THE ZERO-HUMAN EQUATION: HOW REI VARDI DE-RISKED ASSET SHARING WITH EON RIDES

E116 The Zero-Human Equation: How Rei Vardi De-Risked Asset Sharing with Eon Rides

Transcript

Dalton Anderson (00:00.876) Hey, Rei, welcome to the show. Lovely to have you on.

Rei Vardi (00:05.246) Thanks, Dalton. Super excited to talk to you today.

Dalton Anderson (00:08.408) Today, we're going to be talking about the psychology of a shared asset, the just thought process and the battle of bootstrapping over an eight-year timeline. And just thinking about how trust doesn't scale, systems do. And those are the core topics of this episode. Rei Vardi is someone who founded Eon Rides, which is a ridesharing company, but it's a bit of a different take where

it is the owner sharing their asset, which has a lot of barriers to entry like trust scalability. When it comes to trust, you've got to engineer that out of the equation. And it's very interesting the way that Rei and his company have approached this solution by providing this offering within the marketplace and just talking about how early this idea was when they were trying to raise money eight years ago.

Dalton Anderson (01:12.65) Rei, so I'd like to drop into the grind of the bootstrapping and the decision not to bootstrap, sorry, the decision to bootstrap versus to raise and maybe a brief skit about your time in the minivan.

Rei Vardi (01:29.436) sure. So I started this company eight years ago, right? The whole thing was really kind of a side project that was a joke that became kind of my entire life. At the time I was in college. I was studying biomedical engineering. I had a job at Mass General Hospital doing research on Alzheimer's. What had happened was is my dad had one of the first Model S Teslas.

And I just thought this was like the most incredible car in the world, right? Back then, Tesla was like the brand new spanking toy on the block. So when my dad moved out of state, I convinced him to give it to me. And I basically told him, "Hey, give me the car. I'll find a way to pay for it. Whatever you do, don't sell it. And I'll figure it out. There's got to be some way to monetize this."

Straight from day one, I started kind of renting it out, sharing it. built a website. And I really just wanted this to be a side hustle where I could afford to own this car. Right away, I learned that it was maybe the stupidest thing I'd ever done in my 22 years of life. People, when I could get them into the car, would just create nightmare scenarios for me like immediately. The car came back

smoked in, scratched, dented, not actually brought back. At one point, somebody even robbed a bank with that car. Like, literally, like from the first two or three weeks, had this like brick wall hit me of like, "Hey, dummy, you know, there's no such thing as sharing your car. You just became the world's tiniest car rental company with no experience or understanding of what you're doing. And

Dalton Anderson (03:05.902) man

Rei Vardi (03:24.879) and you're losing money like crazy." You know, like this whole thing is becoming extremely stressful and taking up most of my time. Like while I'm trying to finish my degree and do my work at the hospital, I'm skipping classes and, you to hand off the keys to people. I'm being woken up in the middle of the night where, with my already sleep-deprived schedule, that's, you know, people asking me stupid, you know, customer support questions. And the car is just getting trashed and you know, and I'm kind of, and I'm already looking for a way out

to get out of this situation. So the whole thing was like, "Okay, what's the lesson learned?" The lesson learned is sharing a car is extremely difficult, time-consuming and costly. And I didn't realize what I was getting myself into. At one point, we could talk about kind of how I made the decision to just go in and actually fix it and say, "Okay, I wanna solve this problem."

But the reality was I was never supposed to get into this industry. It was always just supposed to be kind of like a side gig, a way to be able to afford a car that was out of my budget. And what ended up happening is that I realized that the big pain point for actually monetizing this car was the process of handing it off and the maintenance of the safety across that entire experience. Like if I could solve that, then I could make this car work.

But until that was fixed, I was kind of stuck.

Dalton Anderson (04:56.653) Yeah. This, just thinking about this, all the scenarios while you're in school and at 22, you still don't know who you are and you're still trying to figure that out. Plus you've got this other thing going on. It just seems super stressful. Like everybody else is going out party and having a good time studying from their classes. You're not partying. You're just waking up from somebody's party that was in your car.

Rei Vardi (05:24.007) Yeah, that's a great way to put it. Yeah, I was waking up to somebody else's party happening in my car. And you know, the worst part is like, I was getting made fun of a lot, you know, I thought that having this really cool car would give me a little bit of respect. People are like, "Oh, Rei's got a cool car." No. They were just like, I had friends that would publicly, you know,

humiliate me. They were basically like, "Here comes the Tesla guy. Look at this dude." you know. "Rei, you're going to drive us with your Tesla today?" You know, It was like, it was like, "Guys, you know, like, I'm trying my best here." It's like, "What's the matter, Rei? You can't make it to, you can't make it tonight? You You're taking your Tesla out on a date? you know, It was like all this stuff. So like, this really became like a part of my identity in the absolute worst way.

Dalton Anderson (05:50.349) You

Dalton Anderson (06:08.366) You

Rei Vardi (06:17.329) And the reality is that I just got to a place where I was so frustrated. I was frustrated with the car and this stupid mistake that I'd made by committing to pay for a car that was way out of my budget. At the same time, I was getting so annoyed with my career in the hospital because I thought that we'd be out there doing valuable, important research and then going out and acting it out into the world, developing things that help people.

That's always what I wanted to do. What I actually ended up finding is that working in a very large organization like that, a research organization, was all about doing research that for the most part would go and sit somewhere that never actually would end up impacting anybody. During my senior year, me and a small team at the hospital, we actually ended up having a pretty impressive breakthrough in the study of Alzheimer's

in developing like a rapid online test that could catch people very early on. But what really kind of broke my heart is that after a few months of research and actually fanfare, we published it. we got a lot of, We took it to conferences around the country. The hospital really just decided to table the results of the research and there was nothing that could be done with it. It was hospital IP. We couldn't go out and develop it into something. And I just really felt that

in every avenue that my life was going, I was just getting stuck. It doesn't matter how cool the research was, nothing's gonna happen with it. It doesn't matter what my dream of owning this car is gonna look like, the reality is it's just getting trashed and abused and it's taking up all my time. And at the same time was graduating school and I was like, "Man, do I even like biomedical engineering? What have I been doing?" So it was kind of a crossroads moment.

