Dav EL | BostonCoach CEO Scott Solombrino Talks Travel Tech with NECN

Imagine starting your career as a driver and mechanic, then, decades later, running one of the world’s most elite limousine companies.

Scott Solombrino, the CEO of Dav El and BostonCoach, began driving a limo and now he is the driving force behind one of the biggest high-end transportation providers in the world.

Solombrino talks about how he started the company with just one used Cadillac. Now, he is in 550 markets, driving leaders in entertainment and business.

PETER HOWE:  He began as an 18 year old college student driving a limo now is the driving force behind one of the biggest high end transportation providers in the world as you can imagine this is a man with a whole lot of stories from building the business to driving the rich and famous joining us now President and CEO of Dav El and BostonCoach. Scott, thanks so much for coming in.

SCOTT SOLOMBRINO: Thank you, Peter. Glad to be here.

HOWE:  I want to bring up some numbers that I know will dazzle people. Dav El BostonCoach, owned by Marcou Transportation: more than 3,000 employees; operates 1,700 company vehicles; serves a network of 550 cities around the globe; and generates more than $250 million a year in revenue. So, I know a lot of people going back are familiar with the BostonCoach name, but clearly there has be a lot going on in terms of this company growing and expanding all over the world.

SOLOMBRINO: It’s been really an exciting time and when we put together the Dav El brand and the BostonCoach brand, we created the largest company on the planet in high end chauffeured car. So, it’s been an exciting time to keep these two brands together, keep these brands alive separately, as operating separately, but under really one ownership group. So it’s been really exciting for us.

HOWE:  I think a lot of people are familiar with the concept a roll up. Talk about how you have gone about doing that, going to different cities and taking this business that I imagine is pretty fragmented and centralizing it under common ownership.

SOLOMBRINO: Yes, so what we’ve done is that we’ve basically said we do business — both companies, BostonCoach and Dav El — in all these cities around the world. Let’s own the most important markets in these segments. So we own New York, we own New Jersey, Philadelphia, Baltimore, Washington, Palm Beach, Chicago, San Francisco, LA. Then we said, now let’s add cities that we don’t own that are currently in our affiliate network that we think have critical mass of revenue of $5 million or more and then own those cities as well. And that’s what we are out doing now. We’re doing acquisitions. We’re adding onto the brands, and we’re taking back markets that we don’t currently have a company owned presence, and feel pretty good that the market is right for this.

HOWE: Talk some about the economies of scale or the efficiencies or the value that you get from becoming a multi-city, multi-location chauffeured company.

SOLOMBRINO: The first thing is the biggest capitol cost we have is vehicles.  So we have a huge global deal with the General Motors Company. We’re big on the Cadillac fleet side. We also have deals with both BMW and Mercedes. So when you start to add more critical mass into those programs, the price goes down you get a better deal on vehicles, you get a better deal on fuel, you get a better deal on insurance, and you can start to pull out the efficiencies city by city, market by market, because you’re operating under one cost center.

HOWE: Are there back office scheduling, dispatch, other types of efficiencies?

SOLOMBRINO: We have tremendous technological pull. We have great technology platforms. And we would go in and eliminate the current technology, bring in our own technology and we can run things more efficiently out of our own back-end frame in Boston to cover the other markets. So we’ve built these efficiencies in booking systems, GDS tools, mobile tools, mobile apps, so the efficiency of having everyone under one program has really created some major economic input for us. It’s been really good.

HOWE: You think about customer service, I mean, this is the ultimate one-to-one employee to the person being driven. How do you do that across 550 markets … consistent training and honoring local customs or the way people want to be treated?

SOLOMBRINO: So, we’ve had a partnership for almost 30 years on the Dav El side with the Four Seasons hotel company, which is one of the greatest hotel companies on the planet. And we’ve had the ability to use some of their training expertise of how they’ve been training their employees for the past 30 years. And we’ve pulled together our training systems so that they are all standardized, so that you’re trained the exact same way in Boston as you would be in New York or L.A. or in Chicago. That creates the consistent service level that you want to have throughout the whole system. So each driver will treat you the exact same way in each market in each city.  And we are very fanatical on maintaining training and standard levels. That’s what makes the difference of the high-end chauffeured car company and someone just giving you a ride, like one of those app companies.

HOWE: So give me a few examples of things to look for, how I know I am really getting top-flight customer service in a black car.

