Toby Kernon is the founder and CEO of ‘car subscription’ service Wagonex. Here, he discusses shaking up an industry, meeting developers in coffee shops, and the importance of having goals.
What was your background prior to starting your company?
Prior to starting Wagonex, I worked in finance where I ran my own business for 12 years. After being inspired by the Brownlee brothers at the London 2012 Olympics, I was asked to join a sport-focused technology business and was made a co-founder. Sadly, it didn’t yield the exit value we had hoped for, so I joined a funding platform as investment director. After realising this wasn’t for me, the desire to launch Wagonex became much stronger.
What made you start this car subscription business?
I love cars, and have ‘owned’ 19 in as many years through a variety of methods including hire purchase, personal contract purchase, leasing and outright purchase. There were difficulties with every option, mostly yielding unpleasant experiences in one shape or form; paying over the odds when buying, punitive interest rates, knowing that you are selling the car cheaply when switching, additional mileage charges at the end of a lease, the list is endless. I have always thought that something needed to change in the car industry. As a customer-facing industry, the customer seemed to always face the brunt of the problems.
The subscription economy has transformed several industries, and it struck me that the car industry was on the cusp of a massive shift in this direction, so the stage seemed to be set for car subscription. Why do we own cars? Why do we take out interest baring debt on depreciating assets that cost more to maintain the older they get? The car subscription model has the ability to manage all the pain points on behalf of the consumer, allowing them the flexibility to change cars when required all in one monthly payment.
The industry knows that this model will transform the way we consume cars. A recent KPMG survey showed that 75 per cent of industry executives agree that more than 50% of us will no longer own cars by 2025. That is a huge number of cars not being sold and an opportunity for a business like Wagonex to fill this gap.
What challenges have you faced so far?
There are those within the start-up community that will encourage you to not begin the journey until you find a chief technology officer (CTO) co-founder. Finding the right CTO is a very difficult task, and you may not find the person for the job at your first attempt. This can be very expensive in the long run if equity is all you have to offer.
I went down the lonely route of meeting developers in coffee shops and bars, selling complete strangers on my concept and I would not wish that process on anyone. Fortunately, I came across ucreate.it which became our technology partner. I liked their model of reduced rates with an equity stake, ensuring they are incentivised to see our business thrive. They have supported us through the most testing time of being a start-up.
Raising funds is challenging for all start-ups, and we have been no exception. It’s a full-time job for a founder, as is running the business. Early stage VCs are no longer early-stage, and the Angels that once invested in concepts seem to demand traction and revenue. We have continuously engaged with sources of capital of all dynamics; some for the current round of investment, and even those that we are too early; ensuring that we are on their radar for when the time is right.
Was there a turning point for the business?
Nothing specific. However, ‘cold’ conversations, that on paper should have been challenging, were surprisingly well received. This has been a continuous theme for us throughout our initial work, and with an industry which is clearly striving to find solutions, we have discovered that there isn’t one right answer.
There are some great stories we received from senior executives within the car industry, particularly at dealership level, that confirmed my thinking that the industry was struggling from within due to the incumbent ‘old school’ mentality. This did nothing other than spur me on.
Wagonex has a solution that has been well received so far by the industry, and while we have a huge amount of work to do, but this is what we signed up for, and long may it continue.
What goals do you have for the company?
We are an extremely goal-orientated business which we monitor closely internally. Our initial vision for success would be to educate consumers on the types of flexible car ownership available and show them that there is an alternative to traditional car solutions.
The industry is changing rapidly, not only through ownership but connected and autonomous cars and insurance will all bring with them different targets, levels of success, and areas of focus.
What advice would you give to start-ups or small businesses?
Continuously engage with investors. Try to give yourself time for reflection which I am not very good at, but hopefully writing this answer may nudge me to remember from time to time! And finally, to never give up.
Further reading on car subscription
Nominations are now open for the British Small Business Awards, the leading event celebrating the brightest stars in the SME sector. Click here to enter, and make sure you get involved today using the hashtag #BSBAwards. Good luck!