Dalton Anderson (08:16.056) Those are good because those are some good points. I think one thing is, everybody's got to have some kind of constraint to have innovation. And one of those probably is frustration, like getting fed up with your situation and realizing that situation is no longer tolerable. It's probably the best catalyst for action. And then the other thing is you don't really know what you want to do until you start doing it. And so you shouldn't really overthink it. Just get into it. And yeah, maybe biomedical research is super cool

for somebody but not your cup of tea. We don't necessarily know until you really get into it and you have a passionate breakthrough and then maybe it's dorked by, you know, bureaucracy or whatever it may be.

Rei Vardi (09:01.522) I honestly don't think you could say it better than that. On the one hand, you don't know what you are good at until you actually apply yourself. On the other hand, I think most people don't end up getting the chance to apply themselves because they kind of live in this comfortable 9-to-5 type situation. I forget who said it or how the phrase goes, but it's like, "There's nothing more dangerous to human potential than

than a monthly salary." Right? Or something like that. Where the idea was really like, "If I just keep on this path, I'll be fine, but I'm never gonna really know what I'm actually good at."

Dalton Anderson (09:49.55) That's a good point. I think that in my personal opinion, the antithesis of what it means to be human is to explore, be curious about the world and build. Like that's what I feel myself personally is what it means to be human. And so I try to live closely to that line and maybe I step away a little bit, but I feel most enlightened when I'm closest to those principles.

And I think a lot of people, and it doesn't have to be building companies. It doesn't have to do that. Like not everyone needs that stress. Not everyone's shaped to do that. That's fine. Like it's not everybody's cup of tea, as I said earlier, but, you need to be passionate and obsessed about something and have something where it's, it grounds you. It could be religion. It could be some hobby like photography or Instagram. I don't know what it is, but it's gotta be something. If you got nothing, then to be honest, you're not very interesting.

you're not really interested in life because you don't have anything that you're super passionate about.

Rei Vardi (10:53.542) Yeah, I totally agree. I think what I found at that point in life was that in the hospital and in kind of straight career that I had built out for myself, I just was not getting any of that opportunity to build, you know. And I think that's what really frustrated me. Even when we found something really incredible, like when we discovered

this amazing pattern that could identify people with the earliest stage of Alzheimer's very early, the fact that we weren't able to move forward with it or build it into anything was just so deeply frustrating that I just said, "I don't want any of this." So anyway, it all kind of came to a head when I got an email from my school that they had like pre-accepted me into their master's program for biomedical engineering. And I was like,

Dalton Anderson (11:33.55) That would be brutal.

Rei Vardi (11:45.329) I was seriously considering it and then I said like, "Wait a second, why? know, To what end? know, Like here's what this career path actually looks like. I hate it. It's not moving me in any positive direction. You know what? What if we take a little bit of a break, we take a bit of a gap year and let's focus on this stupid car thing now that I'm out of school and throw myself into it."

The logic really went like, "Look, I'm never going to be younger and I'm never going to have less responsibility in my life." And kind of the funny thing is that you can, you can say that at literally any point in your life. You know, it's like people, people have these hobbies. They collect things. Some people collect stamps. Some people collect memorabilia, but at the end of the day, all of us, we all hoard responsibilities. Like as we get older, we just collect more and more obligations.

And that doesn't go away. Like you don't become less responsible as you become an older person. So it was like, "Okay, it's now or never." I put everything aside. I moved in with my parents. Lived in the attic of our apartment. And essentially...

Dalton Anderson (12:47.319) Mm-hmm.

Dalton Anderson (12:56.493) The attic is a sweatshop by the way. That sounds like a sweatshop.

Rei Vardi (12:59.57) No, it literally was. don't think you understand. I had to crouch. barely, The roof was barely taller than like my fourth vertebrae. So like I would have to, I literally was like a goblin up there, you know, every time I had to move around. There was like maybe six inches of space between my face and the ceiling when I was on the mattress. But I was like, "Okay, we're doing it." You know? And then COVID hits. and then, you know, so.

Dalton Anderson (13:09.616) my

Hahaha!

Dalton Anderson (13:22.103) brutal.

Rei Vardi (13:27.45) I just started this business and then everything's going sideways and then I'm like, "Okay, well, I committed to it. We got to keep going. So throw ourselves into it." and, And basically the the, answer just became, "Look, Rei, we said, we're going to go for it. Just go for it. Like do, do whatever it is that has to be done to push it." And of course it was like almost like a weekly panic attack about "What am I doing?"

Like I went to school for biomedical engineering. I spent 12 years being an exceptional student, know, getting all, you know, straight A's so that I could go to school and and, and learn you know, a real career path. And here I am like starting a car rental company. you know, Like went from like every Jewish mother's dream to her worst nightmare, you know, and basically like what a few months.

Dalton Anderson (14:25.442) Yeah.

Rei Vardi (14:26.481) And I was that stereotype of like the guy who after college just goes back to live with his parents. So all of that was part of the equation.

Dalton Anderson (14:38.018) And I think another part of the equation left out was if you're not embarrassed by your first product, then you launched too late, right? Like. So. No, no. it's not, it's not, It's not an OG term that Rei came up with, but it's been around for some time. But I think that's a good, it's a good thought. It's like, I think the responsibility thing, you made a good point about there's never a time where you're going to have more or less responsibility. Just,

Rei Vardi (14:48.635) Yeah, yeah, I say that all the time. Well, I didn't come up with it, but I repeat it to my team.

