Monday, November 27, 2017
How Borrow Is Changing The Model Of Owning A Car, With Jon Alain Guzik
West Hollywood-based automotive startup BORROW (www.joinborrow.com) recently launched a new, subscription service which gives users access to a pre-owned, electric vehicle (EV) through short term leases, of only 3-, 6-, or 9- months. The startup is backed by MuckerLab, and led by CEO Jon Alain Guzik. We spoke to Jon about Borrow and what the company is up to with its service, and how it wants to change the model of owning a car.
What is Borrow?
Jon Alain Guzik: Borrow is a short term, automotive subscription service. We offer 3, 6, or 9 month static terms for our subscriptions. We fall somewhere between a rent-a-car and a long-term lease. What we're trying to do with Borrow, is to concentrate initially on electric vehicles, because EVs present a great use case for our users. For us, the relationship with our users starts with the subscription. It's all about post-acquisition, and having a great relationship with our users for the length of the term. Whether that is free treats and gifts via email or text, or our app when we push that out in Q1 of 2018, we give them services like free maintenance and charging, and what have you. It's all about post acquisition.
How did you start this?
Jon Alain Guzik: I'm a longtime automotive person. I started by career at Yahoo Autos, and then was at the company Driverside. I then started a big media company in the power sports and automotive space, called RideApart. The idea here was that mobility was going to change dramatically, and that there were many people in the new, next cohort and younger generation who wanted to see something different. The didn't want to have a big payment, and didn't want a down payment, and didn't like the long term contracts. So, Rodrigo and I started Borrow. It was initially named Prazo, and was a pass-through system which allowed users to get a two year lease without a dealership. However, we learned that the dealership model was not so onerous that people wanted to use a phone app to get a lease. However, what we did learn, was that what was onerous were the terms those dealerships were handing out. With Borrow, we're trying to present a different way, where there is no money down, where you get help with the insurance, and everything comes in one package.
So, are you looking to replace the way users and dealerships work now with leases?
Jon Alain Guzik: We're not going to put dealerships out of business. We think working with dealers is really important. However, for the moment in time, we think a 2-year or 3-year traditional lease doesn't work for everyone. We are presenting an alternative to putting down a lot of money and doing a long-term lease. Instead, we're going after the next generation marketplace, rather than looking to replace what is already there. For us, it's about the relationship with the user. Since we own the vehicle, we also will be having a longer term data collection play. It's about how you wire up the vehicles, start collecting data, and work with local municipalities, states, and other partners to actually foment change in the EV space. We want to do something really interesting in vehicle-to-vehicle and vehicle-to-infrastructure behind the scenes.
You own your own cars? Isn't that very expensive to do?
Jon Alain Guzik: We are both a software-as-a-service, as well as an asset company. If you look at what other companies are doing, like Karma and Canavs, we are also acquiring vehicles. What we are doing, because we have the right people who know how to acquire vehicles, is we're focused on electric vehicles, because that keeps the costs down, and all the vehicles are pre-owned. If you look at the initial MSRPs of the cars, we're actually getting quite a big discount, because they are pre-owned, and reconditioned up to CPO standards. We also are doing a debt round, which will close at the end of the year or early next year.
So where are you now with the service?
Jon Alain Guzik: We have about 70 people on the waiting list, and we've moved almost a dozen cars. We only launched in August, and we're now growing 40 percent month-over-month. You can go to joinborrow.com, pick a car, whether that's an Infiniti, Nissan Leaf, or BMW i3, or even ta Tesla Model S Platinum, and pick your terms. We have to get users those cars within 3 to 5 days.
Normally, with a lease or sale, there's a credit check or other efforts to make sure the people getting a car can afford the payments. How do you make sure the people using your service can pay?
Jon Alain Guzik: We have a proprietary back-end system we are using, which prevents both fraud and also makes sure that clients are actually worthy customers. We use a proprietary back-end system which takes into account a number of variables. However, for us, I fyou rent a car, you don't need a credit check. Wat we're doing is an alternative to the traditional dealership model. That's a different thing entirely, where they are giving you a brand-new car for three years. For us, we don't expect to do a hard credit pull for every single customer, especially for just a three month term. Our system is constantly changing, and we're updating it to make sure the system is optimized for the right users and providing the right amount of fraud protection.
What has been the hardest part of the business so far?
Jon Alain Guzik: It's convincing those first few people what we're doing is interesting. If you look at the traditional dealership model, if you approach them about buying a fleet of cars, wiring them up, and giving them to people with a short term model, they look at you like you're crazy. So, for us, it's convincing them that the model is working. If you look at the subscription automotive space, there are lots of companies popping up, but we're really trying to do something different. I think that's why our partners at Mucker, our VCs, have been very great, helping us find product fit and market fit. The hardest piece is scaling in a reasonable manner, and make sure every user gets great service as we scale.
Finally, what's next for you?
Jon Alain Guzik: What's next for us, is we are doing a large debt round, and then a Series A, and we hope to have 100 cars plus on the road by the end of the year or early next year, and we'll grow from there. We also will push out into vehicle-to-vehicle and data collection aspects of the business. On thing we are working on, as well, is how we work with local, sate, and city municipalities to get these vehicles into economically disadvantaged neighborhoods. It's not just for corporations, or college students, or millenials, or gen X-ers, this is a way to get electric vehicles to alternative users. By doing that, we can also help them raise their credit score and get insurance, and have a positive effect through the Borrow lifestyle. We're also working with infrastructure companies, to make sure there are chargers available where there is a big concentration of users, and partnering with others to enable a multi-modal transportation revolution.
Thanks, and good luck!