This is a writing sample by “nycghostwriter,” AKA Barbara Finkelstein. It is “1st Biz-Tank presenter gears up to transform ride-hailing economy,” a cover story published in the October 2017 issue of B-Tank Magazine. You can get professional ghostwriting services from a published non-fiction writer. Email me or fill out the short form on my contact page.
Car-sharing startup WaiveCar had an idea to turn electric cars into mobile billboards. Drivers would get two hours free rental and pay a nominal fee for additional time. The road to success was full of bumps — insufficient funding — and unexpected off-ramps — meetings with a globally renowned automaker. Co-founders Isaac Deutsch and Zoli Honig talk about the hard work and fortunate encounters that led to WaiveCar’s success, and to a decision by BizTanks’s venture capital “moguls” to give them $2.5 million in seed money.
By Barbara Finkelstein
Just when you think that technology has stopped disrupting the travel-and-transportation industry, along comes WaiveCar. The newest entrant into the ride-hailing economy has joined Uber, Lyft, Via and other paradigm shifters as it rides a cultural wave that is turning a nation of owners into Share America. And like all startups with traction, WaiveCar has arrived in a crowded marketplace at warp speed: It has gone from whizzy tech idea to competitive threat in little more than a year.
WaiveCar owes its swift success to co-founders Isaac Deutsch and Zoli Honig, whose partnership is a serendipitous blend of advertising savvy and software expertise. Deutsch was an aspiring advertising entrepreneur when he approached Honig, a neighbor and educational app developer in New York City, with a business model that resembles TV advertising: The car rental — like a TV show — is free because an advertiser subsidizes it.
“I told him he was crazy,” says Honig. “This was Isaac’s first business idea and I suggested that he start with something where he didn’t have to buy hundreds of thousands of dollars worth of inventory. ‘Make an app, I said.’ ”
But Deutsch had run the numbers and they added up. He had researched the New York City taxicab industry and learned that ride-hailing businesses, such as Uber, were beginning to run roughshod over taxicab profitability. He investigated car rentals and found that at least one global company reported a six percent drop in total revenues between 4Q 2014 and 4Q 2015. And a look at the apparent decline of car ownership among Millennials suggested that younger people were forgoing car ownership altogether in favor of on-demand car services via app.
Confident that Deutsch had studied the marketplace and found an opening for WaiveCar, Honig jumped on board. “I saw that we could actually make this work,” he says.
Honig stipulated a clear division of labor. He would develop the app and related technology. Deutsch would handle industry knowledge and capital investment.
“Incredibly, Isaac found our first investor and we were off to the races,” Honig says.
A Drive-by Surprise
Shortly after their company went live, Deutsch and Honig had an aha moment when they witnessed WaiveCar’s ease-of-use with their own eyes.
“We were sitting in our office terrace in Santa Monica and watched a guy walk up to a WaiveCar parked down on the street,” Honig recalls. “We saw him look at the sign in the car window tempting passersby to ‘drive me for free.’ He put down his stuff. Took out his cellphone. We had our WaiveCar system tied in with Slack and we saw him download the app, type in his driver’s license number and credit card. His license went through clean — and he was good to go. Seeing our own process at the back end and in real life was amazing for us.”
An easy-to-use car-sharing service was no small feat. Every other comparable service required a key-fob, magnetic card or special hardware to unlock the vehicle. WaiveCar had made it possible to access a car via cellphone at zero cost to the consumer.
“That had never been done before,” Honig says.
Without ongoing investment, however, WaiveCar was in danger of stalling out.
Enter Biz Tank
At about the same time that Deutsch and Honig were building WaiveCar, Brooklyn branding consultant Joel Klein was putting the finishing touches on BizTank, a New York facsimile of TV’s Shark Tank in which aspiring entrepreneurs pitch their business ideas to industry titans and compete for venture capital. Klein’s overarching goal: To aid the Jewish businessperson and empower the Jewish economy.
“My mission from day one was to match funding with creative people in our community,” Klein says. “And when I came across Isaac Deutsch’s pitch, I had to call him.”
In that initial conversation, Klein says Deutsch struck him as a “go-getter.”
“I invited him and his partner to participate in BizTank’s very first session,” Klein says.
Deutsch believes he got Klein’s attention by “daring to be different.”
“I suggested that Joel and his ‘moguls’ visit waivecar.com and then listen to me explain what distinguishes WaiveCar from the rest of the ride-hailing pack,” Deutsch says.