Dalton Anderson (15:07.042) things scale, but people hold on to a lot more things than they need to. Like they've got some kind of club that they're in, that they're on the board or they've got this thing. Like you don't necessarily need to be doing those things. Like the only things you really need to do is like be a, be a family member, be a father, whatever it may be. But like, those are kind of like required things. Like if you have a kid, like you, you've got to be a parent. You can't just like, "Well, actually, we're gonna, we're gonna, we're gonna say otherwise."

Some people can do that, that's their own, that's their own parameter. But what I'm really getting at is I think the only thing that doesn't go away is the fear of embarrassment. And you've got to shed yourself of that if you want to really do something. Because the responsibility thing, you can remove, add, but the embarrassment part, that's always going to be a barrier entry no matter how old you are. If you're 22, 35, 55.

Maybe if you get a little older, you're like, "I don't really care about getting embarrassed. Like I'm going to die in 10 years." But the, the embarrassment part is always there.

Rei Vardi (16:11.753) I think what you, Yeah, that's the key part. I'll actually do a quick caveat. I've got a friend. I think he's one of the best entrepreneurs I've ever met. I'm not going to name him, but he's just exceptional. The way his mind thinks and the way that he's willing to take risks is unlike anything I've ever seen. But it translates into basically everything that he does. So I'll be out with him and we'll just be going, I don't know, going to the gym or doing something normal.

He'll just, you He'll see a beautiful girl on the street and just be like, "I want to go talk to her." And he goes, And he just goes and talks to her. And like nine times out of 10, he gets rejected, but he doesn't care, you know? That one time he gets the yes, it's like the most beautiful girl you've ever seen. And he went for it and he was okay being embarrassed. He was okay, you know, not looking his best. And guess what? The cool thing as someone who sees that from the outside,

and I really do think that we live in a very forgiving society and a very forgiving group of people, we all expect that everyone makes fun of us or looks down on us way more than they actually do. The cool thing is that I notice how I look at him or think about him when I see him doing that. And even when he gets rejected, even when it's kind of in a humiliating way, like the only thing I have for him is respect. And the same with

every other friend that we're in a group with, we all kind of were like, "Wow, that was cool. Good. We like that you that you put yourself out there." And I think that's why he's an amazing entrepreneur as well, because he doesn't have that fear of being told no. You know, I think no is the default. And if you can accept that and you just go after it regardless, you're kind of free to do whatever you want, because

The biggest thing that's stopping you from succeeding is your own fear of failure. And I deeply feel that.

Dalton Anderson (18:16.535) Transitioning from failure to the bootstrap, let's talk into talk about the psychology of sharing an asset. How do we think about architecting a system that scales when you don't want to put the burden on the person renting their car. And then you also don't want to put too much burden on the person trying to rent a car.

Rei Vardi (18:39.707) That's a yeah. OK, so let me explain it this way. The problem with car sharing is that it's unlike almost anything else that you're dealing with. Most businesses, you have a product, you have a customer, you sell the product to the customer. The customer is not happy. They don't buy again. End of the story. When it comes to sharing and renting assets, you're talking about introducing a level of risk that just does not exist in most consumer businesses.

We're now talking about, let's imagine that I give you my car. I have a $50,000 car, let's say, and I'm giving it to you, Dalton, for the first time. Well, what I'm actually, what the proposal actually is here is not, "Hey, I'm gonna let you borrow my car for a little bit." It's, "Hey, I'm gonna give you a mobile weapon that you can take all over the country and maybe even out of the country that you can kill people with, that if you damage it, costs way, way, way more

than what you're actually paying me to use. And I'm supposed to trust you to do this without having never ever met you or knowing who you actually are." And so that's how you get situations where you rent the car to somebody and then they, even if that somebody looks fine, they'll drive around the block, give it to their convict boyfriend, and that guy goes and robs a bank with it, which is what happened to me with my first car.

Dalton Anderson (20:03.278) Yeah.

Rei Vardi (20:06.915) So the problem you're actually talking about is how do we arbitrage selling this weapon basically to another person? And that's the problem of sharing. Now with some marketplaces, that's not as bad of a situation. Like if we look at Airbnb and sharing a room or a house, there's just less that can go wrong. You know, it's true that somebody might be able to trash your place, which sucks, but they can't take your house to Mexico, you know, and fall off the map.

They can't take your house and kill somebody using your house as a weapon. But they can with your car. And so you now have to solve this problem. If you're an amateur as a customer, and I'm an amateur as just a regular guy who owns a car, who wants to share it and make some money, how the hell are we going to make that chaos triangle work, right? We've got this incredibly expensive, dangerous, depreciating asset between us. I don't know what I'm doing. You don't know what I'm doing.

This is a recipe for disaster. So what we've actually done at Eon is make that entire process a streamlined and humans-free system where I can basically share my car and make passive income and you can get the most convenient, easy, simple, you know, cost effective rental you've ever had

without you and I ever having to interact, right? And that's kind of the brilliance of our system. We basically realized that with the cars coming out on the road today, they're basically computers on wheels. So if we can connect to those computers and we can program them to basically create the rental itself, not have to rely on me as the owner or you as the guest to know what you're doing, but let the car do it for us, I can give you the best rental experience you've ever had.

You You show up to the car. Your phone is a digital Bluetooth key that unlocks the car as soon as you arrive. You're in and out in 40 seconds. And I can take my afternoon nap without having to be tech support for you the entire time. That's really the vision of Eon, making it so that if you make that process safe and convenient, you solve the problem on all sides.

Dalton Anderson (22:23.69) Which is a difficult problem. But if you backtrack it and you think about a system and you just talk about the architecture of society, I think there is defined rules throughout your whole life. You go to school, you do well in school, then you go to college. If you don't want to go to college, you go to trade school. Like there's always these defined paths where people go and people get caught up when they are adults and no one's telling them what they should do or shouldn't do

because they're always used to guardrails and rules. And so I think that you could apply something similar within your system because people are used to clear guardrails and rules because that's their default nature. That's just how we've grown up.

