Friday, July 31, 2015
You too can be a rental car company
Oil used to sit in the ground, unused. And then entrepreneurs started pumping it out and selling it.
The grab-a-natural-resource path to riches is fairly picked over at this point. But that doesn't mean there aren't untapped assets just waiting for someone to notice them.
There are a billion automobiles in the world. While it might seem as if they're all trying to merge onto the Ontario feeder ramp at 5 p.m. on a Friday, the truth is that most cars at any given car are parked somewhere.
The folks behind Uber realized that all those idle cars, along with their underemployed owners, were a resource that could be molded into a cab company. In just six years it has grown to a $40 billion company.
Airbnb did the same thing with empty apartments, using the Internet to organize them into virtual hotels. Next in the sights of the sharing economy: the rental car industry.
Meet FlightCar. Like Uber, it taps into the underutilized automobile pool, but rather than put their owners to work as cabbies, it borrows their cars, using the Internet to organize them into a rental fleet.
The clever twist behind FlightCar is it's centered at a place where people not only bring their cars and leave them for spans of time but pay for the privilege: airports.
FlightCar began operations in February 2013 at San Francisco International Airport, and Tuesday opened shop in Chicago, from the parking lot of a Best Western near O'Hare Airport. It's the company's 17th location nationwide.
"Overall, our national growth is very good," said Ryan Adlesh, FlightCar's head of expansion, who predicted the company will be in 25 cities by year's end. "Chicago is going to be a great market for us."
It works like this. You sign up and go park your car. FlightCar zips you to the airport. While you're gone, they wash your car and then offer it for rental. If nobody rents it, you've parked your car for free, saving the $14 to $35 a day it costs to park at O'Hare. If somebody rents it, you get 10 cents a mile. Renters who use FlightCar pay between 40 percent and 50 percent less than mainstream rental agencies.
The company was founded in 2012 by — brace yourself — three teenagers: Shri Ganeshram, Kevin Petrovic and Rujul Zaparde.
Not that they have the market to themselves. Relayrides, Silvercar and Getaround all operate similar services.
Is FlightCar the next Uber? Hard to say. Americans are weird about their cars, and while earning extra money for Uber obviously appeals to those struggling to make ends meet, handing over your car to a stranger for $10 or $15 a day plus free parking might not excite the average traveler with enough resources to buy a plane ticket. Who's the FlightCar market?
"Three main demographics," Adlesh replied. "Young, tech-savvy people who don't mind using his concept. Second, young families who see a huge savings over long-term parking. Lastly, surprisingly, senior citizens, on fixed incomes, who want to travel for less."
Companies like FlightCar represent a fault line in the American economy, between old-school, heavily regulated industries like taxi cabs, rental cars and hotels, and the Wild West online world of unbridled capitalism where anybody with an idea and an entrepreneurial spirit can go into business with a few keystrokes.
Rental cars are a $30 billion industry. Are they scared yet?
"We haven't seen much push back at all, they're obviously aware of us. I don't think we're cutting into their market share enough," said Adlesh. "We think the growth will continue."
The key question is: Do we need all that regulation? Do cabbies need all that training? Or was it merely creating monopolies and high barriers to participation in the market that jacked up prices needlessly? It'll be very interesting to see how this plays out, not just from a consumer point of view but politically. Republicans have embraced Uber — Jeb Bush was taking an Uber car to campaign stops — because it echoes their cry of getting the government off our backs.
I suggested I'd be reluctant to hand over my car to a stranger. Adlesh said the cars are insured for $1 million, plus they've noticed a surprising dynamic among their customers.
"People want to treat the cars nicely," he said. "There's a sense of community. The thinking is, 'They allow me to use it, I'm going to take care of somebody's assets.' Repeat users are very high. They like being part of the sharing economy."