How did a guy who couldn’t rent a fancy car, bootstrap a profitable luxury car rental company?
Noah Lehmann-Haupt is the founder of Gotham Dream Cars, a high-end exotic car rental, an experience company that lets you drive Lamborghinis, Ferraris, Bentleys, and other unforgettable rides.
I invited him here to talk about how he built the business.
Noah Lehmann-Haupt, Gotham Dream Cars
Noah Lehmann-Haupt is the founder of Gotham Dream Cars, a high-end exotic car rental, an experience company that lets you drive Lamborghinis, Ferraris, Bentleys, and other unforgettable rides
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Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of mixergy.com, home of the ambitious upstart and the place where over 800 proven entrepreneurs have come here to tell you their stories so that you can be inspired, learn from them, and use what you’ve learned and what you’re inspired by to go out there and build your own success story. Hopefully one day you will be here doing an interview, too.
In this interview I want to find out, how did a guy who couldn’t rent a fancy car bootstrap a profitable luxury car rental company? Noah Lehmann- Haupt is the founder of Gotham Dream Cars, a high-end exotic car rental, an experience company that lets you drive Lamborghinis, Ferraris, Bentleys, and other unforgettable rides as you can see if you look over his shoulder. I invited him here to talk about how he built the business. Noah, hey.
Noah: Thank you. Thank you very much. It’s really great to be here, and I appreciate it.
Andrew: You were in college, and you had an idea that you wanted to use an exotic car for. What was this idea?
Noah: It’s funny. I think, like any guy, I am a car guy at heart. I think everybody kind of enjoys cars and has a lot of fun with cars. I was in college, and our fraternity, every year we have this rush as fraternities do. You’re trying to impress the other freshmen, and you’re trying to impress everybody to kind of get some excitement around your brand. One of the very early lessons in branding, by the way. I had an idea. I went to the rush chair and I said, “Hey, guys, why don’t we go rent a Ferrari for the night, and we’ll run around campus and we’ll pick up freshmen in the Ferrari.” He kind of was like, “Well, that’s crazy.” And I said, “Yeah, I don’t think it’s that expensive. We can make it happen.” He said, “Okay, go for it.” So I was like, “All right. Here we go. That is the most awesome thing I’ve ever heard.”
I set off to go look to rent a car for this event, and I came up totally empty. It was very frustrating. I was in Boston at the time, and I called companies from New Hampshire down to New York to try to find something and it totally, totally came up flat. It was a little disappointing. That stuck with me. I blocked it out in the back of my mind. I was probably 19 or 20 at the time when that experience happened. I didn’t revisit the thought until many years later, but that sort of got the mind going initially.
Andrew: We connected because of a comment that you put on Hacker News where you said, “Yes, what Paul Graham said is true for my experience, and Paul Graham said look for your own problems, solve them, and then build a business around it.” What I’m curious is, how do you know if it’s a problem that’s unique to you and maybe five other college students around the world or if it’s a big enough problem that you can sustain a business on?
Noah: That’s a really good question. I think a lot of entrepreneurs ask themselves that question. “Am I building a business or a product to solve my problems or the world’s problems?” There are answers to both of those. I think there are people who build very successful products and businesses that maybe only serve themselves, and maybe they serve lots of people. In my case, I can speak from experience. It’s really the only thing I can offer on this one. When I got around to the time of launching my business, fast forward a couple of years, this was 2004, I again encountered another experience where I wanted to rent a car and I wanted to have the opportunity to do this and I couldn’t. I said, “All right, you know what, I’ve now twice in my life wanted to rent a fancy car and have been unable to do this. I have got to be not the only one who has run into this road block before.”
In my case, I used a, and I’m going to give them a shout out because at least at the time they were awesome, called Word Tracker. I don’t know if you’re familiar with them. At the time, back in 2004, they were kind of the place to figure out what Google searches were happening and what people were looking for. I did a very simple bit of market research. I did a Word Tracker search for “Ferrari rental New York City.” Very straightforward keyword search.
I first did the actual search, and nothing came up. I said, “Okay, well, all right, am I the only one searching for it?” So then, with a combination of the Yahoo keyword tool at the time and Word Tracker, came up with an estimate that somewhere between 50 and 100 people per month were searching for the phrase “Ferrari rental New York.” That’s just New York City. It had nothing to do with any other part of the country.
Andrew: And it only has to do with Ferrari.
Noah: Only Ferrari, right. No Lamborghini rental, nothing. So I said, all right, you know, maybe there’s something here. What I did was I kind of ran some numbers. I said, look, if 50 people are searching for a Ferrari per month, let’s extrapolate. Let’s figure out, is there a bigger opportunity? How many times would I have to rent a car in New York to make it profitable? And through the back of a napkin and Excel numbers, I figured out that actually I think it could be made into a business but only with maybe the one car. I didn’t think I needed to be a very big business.
In that case, I used online tools to test my hypothesis, at least initially, that other people had interest in what I was looking for. Now, that being said, who knows whether they are searching for it but maybe they’re only willing to pay $100 for it, and maybe they’re searching for it and they have no idea what it cost. So there are still variables there. But at least I had enough I had enough of a gut to say, all right, well, maybe there’s something here.
Then, after that, it was entirely a little bit of this.
Andrew: Crossing your fingers, for people who are listening to the MP3 or reading the transcript. There is a little bit of that element in every business. You decided to start with how many cars? Not a fleet of, what do you have today, 50 or so cars, right?
Noah: We’re at about 30 right now. We will have 50 by the end of the year, or I’d like to say I hope we do. We started with one, a single car.
Andrew: One car, and it was a Ferrari.
Noah: It was a Ferrari. It was a red Ferrari 360 Modena.
Andrew: What did they lease that for?
Noah: Well, at the time they were anywhere from $150,000 to $200,000. I found one used for about $120,000.
Andrew: And you financed it?
Noah: With my stamp collection. No, I wish that were the case. I managed to raise a little bit of money from friends and family, not a ton. It was a loan. I didn’t get seed, actual investment money. I got a loan for about $150,000. That was enough for me to buy the car and give me a couple of bucks of float capital to get me going for the first couple of months.
Andrew: How many days did you think you would have to rent the car to break even?
Noah: Well, my initial napkin number said if I rent the car four days a month, I will be able to break even on this business. Any more than four days a month, I’ll actually be able to make money on the business. I was willing to take that bet. Four out of 30 days seemed low enough of a barrier that I would be confident that that could actually become something.
Andrew: What would that cover? What expenses? Your monthly payments on the loan?
Noah: When I started, I really boot-strapped. Everything you see here, this warehouse did not exist. I literally parked the car in my garage, and my expenses were the car payment, repairs, fuel, and that is basically it. I was very lean. I built the first version of the website myself. I built the phone system. I used an open-source asterisk project to build more phone system, and so I didn’t have to go out and buy a multi-thousand-dollar phone system. It was really boot-strapped early on. The only expenses I had to cover were the car and then some Google AdWords. That’s how I started to do the marketing. So, at least in the very, very early days, I had extremely low overhead.
It wasn’t my intention to run this business as a big business. That’s not why I started it. I started the business because, going back to your point earlier about [Paul Graham’s] post, I started the business because I saw a problem that I thought would be a fun problem to solve. That was the key for me. It was a hobby. Literally, my attitude was, look, if I can get one car, I will be able to rent the one car. I’m sorry, somebody’s interrupted here, so let me just pause for one second.
Andrew: We are talking to you right from your place of work. We actually are looking over your shoulder, and we see that beautiful yellow Lamborghini and the Bentley, I think that is, in the background, right?
