Car share startup drives up profits
ShiftRide’s simple model saves money and makes money
KITCHENER — With no car of his own, Nima Tahami walked, cycled, rode public transit and hired Uber drivers to get around the suburbs north of Toronto.
On his outings around Richmond Hill, the budding entrepreneur saw opportunity among all the vehicles parked in driveways as he rolled past on a bus or bicycle.
“That was the original inspiration,” said Tahami, the founder and chief executive officer of ShiftRide.
His startup connects people who need a vehicle for a short period of time with underused cars. After launching nearly a year ago ShiftRide has 10 vehicles listed on its platform and about 1,200 regular users who have logged more than 2,000 trips.
They can see what cars are available, read short reviews of the vehicles posted by others, see when the owner needs it back and quickly get a cost estimate for their tip.
Tahami said it took about six months to build the software platform for the startup, but getting the proper insurance coverage in place took nearly three times longer. The policy issued by Northbridge Insurance includes $2 million in liability coverage, comprehensive collision and standard accident benefits.
“That was one of the biggest challenges we had,” said Tahami.
Users pay a flat fee of $2 every time they sign out a car, and 50 to 70 cents per kilometre, depending on the model of vehicle. They also pay six to 10 cents for every minute, depending on the vehicle. Nicer vehicles cost more.
“If you have errands around the city it is perfect for that because it doesn’t cost that much,” said Walid Azhar, a third-year student at the University of Waterloo who uses ShiftRide. “I live on Lester Street and there are three ShiftRide cars placed around me.”
Most trips are between two and three hours covering 25 kilometres. So users are paying between $20 and $25 for most trips.
Currently, ShiftRide has nine vehicles in Waterloo and one in Kitchener. It has focused mainly on the student market during its first year in business. Next year it plans to expand into Cambridge, Guelph, Hamilton and Toronto.
“We estimate that when we have around 100 cars we will be making a good profit,” said Tahami.
A car owner who registers a vehicle on the platform can expect to earn $400 to $800 a month. So Tahami approached a dealership in Waterloo about putting vehicles on ShiftRide. Cars for Anyone on Bridgeport Road East has four on the platform now.
“It has been fairly positive,” said Adam Newington, who owns the car lot. “It did take a little bit for the income to come in any sort of strength. Now it seems relatively decent for the amount of cars we have on there.”
When vehicle owners join, they receive a package in the mail. Inside is a device that is plugged into the car. It continually tracks location, distances driven and pickup and drop-off times.
Car owners also get a small lockbox to hold the keys. It is secured close to the vehicle, and is opened with a combination. The combination is sent to a user’s smartphone when they sign out that vehicle.
Tahami’s startup is based in the Velocity Garage in the Tannery in downtown Kitchener. He started it while studying computer science at the University of Waterloo, winning $5,000 and later, another $25,000 in the Velocity Fund Finals pitch competitions. ShiftRide competes against much larger companies operating in this region and around southern Ontario, including Zipcar, Maven and Vrtucar.
Tahami is up to the challenge. Firstly, his startup does not have to buy and maintain a fleet of vehicles.
Secondly, by generating monthly income for car dealers and individual vehicle owners, and providing a convenient, lowcost alternative to the users of his platform, Tahami believes he has a win-win model that can be successfully expanded.
“The car owners are happy because they are making money off a car that is sitting there depreciating,” said Tahami. “And users get access to a car without having to actually buy one and insure one and maintain one.”