Peer-to-peer car-sharing company RelayRides announced Monday it is going national, the first peer-to-peer car-sharing program to do so. I sat down with RelayRide’s founder Shelby Clark and asked him my burning questions on the peer-to-peer car-sharing model.
ARN: Zipcar just got into the peer-to-peer market by funding a smaller competitor, Wheelz. How does that affect RelayRides?
SC: We’ve had a healthy dialogue with Scott Griffith, the CEO of Zipcar, for a long time and we’re on great terms. I’m excited to see Zipcar get involved with peer to peer. Zipcar has a really strong focus on universities, where Wheelz is. Zipcar is a competitor, but there are way more people that don’t car share than those who do. There are 260 million cars on the road in the U.S. and 1.2 cars for every licensed driver. There are less than a million car-sharing members; that’s less than half a percent of car drivers in the U.S. It’s just incredibly wasteful.
ARN: Why go national now?
SC: We launched almost two years ago in Boston, and since then we’ve been saying “no” to many people in other parts of the country. We’ve wanted to stop saying no.
ARN: How will you deal with the first handful of RelayRides car sharers in a new market? It may be difficult to connect car owners with renters.
SC: In the early days there will be areas where we don’t have really strong coverage. But RelayRides is an inherently viral marketplace, where renters want to see more cars and owners in the marketplace. People really connect with what we’re doing. They get really enthusiastic. They like telling their friends and neighbors. We’ll see growth through strong word of mouth. And we’re trying to make it as easy as possible to get a car up and running in the system. That’s why we’re launching this key-exchange program. It’s the absolute easiest way to get a car off and running and available to rent in less than five minutes. We want to make this process really frictionless.
ARN: Only three states have regulations (pending the Washington State governor signs a recently passed bill) for which insurance companies officially recognize that their insureds are renting their cars. How do you feel about moving into states that don’t have those laws?
SC: The legislation is nice to have but not necessary. It helps consumers become more comfortable with a new idea, because it’s been considered by their legislature as being safe and good for consumers.
ARN: But renting a car is considered commercial usage.
SC: Your personal auto policy does not cover commercial usage of your car, but it doesn’t mean that using your car for commercial purposes has any real impact on your coverage. To give you an example: A pizza delivery boy and realtor are considered commercial usage of your vehicle, as is renting your car out through RelayRides. You need a different auto policy to [cover commercial usage], which is why RelayRides has a $1 million insurance policy on every reservation. But that said, State Farm doesn’t go around cancelling every pizza delivery boys’ insurance policy. They could drop you, but it’s pretty unlikely. We’ve been operating in Massachusetts for two years now without a single problem. The law makes it really clear that renting your car out is legal.
ARN: The laws are written such that the car owner can’t make more than his or her costs. Will that pose a problem?
SC: Yes, your earnings can’t exceed your costs. But you have a lot of things that can be considered car expenses; depreciation, gas, even an iPod connection. If you do exceed the earnings, it’s not the end of the world. You would no longer have those protections, so the worst case scenario is the insurance carrier would drop your coverage. It hasn’t happened yet; we’re confident it won’t happen, and the downside is pretty manageable.
ARN: What is the oversight?
SC: The law doesn’t specify reporting, so we’re not providing our detailed user information to insurance companies. It’s not entirely clear how they would enforce it.
ARN: Have you had any claims on your policy yet?
SC: We have had some claims and there haven’t been problems. We’re really confident that our insurance will hold up.
ARN: Have you had any cars stolen?
SC: We have not had any cars stolen to date. All the cars that we have right now have GPS. With [our new agreement with] OnStar, it has GPS and the system can slow the car to a stop so it can be recovered.
ARN: But moving forward those vehicles that don’t have OnStar will have to be part of the key-exchange program. Isn’t that risky?
SC: We encourage the car owner to check the renter’s driver’s license when they meet them. We have a lot of ways to triangulate the information online and then you have the in-person backup as well.
If we know who you are, we know your identity and we have your credit card info and address, it’s very unlikely that you’ll run off with the car.