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Dr Juliet Bourke  00:01

If you've ever booked a rideshare or rented a holiday home online, you're part of the sharing economy. And while brands like Uber and Airbnb have made it mainstream, the offerings of the industry go way beyond accommodation and transport.

Robert Chan  00:18

Valuations of the sharing economy are up to $1.5 trillion globally. All these assets in our built environment, they're all things that can be shared.

Dr Juliet Bourke  00:28

Robert Chan is the Managing Director of Turo, a peer-to-peer car sharing platform. His goal is to put our underutilised assets, like cars, to better use.

Dr Juliet Bourke  00:41

So what does it take to run a successful marketplace in the sharing economy, and if you're considering sharing the assets at your disposal - either in your business or at home - what are the risks to be aware of?

Robert Chan  00:41

The idea of collaborative consumption as the antidote to overconsumption. The average power drill is only on for 13 minutes of its life. You don't want the power drill, you want the hole in the wall. And so the idea of how do we get the benefit without having all the stuff is really what the sharing economy is trying to.

Dr Juliet Bourke  01:23

This is The Business Of, a podcast from ���������¼� Business School. I'm Dr Juliet Bourke, an Adjunct Professor in the School of Management and Governance. All right, Rob, let's start at the beginning. What is the sharing economy?

Robert Chan  01:41

It's quite a simple idea, which is the idea of what's mine can be yours. It's peer-to-peer access to stuff, to things that we own, via digital platform. What I think that allows people to do on the host side is actually to empower them to make income, earnings, on this asset that is usually depreciating. It's those experiences that the sharing economy can facilitate because of the business model that we have.

Dr Juliet Bourke  02:11

How big is the sharing economy?

Robert Chan  02:14

In Australia when we cut it down, it's about 10s of billions of dollars across all different asset types. And so it's a large market, and to unlock that market it's really about building trust, building a community that understands the brand, and really solving everyday problems. Other examples of the sharing economy - in the accommodation space, Airbnb have definitely done a really good job at opening up doors so people can stay with hosts that are local to get ideas of what to do when they're there. In the other car space, Uber has done a really good job in the ridesharing space. So when someone is going somewhere you can get a seat on that ride and bring that efficiency to a transportation system that is often very congested and very dense. And then in the bike sharing space, on an active transportation lens, those bikes are also part of a shared network that users can rent and get to where they need to go, whether it's home or to the bus or to the train.

Dr Juliet Bourke  03:16

Airbnb I get as part of a sharing economy because you've got some unused space, a bedroom, and that's how it started out. I get the idea with cars, you're not using your car all the time. But actually, the bikes is a really good example of one where a business has been created that's not about sharing the bike that I own in the backyard. It's about a new bike that's sitting there. So how do you differentiate between sharing economy and one that's just an asset that's being used by someone else?

Robert Chan  03:46

So in the world that I live in in tech marketplaces, it's either peer-to-peer access - which is you're accessing someone else's things, so Turo, Uber, Airbnb - or fleet based. So someone else owns the thing like a business, and you're getting temporary access to that. And the fleet based versus peer-to-peer based nuance is what drives a lot of the different expressions of our product and service offering to the market and to end customers. So for some of these docked bike sharing operators, for example, they have the responsibility to ensure that those bikes are where people get off the train and are available so that they can get home reliably. And as a fleet operator, that is a different type of cost base that you have to operate on, much more asset heavy versus a peer-to-peer marketplace, which is where it's much more asset light.

Dr Juliet Bourke  04:40

So let's talk about Turo. What does Turo do? 

Robert Chan  04:43

So at Turo, we put the world's 1.5 billion cars to better use. Because they sit dormant 95 per centof the time, and our job is to put under shared assets to better use. We're a mobile app that you can download, in fact 320,000 Australians have downloaded us in the last three years to try and find cars that they can rent from hosts. And those hosts are local Australian entrepreneurs. It could be moms and dads with an extra car looking to pay off a car loan, or they could be small businesses that have grown out of the sharing economy. That's what we enable guests and hosts to do, to generate income as well as find a more convenient, flexible, often more affordable solution. We facilitate the payments in the app, we facilitate the communications in the app, we help people find it... And that's what we do in our model to essentially just reduce frictions and help make those matches occur.

