[Business Development]
Case Study: Zipcar
Hed: Zipcars: Yours, Mine or Ours?
Deck: Car Sharing Hits Boston
Summary: In its first half year of business, a Cambridge, Mass., service has snared more than 500
clients who share 33 cars. Zipcar hopes that car sharing, a way of life for thousands in Europe, will
catch on in crowded U.S. cities.
Pull quote: "It's viral in its appeal." -- Zipcar user Clark Waterfall, Boston Search Group
Boston residents now have a way to drive a car without worrying about insurance, maintenance,
gas stations or finding parking when they're done. How? Instead of buying or leasing cars, they're
sharing them.
Zipcar of Cambridge, Mass., launched a car-sharing service in the greater Boston area in June 2000
and already has more than 500 clients. Co-founders Antje Danielson and Robin Chase hope the
idea, long popular in Europe, takes hold in other U.S. cities as well.
Clients -- both individuals and businesses -- say the service saves them time and money. Carsharing advocates also say the practice, by taking cars off the road, translates into more parking
spaces in congested downtown areas and fewer cars in neighborhoods -- not to mention less
pollution. One critic, however, says Zipcar faces a bumpy road in convincing families to give up a
car.
Here's how the service works: The company has Volkswagen Beetles, Golf hatchbacks and Passat
station wagons parked in 33 lots around the Boston area, each within walking distance of a publictransportation terminal. Zipcar clients reserve a car for an hour or more up to two months in
advance and use a "smart card" to unlock it. Drivers simply return the car to the space when they're
done. Clients pay a $15 application fee and $50 a year per driver, plus $4.50 an hour and 40 cents a
mile.
Thousands Share in Europe
Zipcar was the brainchild of Danielson, previously a scientist at Harvard, who returned from a trip
to Europe impressed with the way 150,000 people in more than 400 cities participate in car co-ops.
She and Chase, former editor of a public health profession magazine, incorporated Zipcar in
January 2000 and obtained seed money from angel investors and small institutions, including the
Boston Commuting Venture Fund.
"It's been a hard road to raise capital for a concept that's the first of its kind," says Chase, "since it's
a different type of startup rather than a 'me-too' kind of idea."
Even before the cars were available, word spread through a Web site called CarSharing.net and
through "word of mouse" on discussion boards.
Craig Kleffman, an assistant at Boston law firm Testa, Hurwitz & Thibeault, e-mailed the company
two months before it launched to say: "I want to be your first customer." Kleffman says he makes
nearly all his trips by bicycle but occasionally needs a car for long trips or to haul a load of
purchases. For those times, he plans ahead and reserves a Zipcar, spending about $200 to $250 a
month with the company.
Chase, Zipcar's CEO, says Bostonians who use a car only 15 hours a month would spend about
$1,300 a year with Zipcar, less than what she says an average city resident spends on car insurance
alone.
By another measure, Dave Van Sickle, director of automobile and consumer information for the
American Automobile Association, says owning and operating a Chevrolet Cavalier -- roughly
equivalent to Zipcar's Volkswagens -- costs about $6,309 a year.
Business Sees Benefits
Zipcars can also help businesses save money. Clark Waterfall, managing director of executive
search firm Boston Search Group, says most of his employees take public transportation to work.
Before the company signed up with Zipcar, employees would spend an hour or two using public
transportation to get to and from meetings with clients. If they drove, parking fees often added up
to about $40 for short-term parking near the firm and then parking at a client's location for midday
meetings.
"And when employees parked on the street at meters, they would have to go out every two hours
and feed the meter," says Waterfall, "or circle the block for 10 to 15 minutes to find a space, since
on-street parking has a two-hour max. This was ridiculous."
But now employees have access to Zipcars in three locations, each within three blocks of the office.
Waterfall says they love it. Even employees' spouses and others have signed up after seeing how
the firm benefited. "It's viral in its appeal," says Waterfall.
