If there were ever a big eco-challenge, matching up tens of thousands of drivers with riders to reduce commuting emissions would be one of them. Green entrepreneurs Matthias Siedler, Michael Reinicke, and Stefan Weber did just that when they founded Carpooling.com where every day, thousands of people offer and find rides to save money and reduce their personal contribution to climate change. Find out how they make it work, and how they became profitable.
Tell us a bit more about carpooling.com’s mission.
Carpooling.com is Europe’s largest ride sharing network with more than 2 million monthly unique users. Our mission is to make carpooling a reliable and convenient form of transport that is affordable and easy to access (whether by computer, mobile phone or social network). With a few clicks, drivers can offer available seats in their car and passengers can find or book a ride. By sharing a car, people save gas and money, reduce carbon emissions and meet new friends.
Since the creation of our site, we have helped organize 24 million carpools – saving an estimated 630,000 tons of CO2 and 323 million liters of petrol. For a visual overview, see our Infographic.
How did you come up with the idea for the site? What eco problem are you trying to overcome?
Rising gas and transport prices mean that many people are looking for solutions to reduce their transport budget – and many are also concerned about our planet and how they can contribute to reducing their carbon footprint. We wanted to provide a service that is easy to use and that addresses both these concerns.
When you consider that, taken together, all cars travel around 3.7 trillion miles per year and that in 78% of rides the driver travels alone – that gives you an idea of the possible economic and ecological impact of ride sharing.
Stefan Weber, Matthias Siedler and I (Michael Reinicke) met at university and actually came up with the idea while studying for an MBA project. Essentially, it all began as a simple plan to reduce the travel costs for students wanting to go home for the weekend.
What were the challenges in getting started? Where did you find the funding to launch this green enterprise?
We had no external financial support in the beginning and had to invest our own money and spare time in the project. Our sophisticated marketing plan involved heading to the student cafeteria at lunchtime to distribute flyers. Luckily, starving students are an easy target and the popularity of our platform took off immediately – garnering more than 41,000 registered users in its first year.
After graduating, we had to hold down fulltime jobs and work on the carpooling website in our spare time. As the popularity of the platform grew, however, the business began to generate revenue through key partnerships and premium accounts. It wasn’t until mid 2009, when we were approached by a venture capital investment group called Earlybird that we received any external financial support.
How did you choose the web platform that you use? What qualities did you look for when creating the best site for carpoolers?
We wanted to create a platform that was easy to navigate and reliable for the users. As a company, we are very user-driven and constantly seek to develop and improve our offering based on the needs of our users.
The most important aspect of our website are the safety features which protect data confidentiality. In the past ten years, the safety of our users has never been an issue (the most serious complaints have involved trivial issues such as forgetting a cell phone in the car or arriving too late). That said, there is still a strong subjective need for security which is why we have invested a lot of time into habitually developing new features. Some recent additions include: Photo ID authentication, women-only rides and the new booking system which allows users to vote and review a driver’s track record based on a range of criteria. Our social media applications also enable people to connect according to common interests or friendships.
Another key feature of our offering are our mobile platforms. Today, people are better informed than ever and are increasingly mobile. Intelligent internet users want options. With our smartphone apps, carpooling can be spontaneously organized on the go (more than a thousand downloads each day of our free iPhone and Android apps). This is really the future for us. When there’s a problem in public transport like a strike, cancellation or tickets are too expensive, carpooling should be a convenient option and a way to express solidarity with those around you.
How do you measure success as a site?
Our success metric is always our users. Are they happy? Are they continuing to find the site useful? Are they booking rides? Are they using our premium features?
We are always very focused on ways to grow the numbers of users. More users means more rides. And more rides means there’s more of a chance you will find the trip you want. At the moment there are about 10,000-30,000 rides offered every day on our platform but we’re even more ambitious. Ideally, we want carpooling to become as easy and as precise as checking the bus or train schedule.
Since you started, has your mission evolved and changed?
Yes. Whereas in the past, the purpose of our business was to help people save money, now we’re noticing more and more that the social aspect of carpooling is becoming very important. Today, people like to share: good ideas, cool videos, information and even their car. The concept of collaborative consumption (‘what’s mine is yours’) is really becoming a global phenomenon. Look at companies like Zipcar or even successful public programs like the bike share schemes in Paris or Barcelona.
When you share a car, when you share a book, when you share an idea, you forge connections with the people around you. In an age where people are increasingly isolated, carpooling helps to promote solidarity and social links within communities. We have been told, for instance, that we have helped created thousands of new friendships on the road and have even been indirectly responsible for 10 marriages (and apparently quite a few children as well)!
How are you able to reach eco-conscious consumers to get them to use the site?
Partnerships are important for us. People react really positively to public endorsements from governments, respected brands and social groups. The more companies, public authorities and local communities that promote carpooling the better. We can’t do it alone.
Fortunately, we have some great partnerships with mobility agencies (like Agenzia di Mobilita di Parma) and transport companies like Euro Lines.
What are the biggest challenges in educating consumers about alternative commuting methods?
One of the biggest challenges we faced was deciding to expand internationally. Users kept pushing the boundaries with more and more trips abroad but entering a new market is not so easy. What users may value in the UK may be very different to Germany or France. In terms of carpooling, you have to consider geography, language and infrastructure.
Promoting our service in countries that never had a carpooling culture (or, in the case of Italy, never even had a word for it) can be very challenging. You have to make them understand what it is and that it actually works.
That said, our network is really growing in Europe because whether you’re in Poland or Spain, affordable transport is always a universal concern.
What mistakes have you made that you would advise other starting social entrepreneurs to avoid?
I think we underestimated the importance of communicating our presence to the mass media. We are the largest ridesharing service in Europe but many people still haven’t heard about us.
The fact that over 2 million people use our site every month is staggering when one considers that until last year we relied almost exclusively on word-of-mouth. As we continue to grow and enter new markets, however, marketing and user engagement will become more and more important. Staying relevant as a company requires an in depth understanding of what your users want – and market research is a great way to achieve that.
Are you profitable?
Yes, we are profitable. Carpooling.com is financed by a transaction-based booking system as well as corporate partnerships – including, for example, the national Automotive Club (ADAC) in Germany, the bus company Eurolines and the railway company Deutsche Bahn. This allows cheap bus and train tickets to also be purchased on the carpooling.com platform, thus providing users with the most convenient and affordable travel options.
For large companies, carpooling.com also offers white label solutions which allow their employees to carpool to work and therefore save money for travel expenses. Workplace carpooling is considered an important building block for enterprises in developing their corporate social responsibility.
Our philosophy is to give everyone access to the benefits of carpooling and only charge for optional, value-added services.
What advice would you have for other aspiring green and social entrepreneurs?
This may sound a little trite, but it’s important to really put your users first. We’d all love to go out and change the world, but the sad fact is that most of the time people don’t do things out of the goodness of their heart. There has to be something in it for them.
At the end of the day, you have to think about ways to create real, tangible value for your users in a sustainable way. That’s what’s going to make you successful. That’s what’s going to help you make a difference.