There is clearly something to the "sharing economy" that everyone is talking about. There will be glitches along the way, but I'm pretty sure this idea is here to stay. Considering the value of the assets involved, it could be the big economic story of this decade.
As someone else pointed out, I'm sure FlightCar will change their pricing as it gains more traction. For now, the pricing is just a reasonable and simple model.
If there's one thing I disagree with from PG's comment, it's his prediction that this could be the economic story of the decade...no, it has the potential to be the economic story of the century. Not FlightCar by itself, but all these companies disrupting different industries through the simple idea of sharing--it's revolutionary and still young.
It would be pretty big if ownership turned out to be largely a hack people resorted to before they had the infrastructure to manage sharing properly.
You can see a fairly pure instance of this situation in spectrum management (which is a common area used to study property rights because it's easy to deal with theoretically). In 1960, Ronald Coase said we should break off big chunks of spectrum and sell it off for exclusive use, just like we do with land. Transactions in those rights will help achieve efficient allocations of resources, but there is a limit at which transaction costs dominate and optimal allocations aren't reached. If you think of something very coarse-grained like frequencies for broadcast radio, you're likely to get efficient allocations via trading of property rights. If you think of something very fine-grained like allocation of frequencies to a cell phone as it travels through a busy intersection, the idea of doing micro-transactions to yield an optimal allocation becomes intractable in the face of transaction costs. But as you make the transactions cheaper, through technology, it becomes more practical to do micro-transactions.
This basic phenomenon is generalizable to pretty much any situation where you have property rights that are coarse-grained out of accounting convenience. If you can make it cheap and easy to break off little chunks of the property right and trade in them, you'll achieve a more optimal allocation of rights. That's pretty much exactly what AirBnB and FlightCar are: not sharing, but ways of breaking off a piece of a coarse property right and trading in those little pieces in a fine-grained way.
Condominiums, for instance, seem like a crazy type of building if your system of land ownership is feudal, but they're a practical necessity if property value skyrockets and more population housing is needed in a dense area.
One of the main shifts in social structure occurred around the 1890s to 1920s, and was largely predicated on the difficulty associated with sharing issues in urban life, and the lack of rules to mediate that type of space sharing. Debates at the time about how to accommodate these issues were rather fierce, but mostly forgotten now. Our current laws regarding nuisance and abuse of rights are both hacks of the property system to make urban life work. Karl Polanyi's Great Transformation is a fantastic book which recounts the shift, if anyone is interested.
I'm interested in seeing what types of norms and rules would need to exist in order to fulfill the infrastructure requirement that you mention. Additionally, I wonder if certain areas of the world are already normatively primed for sharing, and whether or not they could become springboards for a more global shift.
Ownership is just an idea to align consumption with stewardship. The idea that owning stuff is "right" or "good" is just a cultural phenomenon, and not one shared by all cultures (e.g. Native Americans).
I think you could do a lot worse in trying to find a start-up idea than to ask yourself "where is there excess capacity that can be shared."
Parking, housing, office space, cooking, people-to-do-tasks, storage space, server space - this is the sharing era.
So let's think of scenarios - you park your car for the day for work so you rent it out. What happens when there is a emergency, or you need to pop out for a quick errand? What happens when the person returning it shows up late? The reason you buy a car is for the convenience to be able to transport yourself from A to B, at any point that you need to. I just see so few scenarios, except for traveling out of your home location, that could warrant this model scaling out to other scenarios. The number of airports is very static too.
Personally, I would much rather see good public transport take off in over congested cities like SFO, NYC, etc. I see a business model like this as fixing the wrong problem.
Assuming they reduce all of the liabilities (which is 100x harder to do with mechanical items as opposed to an apartment/house) then I definitely see this taking off. On the flip side, I suspect margins will forever be razor thin in order to be competitive and the growth will halt when no new scenarios beyond airport parking can be found.
Disrupting a $10B market will keep them busy for quite some time before really having to worry about other scenarios (or other verticals).