Dr Juliet Bourke  05:44

And so was there a gap? You can take an Uber, you can lease a car... What was Turo doing that was so unique?

Robert Chan  05:53

So, on average, an Uber trip is roughly 15 minutes. On average, a Turo trip is four days. And so you're not being driven, you're driving the car, and you're driving it often to a location where you need access to the car all the time. It gives you a different type of transportation solution. There are different car sharing providers, for sure, and I think all of that magic of that connected, multimodal experience that's really the goal of what the transportation system needs. It's, yes, more public transit, more active transport, more car sharing solutions - more electric car sharing solutions would be fantastic too - as ways for us to get access to the movement, not necessarily ownership of an asset.

Dr Juliet Bourke  06:39

Well, I get that. And I get that not everyone wants to own a car or can own a car, but there are already options out there. If you talk about, sort of, long term leasing, you could go to Budget Rent A Car, or you could go to Go Get. So why go to Turo?

Robert Chan  06:56

That's... Okay, here's the magic Juliet. Our business model allows you to get access to all different makes and models. If you're a fleet-based operator, you're generally going to have a very defined fleet, but because of our peer-to-peer nature on Turo, globally, you can get access to 1500 different makes and models. So anywhere from a Suzuki Jimny to a Polestar. We find SUVs are a very common family vacation vehicle. You can test drive a Rivian when you're in America - it's not a car that we have here in Australia. It's that peer-to-peer nature that gives you the access to that long tail of vehicles. And in the car industry, there's a lot of change that's happening right now. There are so many manufacturers bringing their cars into market, so if you are looking to test drive those cars you can find all of that range on Turo, and that may not be the same experience with other providers.

Dr Juliet Bourke  07:56

What about the value proposition for someone giving you their car? Why would you do that as a host, not just in terms of making money, but in terms of the risk involved with handing over your car to someone else?

Robert Chan  08:08

Let's talk about the money, and then we'll talk about how we protect the downside risk. On average, we generate about $1,000 of earnings to a car in Australia, and so that can cover car loan, bit of insurance, bit of registration. On average, it's about $450 a week that people pay for the ownership of a car, and we can help offset that. And in today's world, that's important in a cost-of-living conversation we can provide relief in that. But it's beyond that. It's about opening up entrepreneurship opportunities, and it's risky the sharing economy. How do you trust strangers with your car? At the end of the day, it's about risk and reward. And we provide hosts with different protection plans - they can take more money off the transaction, but that means in the incident where someone damages their car there's a higher deductible. We give options for hosts where it's lower on the take, but there is no deductible at all, and we provide a lot of benefits when they don't have that car as well. And so that risk/reward trade off is something that we empower those hosts to make, because they are entrepreneurs. They are making the right business decision, economic/rational decision, for their business. As a marketplace manager in the sharing economy, our job is to build trust. Just as people now jump into an Uber and trust that they will get to where they need to go, or into Airbnbs and trust that they will have a good stay, our job is to make sure that the people that are entering our community are trustworthy people that aren't going to leave your car stranded somewhere, that are trustworthy drivers. And it's not an easy job.��

Dr Juliet Bourke  09:52

Yeah. How do you do that? 

Robert Chan  09:54

We have very sophisticated data science models that help us predict risk. And we have really good staff, teams on the ground, that help us track when things go wrong.

Dr Juliet Bourke  10:06

Is this profiling young males, under 28, who are risky drivers?

Robert Chan  10:13

We don't profile the person, we profile the trip through Turo Risk Score, which is our proprietary, over the last 13 years, learned data model that helps us figure out where the risk is in that community. And so it's not on a person basis, it's actually on a trip activity basis. That I think is a crucial difference to how the car rental industry has approached this. We still do have young driver fees - although it's something that we look at, and we will continue to look at - and that is, I think, a legacy of how traditional actuarial practice has codified.

