TESLOOP vs. Amtrack with Haydn Sonnad
Posted by John Livesay in podcast0 comments
Episode Summary:
The key to success is not about being perfect but having the confidence to pursue your vision in your market. Haydn Sonnad takes smart marketing to another level with TESLOOP and how he pitched this to Elon Musk. The first thing he knew was to not compete with Uber or Lyft. Rather, his company puts the customer first. To do this, Haydn becomes the customer first before giving out something to other people. Haydn explains how TESLOOP offers a cheaper way of traveling in the long haul from San Diego to Palm Springs.
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Our guest on The Successful Pitch is Haydn Sonnad, who is the Founder of TESLOOP, which allows you to be in a Tesla and go from Los Angeles to San Diego or Los Angeles to Palm Springs. It’s an amazing new way to get around in a long distance ride without having to fight traffic or take the train or plane. I took it myself and loved it. He’s only nineteen years old. He’s gotten his startup funded. He talks about how he puts himself literally in the mind or the seat of the customer, how he anticipates every potential thing they might want to have, and what he’s going to do in the future with a car that drives itself.
Listen To The Episode Here
TESLOOP vs. Amtrack with Haydn Sonnad
Our guest is Haydn Sonnad, who is the Founder of TESLOOP. I have personally experienced this incredible service from Angeles to San Diego in a Tesla. Think Uber meets the Concorde jet; that was my experience of it. Everything from a concierge that’s making sure you’re happy, to first class service from “Would you like a drink? Would you like a snack? Would you like a pillow? Would you like earphones? What music would you like to hear?” It was amazing. When I had the opportunity to hear him speak about how he came up with this idea and how it’s scaling and how he got funding, I wanted to have him as a guest on The Successful Pitch. Haydn, welcome to the show.
John, thanks.
Back in 2015, you told your dad that you wanted a Tesla, correct?
Yeah, I just found out what Teslas were in late 2013. Ever since I saw one in person for the first time, I was just fanatic about them.
What did your dad say to you that made you come up with the idea of TESLOOP?
For a decent amount of time, maybe a little over two years before I had the idea, my dad had also been relatively fanatic about Elon Musk and all of his companies he was creating. I’d always hear videos of Elon talking in the background my entire life, so I wasn’t naïve about Tesla. When I was exposed to the economics of Tesla, I just dug into them and how Elon was preaching how these cars had longevity and they were backed by unlimited mile eight-year warranties, it caught my interest because I’ve never enjoyed vehicle maintenance work, like working on cars. I thought it’d be cool if you didn’t have to work on a car as much and you could just drive it a lot. From there, I initially had the idea to just lease out one car because I wanted to get into it and just look at the cars and see how they work for me. I figured that the lease was about $2,000 a month, insurance would be about $1,000, so if I can make up $3,000 month by dragging people back and forth from LA to Vegas, I’d be able to pay for the car and then I’d be able to drive the car when it wasn’t being used. That seemed great to me, because it was a win-win. I wanted to drive these cars, but obviously I couldn’t just buy one.
The range for the Tesla when it’s fully charged is about 250 miles, correct?
Yeah, give or take. The battery has a degradation curve, so it does get a little worse over time. Our 300,000-mile Tesla is probably at 80% of its initial capacity.
How many miles is it from LA to Vegas? Do you have to stop?
Yeah. LA to Vegas was 280, and you do have to do one charging stop in Barstow, which made it not the best trip for us. We generally don’t want to be doing trips that require charging stops. It would just add time to the trip. If you’re already competing on time against airlines, you want everything to be in your favor.
Smart Marketing: If you’re already competing on time against airlines, you want everything to be in your favor.
Is that why you decided you’re going to pivot and go to different locations, like San Diego and Palm Springs?
Initially after the first two months, we wanted to switch into Southern California, but there’s an intensive permitting process for going intrastate, which is like departing in California and arriving in California. For about a year, we bypassed that by leaving California and going to Nevada. After all the permits and TCP got sorted out, we were able to do the intra-California routes, which is where we first launched Palm Springs. Palm springs for TESLOOP is a great route. It’s the perfect distance. You don’t have to do a charging stop on the way. It’s a very isolated community, so nobody living there has a better way of getting in and out, the trains are bad, planes are super expensive, and not too many people like to drive themselves, especially the elderly who cluster in Palm Springs. They want to get back to their family in LA, but they don’t want to have to drive for three hours in traffic. That’s just both tiring and frustrating.
