The Untold Story of Ridesharing — Part II: How the “Sharing” got into “Ridesharing”

Sunil Paul
Mar 2, 2017 · 6 min read

Continued from Part I

Fast forward to 2007, I’d had twins, gotten divorced, sold Brightmail and taken the now-traditional, victory-lap sabbatical. I was ready to re-engage in the world of startups. Having children had changed my view of the world. The definition of what mattered was no longer measured by my own lifetime. I could imagine their lives and their children’s lives. Long range concerns like climate change loomed larger and I committed to do what I could to bend the curve of that impending disaster.

I wondered if we could get rid of private cars if we made carsharing more convenient. I had joined the board of City Carshare, a pioneer in the field, and was very familiar with the service. I tried an experiment. I sold my car and tried to just use carsharing, transit and taxis instead. It quickly became a nightmare. It was very hard to get two small kids to school each day. My daughter still remembers the short cut we’d take to the City Carshare location which involved a steep hill through the woods, a path now blocked with a “Danger ” sign. Taxis lacked toddler car seats, if they even bothered showing up. Transit didn’t go everywhere at convenient times. It seemed like owning a car was the way to go, so I gave up my experiment and bought a SUV, a green Toyota Highlander Hybrid.

There had to be another way to have big impact on transportation, I thought. In the era when Tesla was just getting off the ground and not yet run by Elon Musk, I wondered if it was possible to supercharge electrification of automobiles by re-engineering an existing auto company brand. I recruited a team with a plan to take over the luxury carmaker, Jaguar, and turn it into a electric car company. It was a bold, audacious idea. But it was too weird for the venture capital funders and I didn’t have the experience or reputation in the private equity world to raise funds for the idea. Plus, I was learning that electrification of cars was one of the hardest ways to have impact on the climate.

I led a project, The Gigaton Throwdown, to understand how to scale solutions to climate. We found electrifying cars is one of the most expensive ways to impact carbon emissions compared to alternatives like solar, wind, biofuels, and energy efficiency. Informed by that project and frustrated by the lack of support from investors, I killed the electric car company project.

The end of the car project left me thinking the real opportunity was using information technology to create a very scalable, capital efficient way to change transportation. In the summer of 2009, I taught at Singularity University and helped incubate a company to create peer-to-peer carsharing, Getaround. At the end of the summer I offered to invest in the nascent team and join as an executive chairman, but they turned me down, concerned I would exert too much control over their company. Annoyed at being rebuffed, I decided to experiment with P2P carsharing myself. A key obstacle was insurance. Personal insurance didn’t cover renting out your car to someone else and an insurance company could cancel your insurance if you did so.

In an effort to understand the issue, I met Dave Jones, an Assembly member in the California legislature. He asked, “Why don’t you tell me what changes are needed?” I sent him a note with ideas for how to change laws to allow P2P carsharing to exist, but didn’t think anything would come of it. A few weeks later, I got a call from his staffer, “Dave would like to introduce a bill using your ideas.” Wow. I was floored that it could be that easy. I took several trips to Sacramento to lobby and testify. It passed unanimously in both houses, and on September 29, 2010 Arnold Schwarzenegger signed the country’s first P2P carsharing law. It changed insurance rules to allow carsharing as long as an individual didn’t make more than the annual cost of owning or operating their car.

The new law created an important distinction that would become important years later with the invention of ridesharing. The idea of commercial use of a car revolved around making a profit. Prior to this law, thinking about profit referred to the per mile cost of operating a car. For years, the IRS had used a standard number like $.50/mile as an average cost of operating your vehicle — in the case that you didn’t keep receipts of your actual costs. AB1871 said profit would be measured annually, not per mile. A typical car costs about $6,000 to $8,000 per year. AB1871 allowed a car owner to make occasional income off their car without threatening their personal insurance. It was a new way of thinking about “not making a profit.”

I got a law passed that redefined what it means to make a profit from a car … and I learned an important lesson about innovation and the law.

AB1871 taught me an important lesson. Don’t worry so much about the law when you are innovating. I’d put a lot of effort into changing the law before creating and scaling the innovation of P2P carsharing, only to discover I didn’t think the innovation was that hot. I had spent months not just getting that law passed but doing a pilot with City Carshare with my Highlander, ripping out its dashboard to modify its innards to be compatible with City Carshare. It wasn’t a very scalable model and I killed the project. While I first thought insurance was the biggest risk, I learned over those nine months that it was secondary to more basic problems with the model.

The episode also taught me something about my own anger and pride. I held onto the carsharing project in part because I was angry at the Getaround team. Letting go of that project also let me leave the resentment behind. When I closed that door, others opened.

Next, I started working on ideas that would integrate many modes of transportation into one interface. I envisioned taxi, limo, buses, rail, carsharing, and carpooling all available in one integrated interface. It was, in 2011, an early version of what Google and Apple Maps would become. If you are curious, the patent applications we filed back then are still on file at the Patent Office and are publicly available. I still think the integration of various modes into one interface is a good idea. It’s where Google and Apple maps are headed.

The challenge with these sets of ideas was trying to get taxis to adopt new technology. I was wary of having to integrate with the legacy technology of the taxi industry. Integrating with legacy systems is almost always a nightmare and if you can avoid it, you do. I still had nightmares of integrating with legacy modems at FreeLoader and the rats nest of software to integrate with legacy newspaper systems after we were acquired by Individual, Inc. Plus taxis had the problem that they always prefer a street hail over a phone or computer request. The guy flagging on the street is a sure thing and doesn’t require drive time to get there.

I’d been hunting for the right combination to enable the future I saw of smartphones replacing the need to own a car. I hadn’t been able to assemble the pieces to something compelling, but they were about to come together.

Next Part III: The Birth of Sidecar and Ridesharing

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