The Riders Share Story

Dec 5, 2022

Hello and welcome to Riders Share!

Back in 2013, I was 24 and on my second month riding on a used Kawasaki Ninja 250. I bought it with a Salvage title to save money (and because I was recently single, with too much time on my hands). I missed the adrenaline of surfing back home in Peru, my dad had a motorcycle, and I knew the feeling was close. Living in Irving, Texas and commuting to work was impossible on a bike: you would get sweaty to work or rained on, so I was using my Ninja strictly to go fast on the highway and feel adrenaline once a week. I was so new to motorcycles that I didn't even know cornering was the most fun part of riding!

I landed a new job in Fort Worth with General Motor's finance arm, and I had to move my stuff to my new apartment while hangover from the celebration. The bike was the last item, and as young people tend to be, I got very overconfident on it with my minimal riding skills. I was going about 80mph when I lost control of the bike on a curve because I didn't lean enough. I fell off and rolled for 20 feet before coming to a stop. I was damn lucky not to hit anything and to be alive, but I did break my left hand: my metal watch got stuck against the pavement and destroyed my hand on its way out. The road rash was way more painful than the broken bones, and that's when I learned that jeans aren't very protective. On the other hand, my leather jacket and helmet did a wonderful job.

17 metal pins later and thousands in medical bills, I wasn't ready to ride again anytime soon. I was afraid!

I did eventually return to sport bikes, but today I ride like a grandma

A few months later, the fear subsided and I started missing the adrenaline again. Many people that crash severely quit riding, but perhaps because it was entirely my fault I was not that affected by the event.

I could not afford to buy a motorcycle replacement and I was not going to use it very often. I was also was looking for something less sporty, under the erroneous impression it would be safer. So I looked into renting a motorcycle. That's when I discovered there was an opportunity here:

  • The nearest motorcycle rental shop was >30 miles away from my apartment. There was only one for the entire Dallas - Fort Worth metroplex
  • The cost of $200 a day made it more expensive than outright owning a motorcycle
  • The Yelp reviews mentioned lack of inventory during the summer, no refunds despite having no inventory, and generally terrible experiences - I wasn't alone in experiencing this

Working in the auto industry, I was familiar with Turo, the largest car sharing platform in the world. They had applied the Airbnb business model to cars, and their success was starting to show at the time. Similarly, RVShare and GetMyBoat were allowing people to list their RVs and boats for rent. So why not motorcycles?

The answer was obviously insurance. Motorcycles are riskier than cars or RVs.

It turns out that my new job with GM Financial was pricing the riskiest car loans in their portfolio to ensure we make a profit. Part of pricing required understanding every cost and revenue of the business, and working with the risk management team to understand who will not pay their loans. I learned that GM's subprime loans were only 20% of their portfolio, but 60% of the profits in the years after the Great Recession.

Managing risk better than anyone else in your industry can be a huge competitive advantage. GM had purchased the only subprime lender to be able to securitize loans during the Great Recession for $3.5 billion - the best risk manager, and was now reaping the profits. This lender got good by having more data, more discipline and by using machine learning to predict and segment risk.

So that is how the idea for Riders Share came to exist: I would implement cutting edge risk management techniques and use the peer to peer rental model to make renting a motorcycle as affordable as possible for most people.

It took me several years to finally convince an insurance carrier to take on this risk with me. I also learned that the technology piece was significantly more difficult than I anticipated: way more than just a website. I spent $25,000 of my savings building an app that didn't work and was very difficult to commercialize (most of our web traffic comes from Google searches).

Riders Share wouldn't be as successful as it is today if I hadn't met this guy: Brendon Lamb.

Brendon and his badass pet pig Marco

After cycling through 4-5 potential technical cofounders, I posted on Reddit/r/motorcycles that I needed a cofounder. Only Brendon answered the call, and he was 5x faster than the people I had worked with before. We are still working together, and he's been able to do a lot more with less. While other successful sharing websites started with $10 million in funding, with second time entrepreneurs at the helm, we have been able to do it with less than half of that. Brendon was based near Lancaster, Pennsylvania, so from the get go we were fully remote company. We both grew up playing online videogames and understood highly competitive and coordinated teams could be done online too.

The www.riders-share.com domain was $5 when I bought it, and though we all hate the two s in the middle...it was $5!

The Launch

I moved to southern California in 2017 for a job with Hyundai Capital - and because I thought Los Angeles would be the best market to launch Riders Share. Brendon restarted the codebase from scratch while I saved money and we were ready to relaunch in February 2018. I got into a full time MBA program at UCLA on full scholarship, and this would help me free up time for Riders Share (my manager job at Hyundai was starting to take up all my free time).

Brendon took care of coding, I did customer support and everything else. I would escape my UCLA classes to answer customer service calls, and Professor Alderton dubbed me the chief Chief Customer Service Officer. I took out 8 0% APR credit cards simultaneously, plus my savings, to fund Riders Share to the tune of $100,000 - about half of that spent on insurance, and the other half on marketing. We lost $100 per rental due to insurance, but I knew we needed a track record before we could negotiate better rates.