When did you launch Palm Springs?
We launched Palm Springs I believe in June of 2016, but the month might be wrong.
You’ve just hit your year mark there. Where along the route did you get a co-founder?
I got co-founders about a month in. Originally I pitched the idea of getting that one car and driving people back and forth to Vegas to my dad because I wanted him to financially back the down payment on the car, and he was pretty skeptical about the idea. He was like, “You’re sixteen, you’re not a good driver, and the time to drive back and forth from LA and Vegas is a terrible safety hazard.” I was like, “It might be, but at the same time, autopilot is going to drive these people anyways in the next couple of years, so it doesn’t matter if I’m good at driving or not. It just matters how well Tesla can put together their autonomous capabilities.” He was like, “That makes sense, but I don’t know enough about it, so go ask Elon Musk.” I managed to finesse my way into the Tesla shareholders meeting.
Let’s paint the picture. You’re sixteen years old, using some of your connections because I’m imagining you’re not a stockholder of any size, and you somehow managed to get in there. Tell us that story a little bit because that’s phenomenal vision, chutzpah, confidence that many people at many ages don’t even think to do.
I can’t dig too deep into the details of how I got into the meeting. It wasn’t from having connections. Security at the event wasn’t too strong. It’s not too hard to make people believe you’re a shareholder, if you can provide documents that back up your story.
You get in and there’s a bunch of people that want to get his attention and ask a question. How did you get picked?
I looked at the videos. They just stopped doing the whole Q&A with Elon at the last shareholders meeting, but they’ve done like four or five before, so I had already seen what the setup was like and I noticed that the microphone stands were on either side of the aisle and towards the end of the pitch, they just said, “Get lined up behind the microphone and then you ask Elon your question.” He normally didn’t get to everyone, so the first man on each side got to ask their questions. I just got in and I sat the closest chair to the microphone, and the second they opened up for questions, I got the second question.
[Tweet “Let go of being perfect.”]
I love that you did some due diligence. That right there is such a great takeaway. It’s not about just due diligence on pitching an investor or pitching a client. It’s figuring out the lay of the land before you even walk in the room. Good for you. What was it like talking to Elon who you grew up with his voice in the background?
It was a little intimidating definitely, and I wanted to make sure I got my question down right. I did and I went up and stuttered a little bit, but that’s fine. I conveyed my point and then I got him to answer it well and he said “Within three years, autopilot is going to be able to drive someone from LA to New York 100%.” He said he estimated it by three years, but they’re on track to do it in three years or one year from now. I was like, “My plan will work.”
I love that you just said that I wasn’t perfect and I stumbled a little bit. That’s the key to success. You probably have already figured this out, but you don’t have to be perfect to be successful. The fact, is you’re probably going to be nervous, you can practice as much as you can, and even if you stumble, at least you still got your question in and got your affirmation going. Let’s talk about the name because it’s not Tesla, it’s TESLOOP. From what I’ve read, they didn’t say they had a problem with it, so you didn’t have any big lawsuit pending with people thinking it was a Tesla company?
Originally I came up with the name TESLOOP when I was brainstorming ideas with my dad and he said something like Viperloop and I was like, “That’s terrible. That just sounds weird.” I did like loop because it incorporates the Hyperloop, which isn’t going to be possible for at least a couple more years. It also works out because TESLOOP, we’re just creating loops in Tesla, the car, so it’s a very literal name. Even when I talked to Elon, I’m going to be creating a constant loop between LA and Las Vegas and I’ll call it TESLOOP. He chuckled at that, he thought it was funny. About six months after we had started service, we got an email from Tesla. It was some lower-end corporate guy and he was like, “We’d like for you to change the name because we think it’s a little close and there may be a copyright issue.” We were like, “Of course, we had some backup names. There was no problem with that.” We of course liked the name TESLOOP the most, but if there’s any problem with Tesla, we didn’t want to go forward on that because we’re based on their platform and we want to be as friendly with them as possible. We responded and we’re like, “If you could have someone from the actual corporate come and let us know and tell us what exactly the problem is, we’ll change it.” They never responded back to that, so we’ve had the name for over two years now. They haven’t had a problem, and it’s trademarked under a different industry category than Tesla, so we got through in the trademarking process.
