Revolutionizing the Limousine Service: Limos.com CEO T.J. Clark (Part 4)

Sramana: How long did it take you to get enough inventory to really change the business?

T.J. Clark: It took us three years, almost exactly. We had to build the technology and work with suppliers. We really hit our stride three years into the initiative, which was early 2011. That is when I felt the product was viable and very interesting for larger partnerships and corporations.

Sramana: Did you continue to operate the directory service during the three years you worked to establish your new product?

T.J. Clark: No. We moved to a lead generation, pay-for-performance advertising model. We focused on lead generations and bookings.

Sramana: How did that impact your revenue model?

T.J. Clark: It helped a lot. It was a better value proposition for the limo companies. They were no longer paying flat fees; rather, they were paying based on the exposure we were getting their company.

Sramana: How much did you charge for each lead?

T.J. Clark: It varied based on the value of the quote. If it was a big ticket quote we charged more, and if it was a small service, such as a ride to the airport, we charged less. It was tiered.

Sramana: What did you do in terms of revenue ramp between 2008 and 2011 based on that business model?

T.J. Clark: We have grown our revenue approximately 50% year over year. We have had the same level of traffic growth as well. We have revenues over $5 million today.

Sramana: Did you mold the lead generation business completely into booking, or do you maintain lead generation and booking as a separate business concept?

T.J. Clark: We have maintained both revenue streams.

Sramana: Tell me more about the launch of the booking business.

T.J. Clark: We launched the beta version of that product in 2010. We went into full production in 2011. That is where we believe the future of the company lies. We believe we can become a $50 million to $100 million business through the booking engine. In 2011 it took us less than three months to double our entire 2010 velocity.

Sramana: What is the revenue model of the booking business?

T.J. Clark: It is a commission-based structure, a net rate model. We take a slightly different amount on each job. It is similar to a hotel net rate model that is popular among Expedia, Orbitz, and those types of companies.

Sramana: Were you able to get all 2,000 companies that you had targeted to join your platform?

T.J. Clark: We have 2,000 companies which covers 14,000 companies.

Sramana: Is there a self-service model that would allow you to bring on other limo companies such as the independent drivers? Is there any benefit there, and is there a way you can create a self-service mechanism for them?

T.J. Clark: We have thought about it. We have worked with companies that might have one to three vehicles. We have found that our sweet spot is a company with 10 to 30 vehicles. Our volumes are too large for a company with only one vehicle. We will send them too many jobs for them to keep up with.

Sramana: How many companies are there that fit in your sweet spot of 10 to 30 vehicles?

T.J. Clark: In the U.S. alone there are 10,000 limo companies. Of those, there are 5,000 that you would not want to work with or take a ride with because of quality issues. We look at a lot of objective criteria. We want to work with good companies because consumers are going to be much happier. We have minimum criteria for their insurance policies. Beyond that we have a lot of data for their picking up on time rates and their rider reviews. We will remove companies based on poor performance. Our algorithm will favor companies that treat our customers better.

This segment is part 4 in the series : Revolutionizing the Limousine Service: Limos.com CEO T.J. Clark
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