Noah: That’s a Rolls Royce Phantom right over there on my shoulder, and then sitting right behind me is one of our Lamborghinis.
Andrew: So here’s what I’m wondering. I hear this every once in a while from an entrepreneur who says this was just going to be a hobby, it wasn’t going to be a big business. I get that from some kid who was a developer, who was coding to learn how to code, and then this thing that he coded as an experiment took off. You’re a guy–from you conversation with Jeremy, I know this–who got an offer from J.P. Morgan to go work for them. You clearly had a business background that J.P. Morgan valued. I imagine that a person like that, don’t you think of everything as a business? Don’t you plan your life around what business you’re going to run and how you’re going to earn money?
Noah: That’s a totally reasonable question. Let me give you a little bit of background to answer that question for you.
When I graduated from college, and the story that you tell is one that I’m happy about, actually. It was a fun experience. I started a company with two of my best friends right out of college. This was 1999. So this is Dotcom Boom 1.0, when things were exciting and great. I had a really amazing experience. The experience that you’re referring to was, I’ll never forget this, I got an offer from J.P. Morgan. I did an internship in the summer of 1999. They gave me an offer to work there in the asset management division. I remember they sent me the offer letter. May everybody be able to capture this sort of blissful idealism and ignorance at the time. I was like, “No, I don’t think I’m going to take this offer. I’m raising money for a venture-backed start-up. We’ll have our venture money in a couple of months, and that’ll be my job.” I remember saying that. I was so certain that that was the case. There was zero uncertainty in my mind that that is exactly how things would go.
I remember when the recruiter from J.P. Morgan called and said, “Hey, we haven’t heard from you on the offer.” I said, “Look, guys, this is great. I had a wonderful experience, and I really appreciate it. I’m going to have to decline the offer, because I’m going to be starting my own business.” She was kind of incredulous on the phone. She said, “Wait, have you started your own business yet, or you’re going to be starting?” I said, “No, no, no. I’m going to be starting. We haven’t done it yet. She kind of said, “So you haven’t done it, but you’re turning down our job offer?” I said, “Yeah, but we will. I’ve got a couple of months before I have to worry about that.” Now I can understand where she was coming from. It sort of sounds insane.
So I ended up starting this business. We had a really amazing experience with that for a couple of years.
Fast forward now to when I’m in the process of starting this new business. We’re now in early 2004. I had been in New York for a little bit. I was just getting started with this idea. I had been doing a consulting project previously. In my mind was, look, I do, I want to have a job, I want to have a source of income. But in my mind was not necessarily about starting a business. I didn’t know what I wanted to do. To me, the starting of this company was the kind of beer money, rent money solution. It was to me, look, take the immediate bills off my mind. Start a business that’s going to cover the rent and my beer money and a couple of meals here and there, maybe a date or two, and we’ll get started with that. Then this will give me some time to figure out what I really want to do.
Andrew: I see. So unlike the first business where you were so methodical and so planning to hit it big, maybe even prematurely here, you said, “Let’s go a little bit slower. Let’s see if I can just earn enough money to have fun and to figure out what I want to do.” What happened to that? What was that business, and what happened to it, the one that you launched instead of taking the J.P. Morgan offer?
Noah: It was actually one of the most amazing experiences I’ve ever had in my life. We did a total Internet company experience. What was really exciting was that we were several months, maybe six months, and there was another company ahead of us that got acquired for a billion dollars that was in our space. This was like, heady days of excitement. Unfortunately, we did not have that massive excitement of a billion-dollar sale. What happened was, right around 2002, one of our biggest customers, which was an investment bank ironically enough, contacted us. Actually, I’m sorry, it’s not an investment bank. It was one of the major financial exchanges. They were one of our larger customers. They kind of gave us one of those, “Hey, listen, we don’t want anybody else to get this technology, so we’d like to buy your company.” It ended up being closer to an acqui-hire kind of thing than it was a straight-up company acquisition.
Andrew: What did the business do, and what was it called?
Noah: It was called TruExchange, a really fun business. The best way of describing it is, it was a bid-ask trading engine that we built. The analogy that I would use is we were probably 10 years too early. Are you familiar with Intrade, for the prediction market? Have you heard of them? We would have been powering someone like an Intrade. We built this online trading engine to power transactions for buying and selling items like they were stocks. Two of our early customers were a semiconductor trading exchange and a cardboard trading exchange. We moved into the financial space, and we built this really cool product for financial markets to easily launch new products. It was big enterprise software.
It was exciting. I worked with some really awesome people. I had the experience of understanding a venture-backed startup and dealing with the [??] world, and it was a really amazing and awesome experience. That is what brought me to New York. After that company, I went to work for the acquirer of ours for a couple of months on a consulting project. Then, I was on my own and said, “All right. What’s next? I’m here. I’m in New York. I’m in my mid-twenties. Opportunity is ahead of me.”
Andrew: Did buying ads get you a customer, the way you described it?
Noah: It did. It got me my first customer, and it got me most of my early customers.
Andrew: It got you your first customer?
Noah: Oh, absolutely. This is actually really funny. I will not say her name, because obviously I do not like to release too much customer information, but she was a wonderful woman who lived on Staten Island. She wanted to get a Ferrari for her husband as a birthday gift. I remember when she called, and I remember when I actually got the process of booking that rental, because that was really exciting.
I had no idea what to do, so I put on a suit and called a car service. I had the car service come and wait for me at her house. So, I drove the Ferrari out there. She wondered what was going on. She has got this black car service waiting. A Ferrari pulls up, and this guy in a suit comes out and hands over the car. So, it was really exciting, and I remember getting into the car service on the way back to Manhattan and calling a friend of mine, or maybe it was my parents, and saying, “I’ve just handed the keys of my Ferrari to some stranger, and I’m riding back to the city. So, cross your fingers, and let’s hope it all goes well.”
Andrew: How much money did you rent it for?
Noah: I think it was like $1,200. I had wanted $1,500 for the night, and she haggled me down. So, I got a very early lesson that prices in this business are negotiable, because my very first customer ended up haggling me.
Andrew: That is pretty impressive, though, that you can put a couple of bucks into Google ads and end up with a customer who spends over $1,000 for a day of your car.
Noah: Yes, I know. It was really amazing. It proved to me how valuable Google, as an advertising company, is. Secondly, it is a tool for advertisers. I think of how far we’ve come now. It is still basically text ads. Now we have affiliate ads, video ads, Facebook ads, and web use tracking. It is really come a long way from where we were back then.
Andrew: Is it still a person who comes with the car in a black sedan to pick up that driver and take them home?
Noah: No, that is not the most efficient way of doing the delivery. We now have trucks and trailers so that we can have one person do a delivery. Often what will happen is that a guy will put the car in the back of the trailer, the trailer will drive to the customer, and then he will drive the empty trailer and truck back. Now, it does not always work in places like Manhattan. Sometimes we will send out teams of two people with a follow-up car, but we have our own follow-up cars now.
Andrew: Jeremy, in the pre-interview, asked you what the first step you took was, and you told him that you made a flowchart.
Andrew: What was in this flowchart?
Noah: Basically, the way I think is that I like to break things down into a series of manageable steps. Many people who are teaching programming give a very similar response to how you have to think of writing a program. I have been teaching myself programming, and it is the same thing. You have to take a problem and break it up into its component pieces. You have to understand what needs to be built at what time before you can move onto the next step.
So, for me, I put a flowchart together, and I said, “Look. These are the elements of what I am going to need to launch this business, but let us make sure I get the order right. Because, buying the car is definitely on that list, but if I buy the car before I have a good insurance policy in place and before I have a good website up, then that car is going to be sitting there wasting money and time. So, buying the card, interestingly enough, was the last item on the list, because when I bought the card I wanted to start renting it right away.
