In Pursuit of Better: Andre Haddad, CEO of Turo

Audio Description

Growing up in a war-torn country, Andre Haddad found an escape through his affinity for music, mixtapes, and The Economist magazine. But, that reprieve quickly turned back to reality when his home was bombed and his music collection was destroyed. Little did he know, this would later lead to the ideation of his first business venture in e-commerce and the start of his entrepreneurial journey. Listen to his inspiring story. 

Transcript

00:00 - 00:16

They said, you're crazy, you have the loan, you haven't paid at this point even a small portion of it back, you've got all these expenses. You live in this expensive town. And frankly, everybody around me thought it was a crazy idea.

00:16 - 00:36

Hi, everyone. Welcome to the Inflection Point where we talk to entrepreneurs, business leaders and innovators about their journey and the make or break moments of their career. I'm your host, Stu Katz, Managing Director at Bernstein. And today we're on the line with Andre Haddad, CEO of Turo, an app that enables you to rent your car for a day, a week or a month. And we spend a lot of time talking about what led up to Turo.

00:38 - 00:43

Andre, thanks for joining us. We're super excited to have you here today. Delighted to be here. Thanks for having me.

00:43 - 01:16

This is the Inflection Point podcast. And obviously we're interested about inflection points in your life and there's so much rich territory that we can cover. I thought it would make sense to start out as a teenager going through the end of the Civil War, growing up in Beirut and then making the transition to move thereafter to another country. I just, I wanted to perhaps start there and get your perspective on what you were going through at the time and how it impacted you going forward. I grew up in Beirut during the Civil War.

01:16 - 01:25

I was born in the early 70s and the war started in '75. So in many ways I only knew my city of birth in a state of war.

01:26 - 01:55

In fact, we lived in an apartment building with my family that was not very far from the green line that separated East from West Beirut, and I remember going up outside in the balcony and looking west and seeing that the very end of my street there were these barricades that was the official start of the Green Zone. It's always been, was a very strange experience growing up in a war-torn country and a city.

01:55 - 02:08

But humans are amazingly resilient and we all get used to the constraints that we have and the cards that we're dealt with. And we survived, and we were mostly in that survival mode during those years.

02:08 - 02:34

And then in 1989, our house was bombed. This was actually the third time our our building was was hit by shells, but this time was very close. You know, the shell landed in actually my bedroom. Thankfully we were not in our apartment when the shelling occurred. We were in the underground parking garage of the building that has been serving us as a shelter during during those times.

02:34 - 02:48

So challenging moments, recollecting them always fills me with a with a sense of sadness and anxiety, remembering those moments. That was, I think, an important inflection point for myself and for our family.

02:48 - 03:14

Shortly afterwards, we decided that we were going to try to find a better life elsewhere. And I was very lucky in so many ways to have found a landing place many thousands of miles away, in the beautiful city of Paris, where I had connected with a family member who had been there for the last 15 years, he had left Beirut because of the war,

03:14 - 03:49

but much earlier. And I just connected with him and asked for his help and he was very generous with his help. This was one of the many people that providentially showed up in my life and were just at the right place at the right time. And I have so many people to thank in my life because they just helped me in ways that they didn't even realize back then how important their help was going to be. Andre, as I understand it, you ended up in Paris in University. Other members of your family went to, I believe it was Cyprus. So you're really other than the cousin in many ways alone in a new place going to school.

03:49 - 04:22

You know, on the one hand, it's remarkable to have gotten out of Beirut and into this new opportunity, at the same time, the perils associated with being an immigrant in a country that you're not familiar with. Can you just talk a little bit about that experience as well? It was definitely very, very challenging experience. I feel like with retrospect, you know, I've grown quite a bit during those years. I was barely 17 and here I am in this giant new country with a language that I was familiar with. I had to learn French in school, but in many ways I wasn't really familiar with the culture.

04:22 - 04:28

Our family got separated because we had to find different landing places for all of us.

04:29 - 04:58

It was really the start of a new phase in my life. At the same time, I was enrolled in a pretty competitive program that was a two-year program that then ended with a competitive entrance exam to the business schools, where sort of the big prize was to to be able to land in one of those business schools. And I remember my first day arriving in this prep school that I was enrolled in.

04:58 - 05:17

First of all, I show up eight weeks too late. You know, I show up in late October when the school year had started early September. And of course, I couldn't show up earlier because I couldn't leave the country before then. So imagine me,

05:17 - 05:37

you know, this kid, 17 years old, in this new country, new city, in this very competitive program, arriving two months late into the starting point and then having to adjust to all of this. It was pretty challenging experience, I have to say.

05:37 - 06:13

And I remember studying really hard, staying up to midnight, 1 a.m., 2 a.m., every night for the first three months, just to try to catch up and just try to be at the level that everybody else was at, and and just making a lot of a lot of mistakes in handling my daily life routines, finding myself out of food or out of milk for my cereal breakfast in the morning, many times, you know, many days in a row, and just having, you know, having to adjust accordingly.

06:13 - 06:29

But, you know, what doesn't kill you makes you stronger. And I came out of this first year or so of my transition feeling like I had survived probably one of the toughest steps of growth in my life.

06:29 - 07:03

Well, to go through what you went through culturally, academically, right. Just jgetting yourself adjusted to that new world. And by the way, you're still a kid, for all intents and purposes, is no small thing. See, you get yourself to a point where you're, comfortable might not be the right word, but you're having success and there's a path forward. So you get through school and you move into the corporate world. How did you think about that process in terms of what you were going to do, the type of industry you were going to target, the type of work that you wanted to do?

07:03 - 07:15

So I'll have to rewind back to what had happened during those last teenage years before I had to leave Beirut. I was just a big music enthusiast.

07:15 - 07:44

I remember spending almost all of my time and any of my savings that I had back then on music and my, you know, my love in my life was making my mix tapes. This was the era of the mix tapes. Maybe many of the folks in the audience will not even know what I'm talking about. You're going to date us when you're talking about, I'm with you, the era of making mix tapes. But go ahead. We're going to sound old to some people. At that time,

07:44 - 07:59

It was a way to express your creativity, your musical creativity by being your own personal deejay. Mix tapes was like the very beginning of of that wave of consumer musical enthusiasm.

07:59 - 08:22

And unfortunately, that was one of the biggest blows for me when our apartment was bombed with my entire mixtape collection was destroyed. So... Devastating. Devastating. And, you know, when you're a teenager, music means even more to you, especially when you sort of imagine a different kind of life in this music. It was very devastating.

08:22 - 08:50

I also lost all of my collection of The Economist magazines. I would switch from doing my mix tapes and then reading The Economist, my friends thought I was a really strange kid doing these things. But, you know, I was also very passionate about getting to know the world and reading about, you know, politics and society and the economy and business. I was very passionate about business. I was very passionate about entrepreneurship and not really knowing even that word back then.

08:51 - 09:24

But, you know, all all of those things that I loved were gone. And so after having successfully gone through college and graduated from business school, I was really interested in being part of something that reminded me of my love for business and entrepreneurship and ideally for music. But at the same time, you know, I had some significant financial constraints. I you know, I had to pay out of my own pocket, my tuition, my college tuition.

09:24 - 09:51

And I took a huge loan, which for me at that time was a giant amount of money that I was very intimidated and felt a lot of anxiety about paying back after finishing my education. You know, I just had to take that loan because I didn't have any other options. The clock was ticking because I had to start repaying this loan a year after I finished my studies.

09:52 - 10:20

And so after my graduation, I ended up working in consulting, which had... strategy consulting. I started working at Booz Allen Hamilton, which is one of the strategy consulting firms. They paid the highest salary. And I was lucky to have an offer from them. And I thought this is what I needed to do in order to be able to pay back my loan. Anyway, I started moving a bit closer to the territory that I felt in my bones I was interested in.

10:20 - 10:53

I jumped into a marketing job at PNG and when you're the brand manager at PNG, you're sort of a mini business owner of your brand. You're responsible for the performance, the business performance of your brand. You're responsible for its sales and market share and its profitability. And then, of course, you work with the entire cross-functional group that delivers that performance. So you work with your R&D team to build new products. You work with your sales team to make sure you've got great distribution.

10:53 - 11:03

You work with, you know, all the different parts of the company. And that was my first taste into what it felt like to be a business owner.

11:04 - 11:28

And in parallel, I had discovered the Internet. I was a big technology enthusiast as well as I was growing up, I remember having one of one of the first, this was before the compatible PCs, before Windows. I had a I had an Amstrad computer. You should Google it.

11:28 - 11:51

It used to be a big, big deal back in the late 70s, early 80s. To go along with your mix tapes and copies of The Economist as well. In fact, in fact, the Amstrad computer had a cassette tape as the input program. This was before even the CDs or before any of the more modern technology.

11:51 - 12:24

So had plenty of cassette tapes in my room. And so I was fascinated by technology and had taught myself programming, very rudimentary programming of that era. And in the late 1990s, I discovered the Internet. With the Internet and with this computer at home, I finally decided to rebuild my music collection after 10 years of being completely disconnected from music, after the trauma of losing all of my mix tapes, and I would spend my nights browsing eBay to find what I thought

12:24 - 12:57

my memory reminded me of what my mixtapes included in terms of songs and artists, and I was relying solely on my memory. So I would just keep on browsing. And I felt like the more I immersed myself in what was available, the more I might remember everything I had created over the previous years. And it became a very addictive experience. And then at one point I decided, you know what, I'm just going to start buying these vinyls and CDs. And in order to to be able to buy them back then, it was very complicated.

12:58 - 13:19

There was no Paypal. There were no online payments. I had to go to the post office to send a postal check to the seller and then they would ship me the, usually it's a box of music because it made no sense to buy an individual CD or an individual record because the shipping costs were just very high.

13:19 - 13:40

Oftentimes I would find that 10 or 15 percent of the music was interesting and the rest I didn't really care for. And so over many months, I started accumulating a lot of music that I didn't really care for and I couldn't actually go back and resell them on eBay because eBay was not available in France back then.

13:40 - 13:44

It was only in the US. This was circa 1998, 1999.

13:44 - 14:18

And that's when I thought, well I might as well quit my job at PNG and start the eBay of France. I have to stop you right there because this is really, this is important, separate and apart from the fact that I think we've created a history lesson in terms of technology and payment and all of those things. So this is really interesting to me. Right. You went through what you went through growing up. You made the move to Paris as an immigrant and dealt with the uncertainty of that experience. It wouldn't have been crazy for you to say, you know what, I want to be in a position where I have comfort and security. Right.

14:18 - 14:35

Having gone from consulting to now PNG, clearly you're accomplishing things. You're on a great trajectory. But, you know, you're following this passion. You say, OK, I'm going to go start this business. Just give us a sense mentally for your thought process there, the willingness to take that kind of risk given all that you've gone through.

14:36 - 14:56

My parents thought I was insane. You know, they said you're crazy. You have this loan you haven't paid at this point, even a small portion of it back. You've got all these expenses. You live in this expensive town. And frankly, everybody around me thought it was a crazy idea.

14:56 - 15:26

So it took me it took me a few months of maturation of the idea for me to start feeling comfortable in pursuing it in a more deliberate way. You know, I started talking about what I was doing at night on eBay and buying all these records. And I started meeting people who were somewhat like minded, who were also working at PNG or working in other Fortune 500 companies that were connected to friends of friends.

15:27 - 15:37

And they were all successful young professionals who were two or three or four years out of college or business school.

15:38 - 16:03

But they were all looking for a more exciting business adventure and career adventure. And one conversation led to another. And I met with a couple of people who were as excited as I was in sort of pursuing this exciting path forward and letting go of their corporate jobs and starting to build the first

16:04 - 16:19

internet company in France, and we were the very first Internet, e-commerce or marketplace company in France when we launched in the summer of 1999, in August 1999. So this was very pioneering back then, just easy to forget.

16:19 - 16:39

But back then, only three percent of the French population had Internet access. It was around five percent in the US or six percent. So the Internet was not what it is today. It was, it was still a very foreign thing for most people. Most people didn't have computers at home with Internet connections.

16:39 - 16:55

I think a lot of people were very skeptical that this was something that was going to be a big deal. And so quitting your corporate job and what looks like a promising corporate career in a Fortune 500 company seemed like an extremely foolish move.

16:55 - 17:16

What gave you the confidence in the face of that? Your parents who are well-meaning and who care deeply about you, the other people in your life who, you know, are looking at this and, this piece is really, to me, really interesting. To be honest with you, so I didn't have any confidence. I just thought, you know... no, I didn't have any confidence.

17:17 - 17:40

I just had a lot of excitement and, you know, frankly, after having survived the bombs of Beirut, you know, nothing else really could go as prudent as what happened 10 years before. So, you know, it felt like it was, of course, risky, but it felt exciting. It felt like I also didn't have much to lose.

17:40 - 17:59

It's easy to sit where we are now, given your success in your current role at Turo. Right. And the opportunity that exists there, to look back and go, wow, of course, that was the right decision. And of course, all of these things were the right moves. Right. In retrospect, it's easy to do that. I want to tie this in a little bit to where you are now, because you started this, to your point,

17:59 - 18:29

this business in France, had success with it. You run into the tech bubble bursting and the challenges that you faced there, you've lived through the crisis in '08 and obviously we dealt with the pandemic last year. We're still dealing with it. Of course, maybe if you could talk a little bit about just some of those challenges after you got the business off the ground and other challenges that have been formed, frankly, how you navigated what we've been going through here over the last fall. Yeah, the Internet bubble hit us really hard back in 2001, 2002.

18:30 - 18:54

The business was doing very, very well from a growth standpoint, from expansion standpoint. Very quickly, we went from being an idea that a few of us were dreaming about while continuing to work in our corporate jobs during the day and working on the idea at night, to a business that launched in August of 1999. We made a huge bet.

18:55 - 19:14

Shortly after we launched, we started advertising on television. It was one of the boldest ideas that I think we've ever, I've ever had in growing that business back then, because again, remember, only three percent of people had access to the Internet.

19:14 - 19:41

So advertising on TV, which which touches 100 percent of people, made no sense from a targeting standpoint and from a cost and ROI standpoint. However, having spent a few years at PNG, knowing the power of television marketing, I convinced my co-founders to spend three quarters of the money that we raised on a single TV campaign that started on the 18th of August of 1999 and ran through mid-September.

19:42 - 20:04

And in two months we became the very first pure Internet company to advertise on television in France. So this was big news on its own. A few weeks after after the launch and a few weeks of running this campaign, we became the third most visited website in France.

20:04 - 20:35

Your partners immediately patted you on the back afterwards and said, how brilliant. Well, we were burning a lot of cash. So that put us in a... but during that time, we were able to raise money because the Internet was, the Internet bubble was still going strong in the fall of '99 and at the end of '99. So we raised another round and raised a third round and we started expanding and in a matter of eighteen months we were present in eight markets in Europe and we are like the leading e-commerce company in Europe.

20:36 - 20:57

But that leadership was measured at that time and eyeballs ,visits, paid views, and we were monetizing very poorly this incredible position that we built from a consumer standpoint and we were advertising with online advertising. So we started putting banner ads.

20:57 - 21:16

And, you know, it was the easiest way to monetize back then because online payments were not figured out. We started working on our own online payments product, but that was going to be nine months worth of work. It was complicated. So we monetize through online advertising. And then, of course, the bubble burst and the online advertising market collapsed.

21:16 - 21:46

You know, that was another inflection point in my personal growth and maturity as a business leader that would end up carrying a lot of lessons for me for the next 20 years, including what happened last year in the pandemic. One of the biggest mistakes we did as a team back then was we thought that things were going to recover and we didn't take very decisive actions to monetize the business and to control our costs.