I bought a V-Rod to list on Riders Share. Here, I was stranded with a check engine light, which totally ruined my date (she is taking the picture)

From February 2018 to July 2018, we grew from nothing to roughly $60,000 worth of rentals per month. I handed business cards at biker bars in Los Angeles, talked to everyone I could, emailed motorcycle journalists to write about us and ran online ads. I listed Riders Share on Craiglist, Yelp, etc. and tried every growth hack in the book.

It was awesome, but we were not profitable. Venture capitalists wouldn't even take meetings with me because I didn't have a network, an impressive team or a truly revolutionary business idea. We were 2 weeks away from running out of cash when a fraudster used a stolen identity and credit card to steal a motorcycle from Riders Share and crash it. Luckily, one of our top hosts out of Houston happened to be a venture investor at Texas HALO Fund. He was making thousands off his listed Harley Davidson. He funded us with a $300,000 round in September 2018, which allowed me to pay off the credit cards and keep going.

By October, we had cut our insurance costs by 75% and were close to having a business model that worked. We kept growing, and we received $500k from our investors. During the time, we participated in pitch competitions sponsored by the UCLA program, which helped broaden my network. Pritzker Group Venture Capital, gave us a $20k investment and some training, and helped us get into the Techstars Los Angeles program shortly after I graduated from UCLA. We invested almost all the capital into marketing, we grew 300% YoY, and I could brag that I grew Riders Share to over $1 million in rentals while completing a full time MBA program.

Brendon and I during the Techstars Los Angeles accelerator program in 2019

I pitched Riders Share to roughly 100 investors, practically every VC in Los Angeles and nearly every early stage marketplace investor in the world. Everyone turned us down, except LiveOak Venture Partners. One of the partners used to work for Turo, so he knew we were growing 10x faster than Turo with 1/10th of the capital, and was able to get past my inexperience and lack of pitching skills. He was required to invest in Texas though, so we ended up moving the HQ to Austin, TX in March 2020 to make it work....2 weeks before the pandemic hit.

The Growth Phase

With a fresh $1.5 million in the bank and insurance costs low enough to make a positive gross margin, I thought we were ready for hypergrowth. Then the pandemic happened. We discovered 90% of our customers were plane travelers and consequently our revenue tanked. Furthermore, people willing to rent motorcycles that year were risk-takers, got into more accidents and our insurance costs did not allow us to have the expected positive gross margin. We managed to grow 20% despite the setbacks, but I had to lay off newly hired people and continue to do nearly everything myself.

In 2021, we continued to improve our ability to manage risk, finally had positive gross margins, and grew over 100% as we invested in marketing again with LiveOak extending us more capital. Over 3,000 motorcycles were listed on Riders Share by September 2021. However, that growth was not enough for venture capital funds that invest in marketplaces. They like to see 300% yearly growth at that stage!

In 2022, we are on track to grow close to 100% again, serving millions of dollars worth of motorcycle rentals with a team of just 7 people. We continue to improve our insurance costs and gross margins, with plans to cut them another 30% starting January 2023. We have also found a marketing channel that is twice as efficient as the ones we used in 2021-22, and plan to invest heavily on growth in 2023. We need to grow just 40% to be profitable while affording to invest in marketing and growth, per our internal estimates - and we think we can grow a lot faster with recent improvements in marketing tactics. In fact, October 2022 was our first month with positive net income, proving we are very close. We have raised under $5 million in equity, and I think we are about $500,000 in growth investing away from achieving profitability.

We are fundraising again to achieve the goals of profitability and fast growth. While leading RV and boat sharing companies have over 150,000 vehicles available for rent, we have under 4,000. There is a lot of room to grow! We also don't even have a mobile app as we have kept the team very lean to survive the pandemic. The opportunity is huge, and the future is bright!

The Vision

The world has enough manufacturing capacity to feed, clothe and transport every human being if it was put to good use. The internet era made information more widely available to better allocate this capacity. The next phase is the sharing economy: building enough trust among humans so that we can share things and enjoy them, maximizing utilization and reducing waste.

Motorcycles are only used 3,000 miles per years, compared to 12,000 miles per year for a car. And cars sit in driveways 99% of the day!

We want to make motorcycles and powersports more readily accessible for more people. In an era when people are glued to their screens ever more frequently, we are building a community that gets them outdoors. In an era where people have become risk-averse, we are making adventures easier to access and hopefully helping them find the confidence to take more risks, wisely. Luckily for Riders Share, encouraging safety and cautious riding is not just the ethical thing to do but also how the business achieves profitability.

We want you to be able to rent motorcycles, ATVs, or snowmobiles anywhere in the world, not just the US. We want you to be able to list riding routes, events, and even classes in your area, not just motorcycle rentals. Our mission is to make powersports accessible while promoting safety.

Thank you for joining us in this journey. It's going to be even more fun in the years ahead!

Guillermo Cornejo

CEO | Riders Share

And thank you to the Riders Share team, and to former team members that gave their all.

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