In this business, despite the good eye candy behind me, this is the worst possible thing right now. Having two or more cars sitting behind me means they are not out being rented right now. Now, granted we are on a cold February night up in New York, so this is not our peak season. I can talk a little bit more about where our other markets are where we do have cars that are being rented. But the idea is, you don’t want your assets sitting idle. The last step in the process was getting that car. The first step in that process for me was getting insurance because I knew that without the car insurance, you’re not going to be able to get the car. The website, the phone system, the rental agreements, those are all details that are basically going to be useless unless you have the various pieces in place. So I put that flow chart together, and the number-one item on that list was make sure you have good insurance to cover you.
Andrew: How do you get insurance for a high-end car that you plan to rent out to other people?
Noah: Very slowly, and very, very difficultly.
Andrew: How long?
Noah: It took me nine months of full-time work to get insurance for this business.
Andrew: Nine months to get insurance for that first car?
Noah: Yeah, for that first car.
Andrew: So it’s a good thing you didn’t buy the car and then get insurance that would allow you to rent it out.
Noah: Right. Precisely. I would have ruined it. If I had bought that car and then left the insurance later, nine months with no revenue, I wouldn’t have been able to make my loan payments and that was it.
Andrew: So how do you even find a person to do this? You can’t call up GEICO and say, hey, I’m renting. You can’t even do this on the sly. You have to actually be insured for other drivers or else if they have an accident, you’re in trouble. So what do you do?
Noah: It was frustrating. Not only are you right–and by the way, I should point out, I have to get a little jab in here–a lot of our competitors around the country do not get commercial auto insurance for rentals. They just go and literally they tell GEICO, “Yeah, it’s my buddy’s car,” and then they rent out a car with a GEICO policy. That’s totally illegal and totally bad. Unfortunately, it’s one of the downsides of this industry. What I had to do was call up insurance brokers and basically pitch my case.
Now, this was a particularly frustrating situation because I was not speaking to the underwriters directly. The insurance business is a very difficult and frustrating business for this way. If I liked it more, I would go and try to innovate in this business, too. The way it works is you have to go through an agent who is a licensed agent, and they have to go to an underwriter. So I basically had to go to these agents and say, “Hey, look, I’ve got this idea.” They would then go to their underwriters. Without fail, their underwriters would say, “I have no interest in doing that. That sounds very risky.”
So the boring agents would then come back to me and say–boring is the wrong word, but most agents would come back to me and say, “Hey, look, sorry, talk to my underwriters. I can’t help you.” I’m a waste of their time because they’ve got other clients who they can help who just want their regular home insurance, and their mortgage insurance, and their life insurance handled, and they generate money for the agents.
What it took for me was to find a couple of agents who actually liked me and were willing to put an unreasonable amount of time into calling insurance companies and getting a quote for me. From a pure logic and from a pure financial standpoint, it was a bad investment. They were getting this kid with one car, an insurance policy that was not going to pay them a big commission. The business might or might not have worked, and they would have to put in a lot of time.
It was very frustrating for me. There were times where i was throwing my hands up in the air when the agents would just say, “Sorry, I can’t help you.” I’m the kind of guy, I want to talk to the decision-maker directly. I would say to them, put me on the phone to the underwriter. I will explain to them why this is a good business. I will explain to them the security precautions we’re going to be taking to make sure that this is not a high risk. They didn’t want to hear it. The underwriters have preconceived notions for what they think it is.
I even considered getting my insurance agent’s license at one point to become my own agent so that I could then call the underwriters and speak to them directly. Thankfully, in the end, I found an insurance agent who got me a phone call with an underwriter so I was able to then get on the phone and, for the first time, have direct contact with the person who was deciding the fate of my business, basically. I know how to make a pitch, so I basically convinced him and explained to him that it was a good investment to write us an insurance policy. “It’s a good investment to allow me to pay you money to insure my fleet.” The did, and that got me going.
Andrew: What did you pay a month for the first car?
Noah: Oh, God, I don’t even remember. It was something like $25,000 per year per car, which threw my spreadsheet completely out of whack for how many days a month I would have to rent the car. We’re now looking at two thousand bucks a month for insurance when I was budgeting a couple of hundred. It changes things a little bit. It’s five days instead of four days now.
Andrew: You told [Jeremy] in the pre-interview, “I plan to make $50,000 a year so I can pay for rent, food, and beer.” Did you do that in the first year?
Noah: I discovered two things when I got started, after a couple of months. One was good and one was bad. The bad thing I discovered is that because of things like the insurance and the repairs, which were much higher than I expected even though I budgeted for Ferrari-level repairs, they were even higher than what I expected. With one car running the business, it was not enough to make that kind of profit to manage the business. So, that was the bad thing. The good thing, I discovered, however, was that the phone kept ringing, and people wanted other cars. And that’s where I kind of began to get a little hint that there may be something here. I remembered that I would get those calls that say, “Hey, I don’t actually want to rent our red Ferrari. I’d like to rent a yellow Lamborghini.” Or, “I don’t want to rent your yellow Lamborghini. I’d like to rent a Porsche, or a Bentley.” That’s where I began to get this clue. It was almost at a necessity. I said, look, I’m not going to make enough money with the one car to run the business in the way that I want to run it. But with two cars, and if I don’t increase my overhead by too much, I can actually now own three cars.
Andrew: Was the first car automatic, or manual?
Noah: It was an automatic. In the Ferrari and Lamborghini car lines, it was a F1 style, or semi-automatic. It uses these two pedals on the steering wheel to shift. It’s got the benefits of a manual, but it’s easy to use like an automatic.
Andrew: OK. I heard you had trouble later on with manual steering.
Noah: Manual transmission. What we learned, is 100% of the manual transmission cars that we purchase and gave to people to rent ended up getting crashed. 100% of them.
Noah: Because everybody thinks they know how to drive manual. Most people do, but it just takes one guy who thinks he knows better than he actually does. The thing about a manual is that when you’re pushing the car to its limits, and you do a bad shift, what that can do is destabilize the car. So, if you’re going around a turn really quickly, and you accidentally shift from fourth gear to second gear instead of fifth gear, you destabilize the car. That can then make the car, and it will go into a spin. So, we had that happen quite often with our manual transmission cars, because these are high performance vehicles. It was literally very easy to see metric. It wasn’t the type of car. If you gave somebody a manual, the manual would get crashed, if you had the automatic, or both. So, we just removed manuals from our fleet, and obviously the accident rate went way, way down.
Andrew: And what happened to your insurance at that point?
Noah: The good thing about the insurance is that the primary line of defense in this business is the customer. It’s the person who rents from us. Their insurance is actually the lead backup if something happens in an accident. So, our insurance is the secondary insurance in the event of an accident.
Andrew: So, if I have a car, and I’m paying my insurance. And I then rent one of your cars, and I get into an accident. My insurance can’t cover the whole value of the car that I’ve just driven off your lot, right?
Noah: Believe it or not, they do.
Andrew: They do?
Noah: Yeah. That’s one of the wonderful things that we did discover. I don’t want to bore you, or whoever, with insurance deals. But basically, and this actually is a useful hint for most people when they rent cars, when you rent a car, whether you go to Hertz, or wherever, your insurance will actually cover you in a rental, regardless of the value of the rental as long as you have full coverage on your own car. Basically the analogy we use is, if you’re driving your personal car (let’s say you drive a Prius) down the highway, you run a guy in a Bugatti off the road, and it’s your fault. Your insurance will pay for the damage to that other person’s car regardless of what kind of car it is. They don’t make a judgment. So, it’s considered property damage, as opposed to your personal car. Which is a wonderful thing we discovered, because we’ve had people smash up some cars, walk away, and say, “Well, what do I do now?” And I say, “Call your insurance company.” And they write us a check. They don’t love doing it, but they do it.
