Car-sharing start-up is the talk of Europe

In France, Charlotte Jurdieu has become part of the millions in the sharing economy.

Twice a month, Jurdieu (26) drives her Vauxhall Astra from Paris to her hometown in the Alsace region of eastern France to visit her family and boyfriend.

And in the passenger seats of her small car come fellow customers of a French start-up company, BlaBlaCar, which has created an online ride-sharing service to match drivers like her with passengers in need of a ride.

Founded in Paris in 2006, the company aims to connect people who want to share long-distance journeys. It is also active in Russia, Germany, Poland and eight other European countries.

BlaBlaCar last week announced that it has raised $100 million in new investment from a group of European and American venture firms, including Accel Partners and Index Ventures.

While sharing start-ups such as Uber and Airbnb have met regulatory resistance with their business plans, BlaBlaCar operates differently, forbidding participants to profit from the ride-sharing service. Instead, drivers share the costs of their trips and riders often pay less than they would have using public transportation.

“I’m a lot cheaper than the train,” says Jurdieu, one of more than eight million Europeans who now use BlaBlaCar. One-way train tickets from Paris to Alsace can cost more than a third more than what she charges for the same route. “As it’s a long time to spend in a car, travelling with people also makes the time go faster.”

The company’s English name, which it uses regardless of the country where it operates, comes from how chatty people are when sharing journeys. If passengers do not want to talk during the trip, they can mark in their profiles that they are only “Bla,” to denote that they are not looking for much conversation. Or they can go a full “BlaBlaBla” when they are happy to chatter throughout the trip.

Users such as Jurdieu complete online profiles that tell others whether they have a vehicle or are looking for a ride. People can post when and where they are going, and others can then sign up to share rides.

The driver posts a price per seat, people pay up front – online, in some cases – and BlaBlaCar takes a 12 per cent cut of each trip.

The typical journey – mostly between large European cities such as Munich and Hamburg, Germany – is less than 200 miles, and the company says that more than a million people use the service each month. The largest markets, each with more than a million users, are France, Germany and Spain.

Growing trend

“The need we’re trying to address is universal, and the market is massive,” says

Nicolas Brusson

, a founder of BlaBlaCar. He says the company planned to use the new investment to expand across Europe and into emerging markets like Brazil and India where transport infrastructure is poor. “Countries like Turkey have many similar features to where we operate in Europe and Russia.”

The rise of BlaBlaCar is part of a growing trend of companies that are tapping into the so-called sharing economy.

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)