Deutsch also wanted to tell BizTank in person why WaiveCar sought a $2.5 million cash infusion in exchange for a ten percent equity stake in the company.
No business plan. No detailed outline. Just a website and a dream.
In late 2016, Six BizTank moguls sat in Klein’s Havemeyer Street office to hear Deutsch — and Honig via Skype — describe WaiveCar as the hail-riding economy’s first free electric, emission-free car-sharing program. Having scrolled the website, the moguls now got a deeper dive into the startup’s business model.
The chief source of WaiveCar’s revenue comes from the sale of advertising space atop each car. Every WaiveCar roof is equipped with a military-grade digital screen whose advertising messages are “geo-dynamic,” changing with location and time. “Say that BizTank only wants to advertise when WaiveCar passes the moguls on Havemeyer Street,” Deutsch said. “The advertisement in the screen can switch automatically to a BizTank ad. We can do the same for Starbucks or any other company or brand.”
Additional revenue comes from the advertisement “wrapped” around the body of the car, a marketing strategy borne out of WaiveCar’s relationship with startup Wrapify.
“Together with the wrap and the screen, we estimate that we can make upwards of $6,000 a month per car,” Deutsch says.
Because the lion’s share of revenue comes from these two advertising channels — a more modest revenue stream comes from drivers billed $5.99 an hour for using the car beyond the two-hour free limit — WaiveCar can boast that “we waive the fee, you drive for free.”
At BizTank presentation time, WaiveCar’s fleet consisted of twenty cars wrapped in an advertisement for Oscar Health Insurance Corp., a Google-backed startup that is using big data to improve health outcomes. The co-founders scored the Oscar account by giving the insurer a “great deal.”
“After all, they were ‘pre-buying’ before we even had a fleet,” Honig says.
For the near term, Deutsch and Honig decided not to drum up additional advertisers (other than WaiveCar itself) until they could prove to their satisfaction that their business model worked.
And satisfied they were. Next in line for digital display and wrapping: Hulu, a U.S.-based video-on-demand subscription service.
Impressed But Cautious
Five of the six moguls were impressed, but still cautious. They asked for further details about initial investment, market valuation, competitive threats and profitability. They became increasingly confident that the new travel-and-transportation startup had raised $1.3 million in its first round of funding; were valued at $25 million; were clearing $300 a day per car, and faced virtually no competition anywhere in the country. In fact, WaiveCar’s nearest competitors —Zipcar and Car-2-Go — had been in business much longer before reaching WaiveCar’s numbers.
The five moguls were also happy with WaiveCar’s decision to test-market its car service in Santa Monica, an eco-friendly coastal city in western Los Angeles County. The need for an affordable car-sharing service there was clear. As with neighboring L.A., Santa Monica lacks reliable public transportation; car ownership is in decline, and existing car-sharing services are expensive. Zipcar, for example, charges a $7.99 monthly subscription fee and an additional $12.99 per hour of rental time.
Moreover, California is an ideal laboratory for the development of the car-sharing economy. The state offers tax incentives to drivers of electric cars. Metered parking for electric cars is free as are charging stations for the first hour and a half. And many high-tech employers are providing electric car allowances for employees willing to use carpool lanes.
Indeed, electric propulsion, combined with ride-hailing and self-driving technologies, could mean that transport-as-a-service will make dramatic inroads into car ownership in California. Just about everywhere else too.
A Giant Leap Forward
In a September 2017 follow-up conversation with Deutsch and Honig, BizTank’s Klein expressed admiration for the courage it took to come up with an unabashedly big idea. “You convinced an advertiser to come on board before you even had a product,” Klein muses. “So many startups out there are trying to raise money, and WaiveCar did it by having its proof-of-concept locked down.”
BizTank’s Klein praises private equity investors Adam Margules and Neil Rock for betting their money on the right horse so early in the game. The moguls’ seed money has helped WaiveCar pursue deals with two more high-profile advertisers.
And it helped underscore the truism that fortune favors the prepared mind.
“Isaac and I went to an Internet of Things (IoT) conference in Silicon Valley thinking we could make some good industry connections,” Honig says. “Unfortunately, the automotive aspect of the event was really small. We weren’t meeting anybody. It was frustrating.
