“Sharing Economy:” David Walks Episode 4 with Michael Ulrich, VP Sales of BoostOptix

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Mike Ulrich Okay. Keeping up with everything. I’ll tell you how this came about. So, this past weekend, I was sitting on the couch, I was multitasking, I was texting, and also I was going through the web. There was a couple articles that I had left open, about like sharing economy.

You read an article, and it’s like, you know, you read through part of it, and you hear a new name or a new company, and there’s a hyperlink, so, I opened up a new tab/ Before you know it, it’s like you’ve got five tabs opened up. New information to consume, right? Digest and figure out, you know, whatever your next inspiration is.

So, in texting, I’m trying to figure out how to move a bed from Maryland to San Francisco.

David Smooke: That’s tough.

Mike Ulrich Yeah, it’s a little bit of a ways. It’s been sitting there for four years, so, I want to hurry up and get it done with. But, I’m sitting there, texting, and I’ve got my sister’s friend who is moving out to California, so it’s like I’ve got now a person to split this $2,000 cost with. Which was really not at all feasible. A $2,000 mattress, $2,000 worth of shipping. It makes no sense.

But all of a sudden, it became possible because I’ve got a person to split it with. I’m thinking, how amazing would it be to be able to split that with four or five people. So, it started getting me thinking about this whole sharing economy, and this is kind of a backend way to get there.

But, at the end of it, I was, I came back to my computer, and I’m like, “Okay, what do I do next?” I’ve got five tabs open, all these things to read. I don’t want to X them all out. I started thinking about you just get buried in it. It’s so hard to keep up. What’s the solution? Is there one? What’s the right course of action?

David Smooke: Before we go too far, I’m a little confused how you’re going to get five people to pitch in on shipping one mattress.

Mike Ulrich Well, it’s more so destination to destination, right? If you’re in Washington, D.C., there’s a couple places close by. You’ve got Maryland, you’ve got Virginia. If somebody’s looking to ship anything that’s of significant size. or maybe move something, is a better word.

If it’s coming out to say, San Francisco or Oakland, they’re close enough where you can join up and share the cost, share the ride, right?

David Smooke: Yeah, but a mattress is really big.

Mike Ulrich Well, not everybody has to be sharing a mattress. It’s all about the space that you have allotted for. If you have a U-Haul, you know, a moving truck, it’s not built to just carry a mattress, right? You’ve got ten feet by ten feet.

David Smooke: Now we’re getting somewhere. A U-Haul truck has a certain amount of space, and every time you rent it, unless you absolutely maximize it, there’s empty space in the U-Haul truck that’s going to cost you very minimal amounts in added weight of gas. Every pound you add is going to cost you more. You’re not going to realize it all, if you’re going 3,000 miles, and it costs you half a cent a mile, or whatever.

Mike Ulrich Just to kind of give you the context of, the model. They charge per pound, right. And they’ve got a minimum of, say, 1,000 pounds.

David Smooke: Oh, I was thinking of renting the whole U-Haul. I was thinking more of a trailer than a truck. Then, the sharing economy is less valuable because, I mean, you’re paying by the pound. Every extra pound is with the trailer, it’s really clean, though. Because you have so much space, and then whatever is leftover space, you could pack someone else’s stuff in.

Mike Ulrich Right. The way it works, at least with the company that I spoke with, is they have a 1,000 pound minimum. Which is, like, you’re not going to even meet it. But it’s the fact that they charge it, in a weight, so-

David Smooke: So the opportunity is, every person that’s seven hundred pounds, filling up that other three hundred. They’re already paying for that, so anything they can add on top is profit.

Mike Ulrich What I’m saying is you often get to the size, you know, the space limit before you get to the weight limit. You’re not getting a, you’re bottom of the barrel with a 1,000 pounds, necessarily, as quickly as you are filling up the truck with space, so, what I’m getting to is, you really, the underlying is, it’s this oversubscription, right? It’s a good example of something that you’re oversubscribing for, and you don’t have an opportunity to really subscribe at the optimum amount, right?

You’ve got a truck that is built for, it’s just a rectangle, right? You’re trying to ship goods, whether it’s boxes, or in this case, mattress. It could be furniture, all sorts of things. But, you’ve got the ability to split this space that you’ve rented. You’ve got the space, the added weight may or may not cost you anything. If it costs you anything extra, it’s marginal. And, yeah, people are moving all the time, right? Transplant-like country that we’re in.

David Smooke: Seems to me the easiest way to do it would be if you’re the U-Haul company. If you’re the U-Haul company, you can then say, “Well, you know, this is our cost, and if it’s over your limit, you can log into our app, and start taking other people’s stuff.”

I’m just worried about, the U-Haul company’s not going to want to say who’s moving.

So, now you have to get people to log into your website or your application, and say they’re moving, and they have to decide, the window is so small, when they rent something, and they rent it out for a thousand pounds. They don’t know they have 500 or 800 or 1,200, until the moment they fill it all up. Then, the moment they fill it all up, from when they leave, is a very short window.

