Pando

Forget AAA. Honk is a nationwide on-demand towing platform fueled by technology

By Michael Carney , written on November 19, 2014

From The News Desk

There’s nothing enjoyable about needing a tow truck. From the frustration of waiting forever for it to arrive to the unshakable knowledge that you’re about to be gouged for a simple service, it’s a situation most drivers would gladly avoid. And like most industries, the experience of ordering a tow truck hasn’t changed in decades.

Honk is a Santa Monica startup working to modernize roadside assistance via an on-demand mobile platform that puts tow trucks at the touch of a button.

Unlike membership models like AAA and Roadside America, there are no upfront fees for access to the Honk network.

“Peace of mind should be free in today’s day and age,” says founder Corey Brundage.

Nor are users limited to preferred tow truck operators. Honk simply beckons the closest of its 20,000 nationwide vehicles to your location, offering arrival times less than half that of industry averages, and promising prices 50 percent below retail. A basic roadside service costs $49, and the company can handle tows, jump starts, fuel deliveries, tire changes, and locksmith services.

Honk has quietly been operating nationwide for several months now, initially under the throwaway brand of RoadsTruck, and has grown its tow truck network to more than 10 percent of the nationwide total, with more than 1,000 new drivers signing up daily. Most tow trucks operate out of small fleets and thus rely on central dispatchers like AAA for bookings. But despite consumers paying upwards of $200 for the average service, these drivers see only an average of $23 as a commission.

Honk is attractive because it can offer nearly double that income rate, largely because it has no need for the tens of thousands of regional call-center operators that have been the backbone of companies like AAA for decades. Honk also promises to help drivers complete more services per day through the use of its sophisticated – at least relative to the archaic system currently in place across the industry – dispatch algorithms and the use of GPS-enabled smartphones by all Honk driver partners. It’s no wonder the company’s tow truck signups have been largely word of mouth driven.

Like most on-demand services today, Honk drivers are not employed by the company. Rather they contract to use its platform to connect with customers, but maintain their own business licenses, insurance, and so on. This raises the familiar question of liability in the event of something going wrong. Brundage makes it clear that he’s well aware of the horror stories that fellow on-demand and sharing economy pioneers Uber, AirBnB, TaskRabbit, and others have endured, seemingly as a right of passage when entering this industry. As a result, Honk only works with established tow companies – not lone wolf truck operators – and vets each business’ customer reviews through platforms like the BBB. It also requires that these tow operators add Honk as an additional insured to their existing policies, while carrying an umbrella general liability policy to for issues above and beyond this existing coverage. Worryingly, the company does not yet conduct background checks on individual drivers, though many of its tow partners do their own checks.

Brundage began working on Honk after what he describes as one of the worst consumer experiences of his life. Like most millennials, he has never been a member of a roadside assistance club, and as a result, was left to fend for himself when his fiance’s car broke down. The frustration of having to Google-search for local tow operators, waiting more than an hour for one to arrive at her location, and being price gouged without any transparency, stood in stark contrast to the ease with which he had ordered lunch to his office earlier in the day and later hailed a car to meet her on the side of the road. In today’s mobile and on-demand world, roadside assistance was anything but a modern experience.

Honk has raised $1.8 million in across two separate rounds of Seed funding – first $600,000 and then $1.2 million – from investors that include Paige Craig, Naval Ravikant, Ben Huh, Mike Walsh, Double M Capital, Venture51, Expansion, and Karlin Ventures. The company is already generating meaningful revenue and has grown to a healthy dozen employees. That said, it will likely need to raise additional capital and dramatically grow its team if it wants to disrupt this decades old, multi-tens-of-billions of dollar industry.

There are two other startup competitors that Brundage is aware of in the on-demand roadside assistance space. The first, Honolulu-based Tow Choice, is a TechStars Boulder graduate but is well behind Honk in network size, technology sophistication, and funding. More formidable is Washington, DC-based Urgent.ly which has raised similar capital and has grown to a meaningful tow truck network within its local region. Honk’s nationwide strategy and Brundage’s experience as a multiple-time founder seems to give the company a leg up.

Sadly, there are 42 million highway accidents alone in the US each year. (The global figure is surely even more staggering.) Add to that all the dead batteries, flat tires, and other mundane service issues and this quickly emerges as a massive industry. And having gone decades without any major innovation, roadside assistance is ripe for the kind of disruption that has upended industries like transportation, hotels, and food delivery before it.

The vision for Honk is larger than towing, Brundage says. And while he’s understandably coy about exactly where the product is headed, it doesn’t take much imagination to think of all the automobile-related services that can be placed at the touch of a button. Partnerships with rental companies, dealerships, garages, and a variety of other channels could certainly be in the works.

“If Uber is the app you need if you don’t have a car, we want Honk to be the No. 1 app you must have if you do have a car,” Brundage says.