Rei Vardi (23:12.336) So you've got two problems, right? People are used to guardrails, and they're used to being kind of directed what to do. They're also used to not having to read or kind of understand what's expected of them. Look, the next time you download an app, try and notice the UI, UX. Take any app that you downloaded for the first time

and just go through the onboarding process and you'll see that it works like this. You open up the app and then you just click next, next, next, next. Okay? And that's basically what people have been trained to do for the past you know, 10 years. This is like your default. You are used to just going click, click, click, click, click, right? Every time you log onto social media, it's swipe up, swipe up, swipe up. I mean, it's just so simple, right? There is no

need to kind of apply any thinking or even read through what you're clicking through because everything has been designed to make it as easy to convert you forward as possible. Everything that you have in your digital life is already guardrailed. The developers, the users, you know, The people that are designing your experiences, both digital and physical, have a set path that they want you to walk on and they create these extremely simple guardrails that you go down.

So very few times are you actively using your mind to decide what you want to do next. All of a sudden, you are now coming into a place where I'm giving you a car and you can take that car anywhere. You can drive that car down to zero. You can give that car to people who should not be driving. You can smoke in that car. You can go and crash it into your neighbor's house. There's a thousand different things that you can do that are not guardrailed,

that you're not going next, next, next, that you are actually actively making decisions. And if you're not actively making decisions, if you're not understanding what you're doing, what you're supposed to be doing, what you're not supposed to be doing, you could cause an unlimited amount of damage. That's the sad reality. You can give that car to somebody who should not be driving, that maybe even doesn't have a license, and they can go and run over a kid and kill someone.

Rei Vardi (25:33.264) And that's the problem. Okay. So, when you're talking about how do you solve for that, that's kind of been what's become my lifelong mission. know, This company has been around for eight years. I've been running it basically since college. And that is still the biggest thing that we're trying to solve for. And we made some incredible strides forward from those early days. You know, there's been no more bank robbery since that first car.

But, the reality is that you are trying to design for pushing people in the right way while knowing that you can't actually prevent someone from doing harm if they intend to.

Dalton Anderson (26:18.177) Interesting. I would think about that as maybe there's two things that people are used to easy onboarding with apps, given that new users is a key metric for evaluations, right? But getting new users for your company is not necessarily what you want. You want new curated users that are your optimal userbase. Like you have a very tight target, whereas you can't have everybody. Not everybody can be on the app.

Maybe eventually, but you got to get to a place to where you've got a really tight group that you're operating with. But how do you, how did you think about curating the behaviors without the control? And it's, That's a difficult thing to prescribe.

Rei Vardi (27:04.685) Yes. So look, the first part of it is you're right. It is about curating new users and

banks do this all the time. Any kind of lending organization has the responsibility of vetting the people that are lending something from them, whether it's a house, a car, money. But in terms of pushing people in the right direction, I'll be fully upfront and say that there's only so far you can take it. If somebody rents your car with the intent of using it as a getaway vehicle for a crime, you're kind of stuck.

Right? But when it comes to mitigating most situations that could get worse, right? That's where you have a lot of area you can play with. See, most people kind of lie on this spectrum, right? You've got people that are angels that will do the right thing at every given opportunity on one side. And then you've got absolute maniacs that will always choose the path of most harm, right? The chaos people. But most people lie somewhere in between.

And so that means that you got to create scenarios where choosing the right path is the easiest, best thing that they can do. And I'll give you an example of how this looks in real life. So let's say that you're just trying to get to your, you're, having a weekend trip. You and your friends are off, you rented a house upstate or something and you're driving, but you get a flat tire. Now in a situation where you get a flat tire and

you now have to kind of figure out what to do with it, the average person will take the path of least resistance to resolving it. So in a scenario where like, let's just say I'm renting your car, Dalton. I've got no other support network, my only support is Dalton, but Dalton's on a flight and he can't be reached. Now I have to decide what I'm gonna do with this flat car. I have two options really. I could you know, find the right tow company

Rei Vardi (29:08.431) that is willing to come to my location, has the tires that I need in the stock, validate that everything's true, pay it on the spot, and hope that Dalton will reimburse me later. Or potentially, in the worst case scenario, I might say, "I don't really know what to do here. I'm just going to leave the car where it is, and I'm going to get an Uber to continue my trip." Now, that situation of "I'm going to leave the car where it is" is extremely expensive and damaging for everybody.

The Uber is going to cost a lot more. The car might be parked in a legal place, get towed. There's additional cost on cost on cost. But the reality is that not having that push of here's what you do next and here's the support that you need in the place that you need it made the situation much more expensive. So what we've done is if you get a flat tire on the platform, you have very easy steps where you can kind of choose,

"Hey, I can do this, I can do this, I could do this." And it gets done much more quickly. So now, even no matter where you are on the spectrum, you're more likely to choose the path of easiest, safest resolution because we've made it easier for you. You have more information. You're not stuck there trying to figure out things for yourself. Another example that makes it even easier to understand, our entire app and system works on a digital key. So your phone becomes a Bluetooth key.

So Dalton, I allowed you to rent the car. Your phone is now your key. If you want to add your buddy so that he can drive, he can be added and he can be verified. And if he's allowed to drive as well, his phone becomes a key. But let's say you have a criminal buddy of yours who wants to rob that bank. You know, He didn't get approved. Well, it's much harder for you now, Dalton, to go off and hand over the car to him

because in order to hand off the car to him, you now have to give him your entire phone. Right? And that's just much harder. It's just more friction. It doesn't mean it's impossible, but it just means that, you know, maybe you're like, "Well, I can't really help you. Maybe, you know, rent the car yourself or go through the proper channels or let's try and figure out a different solution for you." Because a little bit of friction in the right places and less friction in the other, like less friction in the right places and more friction in the wrong places

Rei Vardi (31:31.671) means that you're slowly moving people in the direction that you want them to go. And that's really the whole game, as far as we're concerned.

Dalton Anderson (31:40.441) The rip current of positive outcomes.

Rei Vardi (31:44.418) Exactly.