The other thing I love about what you’re doing is that you’re not competing with Uber and Lyft. This is not for short, little, long distance. This is for the long haul, San Diego, two to three-hour Palm springs-LA, and that market is not being tapped because that would cost way more than what you’re charging around $49 or so depending on where you sit if you were to take an Uber there and it wouldn’t be nearly as comfortable. That is smart marketing. Can you tell us the story of how far in were you? How much proof of concept did you have before you reached out to investors?
Let me just go back one step and talk about why we’re not competing with Uber and other intercity ride-sharing services. Fundamentally, they’re all based on the car won’t come on a platform, which is your internal combustion engine and you drive it yourself, an old car. I can almost bet that just don’t make sense in the future. There’re no other players in the regional mobility space that are on this platform, so we’re able to offer a way cheaper product than what you could do in an Uber. Uber from LA to Palm Springs is generally about $150, maybe $160 or $170, whereas the TESLOOP is about a third of that cost, if not less. I don’t think Uber is ever going to be competing in the long distance mobility space, just because they’re not on this car 2.0 platform and it doesn’t make sense for them. Eventually there are going to be competitors. There’re even competitors right now, but they are just planes, trains and buses, so they are again not economic competitors; they’re just in the same space as us.
Smart Marketing: It’s great when travels are rewarding and people are looking forward to it and they can see something to gain out of it.
When you look at the product required for regional versus in-city mobility, it’s a lot easier to get a fully automated in-city mobility product like the Tesla Network, which is going to be mobilizing all of the Model 3s to allow people to book them out on the months that you’re not using them. That’s going kill the inter-city space, and we don’t want to be competing at all with Tesla especially. When it’s in a long distance model, there’s a lot more human interaction, there’s a lot more routing that needs to get done, and there’s a lot more attention required to deliver a consistent experience. That’s very key to long distance, where if you’re going to be in the car for three or four hours, you don’t want to have that aspect of unpredictability like you find in Uber.
Let’s just take little reality check on that, especially if you’re taking senior citizens back and forth between LA and Palm Springs. I’m guessing that bathroom stops are a concern as opposed to train that might have a bathroom on it, but you’ve addressed that.
We definitely have always considered that and surprisingly it very infrequently comes up. Very little people ever request bathroom stops. When they do, we make it simple for them so you can either just tell your pilot, “I need to go to the bathroom. Can you pull over at the next exit?” If you don’t feel comfortable since it is in a ride-sharing scenario, you can just text your ground control operator and they’ll convey the message to the pilot, so you don’t have to expose yourself if you’re uncomfortable with that.
That’s forward thinking, that concept of putting yourself in the seat of the passenger’s mindset. That’s great.
We spent a lot of hours just driving around in the cars and testing out every single possible amenity. We’ve gone through twenty different travel pillows and all these headphones and we’ve tried to create the most consumer-friendly cabin as possible.
When I was hearing your talk, you said it’s the vibe of being in a Starbucks with Wi-Fi and all the amenities of free water and everything. It’s a great experience and it’s a great model and no one else is doing it. Do you ever worry that you could get competitors?
There’s definitely going to be competitors in the future once people understand that this model makes a lot more economic sense and it’s a lot cheaper for them to run mobility on it, but TESLOOP is relatively defensible. When you look at Starbucks, coffee is not a defensible industry. There’re so many coffee shops. It’s unprecedented for a coffee company to reach into the billion-dollar market caps. Starbucks did that by creating an experience. We’re creating an experience at TESLOOP that’s very consistent. It’s not going to be something that you’re unsure what you’re going into. Our routing is all done on proprietary software, so it’s very hard to replicate the exact routing we’re using. There are very different requirements when it’s electric autonomous cars as compared to gas cars, because there’s a lot more considerations to take into account. Also these cars can query so much telemetric data every quarter of a second, so there’s a lot more data processing. That helps you also get better estimations of everything related to the car. That’s hard to replicate, but that’s not impossible. If a company were to take $15 million and get a bunch of cars, they could do this. At scale, we could get better. The trips become shorter because we’re able to link people that are closer together at origin and both destination.