Dr Juliet Bourke  11:10

All right, so how did you win that trust of the market?

Robert Chan  11:14

This is the beauty of the network effects that we've been able to have. We operate not just in Australia, but in Canada, in the UK, in France and in the USA, and we've done so over a long period of time. When we launched, we had a launch party and we actually invited Vance Joy, an Aussie artist, and he wrote Saturday Sun on a Turo trip. Those are some of the experiences that we want to share with Australians and people who are traveling to Australia about the different type of experiences you can get access to. At the end of the day, it's about delivering the promise - the brand promise that we presented - which is you get access to a car and it's the car that you booked that will show up when you show up to the car, and it will be clean and maintained, and you'll have a good trip. And most of the time, almost all the time, that is the case. And every time it's not, it's our job as the marketplace manager to make sure that we act on those signals. We tell the host it wasn't up to expectation, we give them clear, compelling evidence as to how to change, and we try to make that a delightful experience to guests and hosts. By doing it repeatedly over time, that's how great word of mouth spreads.

Dr Juliet Bourke  12:29

So what were the challenges then, of getting into the Australian market? Because you're relatively new to this market, right? You've been around a couple of years now.

Robert Chan  12:36

We've been here three years, we launched in late 2022. Some of the challenges... it's all the usual things in starting a marketplace, the cold start problem. When you have suppliers but no buyers looking for things, that's not going to work. When you have buyers but there's no suppliers, that's not going to work either. And so how do you create both sides of the marketplace in tandem, and not over supply one side of the marketplace and not over demand another side of the marketplace, because then cars would get too expensive or because you're not earning enough. Making that growth is the hardest part of balancing what we do. And I think it's quite important in the sharing economy because we're making promises to both sides of the marketplace, and so growing that in tandem has been one of the biggest challenges working in any marketplace, but also here at Turo.

Dr Juliet Bourke  13:28

What did you have to do differently to get into the Australian market or to adapt to the market once you were here?

Robert Chan  13:34

It's very basic things. You might think our metric system and the imperial system is quite different - miles and kilometres, trunk and boot. There are those basic things that we had to localise from a software perspective, but also just the catalogue of cars that we have also very different. The value of the cars are also very different. The seat you drive in and the side of the road you drive in is also very different to our other markets that we operate in. But just to be aware of those local nuances on how people are traveling in Australia - where they're going, what's available to them in terms of petrol stations or electric vehicle charging stations, those are some of the nuances that we've had to adapt to and just be mindful of as we show guests different itineraries. I think the key thing that we were able to do is just change how we talk about what we do and if you're in parts of Australia you would have seen some of our brand advertising activity. So we've been doing quite a lot of brand advertising, and I would say we've departed from where other parts of Turo in other countries have done their brand marketing, and it's because we are adapting our tone to Australians.��

Dr Juliet Bourke  14:42

Can you give us an example? That's curious.

Robert Chan  14:44

The geniuses in marketing will be able to speak so much more articulately about this, but we have different phonics - so different sounds as you hear the brand advertising. Our tagline is slightly different. How we approach colors is also very different. And so, it's not just the ad message that we are trying to talk about, but it's also trying to show the selection, trying to show that diversity in the different colours of cars, that's how we've been able to express ourselves. In our ads you can hear "beep, beep" and it's different to a jingle of metal car sounds, and those are some of the subtle differences that we play with creatively to see what resonates most, and we do a lot of creative testing to verify that. And we are out there experimenting to see what works. We've departed from how our other markets have creatively executed the brand advertising that we're out there with because we're trying to figure out what works best for the people around the world.

Dr Juliet Bourke  15:42

What's your strategy as to how you're going to be different from other players, how you're going to be sustainable? How are you doing it?