Dalton Anderson (31:46.009) So that's on the renter side, like verifying how you'd want a renter to interact with the car and the platform to prevent bad actors. I like the term. what is it? Riptide of positive outcomes. We just said it. Riptide of positive outcomes. But what about on the other end of the spectrum of, "Okay, now I've got a car, I want to rent it." How do I

get on the platform and like, how do you get the right owners on the platform?

Rei Vardi (32:20.121) Well, this is kind of the hack is that we make it so easy to join and start sharing your car and we take so much off of your hands. See, the whole concept of our company is that if you take people out of the equation as much as possible, less things can go wrong, right? What you don't want is a car owner who is a scammer

or problematic individual or has disdain for the customers and gets in the way of them having a safe and convenient rental. So what we do is we kind of take the owner out of the picture. We don't really care who you are in your private life as a car owner. We just care that you make sure that the car is prepped before pickup and that's it. And the way that we kind of validate that is again,

the car is talking to us at this point. So Dalton, if you're sharing your car on the platform, this is kind of the beautiful thing is that before the guest even arrives at the car, the car is reporting to us what its current status is. So we're seeing, yes, it's at the correct pickup location. Yes, it's fully charged. Yes, the tire pressures are all good. Yes, there's no maintenance alerts popping up. We're good to go, right? And so the guests can arrive at the car

with the peace of mind knowing that it's it is where it's supposed to be. It's ready to go. And guess what? If for some reason the owner forgot that he has a rental or the car is not ready, our system flags that and can automatically match the guest to another car nearby so that you don't spend the time as the guest getting there only to find out there's no car. You get there because an hour before you arrive, we've let you known, "Hey, there was an issue with the

with the current car we currently had you in, we just moved you over to one that's five miles away. Here's some Uber credit in case you need it to adjust your pickup." But that way, if you have a business meeting you have to get to, if you're on a family vacation, you don't just add an hour and a half of chaos into your mix that might fully disrupt your plans.

Dalton Anderson (34:32.0) It's funny you say that where things don't go as planned and there's already an adjustment. Like I recently rented a car, maybe a couple, maybe a month and a half ago. We went to this camping trip. Boys' trip, it was five guys, five sets of tents and food for everybody. And so we needed a big SUV and we paid for a big SUV. And then when we got there, they're like, "The biggest car we have is a Nissan Rogue." And

that doesn't, that does not work for us. We, We paid for the big SUV. We need the big SUV. And they're like, "Well, we can give you this car with no refund." And we're like, "Absolutely not. Look, we can't fit for one. And two, we're not getting any money back. Well, why would we, why would we take this deal?" And so we had to wait about an hour for them to give us a bigger car, which was a huge drain on just morale. Like we were all hyped up for the trip and we had to wait in this cold

parking lot out, because it's wintertime. And so it was like a huge pain in the ass. And it was like, "Ah, this sucks." But if you can remove that friction, that's how you get consistent people. It's not the times where everything goes right. Like I think it's the small things. It's like, "Okay, well we had a glitch in the system. Let's reevaluate. Let's tweak this and let's make it more optimal for the user." But it seems like the current model at the moment,

one it's not necessarily super expensive, but if there is something going on, it's kind of on you to hassle whoever the task manager is at that rental spot versus a system. It's up to the personality of the person. It's not up to the system, which I think is a core problem when you think about consistency of the brand and consistency of the experience. People aren't necessarily consistent. You don't know what's going on with that person and their personal life or if they had a bad day.

And they could just be a complete asshole to you, which that person was when we were trying to get, when we were pretty reasonable, trying to get a new, new vehicle that was the size fit model of what we were only ordered. It was like, "What are you asking for? Why, why are you going? Why, why is this a big deal? You just take the car you got." Like, "No." But if you have a system in place, then, then it's consistency. It's, It's repeatable. And when people have consistent outcomes and positive ones that are consistent, and if there is a glitch and it's

Dalton Anderson (36:58.014) already edited within this like architecture, then people enjoy that. And that's how you curate additional users and your users become your best marketing.

Rei Vardi (37:10.956) I think it's incredibly important to remember that if you think your time is valuable, then your customer's time is just as valuable, if not more valuable. The reality is that, you know, hours of time spent on things are not, are unequal, right? If I have an hour where I'm hanging out in the sauna, that's a very different hour spent than I have an hour where I'm waiting for a car and I'm going to be late to my meeting

that's incredibly important for me, right? There's there's the, The Missing an hour in one place or another could be like no big deal or it could be genuinely life or death. Right? And so you never know what it's going to be for the other person. The best that you can do is to try and build that consistency into your system so that when that moment hits where it is super urgent, you get in and go. right? And that's kind of like the

the biggest problem with the mobility space in general. right? Mobility is one of those few places where there is very little room for error, right? Other services and products, you know, if the refund takes two more days to land or, you know, the shipping arrived another three days past when it was supposed to be, it might be a little annoying, but it's not going to be the end of the world. For some people, you know, that means that they're going to miss their flight. They're not going to get to their hotel.

Their tickets that they booked three months in advance are going to be worthless because they're not going to be able to make it on time. These are things that you just can't mess up. And I think this is why so many businesses that try to break into the mobility space and do something new, completely fail. And we can get into that a little bit more, but it's born out in the data too. Like there's a joke about mobility where it's like, "If you want to make a small fortune in the mobility space,

You you got to start out with a big fortune." right? And so, and more than that, like, if you look at how many companies tried to crack into mobility in the tech space, how many startups kind of attacked this, it's a graveyard. There are very, very few companies that actually made a meaningful success and had staying power in this space because it's so unforgiving.

Dalton Anderson (39:32.279) And how many of those are bootstrapped?

Rei Vardi (39:35.5) Very few.

Dalton Anderson (39:36.623) No, yeah, I would like to maybe drop in a little bit on on just the difficulties of the mobility space from your perspective and like why so many groups are consistently failing.

