Start-Ups

How two 17 year-olds disrupted the transportation industry, got sued, got funded

FlightCar lets users park their cars for free at the airport and rent them out while they are away. Airports are fighting it, but FlightCar is moving forward.

 

flightcarhero.jpg
 Image: FlightCar

Parking at the airport in most major cities is usually like the parking in those same cities, hard to find and expensive as hell. Plus, your car sits there, untouched, waiting for your return.

Car sharing startup FlightCar offers users a way to safely monetize their parked cars by renting them out to travelers while you are away. All rentals are insured up to $1 million and all renters are pre-screen to make sure no wannabe Fast and Furious driver abuses your ride.

If you put your car up for rent, you get free parking at the FlightCar location. After the team checks you in on an iPad, they drive you to the airport and drop you off. While you are away, if you car is rented, you can make up 20 cents per mile. FlightCar CEO Rujul Zaparde explains what happens when you return.

"Upon return, the owner can call 1-866-FLIGHTCAR for a pickup or use our web-app. We'll send a town car to pick them up from the curb. When they get to our parking lot, their car will be washed, vacuumed, and they will receive a check in the mail if their car has been rented. The parking, car wash, and vacuum are guaranteed regardless of whether the car is rented," Zaparde said.

If you don't want to wait for a driver, you can take a cab back to the FlightCar lot and they will reimburse you for your cab fare. FlightCar hasn't seen any major accidents so far, but if a car is involved in an accident the company will contact their insurance provider and, if the owner approves, try to have the car fixed by the time they return from your trip. If they are not able to get it repaired by the customer returns, they have loaner cars they can provide.

The company has raised over $6 million and has over 13,000 customers.

The power of youth

Zaparde got the idea for FlightCar after reading an article about home sharing site airbnb. He figured that if people were willing to share their homes, they might be willing to share their cars. After running it by now-co-founder Kevin Petrovic, FlightCar was born.

The funny thing is, the co-founders weren't even old enough to rent a car when they started this company. Zaparde was only 17 years old when they began. They went through the Brandery accelerator in Cincinnati and Y Combinator before seeking a formal seed round. Their current investors include: The Brandery, Y Combinator, General Catalyst, SoftBank Capital, Ryan Seacrest, Ashton Kutcher, SV Angel, Erik Blachford, and others.

Joe Medved, a partner at SoftBank Capital, met the team when they were coming out of the Brandery. He said that their youth and fearlessness plays to their advantage.

"To build a wildly disruptive business, in many ways you have to be somewhat naive about the impediments you are likely to face," Medved said.

That's not to say that Zaparde and Petrovic have no experience building a company. While in high school, they started the Drinking Water for India charity and got around 35 schools across 14 states involved to build clean water wells in India. To date they have built over 55 wells and provided clean water for over 100,000 villagers. Zaparde got accepted to Harvard, but put that on hold to start FlightCar.

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FlightCar founders Kevin Petrovic and Rujul Zaparde in India.
 Image: Drinking Water for India

Experiencing turbulence

So far, the company has facilitated about six thousand rentals in Boston, Los Angeles, and San Francisco. Dan Denegre, a film producer, has been using FlightCar for a year to rent out his 2011 Hyundai Accent. He travels once or twice a month and has used FlightCar about 10 times. His car was rented half of those times and he has made about $100. According to Denegre, the value is the convenience and the customer service.

"Where there are cars to be rented, there should be FlightCar," Denegre said.

They have momentum, but they have run into roadblocks related to their unconventional approach. They are seeing serious tension building with the city of San Francisco, who refuses to see a difference between peer-to-peer car sharing and car rentals. The city is actually suing FlightCar over lost fees, taxes, and some of their practices. Because of this, SFO wants FlightCar respond, financially, like Hertz or Avis would. But, Zaparde said, they are already paying SFO.

