Christian Schaefer and Steve Johnson had a ‘light bulb moment’ looking at their cars at the airport.Photo: Peter Braig.
Airports are rarely a pleasure to visit. There’s travel fatigue, queues, a scramble for luggage and waiting, waiting, waiting.
To top it off, if you have been profligate enough to leave your car at the parking station, you have also just emptied your wallet.
It should come as no surprise that parking fees are a big profit booster for Australian airports – some might even call it a rip-off.
Melbourne airport made $87 million out of its parking last year, equating to $3500 a car space. Sydney airport manages to squeeze $5221 from each of its spaces, with the highest fees in the country: $32 for three hours, $57 for eight hours, and $135 for seven days.
For two young men, visiting Sydney from Melbourne for a break away, a $249 charge when they went to drive home was enough to get them thinking of a new business idea.
What if – instead of paying more than the price of your flight to leave your car at the airport – you came home to a car that had been cleaned and earned you some money while you were away?
Carhood, the car-sharing service started by Christian Schaefer and Steve Johnson (25 and friends since year four at Trinity Grammar School), promises just that.
Sour taste left
“For me it was robbery, it put a sour taste in my mouth,” says Schaefer of the cost of parking. “Melbourne and Sydney airport carparks are the second and third dearest airport carparks in the world and [no one] is fighting these excessive charges.”
Their proposal is simple: You drop your car off with them when you are on your way to the airport and they shuttle you to your flight in a limo. In the meantime, your car is properly cleaned and offered as a hire car while you are away.
If you are a renter, Carhood guarantees to charge 25 per cent less than the rate offered by the four established hire car companies (rates are published on vroomvroomvroom.com.au).
For the owners of the cars, you will get 25 per cent of the money earned by your car if it is successfully rented and you don’t pay for the parking.
If nothing else, you will at a minimum be able to park your car and have it cleaned for free.
If you are travelling for an extended period, Carhood guarantees an upfront payment of $250 for any car loaned for 30 days or more, plus the percentage of any takings from that vehicle.
Schaefer says the idea for Carhood came in a bit of a flash after their weekend away: “We kind of looked at each other and had this lightbulb moment.
“We looked at all the cars sitting right there in front of us … Why don’t people generate some money from their car, when you have got Hertz, Avis, Budget and Thrifty downstairs renting out the same cars.”
Hundreds signed up
So far, Carhood is operating only in Melbourne (launched in February), but it plans to offer its services in Sydney in June. So far, 300 people have signed up to the service.
Schaefer says car-sharing schemes are already well-established. The founders of FlightCar in the US have been named by Forbes as The Youngest Entrepreneurs to Raise $20m after initially struggling to get seed funding for their idea.
In Germany alone there are 150 car-sharing companies. “In the UK, more than 30 per cent of entire population has tried and tested a car sharing model,” he adds.
Schaefer says he anticipates there may be damage to cars in, perhaps, 4 per cent of cases, but Carhood’s insurance will cover the car and driver.
“In 96 per cent of all cases, your car will be the same as when you left it,” he says.
Schaefer and Johnson have been working on the concept since March 2014 and, so far, $120,000 has been spent getting the company off the ground. About $50,000 has been spent on the website.
“Starting out, I borrowed every cent and dollar I could from friends and family. One family member gave me $10,000. We all did what we could to get things happening and Steve and I matched each other, bringing $60,000 each to the table,” says Schaefer.
Another $360,000 has now been raised in a first round venture capital investment, partly from the recently-retired CEO of fleet management company FleetPartners, Nick Johnson, who is now chairman of Carhood (and Steve Johnson’s father).
The connection with Fleet Partners has been an advantage – as was Steve Johnson’s previous employment as a finance assistant with forklift company Adaptalift Hyster. Both companies have made corporate alliances with Carhood to use its services (FleetPartners will let Carhood rent out cars that have finished their leasing period until those vehicles go to auction).
Other investors include family friends Paul Fister and Sue Dann (in the beauty treatment industry) and Jonathan Hassid (a UK-based internet entrepreneur and founder of marketing business TotallyMoney.com). The Carhood founders were introduced to Hassid through LinkedIn.
Both founders have links with the motor industry: Johnson’s is through Fleet Partners (he also has a degree in banking and finance) and Schaefer has sold advertising for carsales.com.au and carsguide.com.au as well as selling cars for a living.
There are just four people working on the business: the founders, a social media manager and a corporate sales manager. A casual employee cleans the cars.
The founders hope to be profitable in about 20 months.
Regular customers include a mother who is renting because she has loaned her car to her son for a few months before he goes overseas. The car she has rented belongs to a small business owner, who has an unused staff car.
Find a problem to solve: the founders encountered a situation that didn’t make sense to them and realised they wouldn’t be the only ones who resented paying so much for parking.
Use your connections: Carhood chairman is Nick Johnson, recently the CEO of Fleet Partners and also Steve Johnson’s father. The advisory board and investors are a mix of former employers and personal contacts.
Do your research: Schaefer and Johnson spent three months in America researching car-sharing schemes. “It certainly wasn’t arduous,” says Schaefer. It was a really fun experience”. He also went to Europe.
Choose investors wisely: Schaefer says although money was very tight last year, the founders turned down a number of offers of investment because they wanted to find people who had the right fit.
Face-to-face pays: Carhood has gone through four different back-end engineers for its website, one from the UK and three from India. “It was very tough to manage that part of the business,” says Schaefer. Eventually they found a company in Melbourne they could sit down and discuss business with.