Ep678: Guillermo Cornejo – Don’t Underestimate the Value of Experience

Andrew Stotz 00:00
Okay. Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our community. We know that to win in investing, you must take risks but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives to join me go to my worst investment ever.com and sign up for my free weekly become a better investor newsletter where I share how to reduce risk and create grow and protect your wealth fellow risk takers this is your worst podcast hos Andrew Stotz from a Stotz Academy, and I'm here with featured guests. Guillermo Cornejo. Guillermo, are you ready to join the mission?

Guillermo Cornejo 00:44
Editor? Yes, thank you for having me.

Andrew Stotz 00:46
I'm excited to have you and you know, learn more about what's going on in your life. And let me introduce you to the audience. Guillermo, the CEO of riders, shares, the Airbnb of motorcycles, which he started while attending grad school at UCLA. Prior to that, he worked for GM, Nissan, and Hyundai in analytics roles. He grew up in PE route and enjoys anything that makes your heart race. Take a minute, Guillermo and tell us about the unique value you are bringing to this wonderful world.

Guillermo Cornejo 01:20
I mean, I don't know me, as a individual, I don't I don't know if I bring a lot of value. But, but the company I started, the mission was to help more people be able to afford power sports. And so you think about it, you know, an ATV and motorcycle is a $20,000 toy is very expensive. And you don't use it that often. And so, it really is something that only really wealthy people can afford, right jet skis, that kind of kind of fun. And so we started right there with the goal of making parts for more accessible and starting with motorcycles because it's what I'm was most familiar with. And but, you know, we're pretty similar to do all kinds of power sports, and we tried to make it as affordable as possible, so more people can enjoy them.

Andrew Stotz 02:14
It's interesting, because when I think about my motorcycle days, it culminated in my Harley Davidson Road King I had here in Thailand. And one of the reasons why I eventually sold it was because I just saw it sitting there too much. I just, I didn't get on it as much. And, you know, there was no option for how I could utilize that asset. And so therefore, eventually, it just made sense to get rid of it and let someone else enjoy it. You know, it definitely brought a lot of joy to my life. So I kind of see where you're coming from with this. You know,

Guillermo Cornejo 02:50
yeah, I mean, that's kind of why I started, I didn't use my bike a lot. I was in my 20s. I was, you know, fairly broke. So I'm like, instead of buying one, I'm just gonna rent five times a year. That's when I realized that renting one costs $200 a day as like, well renting is even more expensive than owning so that's that's what it took me down this path of basically using my background in subprime risk management and an auto industry split experienced to try to see if I could, you know, do it a better way.

Andrew Stotz 03:25
And tell us the website I've got I think I've got the right one here, which is riders dash share.com.

Guillermo Cornejo 03:33
Yes, that is correct. Yep. Hugo, riders share motorcycles, you'll

Andrew Stotz 03:37
find it is it. And your title here is motorcycle rentals done right. So ladies and gentlemen, you'll see it's just like a, you know, an Airbnb type of thing. You choose your city, you choose your dates. And then I suspect that what you're doing also is as the platform or the marketplace, you know, you're bringing in some insurance and other things to try to make sure that it's a secure transaction, maybe just just tell us a little bit about how it works.

Guillermo Cornejo 04:07
That's correct. So people list their motorcycle, we don't own any motorcycles. And then we find that riders we check that they have motorcycle license and all this stuff. We underwrite them. And then we connect them to the owner of the motorcycle. And we pride tour as was resistance for a risk of a rental payment process and you name it just like Airbnb. But in the case of power sports, I think insurance is a much bigger component for AI than that with Airbnb. And so that I think is where I made my worst investment.

Andrew Stotz 04:43
So now it's time to share your worst investment ever. And since no one goes into their worst investment to get will be. Tell us a bit about the circumstances leading up to and then tell us your story.