SOLOMBRINO: When you come out of the airport and you go to get into the car, the driver should be holding the door. He’d introduce himself by name. He’d address you by your name. He’d put you in the car. He’d offer you water, towlettes. He’d offer you a radio station of your choice. He’d tell you exactly how long he estimates the time is going to be between your trip and when you arrive. There are standards that you would see every single day. You’ll find a magazine on one side of the car; you’ll find a New York Times or Boston Globe on the other side of the car. There are very consistent things and patterns of what you’ll get in each experience. And when you see that consistency day after day you know you’re in a Dav El BostonCoach experience. That’s what the customers talk about constantly. There’s a huge difference between the service levels that we’re providing people and what they get just by going to any company.

HOWE: Right. And in addition to being a big and growing company in your own right your part of Marcou Transportation Group, people have seen the buses with the big Marcou on the side. They also own a lot of other transportation oriented businesses. Talk about sort of how you fit in to that overall picture.

SOLOMBRINO: We’re in the taxi business. We’re in the school bus business. And we’re in the public transportation sector. So we are a true logistics provider from top to bottom, covering all different segments. The Marcous, the family themselves, the two brothers, are prenominal. David and Derek they’ve been very successful in understanding that logistics globally is where you want to play if you want to be in the transportation space.  So we can be all things to all people at all times; we’re not just locked into one segment of the transportation market. So it’s been an exciting experience to be able to broaden my own horizons now and understand those businesses and how they affect us.  We also own SuperShuttle in Boston, which has come from the West Coast and is now available here, which is mass transportation back and forth to airports. It’s used by universities, sports teams, people who have a lower-end threshold on cost. So SuperShuttle is also growing at a rapid pace, and that’s really exciting for us because it’s another vertical that we would never have thought about prior to this.

HOWE: And thinking that a lot of people would say, you know, how much would chauffeured limousines have in common with motor coaches, school buses, taxis … are there kind of efficiencies of scale or ways you can cross pollinate?

SOLOMBRINO: Sure, maintenance, insurance, training, safety programming, GPS purchasing, mobile device purchasing. All of those verticals use the exact same back-end things and what we do is find the efficiencies. Everybody has to have training so what we bring now is bring the high end training down to the other product lines as well to elevate their levels of service. And I think it’s only going to make the rest of our product verticals better long term. Because we think, from the high end side of what our customers want, but it’s no different from what someone would want if they were using a taxi cab experience. So why can’t we just cross pollenate them all — there’re a lot of efficiencies in between.

HOWE: So you have Dav El, you have BostonCoach; do you envision keeping both those brand names out there?

SOLOMBRINO: They’re two of the biggest brand names on the globe, and have been for 30 and 40 years a piece. We believe the brands will survive independently. They both have different product offerings, and we think the marketplace is actually demanding that they survive. So we’ve had a lot of input from our customer base who’ve said, “Hey, if we want to have one experience, we’re going to use the BostonCoach side. If we want to have a different experience, we’re going to use the Dav El side. But the one thing that’s going to be consistent is that they’re all going to get the exact same level of service. If we can do that every day and execute that every day then we’re not worried about any of the competitors.

HOWE: So, what would be sort of the Dav El brand experience verses the BostonCoach brand experience?

SOLOMBRINO: Dav El is a company that did many more boards of directors, high-end C-level executives, very heavily into the Rock and Roll industry, the entertainment industry, the movie business. BostonCoach was always heavily on the corporate side, did a lot more major corporate events on their side of the business. So there is a little bit of a different experience on the client base, but basically a lot of those clients were the same clients, but just had different divisions in different companies that were doing different things. So the needs aren’t necessarily consistently the same, but everybody ultimately wants to have a phenomenal service experience in the back of that vehicle. And if we can deliver that consistently every day, it doesn’t really matter which brand you’re going to, you’re still going to get the phenomenal service that you expect. So we think we’re helping each other to elevate our game on both sides of the brands.

HOWE: Of course I love the back story of BostonCoach: Ned Johnson from Fidelity Investments hated Boston cabs and all sort of awkward, icky thing about tipping. Tell us more about that back story.

SOLOMBRINO: Fidelity and Ned Johnson are phenomenal people. The Fidelity people are the largest, most important client to this day. Ned had a vision that there could be an improvement in taxi service and decided to start his own company for his own executives. Many years ago back in the 1980’s he started BostonCoach. They did a phenomenal job in building the brand and building the company and in those times, tipping was forbidden. Ned didn’t believe people should ever tip, that was just one of his things. Today people can still accept tips.