Andrew: That is great to discover that. Where everything you discovered early on was more expensive than you expected, here’s something that’s a pleasant discovery. I often ask founders, how do you come up with your first idea which we did here. And then, how do you come up with the next product. So, let me ask you. First car, I understand. Second car, how did you know what to add to your fleet?
Noah: So, I’m going to answer that question in two ways, actually. They’re both the same answer, but I’m going to give you two stories about that. Our second car of our first product, and our first product was the notion of renting cars out. Our second car was very easy to come up with, because our customers called and asked for it. Actually, it’s the car sitting right behind me. This isn’t the actual one, it’s a yellow Lamborghini Gallardo. This is a much later model and version, but the very first one we had was a 2004 Lamborghini Gallardo. And it was simple. It was a brand new car. I knew a dealer who was selling them, and people were calling and saying, “Hey look, this Ferrari is great, but I hear there’s this hot new Lamborghini coming out. When are you getting one? When are you getting one?”
And, you know, in many ways it makes my job easy. All you have to do is listen to the people who are calling. And you know, we ended up…we have some Range Rovers on our fleet. One of the things we did later…I was never an SUV guy…wasn’t something that appealed to me. I’m not the kind of person who’s into SUVs. So, I didn’t know anything. I didn’t know whether a Range Rover was better than a Navigator, better than an Escalade. But, everybody who was calling and renting our cars was asking for Range Rovers. The people who were renting high-end cars wanted Range Rovers. So, that led me to research, I kept it hearing it over and over and over again, and realize that actually Range Rover is the nicest when it comes, to like a quality, luxury SUV. I didn’t know that. But our customers told us, because they were asking, and they knew better than we did. Now, we’ve learned that, we recognize what the good SUVs are. So, that’s part one. The second part is our second product. So, our first product was renting exotic cars.
A couple of years later we launched a product we called the Dream Car Tour. The Dream Car Tour is an event in which we take, a group of people out, in six different cars. So, we’ll take them out in a Ferrari, a Lamborghini, an Aston Martin, Maserati, and let them try all six cars. We take them on this really awesome route that we figured out, you know, through highways and basically everyone gets in a car, every 15 miles they pull over and everyone does a round-robin switch. And it’s a three hour event and at the end of the three hours you’d have driven 6 different cars, 15 miles each, it’s a huge amount of fun. How did we come up with that product? Well, we came up with that because what we were discovering was that our cars were not renting so much in the middle of the week. That the cars were all renting on the weekends. And that everybody wanted a car to go out to the [??] on the weekends. So, Friday, Saturday, Sunday, a little bit of Thursday, a little bit of Monday. But Tuesdays, Wednesdays and Thursdays our fleet looked like this, sitting behind us. So, what we did was we came up with this idea, well, how do we can get the cars moving more on Tuesdays, Wednesdays and Thursdays. So, we launched this product which is a lower priced product, you know, we charge $895 for this tour. You are getting more bang for your buck so to speak, in that you getting to drive six cars instead of one car. And it’s a fun way to spend an afternoon.
Now obviously, there are some trade-offs. You know, you can’t take it…you are on our route…you can’t take it to your prom or your high school reunion, you know, on the Dream Car Tour. So, it’s more about the driving of the cars. But we launch that product to balance out our high weekend demand with the rentals and so we now have this, sort of, stable, mid-weak product that we can then fill up to keep the cars moving in the middle of the weak. So, again, necessity and we looked at the problems that we were facing and we looked at what are the frustrations that we have and what are the problems we face, how can we solve those problems, that’s how we then launch our second product, the Dream Car Tour.
Andrew: How did you come up with…I understand that you needed to come up with something in the middle of the weak, but what I might have said is, hey you know what, let’s lower the price for middle of the weak…
Andrew: …because people aren’t renting it and if they can’t afford a full day, let’s offer them slices of an hour. I wouldn’t have come up with this experience which is so much more fun than what I just described. I’m curious how you did. How did you know to come up with multiple cars, one route, multiple people at once?
Noah: That’s a great question. I’m going to give the absolute, honest answer which is, we had running into a company out in Las Vegas, who is a friend of ours, who had tried to do an experience like this and had offered it up for sale. He called it the Super Car Run or something, I don’t remember what it was called then. We knew the guy through our dealings in the business after a couple years, and I remember being in his office and looking for the poster. And I said to him, I said that’s an interesting idea. And he goes, yeah we tried but nobody ever signed up for it, we couldn’t get enough people, so, we’ve done one once, said it was really fun, but nobody really, we couldn’t organize well. And I said, well, it sounds like a really good idea, I said, do you mind if we try this at our New York office, and he said, go ahead, I couldn’t make it work, if you can make it work, better for you. So, we sat down, and we said, look, let’s take this basic model of an idea and we’ll go on and work on it. So, I have to give absolute full credit to the guys who were at Rentervet, it was the name of the company, really awesome guys. I know them and I continue to know them and they are really cool, and they get full credit for coming up with that idea.
Andrew: Actually, it’s really helpful to hear that, that you talked to someone else in the business, you saw what they were doing and you brought it back to your market. I want to follow up, but before I do, before I ask a follow up question on that, do you remember the fifth customer that you had?
Noah: Yes, I remember, I mean I don’t remember specifically the fifth, but I pretty much remember my first 10 customers pretty clearly.
Andrew: One of the first ten was a woman who rented a car for her husband…
Noah: Oh, Yes.
Andrew: You guys are still friends with her.
Noah: We are, absolutely.
Andrew: Can you tell people about what her situation was and how you still know her, and then I’ll ask that follow up question on Vegas story.
Noah: Sure. Yeah. It was great. She was really a wonderful woman, actually, or is a wonderful woman. She rented the car for her husband. It was a three hour rental. When I first started, I didn’t realize the logistics required to do multi-hour rentals as opposed to daily rentals, so I wanted to offer something for everyone. So for the first 10 to 20 customers I had a product where you could do a three hour rental, a half day rental, or a full day rental. We eventually dropped the three hour and the half day rental because the overhead was too high. But she rented the car just for three hours or a half day. She had a great time and then emailed; it was really nice to meet her. I met her and her husband. Then a couple weeks later she actually emailed me and said, ‘We had such a really good time on this experience. We’re thinking of launching this business ourselves in our home.’ They lived in Portland, Oregon at the time. I said, great, good for you, go for it. So they ended up launching this really fun little business of a couple cars in Portland, Oregon. They ran for a few years. I would give them advice, stayed in touch with them. They weren’t competitive in any way. We weren’t planning on expanding to Portland so I said, sure, happy to help. And we’ve just been in touch. She kept me posted. We’d stay in touch on Facebook. She got into running recently; I got really into running a couple years ago so we keep in touch on the marathons and stuff, and she actually flew to New York this year and we were going to run together as friends with a couple of other friends in the New York Marathon. They cancelled the New York Marathon this year, but she ended coming out with me and another friend of mine and doing the replacement New York Marathon. We did that in the city. She’s a good buddy, and it’s really nice, and it’s really cool that one of my early, early customers ended up being a friend.
Andrew: So, here’s what I want to know. This person from Oregon, you guys are friends. You were telling her, sure, you can start this business that’s very similar to the one that you just came and experienced that I happen to run. The person in Vegas, you’re friends with them, or you at least talk to them and exchange ideas.
