On April 15 BlaBlaCar announced it was acquiring its biggest competitor Carpooling.com, and the Hungary-based AutoHope, to become Europe's largest ridesharing service. This article about how they got there was taken from the May 2015 issue of WIRED magazine. Be the first to read WIRED's articles in print before they're posted online, and get your hands on loads of additional content by subscribing online.
Frédéric Mazzella was in a fix! He’d committed to go home for Christmas in 2003 but, busy at his job with Kabira Technologies, a transaction-processing platform, he had left his travel plans to the last minute. With the French trains fully booked and only a couple of days to go until the holiday season, he began to fret. He didn’t have a car, so the options for getting from Paris to his family home 420 kilometres south-west of the capital were limited. Eventually, his sister Lucie agreed to make a 150-kilometre detour to pick him up. Heading down the A10, he looked around and realised that most of the cars had no passengers. "I thought, OK, we’ll just put all those cars with empty seats in a search engine so that we can search the available seats in cars just like we search available seats on trains."
For the next few nights, he couldn’t get the idea out of his head. "I remember waking up and saying, ‘It’s not possible, it must exist.’ But then I was like, ‘If this existed, I would know it because I travel so much’," he says. Mazzella knew that if there were such a thing as an online ride-sharing service, it would be massive.
As soon as he returned to Paris he did his research. There were a few random trips listed on sites such as Craigslist, but nothing of the scale and scope that he’d imagined. So he contacted a friend and together they got coding.
Eleven years later, Mazzella, 38, is sitting in a Parisian bistro (well, the bistro-themed café in his company’s impressive new headquarters near Gare Saint-Lazare) talking about the breakout success of his startup BlaBlaCar. The ride-sharing service now counts more than ten million members in 14 countries and facilitates trips by two million people every month. In summer 2014 it raised $100 million (£60m) from blue-chip venture-capital firms including ISAI, Index and Accel to fuel its growth, and it employs 230 staff in nine offices across the globe. In early 2015, the service launched in India following successful roll-outs in Turkey and Russia. Latin America is next. In its home market of France, BlaBlaCar has changed the way many citizens approach long-distance travel. Guillaume Pepy, president of the SNCF rail network that didn’t have a ticket to sell Mazzella back in 2003, has identified BlaBlaCar as a chief competitor.
"From the beginning, I realised that what we’re disrupting is not hitch-hiking, it’s the transport industry," says cofounder and COO Nicolas Brusson, 37, who joined in 2011 after working behind the scenes for years. "Eighty percent of city-to-city travel in Europe is done by car," he continues. "What we’re doing is tapping into empty seats in cars -- and there are maybe ten times more empty seats in cars travelling between Paris and Brussels than seats in trains or buses. So you unlock by far the biggest world inventory of seats available. Then the question becomes, ‘How many people are going to adopt that new way of travel?’"
The answer: a lot. Membership has increased from six million in April 2014 to more than ten million. Today, whether you’re in Manchester, Moscow or Mumbai you can search BlaBlaCar to see if anyone is making a trip to your destination around the time you’re hoping to go. If you find a ride, it will probably be a fraction of the price of taking the train or hiring a car. "Today [a car from] Paris to Brussels would be €20 (£15); the train €80. London to Manchester would be £15; the train starts at £80. You have a huge motivation for the passenger to actually take a BlaBlaCar," Brusson says.
Or, if you are planning a long drive somewhere, you can post the trip details and the cost per seat. Although you won’t make a profit (it’s against the rules), taking passengers can offset costs. "It’s a win-win on the passenger and driver side," Brusson says. "Our job is then to create enough trust in the transaction and to create enough of a brand and awareness of the activities so that people adopt it." Because the drivers do not profit, BlaBlaCar has managed to avoid the regulatory headaches which have plagued other new car services such as Uber. BlaBlaCar verifies email addresses, phone numbers, bank details and Facebook profiles. When a ride is posted, the driver must declare that he or she holds a driving licence and insurance, but BlaBlaCar doesn’t verify insurance or the driver’s record. Instead, it relies on input from the BlaBlaCar community, encouraging members to take an active role in rating each other.
