The news that Avis
Budget Group will buy Zipcar for $491 million has evoked strong
reactions in the marketplace. (Zipcar offers hourly rental of autos
in several U.S. metropolitan areas.)
Yet despite the cheers
and howls, nobody knows what will become of the marriage. But the
early-January deal reinforces Steve Case�s belief that we�re moving
toward a sharing economy. The AOL co-founder, through his Revolution
LLC fund, is Zipcar�s largest investor. Revolution stands to make
about $96 million from the sale, according to Bloomberg News.
Case bought into Zipcar
back in 2005, because he saw �a generation shift from ownership to
sharing experiences.� The key, as Zipcar showed, is to make it
easier to share by giving people 24/7 access to vehicles parked in
convenient locations at a reasonable price. (Even the gas is
included.)
What�s driving the boom
isn�t just that it is easier to share vehicles, but that it is often
a hassle to own one.
Case has also invested
in widely-ranging ventures such as Exclusive Resorts, a high-end
vacation club that gives members access to luxury homes worldwide,
and LivingSocial, which encourages collaborative consumption with
incentives for friends who buy together. Case is not alone in his
thinking. Witness the growth of
Airbnb.com,
which lets users rent their homes, and
ParkingPanda.com, a new site that lets people rent out their
precious parking spots when not in use.
That said, many
investors are skeptical about the trend in sharing everything from
cars to homes. Some dismiss it as a fad that young hipsters will
ditch once their incomes rise. Insurers have certainly balked at the
idea of covering whatever damage is done by strangers using a
policy-holder�s stuff. Landlords and municipalities can ban people
from sharing for money, or at least demand part of the income. But
such complications also give an edge to businesses that have the
resources, infrastructure, and scale to compete.
As Zipcar�s new owner,
Avis Group brings more than capital to the table. It also brings the
welcome asset of more cars. Zipcar has about 10,000 cars located
throughout ten cities at the moment, which is also the number of
locations Budget and Avis boast worldwide. Therefore Zipcar�s
expansion looks to be dramatic. Moreover, since Avis relies heavily
on corporate clients whose demand for vehicles is lower on weekends,
it makes expansion with Zipcar a natural.
If Avis can share both
its fleet and expertise in managing it with Zipcar, and Zipcar can
give its new parent more access to a hip/urban clientele, that could
take the sharing economy to a whole new level.