HOWE: That’s good. I bet they appreciate that. We should go to a quick break but when we come back we will talk more about Uber and how much a competitive threat is it? Also more of Scott’s story, starting at the age of 18 with a $600 Cadillac. … Welcome back to CEO Corner. We’re talking with a man who knows his limousines. He’s Scott Solombrino CEO of Dav El BostonCoach. We eluded before the break to Uber, which has come along, and talk some about how much a business threat that is or is not to the type of limousine service that you offer.

SOLOMBRINO: So I founded that National Limousine Association in 1983, which has 2,400 companies involved on a global basis in the chauffeured car industry and we’re the lobbying arm of the industry. Uber was a phenomenal idea and a phenomenal concept put together by some very smart guys in Silicon Valley. They’ve had huge market penetration and they’ve actually changed and shifted the paradigm of how people use chauffeured cars. It’s been good for business. The problem is, is that they skipped all the regulatory steps. So technically, they’re illegal in many, many places that they operate. They don’t have the ability to use employees; they use independent contractors, which is questionable whether or not that’s legal in a lot of jurisdictions. And so you have a lack of duty of care and safety. I just came back from the Global Business Travel Association’s annual meeting in L.A., which is 7,000 corporations from around the world. I’m president of half of that organization and the chairman of a public company, Concur, an expense management company, got on stage and gave a whole speech about a new partnership they have with Uber. He tried to basically tell the audience that it’s the new standard of duty of care, and people were really mortified by that because they don’t …

HOWE: When you say duty of care, what do you mean by that?

SOLOMBRINO: … Safety for travelers. So that became kind of an issue, became a real flash point. Now the National Limousine Association is about to go on a campaign to say, “Wait a minute, that’s not true. How can you be the standard of duty of care when you’re not regulated properly, when you’ve skipped the regulation process, when you don’t necessarily drug-test your drivers, when you don’t do background checks, when you can’t guarantee how your insurance rating is, and when you’re not actually insuring the cars because you’re using third parties?” So you never really know. Is the vehicle insured? Who is this person driving? Do they have issues that I don’t know about? That’s the difference.  When people are thinking about using transportation, they should look at the bricks and mortar companies that have similar technology because at least you know they’re licensed properly and they’re being regulated properly. We’re a public convenience just like the taxi industry. The reason we have regulation is to protect the public. And these app companies don’t fall into these categories right now. Do they have the opportunity to do that? That would be great, because it will put them on a level playing field, and that would mean the pricing would change, because the cost of being regulated is enormous compared to not being regulated. We follow the rules; we can guarantee our customers the safety that they need and require. These app companies cannot. There’s a big campaign about to happen. Enough. It’s been successful, but the rubber’s going to hit the road, no pun intended. They have to understand what the rules are.

HOWE: Interesting. So how convenient is it to order a Dav El or BostonCoach compared to an Uber? Where are you guys with technology?

SOLOMBRINO: So, look, they definitely changed mobility and how you would book chauffeured car. We’ve spent a lot of time and money developing our own strategy. It’s coming out in September. We’ve been in testing for quite some time and its working very well. So you’ll be able by the end of September to pick up your mobile phone, whether it’s an Android or an iPhone, push a button, watch the car on GPS come to you, get your negotiated rate (Uber doesn’t have negotiated rates) from your corporation and be guaranteed all of the things the compliance department of your company hopes that their travelers are getting delivered to them. We will have the same usability. So I think that it took the industry some time to react to this. I think we were late to the party as a sector in general because we were not necessarily tech companies. But I think that you’ll find that some of the major players in chauffeured car are going to morph to become more technology savvy and become more of a tech play and less of a chauffeured car play, but still have the bricks and mortar in the backend to deliver the service. So I think it’s going to get very competitive very fast. The good news for us is that Uber’s evaluation as of last week was $18.5 billion dollars and they don’t own any assets. Well if I can take the evaluation of Dav El and BostonCoach to $4 billion, $5 billion or $6 billion I’m perfectly happy with that number.

HOWE: That’s a good place to be. Anything you’ve learned from a big IT deployment that you would share with other people, kind of the difficulties the challenges or the things you wished you had known at the beginning of that?

SOLOMBRINO: Yes, I think we wished that we had known and saw that mobile applications would take over in the travel sector as easily as they did. I think we all missed that. Now that we know that, we can now respond to it. So we’re about two years behind, and I think we are going to close that gap very quickly. Remember, we have the largest network; we have 30,000 vehicles in our network that we deal with every single day in non-company owned cities and markets, so we can provide as many cars as anybody on the planet, we just had to get the tech piece right. Now that we understand that the attitudes have changed on how people want to use technology in chauffeured car, we’re now ready to react to that.