Robert Chan  15:50

One of the things that we do as marketplace managers is to invest into the marketplace, and one of the choices we can strategically make is to keep our take rate – our cut – very, very low. And we do that deliberately because we want a very vibrant ecosystem of hosts that want to make money on our platform, but also guests to try us. It's a rational choice because we're trying to create that economic activity. That's how we have chosen to enter all our markets, and then as we are able to deliver on that brand promise and create that value, we can find ways for us to increase that. Our job is to try and find all those levers to increase take or increase monetisation, but resist the urge to do so. That's actually part of the magic of what we are trying to build as we continue to change as a product and as a company.

Dr Juliet Bourke  16:45

That's a great strategy for any new entrant into market. You basically undercut the competition, and that's what you're doing, right?

Robert Chan  16:53

It's an investment choice. At the end of the day, it's an investment choice. We're here for the long game. It's a long time, you know, cars have been invented for 160 years. We're here for a long game, and cities and how people choose to move doesn't change overnight. We're aware of that, and we make those strategic decisions for the long run.

Dr Juliet Bourke  17:14

Have you learned anything from other parts of the sharing economy? We talked before about sharing tools or sharing your bed? Well, not your bed, but your house.

Robert Chan  17:25

Yes, definitely. We are a small team here in Australia, but we also have colleagues in the Bay Area in California, and we take a lot of inspiration out of how Uber and Airbnb are building it, but also how Amazon and eBay looked at retail e-commerce. And so there are definitely a lot of inspiration about star rating systems; cancellation rates, fulfilment rates and how we approach that; how we talk to hosts, very similar to how Airbnb would talk to hosts. And so we do take inspiration and draw on each other quite a lot, and I think that's the magic of when you work in, sort of, building tech marketplaces is often venturing into the unknown and we don't know what's useful, successful, and there is that vibrant sort of knowledge sharing that creates that innovation culture.

Dr Juliet Bourke  18:11

So we've talked about the sharing economy in relation to tools, houses, cars. Where do you think it's going to go to go to next?

Robert Chan  18:21

I think the technology makes access possible. It's at the end of the day is the trade off between the effort and the earnings worth it for the host? Is the value proposition good enough for the guest? And to build the sharing economy, to build these multi sided marketplaces, it's about if we can create that volume of vibrant economic activity that has economic rational value, hopefully good societal value - and I truly believe that we are driving good societal value. We can do it to all types of assets. Now the hardest thing, as we've spoken about, is trust. It's about keeping up that promise. Where it has gone the most vibrant has been on those assets that have often been the hardest to purchase – accommodation, housing, cars, second most expensive asset a household would purchase. And so as you keep looking at different asset classes, I think there will be those opportunities. And there are other peer-to-peer sharing economy marketplaces vibrant here in Australia. You can rent a boat from a local boat owner; you can rent an RV from a local RV owner. We've focused on cars, that's our specialty, and we've built a really good business model out of it, but there are definitely other things that you can share and you can rent.

Barney Tan  19:59

Technology has enabled the expansion of the sharing economy by essentially supercharging reach and efficiency. Apps, GPS, real-time availability, secure payments... these are what made platforms like Airbnb and Uber explode in popularity.

Dr Juliet Bourke  20:14

That's Professor Barney Tan. He believes that while technology has allowed the sharing economy to grow, it's not the only ingredient for success.

