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Hubber is a car-sharing company servicing travelers flying out of and in to Los Angeles International Airport (LAX).
I originally spoke with Paul Davis for an article I wrote to my LA Business News Examiner page and we discussed how he got the vision for his starting his business.
A link to the company's website is at the end of this article.
The Business Idea
Paul is a film producer who decided with the thousands of empty and privately-owned cars sitting unused in parking lots there had to be an alternative to paying for parking at LAX.
Paul is the co-founder of Hubber which launched mid-year 2013. He had the vision for the service. His business partner and president of Hubber, Jim Meyers, brings corporate finance experience to the business.
I spoke in-depth with them recently about their business and both the pain and joy of starting a company and running a small business to make it operational and profitable.
Each day this week, I'll be uploading one part of the interview.
The Business Model
How did you know it would work?
Paul: we did market research to decide LAX would be our launch site in terms of traffic as well as methodologies of how to get to the airport. Not a great public transportation system.
Our model is principled on being an alternative. You're saving money not only on the parking factor but your means of getting to the airport are limited in LA. It's taxis, people coming from Santa Barbara or down south or out east it's expensive and it's a time consuming effort to get to the airport so it really has a confluence of owner issues of access to the airport.
In terms of the business model itself it hasn't been done. So there wasn't much to test on.
We could see that the shared economy was taking off in terms of Air BNB, housing, and other mediums but no one had done it at airports with cars before. So we didn't have any data on that part alone and it was almost like winging it and embracing that concept.
As far as LAX when the rental car market was strong but owner options were limited.
You've got a huge population and no easy way to get here.
Jim: From a demographic perspective, international travelers are receptive our bundled insurance, is normally something they pay a premium for. So they're pretty sold on our delivery as far as a retail offering.
There's no need for us to upsell or change the economics. They fully anticipate buying insurance for their U.S. travel.
No upselling of insurance, pre-bundled
Paul: You might get a $15 rate from some other car rental at LAX but then they're selling you a $25 insurance package.
Jim: We have the best price in town for a rental car.
Paul: We do our pricing based on the price of the vehicle. If you drive a more expensive car you pay more. If you drive a less expensive car you pay less.
Jim: We look at the value of the vehicle, the price of the vehicle versus the size.
A 5-year-old Mercedes will be in a lower price level than a brand new Prius but at the end of the day it gives you access to the kind of car you would want and you can still get there economically.
If you go to a traditional rental car company you pay the same price regardless of whether it's a nice SUV or a garbage SUV.
Every rental car company has the same methodology. We're giving the consumer choice.
Paul: We want to build consumer choice into our message.
Paul and Jim built strategic and important relationships to get the business up and running. Those relationships helped reduce the normal overhead of a traditional car rental company.
In the next post, we'll look at the relationship with Standard Parking.
Click on the Hubber website for full details and rental car information.