Case | HBS Case Collection | October 2001 (Revised August 2005)
by Myra M. Hart and Wendy Carter
Provides a detailed description of the processes and tasks associated with creating a new venture in an emerging industry (subscription car-sharing for urban dwellers). Chronicles the entrepreneur's concept development, industry analysis, market research, identity definition, and brand building. Also provides background on writing the business plan, creating a budget and building financials, developing a management team, creating business partnerships, and financing the businesses.
Keywords: Entrepreneurship; Financing and Loans; Leadership Development; Venture Capital; Business Strategy; Growth and Development Strategy; Business Plan; Budgets and Budgeting; Management Teams; Partners and Partnerships; Marketing Strategy; Brands and Branding; Auto Industry; Service Industry;
1. Evaluate this potential venture and the progress that Chase has made. The potential for the Zipcar venture during late 1999 and 2000 has many attributes as well as a few hurdles that still need to be addressed. The car sharing format has been proven in other cities – successfully in Europe and still in its infancy primarily in the western United States. Chase and Danielson have the opportunity to learn from the experiences of these other established companies. They chose Boston as their pilot city with an intention to expand to other cities, first in the northeast and then into the Midwest. Boston is the ideal startup location because it has limited public parking and expensive private parking which discourage residents from car ownership, as well as an efficient public transportation system which allows residents to live conveniently without a car. Boston is also home to tens of thousands of college-educated professionals, which research showed was a significant part of their target market. In addition, Chase and Danielson both live and have worked in the Boston area so they are familiar with the residents, their concerns, and experiences with vehicle ownership. Lastly, both have significant connections in the Boston area, which will allow them to further their own market research. Each founder has different expertise that they are bringing into the venture and a different set of contacts that can help them launch the venture. This network of contacts can provide feedback on their ideas and possible connections for procuring/leasing cars, parking, IT work, etc. However, both lack experience in the car rental and automotive fields which they later found to be a limiting factor in attracting investors. The venture has potential in densely populated areas where people do not need to have vehicles to commute on a daily basis, but may want the occasional access to a car that does not substantiate the need or the expense of owning one. Being able to reserve availability online for the same car each time it is needed has significant advantages over having to go through the administrative hassles of renting a car. Zipcar provides customers with access to cars located throughout the city without the need to complete administrative paperwork for each use, without having to worry about parking, and without the stress of car maintenance. Positive experiences with the car conveyed by word-of-mouth combined with the logo placement on the vehicles would generate significant exposure and help decrease the need for additional marketing expenses. The company has a specific market segment that they are targeting which would allow them to focus their marketing research and marketing efforts. Because Zipcar is not only focusing on the convenience and cost effectiveness of the model but also the environmentally friendly aspect, their audience can be expanded from the existing U.S. car sharing programs that are focused primarily