Zipcar Sets Sights on the Capitol
Despite its youth, Zipcar is the largest car-sharing firm in the country, surpassing 3-year-old
CarSharing Portland in Portland, Ore., which has 300 clients and 23 cars. Chase says Zipcar will
most likely start its next operation in Washington, D.C.
Meanwhile, she's promoting Zipcars though gift certificates (a $68 trial membership covers the
application fee and $50 in driving credit) and an emphasis on personal service. Kleffman, for
example, says he recently found that the Zipcar he had reserved had a dead battery.
"I called Robin (Chase) and she had one of her cars parked outside her house, so I met her to get it.
It was a matter of eight minutes, and I had the car."
Chase won't discuss revenues but says the firm expects to break even by June. She believes that
Bostonians' frustration with pollution, parking difficulties and the expense of using a car only
occasionally will drive the business. The local government in Cambridge, too, has begun zoning for
greater population density at transit stations, which creates the kind of "critical mass" necessary for
car sharing to work effectively.
Because of demand, Zipcar is adding an average of two cars a week to its fleet. Chase says clients
range in age from 22 to 79. "The only thing they have in common," she says, "is that none of them
need a car to get to work."
Chase says she keeps operating costs low by screening clients (no more than two moving violations
in the past three years gets them covered by her insurer for $2 million). She also says Zipcar hasn't
had any vandalism or theft. And, because the smart cards send wireless messages to a server
tallying mileage and time, attendants aren't necessary at check-in or check-out.
Road Holds Challenges Ahead
It will take more than just good service and word of mouth for Zipcar to be successful, however,
says Charles Euchner, executive director of Harvard University's Rappaport Institute for Greater
Boston.
He argues that families will consider giving up the family car or cutting back from two cars to one
only if the process is "as ubiquitous and seamless as possible." He says Zipcar is doing a good job
of making access to a car as simple as using an ATM card. But plentiful locations will make the
difference, he says.
"Zipcar needs to develop an extensive network so that people find it more convenient rather than
less convenient to use the Zipcar -- and so that Zipcar has enough business to get the greatest value
from its vehicles," says Euchner. "The key is to answer the need for the occasional car -everywhere, with as much ease as possible -- so that people reconsider whether they want to take
the plunge into car ownership."
At a Glance
Name: Zipcar
URL: http://www.zipcar.com
Location: Cambridge, Mass.
Founders: Robin Chase and Antje Danielson
Founded: 2000
Industry: Car Sharing
Employees: 10
Revenues: Undisclosed
Related Links
<a href="http://www.zipcar.com">Zipcar</a>
<a href="http://www.carsharing.net">Car Sharing Network</a>
<a href="http://www.tht.com">Testa, Hurwitz & Thibeault</a>
<a href="http://www.aaa.com">American Automobile Association</a>
<a href="http://www.bsgweb.com">Boston Search Group Inc.</a>
<a href="http://www.carsharing-pdx.com">CarSharing Portland</a>
<a href="http://www.ksg.harvard.edu">John F. Kennedy School of Government, Harvard
University</a>
SOURCES
Clark Waterfall, managing director, Boston Search Group Inc., 224 Clarendon St. Suite 41, Boston
MA 02116, 617.266.4433, cwaterfall@bsgweb.com
Charles Euchner, executive director, Rappaport Institute for Greater Boston, John F. Kennedy
School of Government, Harvard University, 79 John F. Kennedy St., Cambridge MA, 02138,
617.496-3155, charles_euchner@ksg.harvard.edu
Craig Kleffman, assistant, Testa Hurwitz & Thibeault, 125 High St. 11th floor, Boston, MA, 02110,
617.248.7000, kleffman@tht.com
Robin Chase, CEO, Zipcar, 675 Mass Ave., Cambridge, MA 02139, 617.491.9900,
robin@zipcar.com
Dave Van Sickle, director of automobile and consumer information, AAA National Office, 1440
New York Ave., Washington DC., 20005, 202.942.2079, dvansickle@national.aaa.com