Monday, September 01, 2008

BusinessWeek: Zipcar: So Far, Profits Are Zip

"Since Zipcar was founded in Cambridge, Mass., in 1999, it has expanded into more than 50 cities. Fueled partly by high prices at the pump and the green halo of a car-sharing model, membership this year is on pace to grow 80% over 2007, to 300,000 members.

There's just one blemish on Zipcar's rosy complexion: red ink. Although the privately held company expects to pull in about $100 million in revenues this year, up from $60 million last year, it won't be in the black until 2009, at the earliest. Simply put, Zipcar's all-in-one price scheme leaves it vulnerable to volatile fuel prices and other costs. "I lose sleep at night knowing I'm paying for gas for 225,000 people," says CEO Scott Griffith.

The solution, he says, is scale. The bigger Zipcar's customer base, the more broadly it can distribute its operating costs. That's one reason Griffith merged his company last October in a stock swap with Flexcar, a West Coast competitor backed by AOL (TWX) co-founder Steve Case. The deal won him much-needed geographic reach and lowered his per-car overhead. But expanding into new markets is costly, and saps income from already profitable older cities such as New York. "There's a minimum size you need to be to make money, to lower financing, insurance, and vehicle costs," says Neil Abrams, an auto rental market analyst. "The merger takes them closer," he says, but the business is still "a niche."

Zipcar is bolstered by $45 million in angel and venture capital. Most of it comes from Benchmark Capital, Global Capital Partners, and Greylock Partners."

2 comments:

Anonymous said...

til zipcar wont change the managment and the blood money thersty oficers in the ny ofice in nyc including the new vp in the new ofice the company wil not turn profit point blank. very bad managment!they have to start from the streets of nyc again n go up!not the other way.zipcar is a good model but the direction they take the company is down hill!

Anonymous said...

HAVE BENCHMARK AND ALL OTHER COMPANY POUR MORE MONEY INTO ZIP-CAR AND DO LIKE THE CREDIT MARKET OF TODAY , CAUSE THIS COMPANY IS ON THIS WAY,NOT CAUSE THE MONEY NOT THERE ,COSE THE MANAGMENT IS BAD STARTING FROM THE DISPATCH TO VP NY,NO BODY HAVE EXPERIENCE IN THE CAR BUISNES!ALL THEY HAVE IS THE LUCK OF RENTAL THAT IS GOING TO BE FINISHED WITH THE COMPETITION ARIVE FROM HERTS N ENT N MINT N OTHER SMALL COMPANY THAT EMERGING AS OF NOW IN NY