Rei Vardi (39:48.216) Sure. When I was raising capital, because we kind of framed this whole thing as if I made the decision early on to not raise capital, that's not true. I always, In the beginning, I really did want to raise capital very, very badly. Like I thought that it was a tech company. Like, "Okay, I'm going to build this platform. It's going to be a national, maybe even international company. I need resources to get it off the ground." And so what I ended up doing is, I, at first I didn't have

any money whatsoever, so even my first partner that I brought on, I didn't even understand equity at the time. Like I didn't have any money to pay him. So I gave I made him a deal. I was like, "Listen, help me build the first version of this. And in return, for the rest of your life, while so long as this company is running, you'll have free access to cars anywhere, right anytime you need." So we started building it together. And then I said, it's time to raise capital. So

I ended up pitching and pitching and pitching and pitching and pitching and and for two years I was pitching. At one point I said, I got, "It's time to get serious." I flew down to San Francisco. I stayed in my dad's minivan for two months. while I was, you know, I literally every single morning I'd get up out of the minivan, go to the gym, brush my teeth there, shower, and then head to my next investor meeting where I would pitch and get no, no, no, no, just over and over and over again.

And you know, it was extremely demoralizing at first, but at a certain point, I kind of started to understand from the VC perspective, like why is it that they are so hesitant to invest in another mobility startup? And you got to remember that this was back in like 2021, 2022. So this is maybe 10 years past the first wave of mobility startups and mobility tech. If you're thinking about companies like Uber, Lyft,

Lime and a bunch of other you know, mobility companies that popped up, this was all around the, the, the early 20 teens. Right. And what a lot of these investors had kind of gone through is that they'd seen this wave of mobility. They all kind of went in and other than like one or two major companies, that whole thing became a graveyard. Right. And the thing is you're not even going to know all of the companies that

Rei Vardi (42:17.089) that came in and didn't even get acquired or acquihired. They just died. You know, They just got abandoned. Because you'll have forgotten about them by now, but it was a complete bloodbath. Investors lost tons and tons of money on this wave where we thought that mobility would be completely transformed. really It was like, it was Uber and that was it. And there's a very good reason for that. And that's, that, you know,

tech investors are used to seeing tech returns. They're used to seeing zero margin, zero marginal cost of growth. So serving your 10,000th customer costs exactly the same as serving your 100,000th customer. There's no additional cost. It's a tech product, it's software. That's just not the case in mobility, right? You've got people on the ground doing things. You've got actual people's time. You have

maintenance, have insurance costs, liabilities. These things do not scale nearly as well. And so company after company did the same playbook that VCs expect, which is "We're going to build, invest in you and you go hyper growth. You scale as fast as you freaking can. And then once you've dominated the market, then we can update the unit economics and you can change pricing. You can fire some people and now, you know, find your path to profitability."

That just does not work when you have operational costs on the ground that do not scale and are not accounted for.

Dalton Anderson (43:55.235) Really good points there about VC model. And I also think it's difficult to do that when you're still trying to figure out what works with mobility. Like how do you even make a model that is profitable in the first place? Like solving this trust issue. Like there's a lot of iterations that need to go through and then it's not necessarily always the right answer to raise money. It kind of depends on what you're trying to do. Like tech is great, right? Like I think you explained it,

hit the nail on the head, where the unit cost to serve the thousands to the hundred thousands customer are very similar. But when you think about people's time, insurance, those kind of things, those don't scale. And I think there's some parallelism to VCs raising for insurance companies. Like I'm from insurance background. That doesn't work very well. And that was also a complete bloodbath because insurance is not a tech company. Like there's legitimate liabilities like

you're basically loaning out capital consistently and you're on the hook for quite a bit of money either in your reserves or within your book because you've got all these liabilities of these policies. And it's kind of similar. like You can't really grow super duper fast because you've got to figure out the system. One, you got to make sure that you've got the right stuff coming through the door. Like if you said, "Okay, I'm going to raise money and this mobility company, we're going to grow fast. We're going get so many users."

Well, guess what? Your users are probably not the most optimal users on your user base. And it might work for six months. You might raise more money. You might do bet. You might, You might be on top of the world, but then all these lawsuits come through and there's issues with the brand. Then, then, Then you collapse because you just, you don't have the structural foundation to serve at that level of capacity. One, probably doesn't make sense, but two, you're not, you're not there yet. And simple because you're figuring it out and it

Rei Vardi (45:30.517) No.

Dalton Anderson (45:53.315) doesn't make sense for what you're trying to do.

Rei Vardi (45:55.755) That's extremely accurate. look, VCs and this kind of hypergrowth scale model works really well when you have super defined problems, right? Like you know what you have to solve when you have like for tech companies. We saw We fixed one really particular set of problems. We do that really, really well. And then we find all the customers that we can save. And then we, we, go straight into that. When you're talking about mobility,

the amount of things that can go wrong, the amount of different problems that you have to solve is astounding. And so the thing is, is that while you're scaling, you could be ignoring a very, very critical part of the infrastructure that you're building. And then that comes and bites you in the rear in such a spectacular fashion. And that's really what you saw with so many of these companies. So many of these like hyperscaled mobility companies, they just crashed and burned.

Even though they got to really significant sizes and valuations. I'll never forget, like you know, I don't want to name too many names, but there is a pretty major platform that shut down fully across the US after reaching a billion dollars in valuation, you know, like they didn't even get acquired, right? Like that's the thing that That's the level of like, "Get up there and then crash." you know.

Story of Icarus flying too close to the sun kind of a thing. Because they didn't solve the fundamental underlying problem. The unit economics, the customer base. You pour money on a problem, you end up making it bigger sometimes. So what actually ended up happening on my side was I got lucky more than I got smart. It's only in hindsight that I'm like, "Okay, we got lucky because we built it wisely.

