The archive · Business Models · Strategic decision · 1999–2013
Zipcar sells car trips by the hour instead of the day — 'wheels when you want them', 2000
Zipcar (2000) turned car rental into an hourly membership: reserve online, unlock with a card, pay per hour — 860,000 members by 2013.
Zipcar
What it had to solve
Robin Chase and Antje Danielson met at a Cambridge playground; in 1999 Danielson described Berlin's hourly car rental over coffee, and Chase saw that the internet was made for it. Owning a second car for occasional trips was expensive and wasteful, while traditional daily rental was too heavy for a two-hour errand.
How it works
Zipcar started as a conversation: in a Cambridge café in 1999, Antje Danielson told Robin Chase about a Berlin company that rented cars by the hour instead of by the day. Chase — a stay-at-home mom with an MIT MBA who dreaded the cost of a second family car — called it a brilliant idea and said it was what the internet was made for.
They incorporated in January 2000 with $75,000 of startup financing. The first car went on the road in May 2000, and by September the service had more than 600 customers. The mechanics were the point: members paid an annual fee, reserved a car online, unlocked it with a wireless card at the windshield, and paid by the hour — insurance, gas and parking included.
The business was deliberately not a European-style co-op. Chase branded Zipcar as a smart, urban choice: 'people feel that they belong to a club,' she told the Harvard Gazette. Cars were parked in neighborhoods, so the average trip started with a short walk rather than a trip to an airport rental counter.
The format scaled through the 2000s, and when Avis bought the company for $491 million in January 2013, