A Dallas ridesharing startup thinks it has the formula — and now the funding — to disrupt the fast-growing on-demand rides market controlled by the likes of Uber and Lyft.
With a members-only subscription model, Alto will put $14.5 million in funding into scaling up a service its founders say puts safety first. Its main backers are Road Ventures, a European fund that invests in the transportation sector, and Frog Ventures, the venture arm of global design firm Frog.
Dallas natives Will Coleman and Alexandra Halbardier are the driving forces behind the company, which launched in Dallas during the recent holidays.
Alto’s business model differs from traditional ridesharing companies. The company employs its drivers and manages a dedicated fleet of SUVs. It also gives more control to its customers. For example, Alto members use an app to control the in-car experience, from music to climate. Investor Frog Ventures designed the app and in-car experience.
“I’m really excited about the potential to disrupt the disruptors in mobility,” CEO Will Coleman said in announcing the venture backing. “People often ask us how we’re different, and it’s simple. It boils down to two things: safety and hospitality.”
Alto says it rigorously vets and trains drivers and manages their performance. Using the app, Alto vehicles light up for easy identification when members approach. To protect drivers, the app notifies them when their passenger is in range, so they can unlock their doors.
This spring, Alto will initiate another fundraising round to fuel expansion to other cities.
Alto CEO Will Coleman took part in a Q&A with The Dallas Morning Newsabout the company. His answers were edited for clarity and brevity. You also can watch the company’s introductory video here.
What was the a-ha moment that led to Alto’s launch?
The a-ha moment was when we learned that women are half as likely as men to be active users of existing ridesharing services. 75 percent of women say this is due to safety concerns. We felt like there had to be a way to bring a safer and more consistent service to the on-demand rides space. Our goal is to give customers more control over their experience.
Why does Alto think it can disrupt Uber and Lyft?
Existing players have done an incredible job solving for convenience. But they don’t have a way of addressing passenger’s other needs — like safety, comfort and consistency — because they don’t control the drivers or the cars. We’ve decided to radically change the business model by managing a dedicated fleet of cars, employing our drivers, and giving riders in-app control over the in-car experience (like changing the music or signaling to their driver they don’t want to talk). We feel like this is the only way to really move the needle on passenger experience.
How does your subscription model work?
We have a few levels of subscription offerings. The base membership fee is $12.95 a month. This gives customers access to Alto’s service at a 30 percent to 50 percent discount vs. ridesharing competitors’ higher-end offerings. There also are subscription offerings where users can subscribe to 15, 30 or unlimited rides for $349, $549 and $899 a month, respectively. We build a service charge into every ride so that tipping is not encouraged or expected.
When did Alto launch and how has it been received?
We officially launched over the holidays. So far, it’s been exciting to see the growth in these early days. We’ve signed up more than 600 members that we serve with 25 Alto cars. We’re trying to grow both quickly.
Describe how you vet your drivers to ensure safety?
Each Alto driver is interviewed, fingerprint and background-checked and drug-tested. Additionally, drivers go through rigorous training, which includes a defensive driving course, customer service training and in-car, on-the-job training. Additionally, each new driver has a supervisor shadowing them on rides with real customers before becoming an active driver.
What’s your current revenue and what’s the business plan that attracted your outside investors?
This is a big time for mobility. Ridesharing is everywhere. In the U.S., ridesharing is a $25 billion market. Globally, it’s $75 billion and predicted to grow to $285 billion by 2030, according to Goldman Sachs. New vehicle purchases per young adult is down 30 percent over the last 10 years. And while existing ridesharing competitors are established, the market itself is very young. For us, this represents a huge opportunity, and the way we think about capturing this opportunity is by focusing on the passenger experience. We think this is the wave of the future, especially as we look to an autonomous world, where passenger experience and fleet control become the central part of the conversation. (Note: The company declined to provide current revenue figures.)
How does Alto plan to put its investment to work?
We are aggressively building our team, investing in our technology to enable all of the features we already hear our customers asking for and building our fleet to be able to serve more customers across the Dallas area.
What’s the back story on the founders?
I’m a former partner at McKinsey & Co., where I worked for 11 years and led the firm’s consumer travel practice in North America. I’m a proud Texan and University of Texas Longhorn. I always had a passion for travel; so much so that when I was a young analyst at McKinsey, I had a broadly distributed newsletter on travel and credit card loyalty programs. I’ve known chief customer officer Alexandra Halbardier for many years. When I went to her with this idea, she couldn’t turn down the opportunity to help build a brand and customer experience from the ground up. She was previously a principal at Boston Consulting Group and holds a bachelor’s degree from Princeton and an MBA from New York University.
What’s the significance of the company’s name?
Alto means elevated. We focus every day on how to take the ridesharing experience to new heights.