FlightCar: peer-to-peer car exchange and the fight against bureaucrats

About a year ago, FlightCar.com, a startup startup company that started leasing its own car, started its work. A similar business scheme in the United States is known as “peer-to-peer car sharing”. The founders of the startup are three young people, 18-year-old (at that time) Rujul Zaparde and 19-year-old Shri Ganeshram and Kevin Petrovic. For the sake of creating his company, Rudzhul refused to study at Harvard, Kevin left Princeton, and Sri - MIT.
I must say, this is not the first joint project of Rujul and Kevin. While still in high school, they founded a non-profit foundation whose task was to raise funds and build wells in Indian villages with limited access to clean water.


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Despite the fact that companies with a similar business model existed before, for example, Getaround was founded in 2009, RelayRides in 2010, FlightCar found a specific niche. The business idea was quite simple: people arriving in another city are often forced to rent a car. In this case, their own car at this time is not used, and in many cases, the owner also pays money for parking the airport. So why not optimize this process?

By logging into FlightCar website or using the application, the owner of the car can notify the company about the date of his departure and arrival. When he arrives at the FlightCar car park, just a few kilometers from the airport, the client is already waiting for a comfortable Lincoln or Ford Excursion, which will take him to the desired terminal. Just a couple of minutes on the formalities, until the FlightCar employee enters into his application information about the appearance of the car and gives the owner the terms of the agreement for signing. Each car company is offered insurance for a million dollars and a free car wash, even if in the absence of the owner no one will rent it. If the car is rented, the owner will receive from 5 to 20 cents per mile, depending on the age and class of the car. Judging by the site, the average client leaving their car, earns about $ 30. Probably, our experience is not “average”, for those 7 times that we used the services of FlightCar, our car was rented only once (earned $ 130 + baseball tickets and a full tank of gas). However, the savings in parking and washing the car turned out to be more significant.

Upon his return, the owner of the car notes in the application or on the link from the SMS reminder, when he is ready to be taken from the airport. The driver arrives within 10 minutes, so it makes sense to report the arrival after receiving the baggage. If all the drivers are currently meeting or seeing off other passengers, the application will inform the client about this and offer to take a taxi to FlightCar parking. Upon arrival, the incurred $ 10-15 per trip will be paid by an employee of the company.



The scheme for those who want to rent a car works in the same way: they will be picked up at the airport (or in any other place) and brought to the parking lot, where the selected car equipped with GPS, and including free insurance, will wait. The rental price will be from $ 15 to $ 60 per day, with a daily limit of no more than 90 miles (for exceeding the price will be higher, as well as the premium to the car owner). Traditional rental companies that allow you to rent a car at the airport usually offer prices twice as high.

The company's founders took part in Y-Combinator in early 2013 and raised $ 570,000 in seed funding. Starting in February 2013, in April they received another $ 5.5 million in Round A from investors such as Brian Chesky (founder and CEO of AirBnB), Alexis Ohanian (co-founder of Reddit), Erik Blachford (formerly Expedia CEO) and several other well-known investors and funds.

Despite the fact that the founders come from Boston, the first airport where the project was launched was San Francisco.
Perhaps because it is traditionally the most geek audience, and perhaps because AirBnB also started from San Francisco. However, quite quickly, despite the rather modest turnover of the young company, the airport felt that it was setting a precedent in which it was deprived of income. Whether a person leases a car at the airport, takes a taxi, uses a shuttle or leaves his own car at the long-term parking of the airport - from all this the airport receives its commission. The only exception is if the traveler is transported or met by someone from his family and friends. In the US, there is even a common expression that it is easy to distinguish friends from just acquaintances - only a real friend will take you to the airport. And then suddenly the passengers had a “friend” with a 6-million financing, a mess!

As a result of the threat of a lawsuit and a ban on work at the airport, after several months of negotiations, FlightCar and similar companies had to recognize themselves as “a car rental company operating outside the airport” and pay the appropriate fees: $ 20 per transaction and 10% of total revenue, associated with work at the airport, which in total absorbs about 17% of the company's revenue. For the airport, however, such fees also constitute a significant part of income not related to aviation - up to 20%.

However, this trouble is not over. City services of San Francisco also decided to sue FlightCar due to the lack of duties, taxes and the practice of disembarking passengers on the sidelines, because the company would have to pay the city for using public transport or taxis. Boston, where the startup opened its second representative office, while taking a wait-and-see attitude, watching the San Francisco case resolve. In the third city, Los Angeles, FlightCar went out already taught by bitter experience and immediately agreed to cooperate with authorized city transport agencies. Operational changes in legislation regulating the work of such companies, including Uber, Lyft and others, which California lawmakers made in September 2013, also helped a little.

However, even here the adventures were not over. In the town of Millbrae, a suburb of San Francisco, where the startup parking had moved in the second half of 2013, they also decided not to give them a quiet life, and on 4 November they voted to cancel the conditional permission to work. At this point, the startup could not stand it, and decided to sue himself, resenting the fact that the local administration did not go through preliminary warnings and negotiations, but immediately decided to “get rid” of the young business.

Meanwhile, the situation with the lawsuit from San Francisco has not yet been completed. A couple of weeks ago, the parties met in court, but the details of the public meeting are unknown. On January 23, the CEO of FlightCar wrote a note in which he called on bureaucrats to come to their senses and not to beat young companies, but to come to a common denominator and work out a unified set of rules for a booming peer-to-peer economy.