“We were planning our departure back to L.A. when all of a sudden these two ladies sit down. Apparently, the food at the conference was bad and they had brought in some sushi. Person after person came over to them and asked where they had gotten it. Finally, I said to them, ‘The next time I come to a conference, I’m setting myself up with a sushi chef so that I get as much attention as you!’ ”
Honig and Deutsch struck up a friendly conversation with the women and discovered that one of them ran an accelerator program for Korean startups.
“She asked us what we were doing there,” Honig says. “We said we were looking for vehicle manufacturers and venture capitalists. She goes, ‘Well, do you know John Suh?’
“‘Of course we know of John Suh! We’d love to meet him.’
“So she goes, ‘John is a good friend of mine!’ ’’
The woman took a picture of Deutsch and Honig and texted it to her friend, John Suh, vice president of Hyundai Ventures, along with a sly message: “These guys are dying to meet you. Where are you?”
Within five minutes, Suh was listening to the WaiveCar pitch. Halfway through, he said, “This is perfect for what we’re trying to do with the IONIQ, our new electric compact car.”
Suh had a directive from Hyundai Motor America to investigate electric car-sharing options. A week after the IoT conference, he sent a Hyundai representative to check out WaiveCar in Santa Monica. A week after that, Deutsch and Honig flew up to Hyundai’s Menlo Park office to make yet another pitch. Within three months, WaiveCar announced its strategic partnership with Hyundai at the Los Angeles Auto Show.
With appropriate funding — and a we’ll-tell-everyone-about-us mindset — Deutsch and Honig had solved what they call their chicken-and-egg problem: To get big advertisers, they needed a big fleet of vehicles. To get a big fleet of vehicles, they needed big advertisers. With the Hyundai deal, WaiveCar came into 400 IONIQ electric models as well as a client committed to one full year of advertising on each car.
Nearly two years down the road, Deutsch and Honig credit chutzpah, failure and some divine providence for their accomplishments to date. “Hindsight is 20/20,” Honig says. “So, we don’t dwell on the past. We just look forward.”
Be that as it may, the two thirtysomething entrepreneurs offer up seven lessons they learned in the course of building WaiveCar from the ground up:
- The perfect is the enemy of the good. “Our app definitely had bugs,” Honig says. “But if we insisted on making a 2.0 version, we could have lost our first advertiser, which was under its own open enrollment deadline pressures.”
- Listen to industry experts who will tell you the truth about your business. It’s not about your idea. It’s about your execution.
- If you’re going to fail, fail fast. The sooner you know what’s not feasible, the sooner you can move on to what is. Learn from your mistakes and keep going.
- Knock on every door. When asking for funding, you’re going to get a hundred no’s before you get one yes. Even if you don’t get money from BizTank, leverage the moguls’ contacts. You never know who might introduce you to a potential funder.
- Know your business inside and out. You’ll never convince anybody to give you money if you haven’t done your homework.
- Use feedback to refine your idea. Getting a business up and running is no time for hurt egos.
- Be open to people. Use the weather or the sushi as a pretext to start a conversation. You never know who’s going to offer you a sympathetic ear — and an outstretched arm.
“Business success is not always about having a great technical education,” Honig says. “I didn’t learn my technical skills in school. Mine came from playing around. Even as a little kid, I liked to press buttons to see what they would do. What you want for your own kids is an environment that tolerates experimentation, failure and some risk. I try to keep in mind that the rules of life were made up by people no smarter than you.”
“Look for great role models,” Deutsch says. “I was lucky enough to watch my father and grandfather shoot for the moon. They had some successes, some failures. I figured I would try to follow in their footsteps.”
What’s Down the Road
At press time, WaiveCar has begun rolling out Hyundai’s IONIQ cars in Los Angeles. Prospective markets include Austin, Texas and Portland, Oregon. The startup is also working with business partners to implement a fleet of self-driving electric cars.
How technology will provoke the next industry disruption is anybody’s guess. Judging by Isaac Deutsch and Zoli Honig, though, the next generation of moguls will come from individuals who can see the business, technology and cultural opportunities hidden in plain sight. For those unable to leave obsolete business models behind, be aware that a taxi medallion for a yellow cab in New York City — worth about a million dollars in 2014 — is yours today for about $250,000.
ABOUT THE AUTHOR
Barbara Finkelstein has written and podcasted for major corporations, universities and not-for-profit organizations. She has contributed book reviews to The New York Times, Newsday and many other U.S. newspapers, and currently writes for the Forverts, a Yiddish-language website and magazine.