Each person has a profile with a photo and a brief bio declaring how chatty they tend to be: "Bla" for not very, "BlaBla" for someone who likes to talk, and "BlaBlaBla" for those who can’t shut up. Drivers are asked to rate their passengers and vice versa. "When you arrive on the profile you have the picture, the preferences, the bio and the ratings of the people who’ve been riding with this person. We check phone numbers and their information," Mazzella says. "Then you allow people to choose with whom they will ride, because this is also part of the service and the experience."
BlaBlaCar refuses to disclose how many rides it has facilitated, only that the collective distance exceeds five billion kilometres. It estimates the service generates total savings of £216 million for drivers every year. "We are giving back the freedom to people to move around for an affordable price," Mazzella says.
Mel Rowcroft regularly takes passengers on trips between Preston and London, where she attends university. "I’m living on a student loan,” she says. "If it wasn’t for getting people into the car share, I probably wouldn’t be able to get home to see my little boy as much as I do."
Paris-based special-needs teacher Jeanne le Penglaou says she’s taken around 100 trips and wouldn’t have been able to complete her studies without the money she’s saved. And there’s another reason she keeps coming back: "It’s the diversity," she says. "I’ve met doctors, auditors, students, people in fashion," says Nicolas Bouvattier, a 28-year-old Parisian who’s been using the service for five years, first as a passenger and now as a driver.
But it hasn’t all been smooth sailing. Last year, a 49-year-old man was arrested by French police on suspicion of sexual assault after a female BlaBlaCar passenger alleged she’d been drugged. BlaBlaCar provided the police with information about his past trips. "The first reaction was a hurting in my stomach," Mazzella says. "The second reaction was, we will stop that as soon as possible and the guy won’t go unpunished. The third was, we will improve things so that it doesn’t happen again."
The company already offered female-only trips and it ensures members can report situations that make them feel uncomfortable. Building a business based on trust throws up challenges -- the first being finding a business model that works.
Before Mazzella ever considered creating a business, his life centred around music and science. Classically trained as a pianist, he was educated at some of the best schools in France. After majoring in maths, physics and chemistry at the Lycée Henri IV he gained a master of physics at the esteemed École Normal Supérieure. "One day, when I was taking the physics classes at Normale Sup, I realised that in one class out of two we were talking about Einstein,” he says. "I was like, ‘Why on Earth would I continue on this path when one guy published three papers in 1905 and almost 100 years later we are still amazed at what this guy thought?’ And I decided that if I wanted to have an impact, maybe I’d rather focus on something which is not quantum mechanics."
The opportunity to branch out came through the school’s internship programme, he cast the net wide, applying to 80 firms and universities before landing an opportunity in the robotics department at Stanford University to work on a research project for Nasa. The task was to help design a virtual tool to allow surgeons on space missions get up to speed on procedures before performing them on astronauts. "You bring a surgeon on board with ten or 12 astronauts, and if one of the astronauts gets injured, the surgeon has to fix them. You can’t send him back to Earth so you have to fix him while you’re there," Mazzella says. "So I was applying all the physics equations into a virtual environment for surgery, and then I had to learn how to code to bring those equations to life."
He enrolled to study for a master’s in computer science at Stanford in 1999 and soon noticed that many of the school’s best and brightest were disappearing. "I was really surprised to see students dropping out and going to startups. I was like, ‘Wow. I mean, I hadn’t been told we could do that!’" he says. "I thought the normal thing to do, and the most successful path, was to study very hard, then get your master’s or your PhD and then after that you get a job. What’s this dropping-out thing?"
Mazzella completed his degree, but started thinking differently about his options. Returning to Paris, he joined the local office of a Silicon Valley startup called Kabira. That’s when he had the epiphany that led to BlaBlaCar. The full-time job meant his work on the ride-sharing concept was relegated to evenings and weekends but, by 2006, he’d created a website with the name CoVoiturage: French for carpooling.
