Car-sharing start-up is the talk of Europe

Founded in Paris in 2006, BlaBlaCar aims to connect people who want to share long-distance journeys

Mon, Jul 7, 2014, 01:00

American companies such as the apartment-sharing service Airbnb and the ride-sharing company Lyft have quickly spread across the US and overseas, as more people look for alternatives to traditional services from the likes of hotels and taxis.

Many of these companies, however, have run into resistance from existing businesses, which complain the startups either do not comply with local laws or do not pay enough tax in the cities where they operate.

That is particularly true for the driving service Uber, which faced protests across Europe last month from thousands of taxi drivers who complained that the American start-up was not playing by the same rules that govern the region’s taxi industry.

In response, Uber says it is offering greater choice for consumers in a heavily -regulated industry that has seen little technological innovation for decades.

As BlaBlaCar does not allow drivers to profit from the ride-sharing service, the company says it does not face the same regulatory and tax problems that companies such as Uber are facing in the US and Europe.

The company caps how much drivers can charge passengers per route to ensure they cannot overcharge to make a profit from each journey. Instead, the company says, users can break even only on journeys by splitting the cost with other travellers, after BlaBlaCar takes its percentage.

Passengers are covered under the driver’s existing insurance policy, which the company says does not need to be changed to take part in the ride-sharing service.

“It’s a model where people aren’t participating to make money, but to save money,” says Dominique Vidal, a partner at Index Ventures. “That’s fundamentally different to other sharing-economy companies.”

BlaBlaCar, however, has had a few troubles. This year, for example, it expanded into Russia and Ukraine, only weeks before tension between the two countries eventually led to Russia’s annexation of Crimea.

The company also had to try to address customer concerns about safety, particularly among female passengers worried about getting into a car with a stranger.

“We take safety extremely seriously,” says Brusson, who added that women can choose to share vehicles only with other women. “People rely a lot on peer reviews. It’s the first thing people check when they want to find a car.”

Cheap way to travel

As it looks to expand into new markets, BlaBlaCar says it is drawing lessons from Russia, where despite the geopolitical tensions, it has attracted about 250,000 users since its debut in February and expects to hit one million subscribers by the end of the year.

To aid that growth, the company acquired a local Russian rival – an approach it is likely to follow in other countries it enters, according to Brusson.

When one customer, Dzmitry Bazhko, signed up with BlaBlaCar, he was looking for a cheap way to travel from Moscow to his hometown, Minsk, the capital of Belarus.

“I don’t have a driver’s license, and the train can be really expensive,” says Bazhko (27), who works for Airbnb in Moscow. “So far, it’s the cheapest way I’ve found to get back home.”– (New York Times News Service)

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