"We're making travel more affordable for locals, and that isn't something the airport seems willing to recognize," he said. "We already pay SFO 15%-17% of our revenue. We work with a number of local livery (limo) companies to pickup/dropoff anywhere within a 10-minute radius from our location, including the airport. All the livery services we work with are licensed by the Public Utilities Commission of California, as well as by SFO itself to pickup/dropoff curbside at the airport."

Every time a limo enters SFO, they are charged about $4 and FlightCar covers that fee. After covering all of the fees from the coming and going associated with getting car owners and renters to and from the lot, it ends up being between 15 and 17 percent of their revenue per rental.

Despite the issues they have run into at SFO, FlightCar is pushing forward undeterred. They are planning to expand aggressively this year, but they want to start by focusing on building out their current markets.

What do you think?

We want to hear from you. What do you think about peer-to-peer car sharing and home sharing? Is it something you would be interested in trying, or is it not for you?

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About

Conner Forrest is a Staff Writer for TechRepublic. He covers Google and startups and is passionate about the convergence of technology and culture.

29 comments
Soapy Buoy
Soapy Buoy

Everyone is whining about the downsides to this venture:

- Eww, I don't want a stranger driving my car! 

 - Ohh, I wanna know who's behind the wheel!

 - Boo Hoo!  I don't like to share!

 - What if the insurance... blah, blah...

 - What if "something" happens, blah blah...

These kinks will either be worked out and the idea will succeed, or they're insurmountable right now, and the idea goes back to the shelf.  Period.  No other options available. 

If you're too squeamish, for whatever reason, to participate, fine.  Different levels of risk tolerance.  But don't bash the idea just because of your personal bias.

ArkSnip1r
ArkSnip1r

I am in agreement with Zorched. I am a mechanic and see vehicles coming and going day by day.  They are not cheap to operate or maintain.  By letting a company rent out a vehicle that you have worked your ass off to pay for, hardly seems like a "good deal"  unless you are the company that is renting it out.  As good an idea as it sounds, it is by far the most stupid business venture I have ever heard of.  If there are idiots dumb enough to use this business, all the power to them.  My vehicle on the other hand, you will never see rented to anyone but myself.

LeSpot
LeSpot

" There were no witnesses to the heinous crime but fortunately a surveillance camera recorded his license number as he sped away............."  

Zorched
Zorched

The government lets us deduct 56.5 cents per mile for business use on our vehicles.  This company pays UP TO 20 cents a mile to use our vehicles.  So are there any tax gurus out there that would tell us if the gov't would let us deduct the 36.5 cents per mile we would be losing by participating in this venture?


The 56.5 per mile isn't close enough to what we really spend to maintain and drive vehicles, so with this we'd really be losing our shorts.  Yes, you're paying for parking at the airports, but you'd be losing money per mile when they're using your vehicle.  The only ones making money in this is the rental company.


I just did the math: Gas at 24mpg (if you're lucky) at 12k miles a year, licensing, oil changes, insurance and $1k in maintenance costs us about $.35 per mile just to run.  If you factor in the cost of the vehicle depreciation, which is about 30K minus 5k trade in after 7 years then you add an additional $.30 per mile.  

Yeah, you're better off having it sit at the ramp.

2chuck
2chuck

This would be a great deal for me if they open in Seattle and Portland.  Rental cars there in the summer are $500+ per week and I've been priced out.  I can no longer afford to go there.  I would also be open to renting my car in Atlanta, but I would have to check my Honda Lease and make sure it's not forbidden.

karl.werner
karl.werner

What if an owner "rents out" an unsafe car and some renter gets injured or killed?  Who's liable for that?