Barney Tan  20:24

The big misconception early on was that you could build a sharing platform around anything, but that's not true. Not everything makes sense to share. A company could have the slickest app in the world, but if the value proposition is weak or their transaction is too inconvenient users will eventually opt out. For a sharing economy business to succeed, it needs two things: a product or service that fits the sharing paradigm and an ecosystem of complementary services that support the experience. So what makes a product a good fit? Well, it's usually something that's high value and underutilised, like a car, a spare room, a power tool, a wedding gown, right? These can be easily transferred or accessed, but it's usually quite expensive to own. But even if the product fits, it won't work if the infrastructure isn't there. Think, for instance, services like insurance, cleaning, maintenance, delivery and dispute resolution. Well, these are the complementary services that make the user experience complete and seamless and they're often what separates successful platforms from the ones that flame out. And there are quite a few examples of failures and cautionary tales in this space. One of the most well known is the story, of course, of MOBIKE and Ofo, both of which used to operate in Australia. These are Chinese bike sharing giants, and on the surface they were tech superstars. Backed by venture capital funding, they had all the technology - they had QR code unlocking, GPS tracking, mobile payments - everything was just neatly encapsulated in their apps. But ultimately they failed because they neglected the offline realities. So you would have reports of bikes, for instance, thrown into the river, bikes that are broken and not maintained cluttering the streets in the city. You have theft, and you have, more importantly, a lack of local partnerships to manage the logistics and maintenance of these assets. Essentially, what happened with these platforms is that they expanded too fast without proper stewardship. So this is what some academics would call the problem of tech without stewardship. And when there's no clear operational model for managing the shared assets or ensuring a quality experience, these platforms quickly lose trust. And it's not just transport. We have seen platforms try to replicate the Ubers and Airbnbs of the world with things like sharing formal wear, camping equipment or even umbrellas, but many of those sharing platforms didn't survive. Why? Because the product wasn't quite right for sharing or the friction in the transaction. Things that you have to do like maintaining the asset, like shipping the product, ensuring safety when a consumer is using the product, these friction actually outweigh the benefits of sharing. So the lesson is this, right? Success in the sharing economy comes from a smart match between the product, the platform, and the ecosystem. You need to ask yourself, is the item valuable but underutilised? Can users easily access and return the item? Are the risks manageable and are there complementary services in place to support it? When all those boxes are ticked the sharing economy thrives, but if you skip any of them even the best technology can't save you.

Dr Juliet Bourke  23:51

So Rob, where do you think Turo is going to go next? I mean, if I think about Airbnb it was houses, but now it's offering connections to experiences. What are you going to do?

Robert Chan  24:02

So already on our platform you can hire child seats, booster seats, you can hire surfboards. Some even have picnic baskets, ski equipment. It's very local to why people are needing those extra amenities, and when hosts offer it, guests do uptake a lot of that. That's already happening on our platform, but beyond that, we focus very tightly on car sharing.��

Dr Juliet Bourke  24:29

Do you offer insurance as well? Is that part of your package?

Robert Chan  24:33

The protection plans are how we protect the assets in the event of it needing a claim? We are exploring different ways of providing when the vehicle is not on a trip. How do we provide protection and insurance to those cars as well? That's definitely something our other markets have pushed forward with, and in Australia look forward to bringing to the market. There are other services that we are looking at - I said earlier the average duration of Turo trip is four days, we are looking at how we can look at the overall car ownership market for multi-month type access to cars as well. Those are spaces that we think is also ripe for change, and we think the way that we do it allows a different flexibility in terms of contract length. Maybe you don't need that one car for many, many months. Maybe you want to try out many cars for many, many months. Maybe you're not in town for that long, and so you only need it from here to there. That sort of flexibility and convenience is what we are focused on as our product continues to evolve. So those are some of the things that we're cooking underneath the hood.

Dr Juliet Bourke  25:59

Thanks to Rob Chan for joining us on this episode. Hear more conversations about digital marketplaces, like Turo, in our interview with Roby Sharon-Zipser. He's the founder of hipages, an app that connects tradespeople to homeowners.

Roby Sharon-Zipser  26:14

The beauty of what we do as a marketplace is the trade gets to pick and choose when and where the work comes to them and what type of work they want. So they're in control. We may show them work, but they don't necessarily have to accept that work. Whereas if you run an ad on the side of your car, or even an ad in Google or Facebook, those inquiries are just coming in. You don't have a lot of say, and you have to answer the phone. And if you don't answer the phone, you're providing a poor service. Whereas what we do is that you don't have that scenario.

Dr Juliet Bourke  26:38

You'll find a link to that in our episode description. The Business Of is brought to you by the University of New South Wales Business School produced with Deadset Studios.��