2019 pitch winner Vendy: Ride-sharing still has a future. It’s just cloudier than thought.
Vendy founder Salomon Horowitz says the future of ride-sharing remains bright.
But it may be too soon to know the wattage.
Vendy won the travel, tourism and hospitality vertical in the 2019 Miami Herald Startup Pitch Competition. The company planned to make money through both sales of goods to passengers sitting in the back seat of an Uber or Lyft and through advertising deals.
But Horowitz says Vendy was unable to gain traction on ad sales, so it has “pivoted,” or changed business models, to focus on selling items out of its Vendy boxes found in ride-sharing cars’ center consoles. Meanwhile, the company is also branching out into selling a patented technology to food trucks and restaurants that will allow eaters to place orders from their phones. The technology is not yet widely available.
Horowitz himself has stepped back from overseeing day-to-day operations at Vendy, having found work with a healthcare startup. Vendy remains self-funded and is not seeking outside investment.
He says Vendy’s issues reflect an ongoing gap in the business model of ride-sharing. In Vendy’s case, the biggest obstacle remains a lack of trust between drivers and passengers. Many passengers, Horowitz says, are still wary of having any interaction with their driver, let alone buying goods from them.
And from the driver’s perspective, because there is no guarantee that a passenger will want to make a purchase out of a Vendy box, they have begun demanding more up-front cash guarantees from Vendy.
But Horowitz says the figures they’re demanding are not feasible.
“The truth is Vendy is not a revenue source that will increase earnings by 20%,” he said. “It’s just a way to help pay for gas or insurance.”
That desire for increased earnings comes from the fact that drivers are already feeling squeezed by Uber and Lyft, he says. A former executive with Lyft, Horowitz says building a profitable business out of ride-sharing has proved elusive even for both ride-share giants. Neither Lyft nor Uber yet operate in the black, and both have seen their share prices fail to recover to their initial portfolio offering prices since going public last year.
One major reason: Uber and Lyft have realized that they can barely pay drivers enough to keep them around.
“They need to reduce their spending, and the biggest spend is paying drivers,” he said.
As a result, Horowitz predicts Uber and Lyft will continue to struggle until driverless vehicles become viable. And based on where he sees current technology, that will not happen anytime soon.
Still, despite those factors, he remains bullish on the future of ride-sharing.
“I have no doubt that by the time kids go to college, they won’t have a car,” he said. “They’ll be using Uber or Lyft, or whatever company is around. But it has taken more time than we thought.”
This story was originally published February 18, 2020 at 6:00 AM.
