February 25, 2017

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Zipcar

Zipcar Mini-Cooper

Owning a car in a big city isn’t always practical. So why not cars you can rent by the hour?

Antje Danielson and Robin Chase thought so.

In 1999, they had children in the same kindergarten class. Chase was a stay at home mom looking to start her own business. Danielson worked for a university, and was researching the European practice of “car-sharing” — renting cars by the hour.

Over coffee one day, the two moms decided to combine their interests and start a company to bring car-sharing” to America. They raised just $75,000 — barely enough to get started – and in 2000, launched Zipcar, in Cambridge Massachusetts.

At first money went out as fast as it came in. And at one point early on, the company had just $68 in the bank. But eventually the idea gained a momentum that astounded even its founders.

Zipcar is a club concept, where members pay a small annual fee for ongoing access to vehicles parked throughout the city. Reservations are made online. Where they can secure a pick-up truck, a Prius, a MINI-Cooper — even a BMW.

Members get an access card for the vehicle and can take the car on an errand, a joy ride, whatever. When they’re done, they leave the car back they found it. And they only pay for the time they have the car. Parking, insurance, and gas are included in the membership fee.

Sound unconventional? Well it worked!

Zipcar adopted the slogan, “Wheels when you need them,” and that theme that hit home with young professionals who’d started ditching their cars and migrating back into cities. By 2011, the little company that started a trend, was benefiting from a new one. The U.S. Department of Transportation reported that overall vehicle-miles traveled had reached their lowest levels since 2003.

In fact, Zipcar became so successful that in January 2013, Avis, the rental car giant, decided to acquire it. By then, Zipcar had over 700,000 members and 11,000 vehicles worldwide.

The purchase price? $500 Million.

Not a bad return on a $75,000 investment!

The acquisition was a change of heart for Avis CEO Ron Nelson. Previously he disparaged car sharing. But 14 years into Zipcar’s success, he told the New York Times he realized the concept could complement the traditional rentals business. Zipcar would open new opportunities for Avis – and make it more attractive to young consumers. No doubt part of that realization came from the fact that Enterprise Rent-A-Car and Hertz already had hourly rentals that were competing with ZipCar.

To get in the game, Avis had to make a move. So it acquired the upstart.

While we don’t know the ultimate fate of the little company that could, the sale of Zipcar testifies to the unconventional wisdom of Zipcar founders Robin Chase and Antje Danielson. Chase and Danielson exemplify an axiom featured on our website: Open Your Eyes to New Trends.

They saw something new in Europe called “car sharing,” and brought it to America with ZipCar. Now Why Didn’t I Think of That?

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