Uber and Lyft may be duking it out in a well-funded battle royale over the future of taxi and town car-style transportation, but there’s another segment of the ride-sharing economy that’s being all but ignored in the US: long distance travel, as in the trips for which people typically rely on buses, trains, and airplanes.
Not so in Europe, where (despite the kitschy name) BlaBlaCar is connecting millions of riders and drivers per year for trips that average 200 miles in length.
“Yes, we’re a transportation network like some of the other well known companies, but we’re serving an entirely different consumer for an entirely different use case,” says BlaBlaCar co-founder and COO Nicolas Brusson. “For $20, we help people get from Paris to Brussels. With Uber, it costs you that much to go from London to London. In many markets we’re not just offering an alternative to existing transportation options, but we’re connecting cities that have never been connected before.”
With more than eight million riders in 12 countries, the Paris-headquartered company today announced $100 million in Series C funding led by Index Ventures, with the participation from existing investors Accel Partners*, ISAI, and Lead Edge Capital. The round brings BlaBlaCar’s total funding to date to $110 million and immediately elevates it into the conversation of global ride-sharing companies to be reckoned with.
BlaBlaCar drivers aren’t full-time or even part-time liveries like those on Uber Black, UberX, or Lyft. Rather, they are people who are traveling from point A to point B for their own reasons and simply sell one or more of the empty seats in their vehicle to others looking to make the same journey. For drivers, it’s a way to defer a portion of the cost of the trip, which BlaBlaCar caps at the EU mileage reimbursement rate based on the distance of the planned trip. The company then makes a per-seat price recommendation, but allows drivers to set the ultimate price. The average long-distance ride on the platform costs just $25 (£16, or €19), far less than available alternatives. BlaBlaCar charges riders a 12 percent fee on top of the base fare.
The seven year old company has grown monthly rides by 200 percent over the last year, while expanding from just one country to 12 across Europe and Asia the last two years. It’s been able to move so quickly due to its strategy of acquiring upstarts with a similar business model and early traction in many of its new markets, according to Brussson. It’s this rapid growth and the remaining market opportunity across Asia, South America, and, eventually, North America, that precipitated this mega funding round.
“When we initially set out to fundraise, our target was $25 million,” Brussson says. “But around that time, we launched Russia, our first non-European market, and the service took off like a rocketship, gaining 250,000 members in the first three months. We realized that the global opportunity was huge. We have the opportunity to make every seat in every car that people are driving around available for transport. We decided to raise more capital to accelerate our pace and expand into new markets.”
This growth is not only key for its allowing the company to fundraise and fend off competitors, but also for the ability to offer ever-increasing “marketplace liquidity” to both drivers and riders, and more precise routes in more markets. BlaBlaCar’s primary KPI is passenger load factor, a measurement of the number of rides transacted compared to total seats available.
“Our currency is actually seats, not rides,” Brusson says.
In a blog post on their latest investment, Index’s Dominique Vidal and Martin Mignot, both of whom will be joining BlaBlaCar’s board, write:
The best consumer companies tend to be the simplest. They do one thing particularly well. So well, in fact, that its customers soon take them for granted, and forget that they ever lived without them, and that the premise the company is based on, was once viewed as unthinkable, even slightly ridiculous. BlaBlaCar falls squarely into that category.
…this ‘wacky, hippie’ platform [as their classmates once described it] has turned into one of the fastest-growing businesses in the world, and is well on its way to creating a new kind of people-powered global transportation network, from scratch, and at a fraction of the cost of the existing ones. Today, the value proposition is so clear that very few people would even think of challenging it.
BlaBlaCar and Uber (or Lyft) may end up operating in many of the same markets – as they already do in places like London and Berlin – but, at least currently, they target different customers and different rides. Vidal and Mignot describe the long distance service as one for the 99 percent, as opposed to its US competitors 1 percent-focused offering. This means that it’s a business that’s applicable in nearly every market in the world, including India, Brazil, and China, and not just in the major cities.
“There is no best market for us,” Brussson says. “Anywhere there’s cars, traffic, and high petrol costs, is an addressable market for us. We look for opportunities to acquire fantastic teams. If you told me that in Japan there was a great team that had attracted 50,000 members and is growing, I would hop on a plan to Japan.”
For Uber and other local transportation networks, the biggest challenge has proven to be scaling up the driver supply to satisfy rider demand. For BlaBlaCar, this equation is a bit different as drivers and riders in its community tend to be the same users. In that way, it’s a lot like early sharing-economy pioneer, Couch Surfing.
“We don’t even think in terms of drivers and passengers, just community members,” Brusson says. “Our number one priority is to build a trusted community – our users value peer reviews above all. After that, the big focus is get to scale in each market to make sure there’s enough liquidity. Having tens of thousands of community members in a market is nothing, we need to get to hundreds of thousands.”
BlaBlaCar has avoided the two primary obstacles confronting both Uber and Lyft as they expand into new domestic and international markets: regulations and liability. This is in part a consequence of the markets it’s operating in, but also a result of its unique model.
By keeping drivers from making a profit – the total fee for all passengers must be less than the tax reimbursement rate for the total mileage traveled – the company is able to avoid being classified as a transportation company within the EU, according to Brussons. The regulations are less clear in Russia and several of its target markets like Brazil, Turkey, and China, but in those cases, unclear regulations often equates to no regulations.
“We have yet to have a regulatory issue in any of our markets,” he says. If the company wants to enter the US, things are unlikely to be so simple. Then again, Lyft predicessor Zimride and YC graduate RideJoy each tried a similar model here and found demand lacking.
As for insurance, third-party liability laws in the EU mean BlaBlaCar drivers’ own individual insurance policies cover them, their vehicles, and their passengers, even when selling a seat through BlaBlaCar, according to the Brussons. As a result, the company does not provide additional insurance to its drivers and its passengers have yet to request such protection. Brussons admits that this could change as the company enters new markets.
“We have carried millions of people in a dozen countries and have yet to have insurance issues,” he says. With comments like that, the founder and his investors better find a big piece of wood to knock.
If one thing’s clear, it’s that BlaBlaCar is resonating with a growing global audience and with a number of the world’s most notable investors. The company could be profitable with less emphasis on growth, according to its founders, proving that it’s got a sustainable model whenever it decides to flip that switch. But for the foreseeable future, the focus will be on using this latest funding found to further press the accelerator and make its long-distance ride-sharing service as ubiquitous as possible. It’s no small task, but Brussons seems unphased by the challenge.
“I’ve seen too many companies tinkering endlessly with their product and their business model, while forgetting about the international scaling,” he says. “But when you have a proven product on a couple of markets, your entire focus should be on scaling as fast as possible, because international expansion is much more costly and complicated than people realise and you should wire your entire organisation to obsess about it.”
As Vidal and Mignot write:
People in every corner of the world want to travel from a point A to a point B in the cheapest, fastest, and most convenient manner. And in every corner of the world, BlaBlaCar’s model is more cost-effective than any existing alternatives.
“As we expand, we’re creating a pretty granular transport network,” Brussons says “We go where cars go and cars go everywhere.”
[*Disclosure: Accel Partners is an investor in Pando.]
[Image credit: Clicsouris]