Startup snapshot: Drivelist
- 26 September, 2013 14:15
Drivelist is a Sydney startup that wants to make test driving a car as easy as ordering a pizza, according to co-founder Shane Herft.
Drivelist is an online service that lets car buyers schedule test drives of nearly any vehicle. Once a customer has made a reservation, a Drivelist employee or dealership salesperson delivers the requested car to the customer’s location and sits with them through a test drive.
The service currently lets users test a range of base models and most brands are available. There are no “exotic cars,” but the startup plans to add a feature for customising the car to be driven, Herft said.
The startup has sought to use the Internet to make the car buying process quicker and less intimidating for customers. “The current consumer experience when it comes to car buying actually really sucks,” Herft told Techworld Australia
While people are already using the Internet for car research, the actual sale process at the dealership hasn’t changed much since the ‘50s, said Herft. Moving more of the process online brings opportunity to provide lower cost, more convenience and better customer service to car buyers, he said.
Allowing people to test drive where they want lets customers see how the car will fit into their everyday lives, said Herft.
For example, one customer who recently tried a Toyota Highlander was happy to find out before buying that the SUV wouldn’t fit into the tight parking space at her apartment building, he said.
For dealerships, the service provides another source of lead generation, Herft added.
Herft has an advertising background and worked on a Lexus account for about six months. For the last four years, he has been doing startups.
“I think it was a reaction to advertising,” he said. Herft wanted to work on something that provided utility and value to people and lasted longer than an ad campaign, he said.
Drivelist has mostly been self-funded, said Herft. However, the startup has received a small amount of money in addition to mentorship and office space through the Incubate accelerator program at the University of Sydney, of which Herft is an alumnus.
Drivelist had a soft launch in late July and has trialled the service with about 50 customers so far in Sydney. The startup plans to advertise the service more heavily after it spends more time refining the service, he said. Drivelist so far has focussed on the Sydney market, but is now building relationships with dealerships in Melbourne, Herft said.
Drivelist deals directly with car dealerships to provide test drive cars. The dealerships pay a flat fee for each lead generated by Drivelist. In some cases, dealerships give the startup a commission on sales.
Dealerships have been receptive to the service, with only two out of about 30 saying no, Herft said.
It does not currently cost the consumer anything to reserve a car. However, Herft said it’s possible the company may add a small booking fee to ensure people turn up for the test drive, he said.
The startup is currently testing two models for conducting the test drive—sending one of its own employees with the car or having the dealership send one of its salespeople. An advantage to the second approach is that it may be more scalable should Drivelist receive high demand for its service, Herft said.
While the startup ecosystem in Australia has improved significantly in recent years, funding remains an issue for early-stage startups, said Herft.
Investors are more averse to risk in Australia than in other countries, he said. “Here you don’t get funding unless you’ve demonstrated significant traction.”
Early-stage startups instead have to rely on “the 3 F’s—friends, family and fools,” he said. “That’s the only funding you get.”
Herft stressed how important it is for the federal government to reverse tax rules preventing startups from giving share options to employees. The new Coalition government is expected to address the problem.
“Making sure founders can have a vesting agreement is so critical for a startup,” he said.
“Many startups get sunk because of it. If you have one founder that decides to walk away and he’s walking away with a third or half the company, it’s like, fat chance getting funding ... No one’s going to fund a company where a third of the value is locked away by someone doing nothing.”
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