Peers Inc

The Birth of Zipcar

One morning in 1999, Robin Chase’s friend Antje described watching someone hop into a shared car in Berlin. Antje wondered if the shared-car concept would work in her New England city of Cambridge, Massachusetts. Chase grasped the idea’s potential because she was its target market. Her husband drove their car to his office, where it sat in a parking lot. The couple didn’t want the hassle and expense of owning a second car. Chase co-founded Zipcar believing that renting a car should be as easy as withdrawing money from an ATM. Users could rent cars as needed, and their availability would be cheaper and more convenient than owning a car.

Initially, investors were wary of the sharing-based business model. They didn’t agree with the three building blocks pivotal to making Zipcar work: first, that people would be willing to share cars; second, that the technology enabling the service would not be too expensive or complex; and third, that users would respect the rules. Zipcar’s initial investment dollars went to developing and perfecting Internet and wireless technology that cut transaction costs to almost zero – in contrast with expenses of $8 to $12...