’re playing for with Getaround, which is providing you a real viable alternative to buying and owning the car as the addressable opportunity
Julian Klymochko: Now in terms of Getaround future. One thing I noticed in your investor presentation, working on attaining positive EBITDA margins over the next few years, what are some of the keys to success in getting too positive EBITDA?
Sam Zaid: Yeah, yeah. That’s a good question. For us, it’s really just a matter of three things. Actually, just continuing to grow the business as we’ve done for over a decade now. It’s enhancing margins gradually by continuing to drive operational efficiencies and then really doing that while exercising prudence over costs and expenditures. And so those are really three things that we’re focused on to achieve you know, positive adjust EBITDA over the next few years
Michael Kesslering: Now, shifting gears a little bit. How is it working with Softbank? Having them as an investor.
Sam Zaid: [laugh] yeah, that’s definitely shifting gears. You know, I’ll say that like overall they’ve been great. You know, they’ve been very engaged, very supportive over multiple years. You know, obviously they’re a large company that you know, gets a lot, I’ll say a lot of attention and flack in the media and can shift priorities very quickly. So that can be challenging as a portfolio company to you know, be on the other side of a changing set of priorities and direction. And that’s probably the biggest challenge I would say is, managing the cycles, the media cycles and everything that goes with you know, the pressure that’s on the SoftBank Corp and as well as the vision fund, but, you know, in the actual day to day, and, you know, for us around the board as investors, they’ve generally been you know, really good partners to us.
Julian Klymochko: Yeah, Masayoshi Son, SoftBank, and the Vision Funds certainly get their fair share of media attention. And I’m sure that’s one of the challenges that you have to face as an entrepreneur, but it’s something that you’ve done for a very long time, in terms of entrepreneurship, basically taking a company from idea to founding, to building, and now taking it public. Was wondering, over all that experience, what would be some of the most significant challenges that you’ve had to overcome?
Sam Zaid: [Laugh] yeah. You know, there’s been so many of them, I feel like entrepreneurship, it’s like a six flags roller coaster, you know, you get to the bottom of one slope and then you’re already staring down the barrel of the next one. And so, to be quite the ride, I would say for us with Getaround. First one we got started was creating a marketplace to convince Americans to share cars. You know, I recall like early on we’d meet with investors and, you know, I think the response given is, hey, I don’t even share my car with my wife or my husband or whatever. And so like, I’m not going to share it with some random person. And so, you know, there’s breaking that mindset is definitely one really big challenge.
Think another was innovating around insurance before inure tech was a thing. Like we actually created one of the first sharing economy, insurance policies, you know, back then, they’re like, I don’t think insurance companies and technology companies ever talked to each other. And then building hardware, you know, building reliable IOT tech that you would feel good about putting in someone’s car, especially doing that as an early-stage company. You know, that was certainly a real hurdle initially. Nowadays less so with the native integration partnerships, OEMs but early on, for sure. And then I would say more recently a thing that’s, you know, scarred in my memory is just really the COVID lockdowns, right. You know, being a mobility company when people weren’t even allowed to leave their homes. And certainly, in France, you had to have a piece of paper that you gave to the police just to like, you know, go like two or three miles from your house. That was definitely one of those, like pull your hair out moments for us, for sure. But a lot of good learnings came out that, but it’s definitely a trying time.
Julian Klymochko: That’s a really good point as a mobility company going through COVID like what were kind of the main things you did to survive that period?
Sam Zaid: Whew. I mean, we did a lot of things. I think we were making like two to three to five critical decisions every day. So, you had to be really fast at decision making and, you know, as a startup, you have to be making decisions quickly, but not that quickly with that little information, you were basically being extremely reactive which, you know, we had to make hard calls around personnel and changes to you know, focus and strategy. We put all of our effort around like the core, core business, and that meant, you know, a lot of the things on the periphery, we just had to sacrifice maybe newer products or newer initiatives that could have born a lot of fruit, you know, that was not the time to be investing in those sorts of things. We refocused all of our product and engineering to work on you know, features and enhancements that had like a 30-day payback as opposed to anything longer than that. So, everything became really short term, like we’re building this thing and we know it’s going to, you know, it’s going to be accretive within a month. You know, we got really creative with you know, financing and just being really sharp on every dollar we were spending and, you know, just managing through it. But it was certainly trying, but I think, you know, the team really rallied and actually we came out of it as a stronger company.
