There's a new niche emerging for car sharers like Zipcar and peer-to-peer entities: ride sharing. The way ride sharing works is that a car owner, perhaps for additional income, offers a ridealong to those willing to pay. Those interested can schedule a ride share through their smart phone. The renter signs up for the service, chooses a nearby car going their way and hops in. It's hitchhiking meets taxis for the smartphone era.
San Francisco is seeing a lot of this ride-sharing activity. Zimride Inc., a five-year-old car sharing company, offers Lyft, a ride sharing service that started in August. Zimride connects people through a software application for Android and iPhone smartphones, and tracks the trip's distance using the phone's GPS to estimate a fare.
Several companies, including Zipcar Inc., are considering entering the ride sharing niche business. There's an emerging market out there for car sharing as Generation Y members get old enough to buy a car but many of them tending to opt out and instead choose flexible mobility. Car sharing is being targeted at young consumers within cities and college campuses by Zipcar, Car2go and other car-sharing ventures. Car sharing and ride sharing also make sense during an era where urban population is increasing globally, and along with it traffic congestion, air pollution and climbing gasoline prices.
Venture capitalists are interested in car sharing, and have been making investments in ride sharing companies. Zimride is backed by Mayfield Fund and Square Inc.'s Keith Rabois. Google Ventures, a subsidiary of Google, has invested in San Francisco-based ride sharing service Side.Cr (also known as SideCar). Uber Technologies Inc. offers mobile apps for booking rides, and has Goldman Sachs Group Inc., Benchmark Capital and Amazon.com Inc.'s Jeff Bezos as investors.
Ride sharing providers do need to stay current on municipal regulations and transportation policies. Zimride has 250 Lift cars registered with the city of San Francisco. The California Public Utilities Commission is investigating ride sharing in the San Francisco Bay Area to see if these businesses are violating state regulations for taxi drivers. Lyft and Side.Cr are still running cars even after receiving cease-and-desist notices in August from CPUC. They are in discussions with the agency.
Other cities will be seeing ride sharing ventures and may take umbrage over the regulatory issues. Side.Cr began operating in Seattle recently and Lyft will be entering a few more cities within a year. There is concern that it could get ugly. "If you tried this in New York, you'd go to jail in, like, a day," said Travis Kalanick, CEO of San Francisco-based ride sharing firm Uber, which is attempting to enter New York and other markets.