Andrew: Why aren’t you thinking, ‘I might want to be in Oregon; I might want to be in Vegas,’ or why isn’t the Vegas person thinking, ‘I might want to come to New York and Miami and all these places’? Why aren’t you more competitive?
Noah: Yeah. Well, I’m selectively competitive, and that’s a really good question. I was pretty sure that I wasn’t going to expand to Portland, Oregon. I don’t think it’s the primary market that we were looking for. And she . . .
Andrew: She could come to New York at some point. She could say, ‘Oregon doesn’t want’ . . .
Noah: Philosophically, I prefer to take and assume a vein of friendship and collaboration. Maybe she will come to New York. My hope is that if she does decide to come to New York, she’ll call me, she’ll tell me about it, and we’ll agree to be cordial competitors. Frankly, I think if more people acted that way, I think business would be a little bit more cordial. I don’t think there’s a problem with it. I take that attitude. When we expanded to Florida, I reached out to the companies who were down in Florida, and I told them right up, I said, ‘We are looking to work in Florida. We want to come down. We want to meet you. We don’t want this to be a nasty, negative, vicious, ‘we hate these guys.” Some of the companies ignored it, but several of the companies responded and sat down with me and obviously didn’t give me trade secrets but were very friendly and said, ‘Look, you’re going to come whether we talk to you or not, so might as well do this on nice terms and on good terms.’ We ended up becoming really nice friends with a lot of these companies because when they have a customer that’s in a jam, they call us up and they say, ‘I’ve got a guy who’s renting a Ferrari. Our car just broke. Can you take care of him?’ I’m very happy to call up and say, ‘Sure, absolutely, it’d be my pleasure.”
Andrew: When you are selecting to be more competitive, who are you competitive with?
Noah: I get very competitive in certain ways. I am competitive with people that bad-mouth us unnecessarily. So if a new company launches and immediately says, ‘We’re better than Gotham Dream Cars. They suck. They do this and that and their cars are purple and brown and rust and fall apart,’ without ever having reached out to me, then they’re going to become, and my guys in my office get this way too, they become enemy number 1. We had a company that started competing with us in a new product that we launched, never met the guys before, and they literally put up on a web site, ‘Why Gotham Dream Cars’ product sucks and why our product is awesome.’ Totally unprompted. Never met them before, never called them, never reached out. So they became enemy number 1. They just become not loved around here. So I get competitive with people who are nasty to us. I will be friendly to anybody who’s going to be friendly to me, and I will be nasty to people who are nasty to me. And I always give them an opportunity to make that choice first.
Andrew: What a thing to say because frankly if they were going to post this against you in a market where it just doesn’t seem like the kind of market that that would pay off. It’s one thing to say hey, Pepsi Cola is not healthy for you and we have a healthier alternative but to say Gotham Dream Cars and really give you the attention in a world where people might not have known you doesn’t seem to pay off.
Noah: Small minded thinking.
Andrew: I mean, I can see the payoff of getting to know your not competitors. Competitors too but people in Vegas who you’re not going to compete with because we’ve seen a couple of examples of that.
What else am I wondering that we haven’t talked about yet? Which is I want to know about the website and the customer acquisition. Let’s talk about the website.
Andrew: Why didn’t you just throw up a quickie website? Why did you code it yourself? Why did you learn to code?
Noah: So I’m going to give you a little bit of long range on that one too. My first version of the website was a quickie website. I built it. It was ugly. It had nothing dynamic in it. It had art coded in HTML pages and everything. However, one thing it did not have was false information. This again goes to kind of how I am with business constitutionally.
I think a lot of people like to talk about why didn’t you put a website with 10 cars on it and see which cars people call the most about and just tell them that 9 out of 10 were not available and only the Ferrari was available. I have a problem with that and I think some people don’t have a problem with that but call it testing and they call it running an AV test or sample. But I just fundamentally feel like it’s a little dishonest to say Hey, we have these 10 cars that makes us appear like we’re bigger than we are.
There are ways to appear bigger than you are without having to misrepresent information. And I don’t think that there’s anything wrong with appearing bigger than you are. I put a recorded phone system together on a [??] box and said Press 1 for Customer Service, Press 2 for Reservations, Press 3 for Technical Support that all rang on my phone. So that’s fine, they all go to the same place. But I think sort of misrepresenting what you have to offer, I have a problem with that.
So the website was honest and straightforward and that was that. Now, fast forward to now. I’m not sure when this interview’s going to go live. I hope it’s our brand new, spanky, flashy, awesome website. Not actually with flash flashy website. It’s going to be up by then. It’s going to go live in a couple of weeks. But I spent the last couple of months sort of renovating our site and rebuilding it as sort of a personal investment as well as an investment for the company.
I believe, you know, deep down that it’s important to keep your skills current and learn stuff. I wanted to learn programming. I wanted to learn programming for a long time. I’ve always dabbled in it. I would never, ever call myself a programmer or an engineer. But I did Basic when I was a kid and I had my own little Texas Instrument TI994A which is an awesome wizard. I took programming classes in High School. But I decided I really over the last couple of years that I really want to learn and I want to be able to sort of be in charge of my own destiny when it comes to that stuff. I have an idea I want to put together so I have gotten really into it recently and I’ve thought myself [??]. I’ve learned [??]. I’ve thought myself Java Script. I’ve learned some cool frameworks around that and our new website I’m using kind of a lot of new technology. I’m using [??], I’m using Stylus for the CSS stuff. I’m using HTML 5 and CSS 3 and the whole thing is built on [??].
I’m really excited by it because it’s a project I did the entire thing myself. It was to prove to myself that I could do this, first off and that I could learn this kind of stuff. And I feel like I’m walking away with, you know the company first off saves some money because they didn’t have to go hire a firm to do this. It’s going to interact with our iPads that my employees do rental agreements though the iPads. All the reservations that they booked online or gift certificates and everything are going to be sold though our site. Hooks up with Shopify, does really cool stuff. So I’m really excited about it.
Visually creates gift certificates and sends PDFs to people. I’m very excited about it. So I feel like I’m spending a lot of time about it. So I do this not because it’s the most efficient job for the CEO to be building the company’s website. I’ve got a wonderful team to place these days. My COO, Rob Ferretti, is running the business. David Day, he’s doing a really awesome job. This is something that I’ve come to grow into after 9 years in business. Now this is, you know, and one month from now will be our 9th anniversary of the first website going live, March 16th.
So it’s been a long time coming and I’m experiencing what I think a lot of entrepreneurs experience as you go through businesses which is sometimes it’s time to kind of step away from that day to day role and this is you’re going to hear this over and over and over and over and over again. This is a very common theme, and I’m embracing it. I’m not the kind of crazy CEO who’s saying, “No, I have to be the boss forever.” I’m excited by the fact that I got a really great team of people who are running the day to day of this business, which can let me kind of step back and work on special projects and oversee the big picture of the business and build our website, teach myself Rails, which is kind of fun.
Andrew: Let’s talk about how you got past the first 10 customers.
Andrew: The first 10 people came to you from Google AdWords. You did your research ahead of time and you knew that there was some traffic for this, and that traffic ended up converting into real customers that you got to meet, charge, grow your business off of.
What happened after the initial customers came in from AdWords? Where did you get the next group of customers?
Noah: Believe it or not, most of our customers have been through internet searches for a while. AdWords was obviously the beginning. Thankfully, what started to happen was I learned about SEO, and I learned about natural search results, and I said, “Hey wait a second. This is awesome. I get traffic to my site and I don’t have to pay for every click. This is the best.”
We have always been, it’s been something I’ve been strong with, you know, very early on we. . . I spent a lot of time making sure that our rankings were high, so we tend to rank very highly for things like Ferrari rental or Lamborghini rental or Bentley rental. A lot of the customers stopped being purely paid customers, and many of them moved to the organic search customers.