Julian Klymochko: So, you got through the COVID challenge now onto the next milestone, which is taking, get around public emerging with InterPrivate II Acquisition, took a symbol as IPVA. Once a merger completes, you’ll be trading under the ticker symbol, GETR I believe. Now, what are your thoughts on market conditions? Obviously, there’s recession talk, there’s volatile markets, rising interest rates, some startup valuations declining. What are your thoughts on, you know, the whole macro picture?
Sam Zaid: Yeah. You know, I wish I had a crystal ball on that, to be honest, because it would make planning that much easier. I think our view on it is you know; I think there’s still some tailwind coming out of the COVID reopening for a lot of businesses. You know, you are seeing still strong, some strong growth indicators around jobs and things like that. You know, inflation is a real thing, but probably it’s a little bit spiky and transient right now driven by, you know not necessarily driven by pure fundamentals, but, you know, things, geopolitical things have happened. I think we’re taking a view that you know, we might be in a recession next year, but so we want to be cautious around what we do and how we plan for that. But that, you know, the fundamentals of the economy, technology, innovation, a lot of the disruption you’ve seen happen over the past 20, 30 years, that hasn’t really changed and that will continue sort of unabated. And so, you know, we just don’t want to lose sight of the long term, you know, over the next 6, 12, 18 months. But I just want to be, you know, very nimble as we navigate the waters or navigate the roads [laugh], you know, over the next little while.
Julian Klymochko: Yeah. Nice, nice one. So, it sounds like it’s moved forward, but with caution. Now, with that being said. Last question before we let you go here. What time do you wake up in the morning on a work date and what’s your favorite productivity hack if you have any?
Sam Zaid: Yeah, yeah, that’s a good question. So, you know, I actually don’t really keep a set schedule [laugh], which has some advantages. Like I never jet lag, people never believed that, but it’s true.
Julian Klymochko: [Laugh].
Sam Zaid: Which was more beneficial pre COVID, you know, in the world with less remote, but so sometimes I’m up with the crack of dawn. Other times I’m actually working until the crack of Dawn. So, I sort of just listen to my body and figure it out. I’d say that you know, productivity hacks, I do make my bed every morning, because it’s like closes the chapter on the night’s rest and you know, you move on. But my favorite productivity hack is probably, I don’t know if my favorite, I certainly (A) product activity act is, you know, I like to plan my day the night before. So, I always find that if I go to bed, knowing what I’m planning to do the next day, then I wake up sort of more attuned to what needs to get done and I can go straight into flow or straight to the gym or whatever, depending on the day, but I can get right. to it without having to sort of like figure out what’s, you know, in the haze of waking up, what I’m supposed to be doing. And then probably another one would be just, you know, having a great [Inaudible 00:23:18], makes a world of difference. So, you know, if you don’t have one of those, recommend getting one. It’s all I got top of mind right now.
Julian Klymochko: All right, great, well solid advice for our listeners and Sam, thank you for coming on the podcast today. A lot of interesting things happening at Getaround. On the verge of going public. So, wish you the best of luck and we’ll be watching this story unfold.
Sam Zaid: Thank you guys. A pleasure to be here. Have a great day.
Julian Klymochko: All right. Take care, bye everybody.
Thanks for tuning in to the Absolute Return Podcast. This episode was brought to you by Accelerate Financial Technologies. Accelerate, because performance matters. Find out more at www.AccelerateShares.com. The views expressed in this podcast to the personal views of the participants and do not reflect the views of Accelerate. No aspect of this podcast constitutes investment legal or tax advice. Opinions expressed in this podcast should not be viewed as a recommendation or solicitation of an offer to buy or sell any securities or investment strategies. The information and opinions in this podcast are based on current market conditions and may fluctuate and change in the future. No representation or warranty expressed or implied is made on behalf of Accelerate as to the accuracy or completeness of the information contained in this podcast. Accelerate does not accept any liability for any direct indirect or consequential loss or damage suffered by any person as a result relying on all or any part of this podcast and any liability is expressly disclaimed.