The story is actually pretty dramatic. So after two months of pitching, I finally met these VCs that saw the vision that I was putting forward. And they're like, "Okay, you know what? We think that this could be a big win. And we see some corporate angle that this could work with. And they gave me a term sheet. They basically said, "Look, we're going to do it. We believe in you." I bring that term sheet to my partner that I brought on. And I was like,

Rei Vardi (48:18.337) "We did it. After three years of grinding this thing together, we're here. We're going to get investment." And that night, he basically tells me "I'm out." He gave me this story about a family emergency. More likely scenario was that he just didn't want the pressure. He kind of sold to me that he was this genius, hypercompetent level engineer.

And later on, as I got a bit better at understanding code and brought in new people that looked at the code, they kind of pointed out that the work was more akin to like a high school sophomore level of talent. as opposed to Steve Jobs level of genius in development. He was not a Steve, sorry, Wozniak, right? So he leaves. I go back to the investors, of course, they say, "Hey, we can't invest in you without a technical

person on the team. You're basically a one-man show at the moment." Now for context, at this point, the business was already, you know, had already grown enough. We were past a million in revenue per year. We were profitable. We were growing. Things were looking up, but you know, VCs are not going to invest in a small mom-and-pop shop. They want to see a startup that can scale. So I told them, "Listen, guys, you know,

Dalton Anderson (49:20.44) Hmm.

Rei Vardi (49:46.592) this is really unfortunate." First of all, personally, it was devastating. You know, This is the person that was a that was a very close friend to me. And I really felt stabbed in the back. you know, At the moment that we got the funding, you know, he disappears at the at the high point. Right. But I was like, you know, I kinda, I kinda had to go into founder mode and say, "Okay, there's just another problem to solve. Let's, Let's like do this the right way and

take our emotions out of it." know, Like there's a day where I can allow myself to feel sorry for myself and and you know, crumble in a corner and cry about it. But today is not that day. Like we're going to save that for the future. And so I go in, and I tell them guys, it was probably my best stroke of brilliance ever. I was like, "Guys, listen, this is terrible. But I don't want you to close the book on me yet. I want you to actually take this as an opportunity to see how I operate under

under a crisis under pressure. Give me 30 days. I want you to see what I can do then and then like reconsider if you'll continue to the investment." And they said, "Okay, you have 30 days." Yeah, I was like, you know, I was like, "Wow, that was the smartest thing I've ever come up with." To this day, I really think that it was like my best schmooze ever. I fly across the country. I go to co-founder matching events. I meet people in San Francisco, in Seattle, in New York, in Boston, in LA.

Dalton Anderson (50:53.423) Great positioning by the way.

Rei Vardi (51:13.62) In Miami, like literally, I live on a plane for a month and I end up bringing in these two guys. One of them's like an even more high-level competent engineer. I show them the company, we go through the code, I give him an offer with equity, with salary, we agree on it. I come back to the investors, I'm like, "Look at this kick-ass team I put together in 30 days." And they were really impressed. And they said, "You know what? We love it. In fact, we're even gonna bump up your valuation just a little bit."

And they presented me a new term sheet. you know? I argued for that, but it worked out. Anyway, it wasn't significant, it was nice. That night I go back to the new team, I'm like, "Guys, we've secured our funding, we're ready to go. We all celebrate, and the guy who I brought in as the new engineer, kind of, he pulls me aside after, just as we're about to leave, and he goes, "Rei, I looked at the code and it's really, really bad."

Dalton Anderson (51:43.331) Mmm, that's nice.

Rei Vardi (52:12.652) I'm like, "Yeah, I know. We've been walking through it over the past two weeks. We know exactly what needs to be done. We've created a game plan on how to tackle it." He's like, "Yeah, but it's so bad. I'm thinking we have to scrap the whole thing and start from scratch." I'm like, "That's an insane position. What are you talking about, scrap the whole thing? The company is growing. We have profit margin." The plane's in the air, man. The plane is flying. You cannot just like,

Dalton Anderson (52:26.415) Hmm.

Rei Vardi (52:41.099) "Okay, let's stop the engine so we can work on them." You know, but he, But then I kind of find out what he's actually trying to do. He goes, "Well, I see, I really see this as because we have to redo all the code. I'm seeing this as a brand new company. So because it's going to be a brand new company, the only way that this is going to work is if we go 50, 50. I want, I want 50% equity in order to move forward." Um, and look, the, To me, this was a very, very, very,

slimy move, candidly, because we'd already come to an agreement there was no new information that he had come up on in those two weeks. What actually had happened is that with the investment, the term sheet secured again, he knew that if he walks, the investment goes away as well, right? And so he kind of tried to leverage me into doing that, which was

stupid for number of reasons. One, not just, and this is for any founder that's out there, right? Just keep this in mind, right? It's not just because now you're never gonna be able to trust that person ever again in the company. And you know that the next time there's a crisis, he's gonna stab you in the back again. But also because just mathematically, I was like, "Look, man, we just got offered X amount of money for this small percentage in the business, okay? What do you think our investors are gonna say?"

Potential investors they haven't even put the money in yet. When they find out that I just gave away, not X amount of percentage, but 50% of the company, not for X amount of money, but for free?" How are they gonna feel about their potential investment? Do they think "Wow, you know, we're coming in at the right time. You know, This is the right opportunity." Are they gonna be like, "Are we crazy? Why are we spit? Why are we giving this guy money

Dalton Anderson (54:21.839) Hmm.

Rei Vardi (54:33.589) for equity that's worthless? It's literally worthless. He's giving it away for free. Somebody just joined the team two weeks ago, gets half of it. Are you crazy?" So I would just make sure that founders remember what equity means. It's a value that the investors understand you need to understand too. So anyway, with all that, I told him obviously like we can't work together. Yeah, it's not gonna happen.

Dalton Anderson (54:58.479) Of course, no.

Rei Vardi (55:01.867) I had to hand in my, you know, walk back to the investors with my tail between the legs again, embarrassed again. I say, "Look, this is what happened. I jumped the gun a little bit, but you know, thank you for the opportunity and the time." And I just said, "You know what? Like maybe I should stop spending so much time trying to convince someone that the company is going to work and just actually make it work and see where we go from there. And the rest is history.