We’ll have more frequency, so it’ll become to a point where even though they are pre-scheduled trips, it’ll be on demand. If we’re having a trip leave every hour, that’s pretty close to on-demand. You never going to have to wait more than two hours until one car is full or something. When you’re doing this long distance, you also want frequency, because there’re a lot of different times that people are traveling for different reasons and you want to be able to satisfy everyone’s time. Also, we can make a more personalized experience through social engineering, which is linking similar people with each other in the car so we can get beneficial human interaction and get people talk to each other and have party cabins and whatnot. There’re a lot of possibilities for creating a very personable brand.
[Tweet “Have a conversation not a presentation when you pitch.”]
That’s where it is an exciting, unexpected treat. I had somebody in the car with me on the way to San Diego that we had a lot in common. We didn’t know each other, but he was fascinating and he found me interesting, so the kinds of people you meet doing this are great. One of my friends, Mark Lovett who lives in San Diego is the Founder of the TEDx down there, and when I told him that’s how I arrived, he got jazzed because one of their goals is getting as many people in LA as possible to come to San Diego to the TEDx events. Imagine getting several cars of yours taking people down to San Diego at different times that everyone in the car would be going to a TEDx anyway and you start this interesting conversations before you even arrive or on the way back talking about the talks you heard. It’s an incredible opportunity.
It’s great when travels are rewarding and people are looking forward to it and they can see something to gain out of it instead of just losing their time and money and motivation to move.
Who knows what connections you would be making there? I was also fascinated that you call the driver a pilot. I believe there’s a two-day training. Can you talk about that?
The training is more intensive than what you’d find in Uber. We train them to be a brand ambassador. We train them how to handle the in-cabin experience, so how to regulate that everyone’s happy. They have to learn how to operate the cars, because driving a Tesla is different than driving a normal car. There’s autopilot you need to deal with, and there are no gears. It’s very different, so we give them at least five hours on-the-road training experience then they do a practice loop where there’s a TESLOOP employee, and then they do one solo loop where they’re heavily monitored. If they pass and we like them and they’re friendly, they become pilots. The pool of people we choose our pilots from is also what adds to TESLOOP. Instead of just having professional drivers that have come to a point in their life where they’re strictly professional drivers and they have less outside experiences to talk about, that can be boring. If you’re bringing in young actors and people that are just full of life and enthusiasm and like talking to others, it can help some people feel more comfortable in the car and just having a rewarding time.
The other thing that’s coming down the road, no pun intended, is the concept that eventually a passenger could be the pilot in exchange for not having to pay for the ride. How would that work? Would you have to train the passenger?
The passenger program could be one of the most revolutionary thing that’s happened to travel that’s tapping into consumer mobility. The way it’s going work is after you are a passenger on TESLOOP and you’ve taken it maybe once or twice. We haven’t finalized the details on this. You’ll be able to apply to a position called the passenger pilots where on any of our routes, you can book the driver’s seat for free in exchange for being a conductor of the trip. Yes, there’s going to be a little bit of training for them. They’re still going to have to do a couple hours, but by that point, once we launched this, autopilot is going to be driving the car safer than any human can drive the car. The actual driving task is going to be very mitigated through autonomous capabilities and it’s not going to be something that’s dangerous to give out to people that aren’t very experienced drivers. We are going to feel very comfortable that we’re able to do this very safely and efficiently. The insurance companies have given us the okay on this. We’ve already done a couple of tests on our Vegas route, but we haven’t pushed that forward just yet. We still want to create the most consistent experience as possible for now and it becomes a little less consistent when you have uncontracted pilots.
Smart Marketing: The people we invest in are the ones that are human and are authentic.
Take us back to what your experience was pitching to get funded.