Andrew: I’m smiling, by the way, because I was testing this as you were talking. I said let’s do Bentley rental New York, for example.
Andrew: And, boom! First result, GothamDreamCars.com.
Andrew: Yeah, and it takes me directly to this page where I get to see what the car sells for, where I get to ask for a quote on renting it, and so on.
Andrew: And you learned search engine optimization yourself?
Noah: Yeah, I just read a lot. I read a lot of forums, I read a lot of stuff. There was a thread recently, actually, on Hacker News within the past couple days about search engine optimization. Some guy posted a really funny message in his robot’s TXT file as a message to Google about how hard they’re making it for SEOs to do their work.
The sentiment has changed, actually, recently. I think in a good way, actually. A lot of people are sort of anti-SEO these days because they feel like it’s manipulative. I think one of the really good points that was made on this conversation was, “Look, SEO has changed a little bit as Google has gotten better.” SEO, it is less about making sure you have the right keywords in the right place to making sure that your site is accessible and logically laid out. It has become information architecture, and Google is catching up with the fact that they now reward sites that have unique content and are original and well designed.
SEO recently has become more an effort in information architecture and creating a logical, well designed website than it is about knowing that you have lots of backlinks and lots of anchor text that says this and that and the other thing.
Andrew: I can see. Even in the URL structure, it’s GothamDreamCars.com/NewYorkCity/Bentleyrental. And that’s you developing that yourself? You made sure and you coded it?
Andrew: You made sure it was there and you coded it?
Noah: That’s how are URL structure is. That was, you know, and that still holds forward today. Our new site is going to have a very similar structure because you’ve got to make sure that you’re, you know. . . But again, that’s less about SEO and more about it’s logical. Right? You’re looking at a page about renting a Bentley in New York City, so you would think that the URL should be indicative of renting a Bentley in New York City.
Andrew: Yeah, as opposed to just GothamDreamCars.com/car58653.
Noah: Exactly. /car/php/?13, or something like that.
Andrew: In your business, if I’m going to be a repeat customer, I’m basically a sucker for not buying the same car. If I’m going to keep renting the same car from you over and over, I should just be buying it. Is this an issue?
Noah: I’m going to disagree with you on that.
Noah: I’m going to disagree with you on that one.
Noah: Yeah because buying a car is a big commitment. First off, buying a car requires a chunk of capital, right? So, to buy this Lamborghini behind me on the used market, figure you’re going to pay about $120,000. You can go and lay out $120,000 and buy the car. If you want to lease it or finance it, you’re going to spend $2,000 to $3,000 a month for several years. You’ve now got to make this multi-thousand dollar a month commitment over a period of years. It’s very difficult to get out of a lease. You’re going to have to deal with buying and selling it.
Now, I’m not trying to say that renting the car is less expensive in the long term. If you’re going to own a car, and you know you’re going to want it three years, yeah, of course, it’s going to be less expensive to own it than renting it from us. But, if you’re an occasional user and you want it for one weekend, two weekends, three weekends a year, that kind of thing, it still makes more sense to rent it than to get yourself involved in a big commitment.
Andrew: All right. I can understand that, then. How much repeat business do you get?
Noah: We get a good amount of repeat business. We see different patterns in repeat business. There is probably a handful of people, a nice group of people who come to us every year for their vacation. We have this one wonderful customer in Florida who I always think of. He is this 76 year old guy, he just turned 76 this year. Every year he calls us up and he rents a Lamborghini for a week. He wants a different model every year. He calls us up and he’s got this very slow, quiet voice, “Hi, it’s James calling, I’m here for my Lamborghini for the week.” And we bring this bright orange Lamborghini to this guy in Florida, Boca of course every year.
Andrew: What a great experience.
Noah: We get folks who we never hear from again, obviously, it’s a one time experience. We also get an interesting kind of repeat customer. It’s sort of like a wild party, binge customer almost. They will come in and they will rent every car in our fleet for a day or a weekend and they will do this for a month or two. You’ll see the same face over and over again. They’ll come back and say, “This is great I love the Lamborghini, give me a Bentley. This is great give me the Rolls Royce.”
Andrew: That kind of experience over a week will cost ten thousand dollars or more.
Noah: Yeah, we will get people who will spend a lot of money on this. They will indulge and they will have a really great time, and then maybe we’ll never hear from them again. I had one guy who came back and he spent around ten thousand dollars. He’ll say, “Look, you know what, I just spent ten thousand dollars but I got to drive a bunch of different cars for a day or two days each, I’ve now learned that I don’t like Lamborghinis but I really like Bentley’s and you’ve saved me from having to go out and buy a Lamborghini and discover that myself. There is no other way to figure that out.
Andrew: Do you have an info marketer package where you rent it by the hour just so the info marketer can take pictures in front of the Lamborghini and then post it on his website and say, “Hey you could be as rich as me if you paid ten thousand bucks for this info marketing.”
Noah: Definitely not a special package. He’s definitely renting for at least a day.
Andrew: He’s doing it for the day and doing multi photo shoot.
Andrew: This is me going to the grocery store, you could be going to the grocery store in a car like this. This is me going out at night. You could be going out like this instead of your bad Toyota.
Noah: Let me tell you something, one thing I’ve figured out about this business, by the way, just so that people don’t have to feel too bad about when you around Miami and you look and see all of these people pulling up at clubs in Miami. You go out to the Hamptons and you see all these guys driving around. Everyone is like wow. Everyone is really rich. Most of these cars are rental cars, OK? I know all the cars in the industry, I know all the people, I know all the folks. Most of the cars you see rolling around South Beach are rental cars.
Andrew: How can you spot it? What’s a tell tale sign of it?
Noah: I just know my competitor’s cars. I know our cars. I recognize our plates and I know that a lot of my competitors down in Miami, specially, have specific colors of their cars and I just recognize them. One guy has a Rolls Royce convertible that is a burgundy red Rolls Royce so I’ll be down in Miami and I’ll see someone driving by looking really cool driving the burgundy Rolls Royce and I’ll point to my friend and say, “Eh it’s a rental. I know it.”
Andrew: The recession of 2008 was rough on you guys. What happened?
Noah: So it was rough, it could have been a lot rougher and I’m really thankful that it wasn’t. 2008, at the end of the year, right around when the whole Lehman Brothers thing started to happen, which I guess was September 2008, something changed for the first time since 2004, when I started, which is the money that we were making stopped going up. Our bank account balance took a turn of direction. We like to keep really close metrics about what we’re doing, but, at the same time it was the first time I’d ever been in the position where we’d look and realize and say, “Wait a second. We’ve got to steer the ship a little differently, this is ’04, ’05, ’06, ’07, even early ’08, everything was great then all of a sudden people just stopped calling, for a seven month period when the world was basically in a panic. So that was a big shock to the system when that happened. The fourth quarter of ’08 was a very painful quarter. We lost money. It was a painful quarter.
Andrew: How do you recover from something like that? Do you just wait for the economy to improve?
Noah: Well, there is no magic, first off. I wish there was a magic thing. We did what I think a lot of businesses did, we recognized the problem, first off, which I think is important. We sat down and did a major cost analysis. We said, “Look let’s trim costs. Let’s trim the fleet. Let’s get rid of cars that we don’t need. Let’s free up some cash.”
Generally in our business we’ve got a lot of cash tied up in assets. It does better sitting in the cars out on the road making us money than it does sitting in our bank account. We did that. There was definitely a little bit of concern, obviously, because you never know really where things are going to go. But what I managed to do was trim our costs enough and keep the business going in a way that, thankfully, I was able to trim costs by more than the amount that our business went down. That’s why we were able to continue and survive and thrive. We took a hit in 2008, but we were profitable in 2009. Our revenue was down a little bit. It wasn’t down a ton, but it was down.