With Airbnb, the compensation is variable and is set based on the owner's perceived value (which factors in the 'emotional piece of mind’ too among other things). It’s essentially a market based approach, and to get a wider acceptance from the supply-side, that’s what FlightCar needs to incorporate while preserving simplicity.
As an optimist, I believe the creases will get ironed out eventually. It’s not going to be easy (never is) and it might take some time, but it will happen. Here’s a structure that comes to my mind:
Tier 1 – Free parking and $10 for every day the car is rented out (like they have now)
Tier 2 – Pay $X per day to park and Receive $Y for every day the car is rented out, where X is the market rate which in SFO’s case is $18 and Y is the daily rental-price you name.
I grew up in Queens, in huge apartment buildings. Everyone there has cars with street parking that they have to move every time street sweeping comes around.
With all due to respect, I think I am done with this thread. Perhaps it is unintentional from your side, but I feel like I am arguing with someone who willfully exaggerates things to get a rise out of me.
Not surprisingly, most people who value their time prefer making a 35-minute drive at their convenience, and paying about $12-$18 per day of parking.
The federal reimbursment rate is $.55/mile. You have to pull gas reimbursment out of that because like normal rental cars (I assume) flightcar renters pay for their own gas.
A conservative estimate based on 20 miles/gallon and $4/gallon is $.20/mile in gas cost. Each mile the renter drives using your vehicle thus costs you $.35 in wear and tear and depreciation.
An alternative data point would be car lease mileage overage fees. They are commonly $.15-$.25/mile and are supposed to represent the extra depreciation of the vehicle.
So its in the right neighborhood of value to the car owner but probably doesnt represent much profit and may not be worth the hassle.
We do try and make the experience way better than traditional airport parking. We drop you off and pick you up in a town car and we give you free Starbuck's coffee before you fly and after you land! You also don't come home to an outrageous bill!
It's probably easier if you can have a car for 10 days straight instead of just an afternoon, but that's where you want to be or not?
BUT - I have to admit - there's a kernel here that think makes this different from RelayRides, etc. And that's that unlike the other companies where they "suggest" that the user return the car washed, FlightCar is actually doing the post-rental clean-up themselves, and that makes a difference. I don't like the idea of coming back to a used, possible dirty car sitting in my garage (i.e. w/ RelayRides), but if I'm coming back to a parking lot where I know the car has been professionally washed and inspected, my peace of mind is greater.
I'm still not interested in using the service, but again that's just me (I'm an anal car nerd), and that certainly doesn't mean others won't use it extensively.
Good luck guys! Love seeing awesome car-related businesses take off.
I wish them the best, though, if any industry is stagnant and in need of being overhauled it's the terrible car rental industry.
I have to say your single sentences can get my mind racing at a hundred mph. Example, Why institute the sharing (AirBnB model) if it is less about sharing and more about not paying for parking? Does this mean there is room for a purely valet model, where one drives to the airport and a valet drives it back their home instead of parking at the airport? Is it going to be a common practice for people to be the AirBnB of "this and that", making the marketing more important than the service, especially when sharing is not the main appeal?
I take what I can from your comments, like your perspective on the sharing model above, but it makes me think getting a YC interview would be bitter-sweet because really I would want to interview you.
A company out to get me free parking is a company after my own heart. In no way was I challenging the AirBnB/sharing/your model, I agree with you and pg the model I describe would not work specifically b/c "shelling out dollars", yet there is value if a valet model cost $18 once and a trip was longer than 48 hours, which sounds like your not meeting a demand so much as your making one.
Keep working on great things.
In contrast, I've never seen a respray that was perfect, even high-dollar work on high-dollar cars.
IE someone has to be arriving in Pittsburgh roughly around the time I'm leaving, and they have to also be leaving before I get home. I think that's the biggest challenge (beyond getting people to know about it and trust it). I'm sure it will take off at SFO at least.
How are the existing car sharing services doing? I haven't actually used one myself yet.
Congrats to the founders!
On demand side, this idea rocks. I remember renting a compact car for a day for around 150$ (including taxes, fees etc etc).
Surprised that the article didn't mention this.