The service lets passengers find cheap rides from one city to another in 19 countries. But Brazil, not the US, is next on the company’s expansion list, CEO Frédéric Mazzella says.
If you’re not one of the 20 million people who’ve hitched a ride on BlaBlaCar, you could be soon.
The Paris-based ride-sharing service, which takes a different tack than more-famous rival Uber, just nabbed $200 million in venture funding to expand beyond the 19 countries where it now operates.
Unlike Uber, which focuses on short, taxi-like rides within cities, BlaBlaCar goes the distance. The idea for the company came during the Christmas holiday in 2003, when co-founder and Chief Executive Frédéric Mazzella found he was too late to book a 300-mile train ride home. His sister ended up driving most of the way to pick him up, and a long-range ride-sharing service was born.
After years of experimentation BlaBlaCar settled on a business that’s proved profitable in France, where it began, and other countries, including Turkey, India and Mexico, where it’s had time to grow. BlaBlaCar connects passengers and drivers headed the same direction, with passengers paying about 11 cents a mile and the company taking a 10 percent to 15 percent cut of the payment.
BlaBlaCar is a prime example of a company in the so-called sharing economy, which lets you pay to take advantage of assets other people aren’t using. With the Internet and smartphones connecting buyers and sellers around the clock, people can find apartments through Airbnb, get a ride across town with Uber or Lyft and rent out their bike through Spinlister.
A different route than Uber’s
BlaBlaCar’s approach is not the same as that of cab alternative and hot startup Uber, even though they both offer rides and let people make money with their cars. Ninety percent of BlaBlaCar trips are between 50 and 360 miles. BlaBlaCar drivers can also only defray their costs, not make a profit, a choice that helps the company steer clear of regulatory complications and ensure its drivers are covered by ordinary insurance policies. Only with seven passengers would a driver do better than break even.
“Our drivers are not making any profit at all,” Mazzella said.
Adding a BlaBlaCar passenger or two can significantly reduce the high costs of driving — about 73 cents per mile in France. With costs a third as much in the US, drivers aren’t so motivated to have a paying passenger. That’s why the US won’t see BlaBlaCar right away.
“It is not the low-hanging fruit for us,” Mazzella said. Next on its list is Brazil, which BlaBlaCar will reach later this year.
Taxi drivers have protested Lyft and Uber, and hotels have fought against Airbnb. So far, BlaBlaCar has escaped that sort of wrath mostly unscathed. The sole exception is a legal complaint by bus drivers in Spain, but their case was undermined by their claim that BlaBlaCar drivers make a profit, Mazzella said. In fact, the company is explicitly set up so it doesn’t move drivers out of the regulatory and legal zone of any ordinary driver.
Why the silly name?
BlaBlaCar’s name came from a central feature invented to smooth over a business difficulty: members could be uncomfortable riding with people who were too talkative or taciturn. Now they rate themselves bla, blabla or blablabla accordingly.
“We found a way to make people feel at ease,” he said. BlaBlaCar may be a peculiar name, but in a test of 30 names, people remembered BlaBlaCar well.
The company has profitable operations in countries like France where it’s had time to build its business, Mazzella said. Its expansion means the company is still unprofitable overall, though.
It’s easier to expand internationally when BlaBlaCar can acquire a small ride-sharing company with a foothold but not enough members, he said. Good Internet access and widespread Facebook use also helps drivers and passengers trust each other.
The company now links more than 10 million travelers each quarter. So far in 2015, they’ve driven more than 3 billion miles. Since 2014, BlaBlaCar has doubled its membership from 10 million to 20 million.
“It’s always been an exponential curve, but when you go from 10,000 to 20,000, nobody cares,” Mazzella said. “When you go from 10 million to 20 million, people begin to look at it like, ‘Wow!'”
In September, BlaBlaCar raised $200 million from Insight Venture Partners, Lead Edge Capital and Vostok New Ventures. The investment round placed BlaBlaCar’s value at more than $1.5 billion, he said, citing financial analysts.
“Being profitable for us now would be nonsense given the opportunity we have,” he said. “In the digital world, if you don’t grow fast, someone else will do it for you.”