Andrew: What size volumes are you guys doing?
Noah: On average, we were doing around $3 million a year at that time. This year we’re going to end up doing more. We’ve grown our business. But right around then we were doing about $3 million a year.
Andrew: At this point, every year since 2008 you’ve done $3 million in sales or higher.
Andrew: About three million.
Noah: Yeah, roughly, give or take.
Andrew: Are the net margins more than 10% in this business?
Noah: We don’t disclose our margins, unfortunately. What I will say is it’s a good business, but a lot of people think it’s a really, really great business. It’s not a really, really great business. A lot of people count the money coming in. They say, “A thousand dollars”–here’s the math that a lot of people do that’s wrong. They say, okay, the Lamborghini costs $120,000. So you charge $1,000 a day for it. So all you have to do is rent it for 120 days and you’ve paid off the car, and then it’s all gravy from there. That is just wrong math because it’s not the way it works.
Noah: First off, every dollar that comes in doesn’t go into the car. We have employees, overhead, things to pay for here. There’s a lot of overhead here. I’ve got a lot of employees to support the business. We’ve got a lot of payment on our cars. We don’t own all the cars outright. We’ve got leases and finance agreements on some of the cars, so you’ve got to pay interest on that.
Like I said, it’s a good business but it’s not this, you know, I’m sitting at home Scrooge McDucking in money there. The fringe benefits are what you see behind me here.
Andrew: Let me tell you a secret of the way I do my research. I can tell you this because it didn’t work in this case. Right now on my screen I’ve got Ali Moiz whom I interviewed the past, who started a company in your space. Often, what I do now, I’ve interviewed hundreds of entrepreneurs, they’re all on my Skype, and I reach out to them when I’m doing an interview or when I want to do an interview and they’ll say, no, that guy really doesn’t have what he claims to have. He’s just trying to promote himself.
Noah: Sorry, one second. One of our air pumps just went on. It’ll be off in just one second.
Andrew: No problem at all. So Ali Moiz had a company called HiGear.
Noah: I knew them well, yeah.
Andrew: You know it. I wanted to ask him about your business. He’s been open with me about other companies in the past. I just didn’t get a chance to ask him about yours because he’s not on Skype. Tell me about his business. I’m curious about why HiGear didn’t work out. They were doing peer-to-peer car sharing of luxury cars. What are the challenges in that space?
Noah: I’m going to pause just one second until our air pump turns on. That’s our mechanic’s air pump. Real time. You guys get the full experience here, what it’s like to be in a shop like this.
Andrew: The cool thing, Noah, is that Skype actually has been canceling out that noise, which is great for us that we don’t here it.
Noah: Good job. Well, I can’t hear anything right now, so give me two seconds.
Andrew: Take your time, take your time.
Noah: Give me two seconds, as soon as that fills up, the air pump.
Andrew: Let me do this. Let me read something that I got from someone from the audience while you’re dealing with that noise issue.
Andrew: Here it is. Jack Couch is a Premier Member who emailed me. I want you guys to know about his story because I want to introduce you to more of the people who are in the audience. He’s running a site called monchilla.com, easy-to-use alternative to Quickbooks that will show you how much money you have in the bank in three months. I asked him, “What did you learn from Mixergy that allowed you to build up Monchilla?” He says, “You guys”–and I love that he knows that it’s not just me here, that there are people who do research and put these interviews together–he said, “You guys did an incredible interview with Rod Drury, the founder of xero.com. Through that interview, I got a sense of what it would be like to do business with him. I reached out to him. This is a guy who’s building a competitor to Xero. He reaches out to him just like you did, Noah. He said, “I thanked him for doing the interview and talked to him about integrating Monchilla payroll with xero.com so that they could better support their customers with our payroll engine,” says Jack. “If it wasn’t for the Mixergy interview, I never would have reached out to him.”
Let me tell you this. First of all, Jack’s got a great business in monchilla.com, which is an alternative to Quickbooks, but what I love about him is he saw a competitor and he said, “I’m going to not just be a viewer. I’m going to reach out to him, and I’m going to get to know him.” Then they ended up doing business together. I always say this at the end of the interview: Find a way to say thank you to anyone who you’ve benefited from on Mixergy.
Andrew: It could lead to something like this. So, Jack, thanks for being here.
Noah: All right, I’m back. The pump is turned off now so I can actually hear something here. Sorry about that.
Andrew: Oh, great.
Noah: I’m sorry. Get me back where we were.
Andrew: Sure. I’ll say quickly, Jack, thank you for being a Mixergy premium member and congratulations on the success of monchilla.com.
Noah: Congratulations, Jack. That sounds awesome. Thank you.
Andrew: All right, so what I was asking was about HiGear. Peer-to-peer . . .
Noah: Right, HiGear.
Andrew: . . . peer-to-peer high end car rental.
Andrew: What’s the deal with that business?
Noah: HiGear was a really interesting business idea. I followed them closely and I think it was a very interesting idea. There are some fundamental problems with the peer-to-peer model. It requires understanding the psychology of car owners. It’s a very subtle thing when it comes to exotic cars because it’s a little bit different than traditional cars. I have to admit, I’m an Airbnb user. I’m a host and a user of Airbnb. I both have people in my apartment when I’m traveling and when I’m there sometimes, and I also rent other people’s AirBnb places. So I understand that aspect of the peer-to-peer economy. A lot of my friends think I’m crazy when I tell them that I host Airbnb folks at my home when I’m there. They say, ‘You let a stranger into your house?’ And I say, ‘Well, there’s a filtering process that you do here.’ They think I’m crazy. Most people think I’m crazy when I tell them that I do that. I think that it takes a certain kind of personality to be willing to share your personal assets and your personal goods with other people.
Like my personal car, I drive an Infiniti, I don’t drive anything fancy or super fancy — a nice G37, which I love — but I don’t want anybody else driving my car because every single time I lend somebody my Infiniti — first off, I know what people do to rental cars and I know how people treat them. They treat them basically well, but they also treat them like rental cars. We don’t have this sort of massive, people bring back the cars totally trashed, although it happens sometime, the garbage and other things in the cars. But my car is my space. I don’t want other people in my car. I know what it takes to prepare a car. I understand what it takes to clean a car. I understand what it takes to maintain a car.
Right now, I’m driving my Infiniti, and it’s got a thumping noise in the front right wheel because of when I lent it to one of my very good friends about a couple months ago. I’m a very easy-going guy about this; I didn’t yell at him, I didn’t get mad. But personally, I know that that thumping noise in that wheel started when I lent him that car. Am I going to go get in a fight and end the friendship? No, of course not. But the fact of the matter is, I don’t want to deal with that.
Exotic car owners are like me times 1,000. Most people who own these nice cars, it is their baby. That is their toy. That is their reward for hard work. They bought that Ferrari; they bought that Lamborghini. Renting it out to other people to make a few bucks, to cover the payment, just doesn’t compute in the psychology. Sure, there are some people who want to do it. I get owners who call me up all the time and say, ‘I own this car. It’s sitting in my garage. Will you guys rent it out for me?’ I have one conversation with them. I say, ‘I just want you to be aware of what you’re actually signing up for. You’re going to have strangers driving your car. It will get damaged. It’s not if it gets damaged; it will get damaged.’ And when it gets damaged, you can’t guarantee that it’s going to go to the perfect body shop back in Italy to get it built back to factory specs. We’re going to have to take it to a standard high-end repair shop. We can’t go spend $100,000 to get the perfect flakes of paint that came off the original, the bark of the tree that Enzo Ferrari used to get that coat. It’s one of those things where the reality of what happens when you’re letting your assets and your goods be used by other people is very different from the theory of what you think it’s going to be like. Companies like RelayRides and the car-sharing model where you’re using your personal car, they’re working and they’re thriving in many ways because people don’t care so much about their regular old beater. Their Camry is a way of getting them to and from the office, and if you can make a couple extra hundred bucks a month to offset that car payment, great. Wonderful. But when it comes to a Ferrari or a Lamborghini or a really high-end car like that, people are just going to hesitate and the money isn’t worth it.
