This stealth company could be the answer to Lyft and Uber's scaling woes

By Carmel DeAmicis , written on December 13, 2013

From The News Desk

As ridesharing companies expand nationally -- and internationally in the case of UberX -- their pain points are different from other businesses and sectors. Drumming up consumer demand has proved simple. Perhaps too simple. So simple in fact, that ridesharing companies have in a sense become victims of their own success. They have too many passengers and not enough drivers.

"When we first started we had a passenger wait list," Lyft co-founder John Zimmer tells me over the phone. "We've had such fast growth on the demand side that we constantly have to balance that side of the equation."

Companies haven't been afraid to admit this publicly. Uber's CEO, Travis Kalanick, penned a lengthy letter to customers, saying "[W]e have to continue to get massive amounts of drivers on board as quickly as possible. Supply for experienced drivers in the city is dwindling."

Both companies have introduced surge pricing -- where the cost goes up during busy hours -- to draw more drivers onto the roads because they can make more during popular hours, like Saturday nights. Lyft has plastered Facebook profiles with "come drive for Lyft" ads.

Uber has rolled out financing options, in which the company helps Uber drivers buy cars with low-interest rate loans. There's also driver poaching. Yesterday Uber began offering Lyft drivers in SF a $50 gas card to swing by the office for an interview, with additional perks if they switched companies to start driving for Uber.

Any wantrepreneur's ears should be perking up right about now. Where there's a pain point, there's a business opportunity.

Right on schedule, a startup has quietly launched in stealth to meet the driver demand need. ZephyrCar, a company that's been flying under the radar for the last few months with little more than a simple website and a Craigslist ad, aims to get more ridesharing drivers onto the road. How? By renting to potential drivers who don't own or aren't able to lease vehicles.

Zephyr charges $50-$75 a day to 'rent' a car. Said renters have to go through Lyft or Uber's application process, which involves background checks and interviews. Once approved, they sign up for car-renting schedules with ZephyrCar, pay the daily rental fee, and keep the profit they make from the ridesharing itself. ZephyrCar isn't partnering with Lyft or Uber -- it's operating independently, stacking its business  on top of theirs.

It's the type of company the ecosystem sorely needs as ridesharing startups face scaling challenges. It's also something that would be welcomed by car-less individuals looking to make money in urban areas.

ZephyrCar matches drivers with one insured vehicle so that their profiles through the app are always consistent. They are also listed on the insurance for that car. That works with Uber and Lyft's app systems, which assure passengers they can feel safe by including the driver's license plate number and a picture of his or her car in the app. [UPDATE: An earlier version of this story incorrectly stated that ZephyrCar drivers are not listed on the insurance of the cars they rent.]

In theory, a Zephyr driver doesn't violate Uber or Lyft's terms of service on the user end. Both Uber and Lyft firmly declare they're merely platforms with no liability, matching willing providers with willing passengers.

We've reached out to Uber and Lyft for comment about Zephyr, and will update this story if we hear back.

Zephyr is such a young company that its founder(s) likely haven't figured out all the details yet. They're still honing their logistics and testing what works best. They're in that nascent startup stage, slowly wrapping itself into a cocoon, hoping not to fall out and die before ever getting the chance to grow.

When they do figure out the details though, ZephyrCar is onto something significant. Unlike some other startups (more calendar apps anyone?), this company is meeting a compelling need, one that benefits the ridesharing ecosystem as a whole as it aims to disrupt traditional transportation.

[Image courtesy: Wikimedia]