We’ve done a lot of different fundraising angles. We have had more than one person involved. There’s been me, my dad, the other two co-founders, Jared and Brian, we’ve all pitched in and tried to help get money for the company. That’s of course an important thing to do for any startup. I’ll just go through one. The very first one I ever did was up in the Bay Area. I forgot the name of the firm, but I went in and it was hard to say anything other than intimidating. It was scary. They were the most institutional investor stereotypes. They were just guys in suits with notebooks all sitting across from me on a table. You can prepare your deck and you can get all your talking points together. Every time once you get into a meeting, the conversation will organically drift into something else and you have to have all these answers that you need to figure out. There’ll be raising questions you haven’t even thought about. It can be scary to think that you’re answering a question in a way they don’t want to hear and that could result in them not giving you money which could in turn be very detrimental to the company. There’s definitely a lot of pressure in situations like that, but at the end of the day, I always go back into the conversational tone and just try to explain it to them as if they were my friend. I don’t try to bring in all these terms. It’s just as simple as possible and go into the fundamental values of TESLOOP and why this makes sense in the future and why it’s a good investment for them now.
That’s so smart. If all the investors I’ve interviewed on my podcast tell me, “The people we invest in are the ones that are human and are authentic,” and as you said, having a conversation like you’re a friend, because it is a relationship that you’re building. It’s not just “Here’s the money, bye.” They typically want to be involved and on your board and there are certain milestones they want you to hit and you have to be transparent if you’re hitting a bump in the road, again another pun. They’re investing in you even more than the idea. I can see why someone said yes to you. What are your next steps? Do you have big milestones? Did you raise enough money to last you twelve months or longer?
I’d say we have about until early next year enough money to run until then in the bank, but we’re going to start raising a real Series A probably end of September or early October. We want to get a lot of money so we can horizontally scale out these operations to a lot of different cities and find what markets work best for us and then further scale in there.
Do you plan to do LA or San Francisco to New York, that kind of venture? Are you’re going to stay within this 200-mile sweet spot?
The sweet spot is the 50 to 250-mile routes. The sweet spot is going to get a little bit longer as car batteries get better and supercharging speeds get quicker. I don’t think ever it will make sense to go from LA to New York. That’s 2,000 miles. That’s way too far. The plane is always going to beat you in that scenario, unless there’s some Hyperloop that does it better. We’re sticking to that electric car loop and hold that range. There’s a ton of markets that play into that. We can go to Texas and there’s the Houston, Dallas, Austin, and San Antonio area. There’re places all over Florida and Seattle, Portland. There’re a lot of routes. Even with 2% of the market share of people commuting between the cities, we can fill hundreds of cars. It won’t be too hard for us to get a decent amount of cars out there and a decent amount of markets.
What piece of advice you have for our audience on getting a startup to become a reality? Getting it funded and scaling it?
What we focus on always at TESLOOP is put the customer first. That’s cliché and everyone tries to say that, but you have to become the customer before you can give out something to other people. You have to take a second to try out your product and anything that you don’t like about it, there’s going to be someone else who doesn’t like that. Even if it’s most insignificant, like you think the travel pillow should be rectangular instead of horseshoe-shaped, you have to make sure that you’re confident in that and that’s how you would like this product to be.
[Tweet “Become the customer to anticipate their needs.”]
That’s great. Become the customer is a great mindset and a great way to watch what you’re doing. This is going to be successful because I’m a customer and I’m a fan and I’m telling all my friends. I even did a Facebook Live about it and it got a ton of views. It’s exciting. As you said, no one gets off a plane at United Airlines and says, “I just had the best flight ever.” There’s a real buzz about what you’re doing and I couldn’t be happier to be on the sidelines cheering you on. Thanks for sharing your insights and your passion for what you’re doing and making a difference on the carbon footprint and giving us all a better way to get around.
For the audience, email [email protected] and you’ll get a free first ride to try out TESLOOP on any of our routes.
That’s very generous of you, Haydn. Thank you so much.
If you want John’s free PFD of the three mistakes to avoid when you pitch, go to JohnLivesay.com and enter your email. Remember people have to trust, like and know you before they say yes.
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