I'm certainly not crazy about letting someone drive my car, or taking responsibility for someone else's personal ride... Can't see me doing either...

msayles
msayles

It's a great idea that might push car rentals into lowering their daily rates.

ondcross
ondcross

I like the idea, but FIRST, the insurance companies need to insure drivers as opposed to vehicles.  Premiums vary by the kind of car and a lot of other items.  This would make safe drivers have the same premiums for a BMW or a junker.  This is a good idea that is a bit ahead of its time.  There would need to be a paradigm shift in the insurance industry, airport industry, and a couple of other places as well.  Good idea, just NOT in 2014.

mldennis
mldennis

Great idea.  I would not use my favorite car(s) to the airport but I would let anyone use my "airport" car with the kind of insurance and assurances I see in the article.  There should also be some expectations the renter assumes and agrees to if they are at fault in an accident.  I like the idea of getting so much choice at airports I travel to and a chance at not paying so damn much for a car I don't use everyday while traveling.  Sign me up.

AtlantaTerry
AtlantaTerry

Won't my automobile insurance then see my car as a commercial vehicle? If true, then I would be paying a LOT more every month than the fees that I COULD be making from FlightCar so in the end I would be out more money than I made. Not good.

snafaxi
snafaxi

I  really like these groundbreaking ideas that are breaking the traditional mold and push effectiveness and control down into the user level.  I will definitely use this service the next time I fly out of SFO,  Sadly I have not trips planned in the forseeable future.

baxendas
baxendas

I'd use it both as a car owner and as a renter.

cartmit
cartmit

Great for renters, car owners. Bad for airports? Tough luck, that's how free market is supposed to work, not have your profits guaranteed by bought-and-paid-for politicos and judges.

Myrna Taylor
Myrna Taylor

Great, for risk-takers. Personally, I would want to know who was behind the wheel of my car!

Luis Retamozo
Luis Retamozo

And who exactly is cool with that? P2p my car my bee- hind. I have problems sharing my bed and boy do I benefit from that! :)

John Varnadoe
John Varnadoe

no way do not like others driving my car see nothing but trouble with this

Ndiaz.fuentes
Ndiaz.fuentes

@ArkSnip1r  I get that. You're a mechanic. Your car is your baby. I'm a programmer and a gamer, and I would never let a stranger near my high-end PCs. However, for those of us who see a car simply as a way of getting around, this might be a pretty good idea.


Flightcar's insurance would cover any accidents. You wouldn't have to pay jacked up parking fees. And you might make a few extra buck while helping out another traveler. I think it's a good deal.

Ndiaz.fuentes
Ndiaz.fuentes

@LeSpot  Records wou;d prove you car was rented during that time. They would also show who it was rented out to. Try again, please.

sinis60
sinis60

@Zorched  You should also keep in mind that the Airports currently charge money to have your vehicles parked at the airport.  Those fees that you would be charged are now negated.  If you don't park your car at the airport the taxi fees are negated.  It's 20 cents per mile which is very low, but it's also free parking and free pickups and drop offs curbside.

Ndiaz.fuentes
Ndiaz.fuentes

@karl.werner  THIS is a valid point. They do background checks on renters, so I'm sure they could do check-ups on cars before renting them out (not sure if they do, just saying they could).

Xennex1170
Xennex1170

@cartmit  From what I gather from the article the SFO has no case since it appears that the actual transportation service provided between the airport and the FlightCar is via 'contracted' limo/taxi which pays the fees that SFO requires.  From SFO's point of view there is nothing to differentiate them from any other limo/taxi. From the limo/taxi point of view it is the difference of who sets the travel points and pays for the ride.

jsargent
jsargent

If they don't already exist, we will see insurance clauses forbidding this in very fine print.

Xennex1170
Xennex1170

As someone has mentioned earlier, it is basically dependent on the car owner's risk tolerance. So perhaps you would not participate but if there are enough participants I don't see it completely failing.

jsargent
jsargent

@Ndiaz.fuentes @karl.werner  How often do they check? What happens if the car breaks down? Who pays for the repairs when the problem may be wear and tare? The owner or the company? If there is a fault not spotted by either the owner or the company who pays for the renter's expenses and tow-truck?

Xennex1170
Xennex1170

@jsargent  Either that or there will be extra charges for 'adding' a driver.