Andrew: That makes sense. And according to this TechCrunch article that I’ve got here in front of me, there’s also a theft ring that targeted them and HiGear.
Noah: Yeah. That is very unfortunate bad luck. I was not expecting that to happen. It’s bad that happened, and that’s a big insurance hit, and I’m sure what happened is their insurance company basically said, “Look, guys, we’re going to cover you now, but this is beyond the scope of what we planned for.” That was unexpected, but again, there’s this notion of when we’re renting cars to people, you’re meeting the people that you know. We have a series of background checks and we’re swiping the credit cards ourselves and we’re signing the rental agreements and we know how to run the driving records.
I don’t want to say that that’s something that I would have predicted that would have happened because theft happens to everybody. We’ve had cars stolen from us. It’s happened. What I would have expected to happen would have been owner hesitation after, the sort of reality of what happens when you rent a car.
Andrew: Right. I’ve got to get him on. I know he’s someone who contacts a lot of my past guests. I’ve got to get him to come back on here and talk about High Gear, too.
Andrew: Finally, a Kennedy. I guess we have so many stories here of people who’ve rented your cars.
Andrew: Why don’t we talk about a Kennedy. I guess Senator Ted Kennedy was a. . .
Noah: That was the best experience I’ve had with this business.
Andrew: Tell me about it. What happened?
Noah: The most memorable. Yeah. It was really a wonderful time. We got a call from his office, an assistant basically saying, “I’m calling from Senator Kennedy’s office. Victoria would like to rent,” his wife, Vicki, “would like to rent a car for the Senator for his birthday.”
This was a couple years ago. I’m a Kennedy fan. I’m a fan of him, I’m a fan of the family, so it was really cool to get this call, first off. We’ve dealt with celebrities before, and we’ve kind of dealt with that kind of stuff, but to deal with a guy of his stature and his legend was fun.
We worked the rental. We went some details. We basically came up with a plan that they were going to rent this beautiful black Aston Martin Vanquish for their weekend trip down to their house in Virginia. I was really happy when they actually booked it because they actually made it happen.
I had to go on this delivery. You know, I didn’t do the deliveries at this time, but I had to do this one. I got in the truck with our transporter and drove down to Washington D.C., put the Aston Martin in the back. We arrived at his home, unload the car. Victoria Kennedy comes out with their stuff, and they’re kind of there, and she’s like, “Shh. We’re going to go get the Senator.”
I’m sort of standing there like, “All right, cool,” and out walks Senator Kennedy. He kind of looks at this car and he looks at his wife. He says, “What on earth did you do?” He said, “You didn’t buy this for me, did you?” She says, “No, no, honey, no. This is just for our weekend.” He got so excited and he smiled. You know, he’s got that infectious grin and that wonderful face, and so I snapped a picture with him, which was really wonderful.
Then I got to take him on a test drive. We always take our customers on the test drive. I get in the car with him. I’m showing him around the car. The whole thing is very surreal. I’m sitting in this stunningly gorgeous black Aston Martin Vanquish with Ted Kennedy in the driver’s seat, and I’m in the passenger seat and we start driving around the block. He makes a couple turns. He gets us on to some main drag in D.C. and we’re at a stoplight.
Again, very surreal experience. I’m sitting at a stoplight in this gorgeous black Aston Martin and people kind of start looking over and start realizing, like, “Wait a second, not only is there an awesome car right there, but that’s Senator Kennedy driving the awesome car.” He kind of does a little bit of a sheepish wave and he kind of looks at me and people start pointing and everything. He looks at me and he goes, “They’re all looking at the car, not me.” I said, “Senator, I think they’re looking at you and the car.”
It was really an amazing experience. They had a wonderful time. They took the car for the weekend. Thank goodness, the car didn’t break down. That was my huge fear was that the car was going to break down, because Aston Martins can be finicky. He had a little trouble getting the battery. . . He killed the battery at one point, accidentally, so he called me up. I have this wonderful voicemail, “No, it’s Senator Kennedy calling. I can’t quite get the car started. I may have killed the battery. Can you give me a call back and let me know what I should do?”
I called back and he goes, “Oh, we got it figured out. No problem, thanks.” I was like, “All right. That was cool.”
Andrew: You know what? At our height, at Bradford and Reid, maybe it’s, yeah, I guess it was at our height, my brother and I finally said, “We need to take a vacation. We went to Vegas and we really lived it up. We went out to the best clubs. We went out to a nice hotel to stay in. . . Sorry, did I say Vegas? It was in Los Angeles. He rented a Dodge Viper. . .
Andrew: . . . a car that was way out of reach for years, even renting was out of reach for years, and now suddenly he had the money, pretty much to buy it and to rent it. I know to buy it because he was under 21, I think, and he put up the money to, as security said, “Look, if anything happens everything’s protected”.
Andrew: We drove it and the feeling of driving it down the road, the eyes that you get, the way that people look when you pull over is unbelievable. The feeling of luxury and excitement. I’m not a car person at all. As you saw, I wasn’t following a lot of this conversation. Even when it came to small tech specs of the cars, I just felt like, “Ooo, I better not screw it up”. But I felt the excitement of it. So I understand why so many people come to Gotham Dream Cars and do a rental for a day or the weekend.
Noah: You know when I bought our first car, the dealer took me around on our test drive, first Ferrari. And he turned to me and he said, “Have you ever driven a car like this before”? And I kinda said, “no”. And he said, “Look, you gotta understand, you are gonna be a celebrity when you drive this car. You have to learn what it’s like. You know people will pull up behind you, people will follow you, people will wave at you. It’s a different experience being behind the wheel of a car like that”. And I saw it when we did it. It was really kind of an amazing experience and it happens.
Andrew: It does happen. And the website is gothamdreamcars.com, for anyone who wants it to have it for them or if you’re a newer entrepreneur…I remember, I forget who it was, I did an interview with an entrepreneur who showed his phone and he said, “Look, this is the car that I wanted to buy when I made it.” And he sold his company and he was able to buy it. And he had a newer goal.
Noah: Nice! Nice!
Andrew: So even if you’re not ready to rent it, there’s a bunch of beautiful shots here for you to put on your phone or put around the office or as your wallpaper on your computer and get yourself fired up. For me . . .
Noah: Two plugs for us. We’re relaunching our website, so I don’t know when this interview’s going to live, but if you’re looking at the old, narrow one we’ve got this awesome fancy, new website that’s going live pretty soon.
Andrew: When do we find out about that?
Noah: It’ll be up probably February 18th or 19th.
Andrew: So yeah, this’ll be up after that.
Noah: OK, cool. So then it should be up by now. We’re now in New York, Miami and, as of February 19th, we’re launching Los Angeles. So we’ve got a bunch of cars available there. And yeah, you’ll be able to check it all out on our website.
Andrew: All right, thank you for being here and this story was inspiring. Congratulations.
Noah: Thank you very much! This was really fun. I appreciate it.
Andrew: Thank you for being a part of it.
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