Can These New Startups Convince Americans to Carpool?
Americans don’t carpool. The proportion of U.S. commuters who share rides peaked at about 20 percent in the 1970s, and it’s less than half that today. In Europe, carpooling app BlaBlaCar is worth $1.5 billion. In the U.S., where gas is much cheaper, nobody’s created a breakout app that matches drivers with riders for long trips. The last serious effort, a service called Zimride aimed at college students, came about a decade ago. Its founders eventually put the idea aside to start Lyft, which along with Uber has made people more comfortable with digital ride hailing.
In the past year, a series of startups has arisen to give carpooling a fresh chance. “It’s no longer weird to get in the car with a stranger,” says Jonathan Sadow. “If Zimride had started in 2014 instead of in 2007, it would have been wildly successful.”
Sadow and his brother, Robert, co-founded Scoop, a year-old San Francisco company that’s struck partnerships with big Bay Area employers that don’t have great public transit access, including Kaiser Permanente and Cisco Systems. Hovee, also in San Francisco, matches carpoolers who are connected through social media. Ride, co-founded by Uber’s first chief technology officer, runs its national service out of New York and Philadelphia. And Google subsidiary Waze is testing a carpooling service in Israel.
It’s become a lot easier for these services to sign up and track the critical masses of users they need, says Julie Ask, an analyst at researcher Forrester. Says Ann Fandozzi, chief executive officer of Ride: “The technology is finally at a place where people can connect the dots.”
Apps can help resolve many of the problems with carpooling, says Susan Shaheen, co-director of the Transportation Sustainability Research Center at the University of California at Berkeley. Among other things, they can remove much of the planning and all the cash transactions. Scoop users schedule their rides ahead of time (9 p.m. or earlier for the following morning; 3:30 p.m. or earlier for the coming evening), and pay one another via smartphone based on the app's distance rates. A 15-mile trip from Fremont to Pleasanton runs $6. As for awkward conversation, none of the U.S. services has duplicated the BlaBlaCar feature that matches people based on chattiness.
Scoop takes a $1 commission per ride (typically about 17 percent). Its rivals generally charge 10 percent to 15 percent. The Sadows say their app facilitates about 10,000 rides a month, with the average user setting up four to five one-way trips per week. The company’s total venture funding is in the low seven figures. Ride declined to share ridership and funding numbers. Hovee didn’t respond to a request for comment.
The big challenge for these businesses will be ensuring drivers arrive as promised, says Paul Steinberg, co-founder and chief business officer of carpooling service Carma. “If you pay a driver to show up, then it works, it’s great,” he says. “But carpooling is the only mode of transport that’s a two-way negotiation, where a driver can change their mind at the last minute and it breaks down the whole system. It’s the hardest thing to solve.”
Like the fresh crop of startups, Carma, founded in Cork, Ireland, in 2009, began by making deals with big employers such as Microsoft and the American Automobile Association. Eventually, Steinberg says, the company joined with government transit agencies—marketing to people who use electronic toll systems—and now sets up 7,500 carpools in the eight-county Bay Area every week, though most don't involve money. App design isn’t the biggest factor, Steinberg says: “People aren’t idiots. They do what’s easiest and cheap. And driving alone has always been and continues to be a very easy and cheap solution.” With oil at historic lows, carpooling has even less appeal.
Scoop is betting that Kaiser Permanente and Cisco carpoolers will form bonds that stretch beyond saving on cabs or gas. Ramesh Bodapati, a product manager at Cisco, says he uses the service four days a week and has befriended the colleague who drives the half-hour to their North San Jose campus while they chat about investing and their daughters. But, he says, he’s only paying $1 a ride and might not use Scoop as often if Cisco stops subsidizing it. “Right now,” he says, “it’s a false economy.”
The bottom line: Startups such as Scoop are giving the U.S. a shot at relatively easy carpooling. It’s unclear whether Americans will take it.