BlaBlaCar CTO Francis Nappez laughs politely when he remembers what it looked like. "It was a prototype but it was unscalable," the 35-year-old says of the basic website built to resemble the classifieds on a carousel. There were no profiles. Instead, drivers were simply asked to submit their email addresses and phone numbers.
Having played a role in the technological evolution of several French tech companies and telcos such as Free Iliad, Orange and Meetic, Nappez welcomed the opportunity to build something from the ground up. "We knew that the experience would be mobile first," he says. In those days, that meant creating a site optimised for mobile access.
The service was starting to look more viable, but there was still the matter of generating revenues. "I wanted to find a way to make it grow and didn’t know how," Mazzella says. He enrolled in the MBA programme at the INSEAD Business School in 2007. It was here that he met Brusson, a French entrepreneur who’d experienced the ups and downs of running a tech company in Silicon Valley. A graduate of Berkeley, Brusson had worked for Gemfire, a startup specialising in fibre optics, through the dot com boom and bust. He’d been through a major funding round of $85 million at the height of the market and remained through the company’s bankruptcy filing. He knew the importance of building a model that would stand up to the rigours of an unpredictable market. "Back then it wasn’t really a company or anything like that. It was really just, like, this kind of embryo project, and then we started to work together on business plan," Brusson says.
They entered INSEAD’s business venture competition with a booking system that resembles the system BlaBlaCar uses now. "People said, ‘It’s not going to work, and no one’s going to use the service’," remembers Brusson. They finished fourth. Mazzella decided to try again the following year with a model that focused on serving corporate clients. It won the competition. "It’s kind of funny because in a way we won with the wrong business model and we lost with the right one," Brusson says.
Nappez quit his job in 2008 to help Mazzella build the business, while Brusson, who’d become an investor at Amadeus Capital Partners, advised on fundraising, strategy and partnerships. On paper, the B2B model made sense because it required companies to pay annual fees of a few thousand euros for carpooling services for employees. In reality, it was a disaster. "They weren’t ready to pay for quality, let’s put it that way," Mazzella says. "So we had to do very, very low prices to match other offers from small companies or software-development companies that were offering bad platforms, but cheaply."
On top of that, businesses demanded the service be tailored to suit their specific needs. "It was a nightmare," Nappez says. "The number of features was increasing a lot and the price we charged was falling and falling." The company was also selling ads to bring in revenue. But the ads made the site look ugly while bringing in virtually no money. What’s worse, when they finally did launch a product targeted at the public, it was clear that the cash-for-rides model had serious flaws. "Passengers would call, like, an hour before or three hours before saying, ‘Oh, I’m sorry, I can’t come. My grandma is sick.’ We had a percentage of sick grandmothers which was way above average," Mazzella jokes. Drivers compensated by overbooking which led to problems with passengers being turned away. Frustrated passengers followed suit, booking spots in several cars to better their chances of success. It was a mess. "We didn’t know which one would work until we tried," Mazzella says. Now, one of the company’s core values, visible on signs and postcards dotted around its international offices, is FAIL. LEARN. SUCCEED. At the time, that meant dusting off the transactional model and charging for rides at the time of booking. (The UK system is changing from cash on pickup to pay in advance this month.) "The transactional business model is simple. A driver asks €20 per seat and we sell the seat at €22 or €23, so we take a cut," Mazzella says. "The advantage of this model is that it brings an added value of engagement because when the passengers pay in advance, they come."
Cancellation rates tumbled from 35 per cent to three per cent. Now that it had become more reliable, demand for the service grew on both sides and the BlaBlaCar took off in France.
Brusson decided to join the company full-time. "I could see as a VC essentially all the European companies not becoming European. So all the European companies became the French leader of that, or the German leader of this, or the UK champion of something else," he says. "And I thought maybe what we need to do is step on the gas and really change the paradigm -- define our market not as being France but all of Europe."