So, you know what I mean? It’s there. The opportunity’s there, but it’s really hard to think about how you would get that person to let everyone like you know that the opportunity is actually there.

Mike Ulrich So, I’ll give you a quick example of who does this best today. I think this may be closer to the model you’re looking for. Look at FedEx. FedEx, what do they do? They do shipping, right? So, they’ve come up with generic rates for envelope sizes, et cetera, they know they’re going to get enough quantity for any destination. I really like when they simplified to just a box size, and one rate.

Some of those simplified options, I think, were really good. And, obviously you get to set things like speed of delivery, what type of pickup, whether it’s certified, and someone would have to be home, and that sort of thing. But, you know, for the moving example, it’s really just a different shipping option, in a way. You’ve got individuals looking to move [inaudible] [06:55] and you’ve got, obviously one locate, Point A, and then a Point B.

How do we get it from A to B in the most efficient way. If you look at today’s options, there is no efficient way.

David Smooke: What sites do you look to in terms of owning the sharing economy? Which is an ironic question, I understand, with the verb choice, but really, people that, in your mind, people are going to start imitating.

Mike Ulrich Well, I think the first one that typically comes to mind, and there’s really two, but the one that people have often coined is, Air BnB, which is exploding, and has been for about four years now.

David Smooke: I really like their new homepage, with video on it. Have you seen it lately? Oh, it’s great. The video almost looks like pictures, but everything is slightly moving in the background. It’s very good.

Mike Ulrich Yeah, they really, they’re a good example of a company that’s really changed. A lot of these companies have changed a lot, actually. TaskRabbit has just gone through a whole transformation. They’re getting a lot of pressure from investors and stuff, having to change their models. [crosstalk]

David Smooke: I haven’t been keeping up with them too closely.

Mike Ulrich The other I would say, is really Uber, that companies tend to reference. I think they, when you’re given a high-level pitch, it’s the Uber for dog walking, it’s the Uber for garbage, whatever the services that’s being fulfilled. So, those would be the two, those are the trendsetters, if you will.

David Smooke: They are. They are. One I thought you were going to mention, not as big, obviously, but more interesting in terms of sharing economy, and cutting out the money, Couch Surfing. Because now, here, there’s different levels of the sharing economy, where, Uber doesn’t technically have a driver as a full-time employee. But for all intents and purposes, for the consumer, it feels like it.

Yeah, you pay on your phone, but you pay for every ride. It’s not you create karma and you get karma, or to create value and you get value. Which, Couchsurfing, on the other hand, you have all these people gaining value without money actually changing hands. Which is where a lot of the purists will look to as far as the sharing economy.

Mike Ulrich I couldn’t agree more. That’s the part that’s really interesting. There’s some naysayers and things that are creeping up, and I think they’re, not frequently do I think this, but I think they’re pretty accurate, I feel, in this, [crosstalk]

David Smooke: Oh, we’re in Jack Kerouac alley, and we’ve got an electric guitar player outside.

I think he’s committed to no hands, on the cigarette. Anyway.

Mike Ulrich So, Couchsurfing, they’re one, they’ve been out there for a while now, but they’re a great example of what the sharing economy could be. You know, there’s definitely models out there that you could do for ride sharing, that is pretty much being done on Craigslist, and other things, I think Ride Joy is one that came out a couple years ago.

We don’t necessarily need to be having a monetary exchange for a lot of these services, right? People are bartering and just trading services for goods, or goods for services, or time for time. It doesn’t always have to be an exchange of money, or companies profiting out the wazoo.

Airbnb has come out of nowhere, and I think their last evaluation was between ten and 20 billion dollars. It doesn’t take that much, really, to connect two individuals. Although [crosstalk]

David Smooke: It almost looks like one of the signs that you’ve made it as someone, in terms of revenue, and getting into the sharing economy discussion, it’s literally the government changes the law for you. If the government, local, city governments, or state governments, once you’re like Uber, and you’re changing, oh, we’re allowed in Boston now, now we’re not allowed in Boston.

Like, the Medallion has these certain rules. Or Airbnb, does my lease actually say I’m allowed to rent it out? Is it renting it out if someone pays me any amount to be in my apartment? If someone comes over, and they use toilet paper, and they buy me new toilet paper, have I rented it out?

Very extreme, irrational example. But, that’s the, the validation is, in some ways, that the government has to change a law for you because they haven’t figured out how to tax your service properly. That means you’re cutting out their money.

Mike Ulrich Yeah, no, right. You see regulations changing and dropping and right, I’d say that’s one way to think of it, in terms of having made it. But, the thing that comes to mind to me is disruption. It’s certainly disrupting, that’s the thing, there’s tons of people on the consumer side of it, they love it, right?

But if you look at the disruption side on the businesses end, like the hotel’s right? You can make a case for understanding it. They’re held to a much higher standard, [crosstalk]

David Smooke: You know, it’s where you jumped off, and where you kept going. It’s who is being disrupted. Is it really disrupting the process of looking for a room? I mean, I guess I get a few more pictures of Airbnb, and they’re all a little more different. But I still log on, I still give a location, I still have my price range in mind, and then I pick a room. Whether it’s trusting the Hilton’s brand name, or it’s picking someone that lives at 17th and Valencia, and their ratings are good.