Guillermo Cornejo 04:54
Yeah, so we launched in 2018. And the company was growing fantastically. I'm like in 20. By 20, you know, within the first year, we were booking well over a million dollars in rentals, you know, I was on top of the world, hobbies is the right word to describe, like, and we were working with an insurance partner, to enhance that hindsight, they had given us pretty good rates. But they were providing a terrible service to our customers. And so it was taking like months and months to handle the claims. And then on top of that, I looked at our history of, you know, accidents. And I measured the cost of how much this company had paid out in claims and how much we had paid this company in premiums. And I was like, they have 50% margin on this insurance, you know, I was gonna do it myself. So I proceeded to, you know, I raised some capital, and then I proceeded to use most of that capital to set up a cap the insurance company, big mistake. So what happened was that, well, first of all, it's expensive to set up a cat insurance company. And then number two is as the company continued to scale. What the more mainstream and easier, the more mainstream or whatever you came, and the easier it became to use the more bad actor who attracted, you know, from people that are risk takers, to fraudsters that just are out there trying to steal our motorcycles. And it cost me millions. I fought you know, because hey, you know, this is exactly, I need all this data to be able to create my risk management. And so this is perfect, I'm gonna, I'm gonna do it better than insurance company. And I didn't realize how difficult it is to actually collect that data. Like when a claim comes in, it can take months before you handle it, if it's a very difficult one. And so, you know, you think you're doing really well. But really, you have this liability. That's how to come into your books, and you have no idea how much is going to be. And so I had, like a much higher reason, a lot of inexperience and how to handle the situation. So now we have it together, we learned we have process, we can manage that risk, and it's now a profit center. But like, if I could do it all over, I would not have self insure it until we had a lot more scale.

Andrew Stotz 07:39
And there's also a lot of regulation, I suspect, but I guess as a captive insurance company, you're not subject to as much regulation or is there just as much regulation there?

Guillermo Cornejo 07:50
Yeah, no, we're not nearly it's not nearly as much as like a proper insurance company. And that's also what made it attractive. So traditional insurance carriers, they have to use these actuarial tables to predict the risk, right to yield explain the regulator what's going on, if we're not discriminating all this stuff, and we play in a space where you can use machine learning and you know, use alternative data sources like hey, how far in advance are you looking at the motorcycle? And, you know, and then get a much better prediction than, than an equatorial table? Or this is what I thought I was doing.

Andrew Stotz 08:27
So how would you describe the lessons that you learned from this?

Guillermo Cornejo 08:33
I think the biggest is, you know, a lot of young people tend to underestimate experience. And now I am super respectful of, of experiences. And, you know, whenever somebody is talking to me, for an industry, I'm all ears. I know, I don't nothing. And whenever I walk into a restaurant, and I see how well put where it is, and less stuff I really admire, you know, I really appreciate how difficult it is to, you know, to even set up a franchise. It's just everything is so difficult, right? And takes a lot of work and time. And yeah, it gets underneath now.

Andrew Stotz 09:15
Maybe I'll share a few things I take away. I mean, the first thing is that, I want to go back to your bio, the last part of it, it says that you enjoy anything that makes your heart race. Two companies that it's like hard enough to run one business, and then you see an opportunity. It's sexy, it seems to come together. And you know, we have something also called overestimation bias, where we think that we can accomplish something, when in fact, I mean, anybody can think about overestimation bias. When you wake up in the morning and you write down the five things you want to do today and you get to the end of the day, and there's only one that you got done that That's an overestimation bias. And I think that that is a great example, in this case of thinking, I can do this, we can do this. And the second thing that is important about that, is the idea that you can probably do a lot of things. But the question is, will you exhaust yourself? Will you exhaust your resources? Will you exhaust the faith that your partners supporters employees have in you. And that's the thing that I think we don't think about when we jump into something, you know, in this case, the other thing that I would take away is to repeat what you said, I underestimated the value of experience. Now I know old fogies, like me and others that are older than me are kind of annoying when they're telling us you know, how hard something is, or whatever. But the fact is, is that there is a lot of value in the experience that someone has had of going through the ups and downs. And we know that there's a lot of value, because we talk on this show about the value that each of us have gained from it. And final thing, I just want to quote you again, on the second thing, and that is, I know, I know, nothing. And anything you would add.

Guillermo Cornejo 11:19
Yeah, you know, it's funny, I tried to mentor entrepreneurs, as anyone asked me for help, I always make time for him. And, you know, 99% of the time, they aren't like, I can see that they are unprepared for the industry that are trying to take on that they're, you know, they're not producing enough. And the cars, they make the same mistakes that I made, which is underestimated. Your competitors, there's like, there's usually a reason why they don't do it this way or that way. Right. And yeah, I wish I could convey to, you know, people tend to go through this startup path or raising capital, how overrated it is. But no one listens, right? Because you have been burned by the media over and over how the successful entrepreneurs and narrow minded 99% that try and ruin their lives.

Andrew Stotz 12:16
Well, good news, Guillermo, is that my fellow risk takers on this show? Listen. They are here, as well as I am here to learn and grow from, you know, what you've learned. So we appreciate that. So let me ask you, based upon what you learned from this story, you know, let's go back in time, and what you continue to learn what one action would you recommend our listeners to take to avoid suffering the same fate?

