Christmas 2003. A Stanford student is trying to get home to his family in the French countryside in time for the holidays.
He has no car.
Buses and trains are full. Getting a ticket is impossible.
The roads are packed with people driving in their cars…alone.
If he could only find a way to connect with someone going in his same direction. He could travel in one of those empty seats. And share the costs with the driver.
The student was Frédéric Mazzella. Soon after, he launched the French ride-sharing company BlaBlaCar.
It’s now one of the so-called ‘Unicorn companies’ (start-ups valued above US$1 billion plus), valued at US$1.6 billion.
The company has more than 25 million users in 22 countries. Blablacar has concentrated in emerging countries like Brazil, Mexico and India. But it’s also thriving in Europe, where the financial crisis has hit hard and people are looking to save money.
Blablacar has effectively organised a hitchhiking service. They specialise in long distance shared trips, and are reducing the cost of travelling with bus and train companies.
Drivers that would otherwise be driving alone can advertise their journey on the site. Travellers can then choose to join the journey and share the costs with the driver. Some members are even using the site to lower the costs of long work commutes.
The website calculates the distance for each journey and the fare price the driver can ask from each passenger. The average trip costs 20 euros (AU$31) and the company takes 10–20% of each journey.
The unusual name comes from a central business feature. People using Blablacar always meet face to face. It can feel quite uncomfortable sitting in a car with a silent stranger…or a really talkative one for that matter. The feature allows users to rate themselves on how chatty they are: bla, blabla or blablabla.
The Ride-Sharing Business Model
Blablacar’s business model is very different to Uber’s for two reasons.
The first difference is that people using the service are going to the same place. The driver is travelling to the destination anyway. Whether you come or not. Uber is more of a taxi app. The driver is taking you where you need to go.
The second is that drivers are not allowed to profit from this service. They can only share costs. No profit equals no tax, regulation or insurance problems.
This is the reason why the company has avoided much of the controversy that has surrounded Uber.
Except for in Spain.
Uber was banned in Spain in 2014. It has just recently re-launched the service. But Uber drivers need to get a license to drive vehicles for tourism to qualify.
Last year, the Bus Transport Spanish Confederation (Confebus) sued Blablacar citing ‘unfair competition’. Additionally, Confebus called for a precautionary ban on the company to take effect during the duration of the trial. Blablacar argues they are a social community and their drivers don’t make a profit. The company has so far avoided the ban, but the court case is still far from resolved.
Blablacar’s success hasn’t gone unnoticed. In September 2014, Uber launched UberPool in San Francisco. It now accounts for nearly half of Uber’s rides in this city.
Uber has expanded the service across the US. It has also launched in England and India, where it’s in direct competition with Blablacar, and could take a large share from their market.
UberPool is planning to land in Australia soon.
Junior Analyst, The Daily Reckoning