Mike Ulrich That’s where they’re really closing the gap. At the end of the day, it’s, every individual, every company, they’ve got a relationship, or they’ve got a, what’s the word I’m looking for here?

David Smooke: Relationship with the customer is brand, or potential customer. Brand is relationship with customer and potential customer. I don’t know, this is where, that’s very general.

Mike Ulrich Reputation. Geez. It took me forever to think of it. So, everyone’s got a reputation, you know? Obviously hotels and businesses, they’re held to a higher standard, they’re held accountable. But they have a lot more to lose, obviously, if something goes wrong. Whereas an individual now, it’s opened up the doors for anybody to become, a micro entrepreneur, if you will. Be a business owner overnight.

It’s closing the gap. It’s pretty new to us. There’s not many, we’ve always had the ability to start our own businesses, we’ve got contractors, you’ve got people doing house cleaning, many other things that people have been able to do things on their own. It’s just a different form of it. [crosstalk]

David Smooke: Look at people’s money-suckers, whether it’s asset or liability. Asset, you’re going land ownership, and liability, you’re going car. Airbnb and Uber. Turning these, the most common investments of the average person, whether it’s rent or ownership, and whether it’s owning or leasing a car. So, even if you don’t put up all the up front money to own right away, you still have now created your primary expense into a money-making venture. Which is a very powerful thing.

Mike Ulrich Well, I, that’s assuming a lot. I wouldn’t say that, number one, that Airbnb’s stance is that only, well 90 percent or so, of the people that are using Airbnb and renting out places, are only doing it once or twice, maybe a month or even less. So, they’re not necessarily turning it into a full time business, but they are [crosstalk]

David Smooke: No, no, no, but I’m saying, five years ago, if you had an apartment in San Francisco, it could not generate you money. Today, that apartment can generate you money.

Mike Ulrich Right, but you need to be careful in terms of where you draw the line, or what your reference is. A lot of people are staying afloat, it’s basically, again, oversubscription, right? We’re filling in the gaps, when something that we’ve paid for is not necessarily going to be used. We’re passing a ladder right now. It’s sitting there. How many people in the city right now could use a ladder? How many people in this one-block radius could use a ladder?

David Smooke: Yeah, so seeing it start with our most expensive assets, and by hour, just the average person here. House, car, it’s very encouraging for the next good. The power drill [crosstalk]

Mike Ulrich I don’t know that it began this way. There’s a website out there called Neighbor Goods. They went the more Couch Surfing, Craigslist route, where they said, [crosstalk]

David Smooke: I’m using “began” just in terms of making a serious dent. Yeah, yeah, there’s a lot of these little ones.

Mike Ulrich Right. There definitely, and I think this actually ties into your point, in that, the greater ones are getting bigger impact and notoriety. Because they are attracting people that can either make money or stay afloat a little easier, with costs going up. Yeah, if they can rent their car out or rent their home out, which are the big ticket items. Whereas renting out your frisbee that you’re no longer using in your closet, or your golf clubs, you’re not going to change your [crosstalk]

David Smooke: Well, that’s going to be hard to sell, let alone rent.

Mike Ulrich Well, it’s more of a borrow, but [crosstalk]

David Smooke: Yeah, so it either makes you no money, or it makes you a little money, to get rid of it. Mainly the golf clubs, probably not the frisbee.

Mike Ulrich Yeah, it definitely begs the question on what’s next.

David Smooke: So, now that we’ve gone down this road of the sharing economy, what would you like to, what’s your elevator pitch of even the next person, in terms of where the sharing economy is going?

Mike Ulrich Well, I can certainly voice where I hope it can go, and I was touching on it earlier. I just don’t think we necessarily need a middleman that’s profiting, as much as we do. I think Airbnb has done an incredible thing. And Airbnb, I would say a little less than the Ubers and the Lifts. But I think of, if you look at any [crosstalk]

David Smooke: Well, if I could post my apartment on 20 different sites I trusted, those 20 sites would all try and undercut each other, and the Airbnb cut of 12 percent, or whatever it is, you know what it is?

Mike Ulrich I’m not sure.

David Smooke: I’m not sure either. But, at that level, I really like competition. I’m just scared to post my apartment to 20 different sites, because there’s only a few that have the level of trust, that I want to know where they live [crosstalk]

Mike Ulrich Reputability.

David Smooke: Yeah, and of the users as well. Not just the site.

Mike Ulrich That’s right. That’s right back to what I was saying about closing the gap on reputation, right? Businesses have always been held to a certain standard, and individuals, I think are going to be expected to be held to a higher standard than they’re used to. Which is going to start to change the game, as you see it evolve.

David Smooke: Cool, Mike. Thanks for taking a walk.

Mike Ulrich Thanks for having me.