21:47 - 22:11

And now at that point in time, the financial markets were completely shut down. And we're we going to be unable to take the company public or even raise a private round. We needed to find a landing place for the company. Because of the very strong commercial position that we're in, we were at that point in time, still in the top five of the most visited Web properties in all of the markets that we're operating in.

22:12 - 22:33

You know, we became an attractive target to many companies and then, we got to meet with the eBay team and eBay made an offer and bought the company for $150 million dollars, which was a steal, because less than a year before that, we had received an offer from another company for more than a billion dollars that we had refused.

22:36 - 22:52

So anyway, it was still a very successful exit, certainly for me, as the guy who was running away from the bombs of Beirut only a short 10 years before that, it was a completely unheard of type of outcome.

22:52 - 23:19

I could see how if we had managed this crisis better, we may have actually been able to keep the company independent and reach the next milestones and really grow the business on our own. And, you know, when the pandemic hit last year, right around March 3rd in 2020, was when we started seeing the business being really impacted at Turo at this time. You know, fast forward 20 years later, we're in San Francisco and the business is very different. It's Turo.

23:19 - 23:28

I was just reminded of what had happened during the internet crisis of 2000, 2001 when the bubble burst.

23:29 - 24:01

And I was determined at this point in time to act really swiftly and to make sure that we really acted decisively as a team to control our costs and to increase the profitability of the business in order for us to withstand what seemed back then like a crisis that could last, you know, multiple years. And we did. And I think that that was directly related to those learnings from that crisis of 2000, 2001.

24:01 - 24:20

We're sitting here talking about Tauro to your point in 2021, based on just our conversation today, you can connect the dots back to somebody who's passionate about music as a teenager growing up in Beirut. Right. And where that took you in starting a business, the lessons you learned, 100 plus million dollars exit is a great exit. When you compare it to what could have been, right. There were lessons there.

24:20 - 24:54

If you wouldn't mind taking a minute, just some of the things that you acted decisively, just a couple of things that you feel like made the biggest impact this time last year. I think the importance of being honest and transparent with your team about what's going on and at the same time demonstrating as much empathy and understanding and humanity as possible and combining those two things is very challenging. And another, I think big learning from the crisis of the pandemic is really focusing on

24:55 - 25:29

the community of customers that you have, you know, we quickly jumped in and try to put ourselves in the shoes of our hosts and our guests, in particular our hosts that are sharing their cars. We thought, wow, you are exposing yourself to COVID now if you host people in your car. And it was a challenging sort of ethical dilemma that we found ourselves in. Should we actually shut down these lease things and prevent, you know, our hosts from hosting in their vehicles, or should we just let them do whatever they want to do?

25:30 - 25:57

And we decided to chart sort of an intermediary path where we wanted to be very transparent with them about the risks of COVID, and we wanted to make sure that they understood what risks they might be taking by hosting people in their cars, especially if they don't take the right precautionary measures. And then we went really hard and really deep in supporting them in understanding what are these precautionary measures.

25:58 - 26:26

And then by equipping them with a lot of sanitization materials for their business on the platform. In a matter of six weeks, we had implemented online training program to all of our hosts. We required all of our hosts to go through this training program. The training program explained exactly what was COVID, everything based on what if it was available back then for us. So we grabbed all the CDC information and put it in a sort of a training format for our hosts.

26:26 - 26:59

And then we trained them on how to sanitize their vehicle and we asked them to wear masks. And then we changed the way hosting worked on the platform. We created a 72-hour buffer between each trip. This way, you know, even if you didn't sanitize perfectly your vehicle, just by keeping the windows open for 72 hours, we had a lot of evidence from the CDC literature back then that, you know, the risks of transmission from surfaces was extremely low.

26:59 - 27:24

Just to give you a sense of the kind of introspection that I think you have to go through as a business when dealing with a crisis of such monumental proportions and being able to both take those decisive, bold decisions and move forward around, you know, right-sizing the cost structure and improving the unit economics of the business and preserving cash.

