Zip Car Case Study

Entrepreneurship

Case : Zipcar

Rohit Kedia

Section C

Barcelona, April 2016

1. What are the origins of the zip car concept? How was it modified? How did it evolve?

The concept of car sharing existed in Switzerland since 1987, however Danielson got the business model and concept form a company in Berlin which had sprung up with the similar car sharing idea in 1999. She realised that this concept would also work in The United States, Zip Car was founded with three values at its core: as an environment friendly, cost effective and convenience for their customers.

Both Danielson and Chase knew the importance of deciding and choosing the right name for the company, they wanted a catchy, friendly easy to remember and convenient name. They had the potential to introduce alot of improvement with the use technology which would make it more user friendly and introduce better interfaces.

They introduced many user convenient features such as that the car could be open with just one single pin.  They incorporated wireless services with the car so that they could handle invoicing better and it made it less cumbersome for the user. Next evolution involved that the wireless incorporation communicated real time information such as the exact location of the car and also much improved data collection methods. They then developed to reduce the time to server and also a system to track the billings and other services. Though Zip car did not evolve drastically with many changes it evolved an adopted many improvements.

1. Getting started: How did the two founders overcome the “hen-and-the egg”-problem with regards to investors and the venture (investors want to have some proof and see some progress e.g. developed team, product, sales, etc., but the founders needed the money to achieve all this?

For the initial investment required for the start of the business and operating it the founders sought it form their family and friends. They realized that they needed to do this to keep the project alive and once the model was ready and was being built with continuous improvement they could then approach a investor.

 In was in February 2000 just two months after Zipcar was incorporated that the viability of the model was tested with one of the groups trusted advisors. The funding process had begun. Chase was set on raising  financing  and this is when she made a formal presentation of the business plan to a group of angel investors.

Side by side she was building the infrastructure of the company, she wanted to prove the concept was a solid one so that the next financing would be easier. Chase estimated that they needed a total funding of $1.3 Million, but in June 2000 again she had so sign a $250,000 bridge loan, The team worked without salary and took bridge loan to be able to finance their operations; it was only in November 2000 that were able to successfully close the first round of financing.

1. Do you think the zip-car company will be successful? Why or/and why not? How do you judge the three aspects of the Timmons triangle (idea, team, resources)?

Yes, Zip-car is poised t be successful company keeping in view that the value proposition if zip-car is offering rental vehicles on hourly basis rather than daily basis which can be attractive to a huge market as the younger population increases and so does their disposable income, this concept will be highly attractive to them. Also as commuters shift to more eco-friendly means of transport Zip-car can be the perfect solution for users who require vehicles for either weekend commutes or on special or extra-ordinary occasions.