Carpooling: the slow lane to success

Carpooling.com has taken on new funding, is adding features to its platform, and growing revenue. The latest hot start-up? Uh, no. They've been doing this for 10 years…

We sometimes write – and think – about technology companies, as if their start-up phase was all that mattered, and are only interested in them for the first few years of their lives. But sometimes something happens down the road, which takes a steady but unremarkable business and propels it to the big time. For example, carpooling.com spent years since its founding at a part-time project of its founders. And then, three years ago, it suddenly grew to the point where the founders were able to quit the day job and start building the business seriously.

A business built on the idea of taking informal car-sharing off the work blackboard and onto the internet, suddenly became serious when they had half a million downloads of their app. A niche business was going mainstream, over eight years after it first launched.

What changed things? “The rise of mobile and the financial crisis,” suggests Markus Barnikel, who joined the company as CEO later last year from Yahoo!. Carpooling went from being a minority activity to a smart, conscious choice, he explains. The financial crisis made it an economically smart choice, and the dis elf a mobile app made it much easier to organise. A perfect storm that finally caught in the sails of the start-up…

The service is shifting 1 million people a month, according to Barnikel, and there a “very few complaints”. The reputation management systems built into the service ensure that. Bad drivers and passengers quickly get flagged that way. Barnikel talks of the way the service allows digital connections to become real world ones – with a level of social comfort. If you’re going to be spending hours in a car with someone, you want to know what they’re like.

The business – based in Munich – is an international one. They have 18 nationalities in their team of 50 – but internationalising a business like that isn’t straightforward. Different regional cultures have different motivations for switching to carpooling.

They’ve taken on a new round of funding from Earlybird Ventures and Daimler and they have quite a shopping list for what they want to do with the money: integrating new features in the platform (the profiles were just improved, for example). Better customer service. Expansion into new territories. Oh, and expanding their reach beyond just carpooling. They want to provide a solution for people who are planning a trip which involves an element of carpooling along the way. If they can get all their tickets through the site, they’re more likely to use a shared ride as part of that travel.

The business will be built on four revenue streams:

  1. Revenue share from bookings made through the site – their base model
  2. Enterprise solutions – allowing companies that use staff facilities as a differentiator to integrate the system.
  3. Selling tickets, and taking commission
  4. Advertising on the site.

There’s something remarkably reassuring in today’s built “fast and flip” to see an online business grow organically, seize an opportunity far into its life, and then turn that into a big push for their future. There are many roads to success – and not all of them are fast ones.