27:25 - 27:37

Yet at the same time, you know, delivering that with a message of humanity and empathy to the team and helping support the community of users to make sure that they have confidence,

27:37 - 28:04

but they're also very well educated and know how to continue their business of hosting on the platform while minimizing the risks of COVID. I think, having gone through crises in the past, I think has been for me, as the leader of the organization, has helped me deal with this crisis, with, I think, a lot more decisiveness, but at the same time, a lot more wisdom. Going through some of that detail in the context of the prior experiences that inform you.

28:04 - 28:38

I mean, it's it's certainly incredibly timely to business owners across a variety of different sectors, given the world that we're in now. And there's so many lessons to be learned there. I want to shift to maybe a final topic. Could you talk a bit in different articles or different interviews about family and the importance of your family. Would be understandable, given everything that you've gone through in your role in leading a business that that could take all of your time. Right. And the idea of not having any balance, somebody can understand why that might be the case. For you with family being so important, how do you think about that in the context of what you're trying to build from a business standpoint?

28:38 - 28:52

You know, if you were to ask me to do what is the biggest inflection of your life, I would say it's our ability with my partner to form a family back in 2006 when our twins were born.

28:52 - 29:18

So it felt like science fiction to me back then, because obviously two men can't reproduce without the, without an incredible, incredibly complicated, and incredibly generous support system. And we're incredibly lucky to, you know, to be in California where you can actually build your family with your intention, even if biologically you can't do it.

29:18 - 29:51

Obviously, it's something that is not open for everyone. It's very, it's very costly. It's very complicated. But the people that we met along that journey, in particular our egg donor and our gestational carrier, were just incredible. The level of humanity and generosity that you encounter when you embark on such an adventure just blows your mind. And we feel so grateful for them. And of course, now we feel so grateful for the kids. We actually have a third now. We have an eight-year-old. So we have two 14-year-olds and an eight-year-old.

29:51 - 30:19

And we've been confined all together in the same house for the last four months, you know. So it's been certainly an exciting phase in our parent-children relationship, we see also time flying by, the older two kids have applied to high school for next year. We try to cherish every moment. Well, Andre, I appreciate you taking the time to actually go through that experience. I mean, it's relevant to the humanity

30:19 - 30:39

that has been the thread through your entire experience, right. What you were passionate about as a kid and where that led you and finding your partners and what that meant. Right. And the lessons you learned and how it impacted how you treated people in your business going through an unprecedented pandemic that we're still in the midst of, and how you went out and built your family. Those things are all tied together.

30:39 - 30:56

And so I'm genuinely appreciative. And I know our listeners are appreciative that you took the time today to do this. So I'd say thank you and I congratulate you on your success thus far to say that we're excited to see what's in store for you going forward here. Thanks so much. Thanks for having me. This was a lovely conversation.

30:58 - 31:17

Thanks for listening to the Inflection Point. If you enjoyed the episode, please subscribe on Apple Podcasts, Spotify, or wherever you listen to a podcast. Be sure to follow us at BernsteinPWM for updates on all of the Bernstein podcasts. Bernstein: Making money meaningful for individuals, families, and foundations for over 50 years. Visit us at Bernstein.com.

The information presented and opinions expressed are solely the views of the podcast host commentator and their guest speaker(s). AllianceBernstein L.P. or its affiliates makes no representations or warranties concerning the accuracy of any data. There is no guarantee that any projection, forecast or opinion in this material will be realized. Past performance does not guarantee future results. The views expressed here may change at any time after the date of this podcast. This podcast is for informational purposes only and does not constitute investment advice. AllianceBernstein L.P. does not provide tax, legal or accounting advice. It does not take an investor’s personal investment objectives or financial situation into account; investors should discuss their individual circumstances with appropriate professionals before making any decisions. This information should not be construed as sales or marketing material or an offer or solicitation for the purchase or sale of any financial instrument, product or service sponsored by AllianceBernstein or its affiliates.

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