Web-Based Carpooling Startups
As gas prices have soared, more commuters have made the switch to carpooling, and they're turning to a host of free Web-based services—from government-sponsored transit programs to iPhone apps and widgets—to meet their needs. But the plethora of options can be a mixed blessing: More options mean your perfect carpool match is more likely to be signed up with a different service. That's not only a problem for you, the commuter, but also for the companies hoping to capture your business; to succeed, ride-match sites have to be able to guarantee that they can get riders where they want to go, when they want to go there.
So a growing number of ride-share startups are following in the footsteps of other Web 2.0 applications providers by targeting the enterprise market. Catering to businesses gives Carpool 2.0 startups both a captive pool of riders with a shared destination (and often similar schedules) and corporate execs who are increasingly willing to pay for customized services, like hosted Web sites and mobile apps.
Goose Networks, a Seattle ride-share company, got its start offering a ride-matching service for residents of King County, Wash., and employees of Microsoft (MSFT), whose headquarters are in the King County city of Redmond. But it didn't take long to realize that the opportunity in the enterprise far surpassed that of the public service market—particularly as gas prices began to climb. "Somewhere around $3.25, $3.50, a switch went off," CEO Charlie Crissman recalls, and suddenly businesses started contacting Goose Networks, citing the need for an affordable way to improve employee retention and recruitment.
Nearby Offices O.K., Too
In Essex, Conn., NuRide counts companies among its customers as well, but its ride-matching service is employer-agnostic, allowing it to capture an even larger share of the commuter market—and match even more riders. Commuters are just as likely to catch a ride with someone who works in a nearby company as they are with someone in their office, CEO Rick Steele points out. "There's no sense in locking them into a walled garden," he says.
Many startups also offer free ride-sharing widgets, so why buy the cow when you can get the milk for free? To differentiate, ride-share companies offer enterprise customers an added level of service. A key offering has been the ability to verify users' identities, helping ensure that a company's workforce arrives at the office safe and sound. While mass-market tools have some strategies for safety—GishiGo uses 99¢ PayPal transactions as a screening tool, and ZimRide's Facebook application lets users find rides within their opt-in network—enterprise clients expect more. To that end, Goose Networks segregates its users by employer to ensure accountability, and NuRide verifies unaffiliated users' companies and e-mail addresses before approving them.
Most ride-share providers also offer enterprise customers mobile apps related to their services. Goose Networks lets enterprise members enroll in "real-time ride-sharing," a text-message service for finding last-minute carpool partners. (Stayed late for a meeting and missed your ride? As you head to the nearest transit stop, send a single SMS to the pool asking for one. It's a little like Twitter or Dodgeball. As the BlackBerry—and iPhone—equipped workforce grows, so too will the demand for such on-the-go features. Amol Brahme, co-founder of iCarpool.com (which offers both a free Web widget and hosted enterprise services), says enterprise customers are increasingly requesting to add mobile services to their package already.
So far businesses are buying it, but will investors step up?
NuRide is currently funded through an undisclosed amount of angel investment, and the company has been cash-flow positive for the last three years, according to Steele. Lump-sum government contracts aimed at reducing demand for roadways have provided the cash flow necessary to get started. But NuRide, which also offers a point-based reward system modeled on the well-funded RecycleBank, is angling to raise a venture round sometime over the next year as well, for as little as $5 million and as much as $30 million, depending on how quickly investors think the company can expand its geographic reach.
Goose Networks is boot-strapped but is currently raising a $250,000 angel round to support its engineering staff. CEO Crissman says he has some milestones in mind, and if there's sufficient "evidence" of the market's potential—a revival of the defunded Best Workplaces for Commuters awards and continued growth in companies offering private shuttles, for example—Goose could pursue an institutional round in 2009.
Investment in the area is still small, according to Crissman, because investors aren't sold on the potential. But that will change as the competition for room on the roadways increases, even if gas prices drop. Commute time, not cost, will keep enterprise customers engaged. Four-fifths of the companies interested in Goose Networks' service cite employee retention and recruitment as reasons for adding a ride-share service. Over the past 40 years, the miles of highway grew by 6%, while the number of miles traveled on those roads increased by 194%, according to the National Surface Transportation Commission. "Demand is going to increase while resources are largely fixed," Crissman says. "We can't just build our way out of congestion."