Uber-like ride-sharing apps, startups chase users.
Startups that piggyback on the groundwork laid by Uber have appeal with investors. Will users follow?
When Trae Vassallo’s children hop in the car to head to their after-school sports in the San Francisco Bay Area several times a week, it is not Vassallo, a full-time working mother of three, who drives them. Nor is it her husband, a nanny or any other caregiver.
Instead, Vassallo, a venture capitalist with her own firm, has scheduled regular rides for her children using Shuddle, a startup that lets parents book trips around town for their offspring. In Silicon Valley parlance, Shuddle is the Uber for children.
“It’s obviously leveraging the infrastructure that companies like Uber have figured out how to do well,” Vassallo, a former partner at the venture capital firm Kleiner Perkins Caufield & Byers who has invested in Shuddle, said of the startup.
Shuddle is just one of a growing number of services to piggyback on the groundwork laid by Uber, the popular ridehailing service that lets users request cars with a few taps of their smartphone. Apart from an Uber-like service for the under-16 set, there is now a service for Bay Area commuters (Chariot), a service for Manhattan (Via) and even one for vans (Leap Transit).
But unlike Uber, Lyft and Sidecar, which are disrupting the transportation market with all-purpose ride-booking services, these new companies focus on specific markets. And they are being fuelled by venture capitalists. In March, Shuddle raised US$9.6 million and has amassed a total of more than US$12 million. Via, a carpooling app serving only Manhattan, garnered US$27 million in venture capital in April. Chariot, a carpooling app aimed at commuters, has been operating in the Bay Area for less than a year and has raised US$3 million for early expansion.
In total, U.S. transport-related startups have raised US$7.1 billion in financing since 2010, CB Insights, an investment research firm reports.
“Look at the economics of all of this,” Vassallo said, pointing to Shuddle and the ubiquitous need for child care and general transport services for children. “It really makes sense not only in the Bay Area but everywhere.”
Yet the odds of success for many are slim: Uber and Lyft have big head starts in many markets. Uber operates in more than 300 cities worldwide, while Lyft is in about 60 markets in the United States. Trips on those services can go for as little as a few dollars, depending on distance and time.
The founders of some smaller, niche startups said their companies could work even though they concentrate on a subset of the market because they could develop loyal, repeat customers in a handful of cities and expand across the country over time.
They added that they could learn from where Uber failed, altering their business models and best practices to win new users. Uber, for instance, faced criticism for its driver-vetting process after several rape and assault allegations. Shuddle said it conducted a rigorous background check and an inperson interview and required two employer references before hiring drivers. It also monitors employee insurance and licence records.
Shuddle costs US$9 a month for membership and mileage-based fares per ride. The company said that more than 95 per cent of its drivers were women because it tended to attract female applicants. “For women drivers on other services, there’s a perception it might be unsafe,” said Nick Allen, founder and chief executive of Shuddle. “Our average driver is a 50-year-old mom.”
Leap Transit and Loup, a shuttle-based ride service, are focusing on relatively low fixed prices and standardized routes along commuter lines. That way, commuters may pay slightly more than they would for a public transit ride, yet avoid the potentially higher cost of taking Uber or Lyft.
Leap Transit, the van-pooling startup backed by the venture capital firm Andreessen Horowitz, has luxury shuttles catering to fixed routes and is offering rides for $2 for a limited time to gain traction.
Via, a carpool service that is restricted to Manhattan, will drive users anywhere between 110th Street and 14th Street for a fee of $5 to $7, depending on how passengers pay. The service also works with commuter benefits programs offered by some employers, which lets users buy ride credits with pre-tax income.
Chariot, a ride service app for commuters in the San Francisco Bay Area, runs 14-passenger vans equipped with Wi-Fi along fixed, hightraffic commuter routes. Trips cost $3 to $5, depending on the number of prepaid rides purchased, which is slightly more than the $2.25 cost to ride the local MUNI bus and rail transportation.
“I asked people, ‘Why aren’t you taking an Uber?’ ” said Ali Vahabzadeh, chief executive of Chariot. “They would pull out their phone and Uber would be at a two or three times surge price,” he said, referring to Uber’s practice of increasing fares during times of high demand. Uber declined to comment.
Uber and Lyft are not taking the proliferation of new competitors lying down and are adding new services. Each company now offers a carpool service, Uber Pool and Lyft Line, that picks up and drops off multiple passengers in one trip, cutting the cost of a trip to a fraction of what it would have been for one rider.
In March, Lyft’s chief executive, Logan Green, said Lyft Line rides accounted for a majority of rides taken in San Francisco, and the company was experimenting with “hot spots,” high-trafficked areas for pickup, similar to some of the commuter startup methods.