Getaround Aims to Tackle “Car Overpopulation”

6/7/12Follow @xconomy

Car-sharing service Getaround burst on the scene a year ago a when it emerged as the big winner at TechCrunch Disrupt in New York, capturing the $50,000 prize. The San Francisco-based car sharing service put a twist on the usual model, allowing car owners to rent their vehicles out to the carless for an hourly rate. Now, a year later, the company has opened operations in the Bay Area, Austin, Portland, and San Diego, and signed up more than 10,000 cars (though not all of them are in cities that are currently operational, so they’re not all sharing quite yet).

“It’s pretty exciting,” co-founder and director of marketing Jessica Scorpio says. “That’s exactly what our model is supposed to do—scale a lot faster than other companies. It took Zipcar 12 years to get 10,000 cars.”

The company started as an idea cooked up by Scorpio and Sam Zaid, co-founder and CEO, while they were participating in a session at Singularity University. Google’s Larry Page challenged students to do something that could positively affect one billion people within 10 years. Zaid and Scorpio wanted to reduce the number of cars on the road. “We were inspired by how transformative car sharing can be in terms of impact,” she says. “We wanted to expand the opportunity, and solve the problem of ‘car overpopulation.’”

The two entrepreneurs met Getaround’s third co-founder, director of engineering Elliot Kroo, through an iPhone app development camp, and the three decided to work to get the project off the ground.

But before Getaround could even become a viable product, they had to make sure they had a big-name insurance company backing the venture.

Using Getaround's iPhone app to reserve a TeslaInsurance is huge for car sharing ventures from ZipCar to City CarShare, which often cater to carless drivers without insurance who borrow vehicles for a few hours at a time. It’s particularly important for services like Getaround that allow users to rent out their own cars to strangers, since it’s essentially the roadway equivalent of Airbnb. If something happens to a ZipCar, a user doesn’t have to worry about it—after all, they don’t own it. But if a Getaround car is in an accident, members need to know they’ll be taken care of.

“We needed a brand-name insurance partner with a big name and credibility,” says Scorpio, co-founder and director of marketing and Getaround. “We really needed to show we were providing top-notch insurance.”

The fledgling company also had to have its proprietary hardware ready to go. The co-founders didn’t want car lenders waiting around for the renters to come pick up their keys. Instead they built a car kit that would allow users to unlock cars with their smart phones.

By the time Getaround won at Disrupt last year, they had hit both initial goals. Berkshire Hathaway backed Getaround’s insurance needs, and the startup developed its own hardware so that renters could unlock cars and grab the keys from glove compartments. Now, Getaround’s insurance covers collision, liability and theft for the entire rental period, replacing the owner’s insurance. Drivers are covered, but face a $500 deductible per incident.

Even before its launch, the company already had begun beta-testing the idea in the Bay Area. “We had to make sure we had proof of concept, to make sure that people were willing to share their cars,” Scorpio says.

So far, 10,000 of them are. Scorpio attributes the fast growth to the appeal of making money off of an asset that’s just sitting stagnant in the driveway. “There are 450 million cars in the U.S. that are sitting idle 90 percent of the time. People spend so much money to have a car they use only minimally.” Getaround users who rent out their vehicles can set their own hourly price, usually from $3 to $15, and on average make between $300 and $400 a month. “Being able to offset the cost of your car is really compelling,” Scorpio says. “A few hundred to thousands of dollars per month really makes a difference for people.”

Car lenders can also set parameters for the hours they’re willing to share, check out their potential renters, and decide who they want to drive their cars. The owner of a Sunnyvale-based yellow 2008 Tesla Roaster, for example, is only willing to rent to members over 30 with clean driving records. (Getaround does records checks for all of its members, uses Facebook Connect to make sure they are using their real names, and has a 24-hour hotline for owners and renters.)

Car renters can browse their different options, almost like dating profiles, with ratings, photos and information about the cars, then pick one that fits the right aesthetic and price range. One black Volkswagen Beetle in San Francisco, for example, costs potential renters $5.50 an hour, while a white Toyota Rav4, also listed in San Francisco goes for $10. The Tesla goes for $75 an hour.

Investors came shortly after the Disrupt win. In September of 2011, the company raised $3.4 million in seed funding from investors including Redpoint Ventures, General Catalyst Partners, Venture 51, CrunchFund, and angels like Marc Randolph and Vivi Nevo.

“It felt slow, because we had a lot of hurdles like the insurance, but it’s been moving fast the whole time,” Scorpio says. “I didn’t know what to expect. It’s been an amazing learning experience.”

In December of last year, Getaround picked up a $1,725,000 grant from the Federal Highway Administration to expand in Portland. It’s a joint project with the city, and the company will also partner with the Oregon Transportation Research and Education Consortium to research the impact of car sharing, and how it can expand across the country. It’s a direct continuation of the cofounders’ original goal: to reduce the planet’s car population.

But their biggest challenge is the same: convincing people to change the way they think about cars.

“Our main competitor is car ownership,” Scorpio says. “People often see ‘one car, one driver’ as the norm, and that’s what we’re going up against.”

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