HOWE: So talk some about … I mention that there’s incredible seasonality, peak periods during the time of day, how you manage businesses to meet surges in demand?

SOLOMBRINO: You could never own enough cars. We could go out and buy 10,000 more cars and we still wouldn’t have enough cars. You have to depend on partnerships. In 1966 when Dav El was founded, David Kline from New York was a guy who realized that and he started to build these affiliate networks before anyone else did in the entire United States. So we’ve been in this game longer than anybody. We have long-standing partnerships and relationships and we basically go out and we partner with people and say, hey, during the day we might need 1,000 of your vehicles every day in New York on a consistent basis, we will pay you X for those cars and you’re going to be available to us. So we have a massive affiliate network, as a matter of fact, next week is our global affiliate meeting in Boston. All of our major affiliate partners are coming here next week for the annual meeting and we’re going to roll out what our plan is on mobile apps. I think people are going to be very excited by that because Uber has affected the market. They’re doing thousands and thousands of transactions a day. The problem is that they are doing it in markets that they are not properly licensed to do them. We think we can clean that up because we are licensed everywhere and we’ve followed the rules and we also understand where we missed it on mobile applications and now we have addressed it. So, look, I wish I had been a smarter guy and a tech guy. Maybe if I was in Silicon Valley instead of Boston, I would’ve gotten on it a little bit earlier. But we weren’t. We were a bricks and mortar company that had to know morph ourselves into a tech company and I think you’re going to see that from this point forward technology is going to be the most important thing for us consistently on the development side because we don’t want to miss another trend.

HOWE: Fascinating. We should go to one more break. I’ve  alluded to it, it started with a $600 and a Cadillac now its $250 million headed in $6 billion in evaluation we hope. More after our break. … We are talking to Scott Solombrino the CEO of Dav El and BostonCoach. You didn’t start with a hundred foot long Cadillac but a ten year old Cadillac and six hundred bucks when you were 18 years old.

SOLOMBRINO: Yes, when I was a freshman in college at Suffolk University, trying to work my way through school, bought an old used Cadillac. Hired a part-time driver to drive while I was in class and I drove at night.

HOWE: So owning the asset putting it to use when you’re not behind the wheel. Tell us the story how do you get from that to running a $250-dollar-a-year, 550-city business.

SOLOMBRINO: Service, service and more service. When you can convince people that you can deliver a high quality of service, people will be attracted to you and what you are selling them. So by the time I graduated from Suffolk I had a 30-car operation doing $4 million a year. I deferred law school for a year to continue the company, and the rest is history. I never went back to law school. I made a deal in New York, hooked up with the largest company in the country. He got ill, the company was going to be sold to American Express at the time. They were going to change the name. The only thing he had left to leave behind was his legacy. I did the deal. He did financing. I bought the company in New York and the rest is history.

HOWE: So, how, if you were going back, was there anything that would have made that growth story easier for you? Or, it certainly sounds. among other things, that you got a great opportunity that you maximized.

SOLOMBRINO: I was very, very attractive to bankers because we would go out, we would buy cars, we would finance cars and they liked that. They liked the business model at the time. Remember, I started in chauffeured car in the late ‘70s. It was a different world than it is today. The timing was perfect for what I was doing and the environment was perfect, because there wasn’t a lot of competition back then. Now the industry has morphed, it’s become much more competitive. I’m not sure it could be duplicated as simply. But, look, whoever thought Uber would become Uber? All that was an idea and a piece of technology. Now they’ve built themselves into a juggernaut worth $18 billion. So I think there’s still opportunity in logistics in ground, it’s just that that opportunity has changed and shifted. It’s a little bit more technology-centric today.

HOWE: What are some ways that as a CEO it helps you had been there, you’ve been behind the wheel, you’ve driven, you’ve built up the company?

SOLOMBRINO: Listen, you’ve seen it all, right? It’s all about who you know and what the relationships are you have today. so you’re able to kind of pass that on. You also know what kind of service you expect as a CEO, and what your expecting is what the client is expecting. So you can bring that down to the driver level and say, hey, guys, this is how I would want it to be done, so let’s change the way you approach the customer. Let’s give them something different. Let’s do something unique. I think as long as you ‘ve seen it all before, you can always duplicate and make it better. That’s what I try to do every day, find ways, how do we improve ourselves, how do we get better at what we do and keep morphing it to the next level.

HOWE: Excellent. Well, we will be watching with interest as you roll out your version of Uber and wish you the best of luck and continue to grow.

SOLOMBRINO: If you every need a ride, you know where to go, Peter.

 

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