French Twist: BlaBlaCar Raises Global Venture Funding for Popular Ride-Sharing Service

Let's define our terms: Uber is not a ride-sharing service. It's a taxi company that uses technology to deliver people who have cellphones and money, not necessarily in that order. It may also, in the future, deliver stuff.

It makes a profit, or at least aspires to, not that the lack of that has ever stopped any tech-ish company from garnering a juicy valuation and eventually selling to some enterprise with actual wealth.

BlaBlaCar is a ride-sharing service which was founded in France. Drivers and riders share costs. It takes advantage of the penchant for environmental and economic interests by reusing existing assets to reduce costs and support a more sustainable lifestyle. That said, this does not necessarily make it morally superior. Just different. But it is taking off in Europe, has received some high-powered venture funding from around the world, including California and is sufficiently interesting to be receiving favorable press in some otherwise skeptical and bottom-line oriented media.

It may well be that the next innovation cycle will be noteworthy not so much for whatever the technology does, but that it is truly global in its sourcing. Wouldn't that be disruptive. JL

Noemie Bisserbe and Inti Landauro report in the Wall Street Journal:

The startup has sought to walk a finer regulatory line than some of its peers. Because it keeps fees so low that drivers are sharing costs rather than making profit, the company argues it is quite different from Uber, which also bills itself as “ride-sharing.”
Diana Gomiz recently opted for a new way to reach the French capital from Lille, her hometown 130 miles away: She skipped France’s signature bullet train and hopped in a car pool she had booked on her mobile phone.
“It may take an hour longer, but it costs half the price,” said Ms. Gomiz. “It doesn’t take long to figure out the math.”
The 28-year-old student is one of a growing number of people across France relying on ride-sharing to travel long distances. Driving the change is a homegrown startup called BlaBlaCar that is challenging state-run railway monopoly SNCF by creating an alternative transport network out of empty car seats.
BlaBlaCar has begun to pick up speed, tapping into growing interest among consumers and investors in what Silicon Valley calls the “sharing economy.” The company has expanded beyond France’s borders, recruiting 10 million members in 13 countries who have access to a fleet of more than one million cars to travel across Europe. This summer, it raised $100 million from European and U.S. venture-capital firms including Index Ventures and Accel Partners—one of the largest venture investments in a French startup.
BlaBlaCar’s ascent has come partly on the back of a deteriorating public-transport system across the continent. Europe’s prolonged economic stagnation is depriving many governments of the ability to maintain, let alone broaden, transport networks. France’s national audit office has urged the SNCF to stop building new high-speed tracks because many existing lines generate losses. Germany, known for its superfast trains, is struggling with aging fleets and tracks. In Portugal, the government recently had to shelve plans to build new bullet-train connections.
“The BlaBlaCar guys are the clear winners of this decade,” said Willy Colin, a spokesman for AVUC, an association that advocates in favor of French train users. Its business model responds to the flaws in train travel his association has been complaining about for years: high prices and bad service, he said.
The fast growth comes with new dangers, as other sharing companies including Airbnb Inc. run into conflict with regulators and incumbent businesses like taxis and hotels. Car-hailing company Uber Technologies Inc. has had at least some of its services banned in the past week in cities ranging from Portland to Madrid to Amsterdam to New Delhi.
“Long-distance travel is not as strictly regulated as inner-city traffic,” said Christian Freese, an analyst with Munich-based Roland Berger Strategy Consultants. “But some companies could eventually face problems from tax authorities if an increasing number of drivers start making money by taking passengers.”
Frédéric Mazzella got the idea for BlaBlaCar after struggling one Christmas to travel back to his parents’ home in western France. All the trains leaving from Paris were fully booked. He eventually managed to share a ride with his sister and got home just in time, but the incident planted a seed.

BlaBlaCar requires users to create a profile describing their car and a series of personal characteristics such as tolerance to pets, and to rate their chattiness from “Bla” to “BlaBla” to “BlaBlaBla.” DPA/Associated Press

In 2006, the Stanford-trained engineer teamed up with Nicolas Brusson, a fellow student at Insead business school. They invested €10,000 ($12,000) each to buy and power up an existing car-sharing website that connected travelers and drivers.
After several years, they realized their business model was causing headaches. Some passengers were booking trips, but not showing up. Drivers began to lose faith and would double book, resulting in mistrust from potential passengers that could threaten the whole system.
The time had come to offer credit-card transactions—with a penalty for the no-shows—in exchange for a fee of around 15%.
“We are filling up a need in the market,” said Mr. Mazzella.
To succeed, the company needs a critical mass of users, which it has achieved in France, Spain and Belgium. In other countries, such as Turkey and Russia, where BlaBlaCar kicked off operations earlier this year, it doesn’t charge a fee yet, but the idea is to quickly shift to the paying model.

“The model we have was to create a massive European footprint, and then a massive global footprint,” and later to make money from it, said Mr. Brusson, the company’s chief operating officer.
BlaBlaCar was originally called covoiturage.fr—simply the French word for “carpooling”—but its founders changed the name to BlaBlaCar to ease international expansion with a non-French brand they could own. The name stems from the realization that in-car chattiness was an important part of the experience. The company requires users to create a profile describing their car and a series of personal characteristics such as tolerance to pets, smoking habits and the gift of the gab, from “Bla” to “BlaBla” to “BlaBlaBla.”
“Drivers’ profiles are usually very exhaustive so you can choose people you feel will be a good fit,” said Clément Gardette, 25, who regularly uses BlaBlaCar as a passenger and driver.
The startup has sought to walk a finer regulatory line than some of its peers. Because it keeps fees so low that drivers are sharing costs rather than making profit, the company argues it is quite different from a company like Uber, which also uses some nonprofessional drivers and bills itself as “ride-sharing.”
“There has been such a hijacking of the word ‘ride-sharing,’ ” said Mr. Brusson. “The key is about the driver not making a profit, and the driver going to his destination anyway.”
Still, things can go wrong. A few months ago, Ms. Gomiz found herself stranded 20 miles outside Lille, after the car ran out of gas. “We were stranded on the emergency lane for hours,” she recalled. But such incidents, she said are rare. “You’re just as likely to be stuck at a train sstuck at a train station because of an SNCF strike.”