The company had raised money twice before: €600,000 from the founders themselves along with friends and family in 2009 and €1.2 million the following year from a fund run by the French VC Jean-David Chamboredon. However, the ambitious plan to take over Europe required a war chest. Brusson approached his friend Philippe Botteri of Accel Partners whom he’d first met in Silicon Valley in 2004. "A lot of people said, ‘It’s hitch-hiking. Hitch-hiking is a very small market’," recalls Botteri. "I didn’t agree with that. For me, I look at it as a transportation network for distances north of 100 kilometres. When I looked at the French market, I looked at how many trips do you have of more than 150 kilometres in France. And that number is 700 million. And a small part of a very big number can actually be a big number. So that was the bet I took."
In December 2011, Accel invested $10 million. Almost immediately, the site acquired a ride-sharing service in Italy to take charge of roll-out there. This was its first "acqui-hire", which have been a big reason why the service has been able to expand so quickly and seamlessly in new markets. (The same approach was used in Poland and Ukraine.)
Mazzella, meanwhile, tackled another problem. The service still went by the name CoVoiturage in France and its app was called Comuto -- also the name used for the service in Spain. To build a cohesive global brand they’d need a single name that worked everywhere. "I had 250 names that I cut down to a shortlist of 30 which I sent to friends and family. A few weeks after I asked them, ‘Is there any name you remember?’" he says. Without fail, they responded "BlaBlaCar". It was too ridiculous to forget. "It was not neutral. That’s what we wanted," Mazzella says. "We had reactions like, ‘Wow, brilliant!’ Some of the time they were like, ‘Are you kidding? You are betting the entire company on this fucking name?’"
The company culture also underwent an abrupt shift. "We had to start staffing differently. If we want to become European, if we want to become like the leader in Germany, the leader in Spain, the leader in Italy, we need Italians, we need Spanish people, we need German people in the company and even in core functions here in Paris we need more international people," Brusson says.
Brusson drew a big laugh at the DLD conference in Munich in January, when he addressed the complexity of Europe’s fragmented market: "When you start from France, everything looks simple." He says that was meant as a joke. "The reality is yes, it’s complex. So doing a European expansion should be easier," Brusson says. "It’s almost as hard for a European company to scale in Europe as it is for a US company."
But BlaBlaCar is showing that it’s possible. Although the company is charging for the service in France, Spain and Portugal, all of the others remain free, to help build "liquidity" in the market. "I’d rather have 200 million or 500 million people ride-sharing globally in six years and not be profitable -- but knowing that we can be -- as opposed to trying to optimise today," Brusson says. Right now the focus is summed up as "footprint, footprint, footprint".
A fresh $100 million investment was announced in July 2014 to bankroll expansion to Asia, South America and eventually North America.
Dominique Vidal of Index Partners says the company has proven it can reach not just cash-poor twentysomethings but also people in their 50s and 60s. "Looking at the numbers in engagement and reach, it was like, ‘Wow! They’ve nailed it’," he says. "These kinds of companies do not happen very often anywhere in Europe."
But, according to Botteri, it makes sense that this idea would take off here rather than the US. "Ride-sharing works with a rail network that’s fairly developed, because you have cities hundreds of kilometres apart. That’s the distance people drive. Beyond that they take planes," he says. "And you want the cost of driving to be high... So maybe we’ll tackle the US at some point."
Mazzella is calm about BlaBlaCar’s growth. "This is what I wanted ten years ago," he says. "The next thing is bigger." What that is, he won’t divulge. "It’s too early." Brusson says the goal is to build "the biggest ground-transport company in the world in terms of passengers transported". Mazzella considers his colleague’s vision. "That’s mid-term," he says with his best poker face.
Matt Cowan is MediaWorks’ director.He wrote about Raspberry Pi in 07.13
This article was originally published by WIRED UK