Guillermo Cornejo 12:44
Think, yeah. It's more of like a personal thing, right? Young people, and some older people do tend to overestimate their own skills and abilities, and knowledge. And but how do you know how much you don't know? Right? And I think what I my main takeaway is to always work with advisors. And, and that's, you know, connect with more experienced people who have done it before and figure out, you know, and most executives do it that way. Right? It's nothing, is there nothing that I'm saying? That is crazy. Notice that anyone any executive order 50 before they make a decision, they console, like five experts. Right? And, and so it's, yeah, it's I think that's, you know, you need to get an idea of how much you don't know, and then try to go like that hole somehow.

Andrew Stotz 13:45
And I would just add on to that, too, you know, when you talk to those experts, the challenge is to listen, because I know also plenty of cases of my guests and myself where we did, we went to, we went to talk to experts, but we didn't listen very well. So for all the listeners out there, you know, one of the best ways to assure that you listen, is to take notes. Every episode, while my guest is talking, I'm clacking away on my keyboard, which is a very quiet keyboard. And I'm taking notes to try to make sure that I'm listening to what my guests are saying. And so, for the listeners out there, find your advisors, ask them questions and take notes because you can't write and speak at the same time. All right,

Guillermo Cornejo 14:35
thorough advice, man, you cannot write and listen at the same time. I'm sorry, I completely agree. Yeah. Every professor in college always told me to take notes. If I take notes, I do not retain anything anyone says. You know, I listened intently right now. But I think what to me is when you listen, and they tell you something and you still are looking because you may have your problem is when you This means when someone is trying to tell you, right? When you look at things through glassy, you know, rose colored glasses. It's very difficult to get rid of your own biases. So I really like having advisors that are very pushy, that are very insistent that are not afraid to do like it is, you know, and some people hate conflict, and people hate having debate and stuff, and what do you think are up? And then a lot of feels like I need people, I need to surround myself with people in my team that are happy to yell at each other until we figure out a solution, right?

Andrew Stotz 15:39
Yeah, I guess the one thing too is that as we get older, we realize like there's so much we don't know. And when you start running out of time, when you start getting seriously older, and you start realizing there is only so much I can know, there's only so much I can do, then you really start to understand that I know, I know. Nothing. And I think maybe that's probably the best thing to come out of this is the idea that try to shift your mind from I think I know something to I know, I know nothing. Let me ask you, what's the resource that you'd recommend for our listeners?

Guillermo Cornejo 16:16
A resource for listeners, there's a book named tactfulness. Have you heard of it? What is it called? Back fullness? Back? fulness? Yes. You heard of it. You have it?

Andrew Stotz 16:30
Yes, in fact, there it is faithfulness.

Guillermo Cornejo 16:36
Nice. Hans Rosling.

Andrew Stotz 16:37
Yeah. Tell us about that. Why did you like that book?

Guillermo Cornejo 16:42
Because it goes to show you how ignorant people are. Even the so called experts, right? Yep. I think one of the things that's crazier. Hans Rosling is that he predicts in that book, you know, years before it happened, that a pandemic that is airborne, you know, would be spread really fast and all that stuff. He also talks in his book out how Western scientists works and scientists react to things they don't know with quarantines because they don't know how to, you know, well deal with it. And yeah, it's a scary Harker and he got to, you know, like he got the pandemic he got accurate. If he was like, rather quarantine, it was like, yeah, it's scary. Smart guy. Wish he was still alive.

Andrew Stotz 17:27
Yeah. In fact, one of the co authors, Anna Rosling rune is episode 632. On my worst investment ever. No way. Oh, yes.

Guillermo Cornejo 17:39
Oh, I have to take it out.

Andrew Stotz 17:40
Yes. Check that out. For the listeners. Also, I'll have a link in the show notes to the book, a great book. In fact, I gave it to my mom to read and she got halfway through it, and she's like, wow. So great recommendation out there. Alright, last question. What's your number one goal for the next 12 months?

Guillermo Cornejo 17:59
I am going to double my company revenues while remaining profitable.

Andrew Stotz 18:05
That is exciting. That, yes, that is like the most awesome thing. All right, listeners. There you have it another story of laws to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. If you've not yet joined that mission, just go to my worst investment ever.com and join my free weekly become a better investor newsletter to reduce risk in your life. As we conclude, Guillermo, I want to thank you again for joining our mission and on behalf of a Stotz Academy I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Guillermo Cornejo 18:43
Thank you so much.

Andrew Stotz 18:45
Appreciate you sharing and that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. Let's celebrate that today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast hose Andrew Stotz saying. I'll see you on the upside.