January 2, 2013
Two stories today point to the perils of businesses that sound good at the time but either fail to maintain their value or just lose the plot altogether. Two companies today point to a bit of both.
Firstly the success. ZipCar has been acquired for $500 million (yes that’s half a Billion) by Avis. Its a good fit for both businesses. It brings credibility to ZipCar. (Especially the poor CRV I saw being transported yesterday that had broken down 😉 But there is a clear message here for others in the “Sharing Economy”. As I wrote in TNooz today:
I think this purchase sends a clear message to those who believe that its OK to comply or not with current legislation.
One of the reasons ZipCar and Hertz on Demand both work in the “Sharing” economy is that there is a clear sense of liability and a clear value. Both of which are handled by the companies concerned. AirBnB and the accommodation players in “Sharing” are now only just waking up to the liability and legality issues. There has been frantic efforts to adjust the rules to isolate the problems they face. (If you are an AirBnB “host” you might want to read the new T&Cs VERY carefully. Ditto the new ones from Wimdu. About now those investors who have pumped loads of cash into it are probably hi5ing themselves. BUT they should be eying the door. However in my opinion this is all window dressing.
ZipCar addressed its car sharing liability early through membership and its legal status. It also lobbied hard to ensure that it could get the laws changed to allow the service. Hertz on-demand service is also a straight rental contract provided by a licensed provider. Both of them legal and both legitimate to the consumer and local and national legislation.
The path to success took ZipCar a long time. There were other competitors who tried to muscle in but in the end they are the survivors. This is a good exit for the company and the founders/investors. Please read part 2 for the downside of not keeping current. Lodgenet.