Dalton Anderson (55:28.719) The rest is history. What a ride. That was a wild ride. Love this story and love the detail you went into there. And I think there's a lot of key pieces that you could take away. One, I would think about it as, and maybe you've coined this before in previous podcasts, but like parent equity. if the company's already up and running, you gotta be really careful giving away equity and giving away control of the company. Because if the company is going well,

you don't necessarily want to give away equity because you're going to think about it as actual money. And if you already have the potential to raise in a term sheet, people evaluate the company. And that's a good way to think about it. It's like, if they're evaluating the company at 20 million and you give away 50%, you're given, you're saying that person's worth $10 million. Like that, that's what you're saying at that point. So do you legitimately think that? And then what does that, what does that look like when you marry that person? How is it going to look like in 10 years? And

Rei Vardi (56:13.107) Right. Right.

Rei Vardi (56:22.049) Yeah.

Dalton Anderson (56:24.88) then how do you get out? And it's like all those things you got to think about and also making sure you've got you still have control is a big piece. You got to keep control of the direction of the company and it might destabilize the direction and the culture given that now instead of having one parent or two parents, there's three or four. It's like, "Okay, well, who makes the decision here? Like what's going on?" And so I think that those are some important points that you you'd made

Rei Vardi (56:27.808) Yeah.

Rei Vardi (56:47.328) Right.

Dalton Anderson (56:54.176) in that storyline, which I think that people need to make sure that they take away when they're building or thinking about things.

Rei Vardi (56:58.891) I think that the comparison to business and marriage and parenthood is so apt because your business actually is your child. It's actually your baby. And the idea that you bring in, let's say you've been a single parent and you bring in a new dad when the kid is 17, you know what I mean? That's a ridiculous thing to do.

Dalton Anderson (57:23.696) Hmm.

Rei Vardi (57:28.585) When you're considering having a baby, having a child, there's so much that you can and should discuss. How do we raise him? Where do we live? What's our parenting style gonna be like? How much money do we spend on these different activities? But when the kid is already fully grown and you've raised him his entire life and he's walking, he's got a job, he's a functional member of society and now you say, "This is your dad. You do what he says." You're not.

giving him any benefits, okay? You're in fact, harming him because that dad doesn't know that kid to that degree. And that kid doesn't respect that dad in that same way. You're actually lowering the value of the child's agency. And the same thing happens with business. There's a time when bringing in a parent or a mentor or a father figure, whatever you want to call it, is appropriate. And there's a time where you have forgotten the value that you've already created. You are so used to being on, you know,

Dalton Anderson (57:59.524) Confusing,

Rei Vardi (58:24.752) We say like, You're so used to being on the edges, right? You're so used to being in a, just like in an unstable state that you have forgotten that you've raised this kid and he's a good kid, you know? And that's the same way with your business. People oftentimes, first-time founders, they under value what they've built because they're so used to being in a desperate situation.

Dalton Anderson (58:41.52) Hmm.

Rei Vardi (58:53.78) But you got to get out of that mindset. You got to get to a place where you do value what you've done. And if you don't value what you've done, other people won't either. And that was kind of the biggest lesson is as soon as I moved from, I'm going to look for a co-founder to I need a kick-ass employee, right? The equity numbers changed by like an order of magnitude, right? As soon as you said, I need a kick-ass employee, guess what? The output just

multiplied because it wasn't just because I found the right person, that's obviously I would say like 80% of it, but that 20% you got to keep in mind is that people will value what you value. right If you tell them, "I'm gonna give you 50% of my company." They actually see that as not like, "Oh, my god. This is an insane opportunity. I could become a multi-millionaire." What they see that as is, "This isn't really worth much." right and and And that's something that I really recommend that any founder to listen to this, keep in mind, right?

Know the true value of what you're doing. Sometimes you're in a place where it is 50% that you have to give away and that's actually the right number. But for the most part, remember that sometimes less is more and that the thing that motivates people is not titles and money. And in fact, I would say if that's the thing that motivates the person you're looking at, run away. Because there's no amount that you're going to give them that's going to get

kind of productivity that you're looking for.

Dalton Anderson (01:00:27.039) 100%, 100%, like nothing to add there. Last thing, Rei, as we come to a close, how would you like people to get in contact with you or if they wanted to reach out or learn more about your company?

Rei Vardi (01:00:41.13) Of course, the best way is to go, I mean, you can find me on LinkedIn. I'm very friendly over there. Just Rei, R-E-I, Vardi, V-A-R-D-I on LinkedIn. You can check out our website, eonrides.com, or just look up Eon in the App Store, Eon Rentals, whatever you Google, you'll find us. We're available all over the country. We have several thousand cars across some 40 cities now in the US.

Dalton Anderson (01:00:41.488) What do you think is the best avenue for them?

Rei Vardi (01:01:10.954) Everything from Teslas and Rivians and Lucids to you know long-term and short-term rentals. So if you want to get in touch with me, that's the best way, and the next time you need a car, keep in mind that, you know, with us, it's 40 seconds in and out. Let's say you're landing in Dallas or whatever, just walk out of the terminal, get in your car and go as opposed to be stuck in a in a line for the next hour

more or less it.

Dalton Anderson (01:01:41.508) Yeah. And if you're curious, just rent a car. Just rent one.

Rei Vardi (01:01:44.894) Yeah, check it out. I had this incredible experience where I was recently on a podcast and the guy was like, "Actually, I've used you guys for like the past three years. And it's really cool to be able to to ask and figure out how you were able to build this." So it's really amazing to see that this is this concept of, you know, if we fix this problem for everyone, everyone benefits is actually taking off.

Dalton Anderson (01:02:13.198) I know. It's amazing. I know what my next car rental is going to be. But, wherever you are in this world, good evening, good afternoon, good morning. Thanks for listening in. Listen in next week. See ya. Goodbye.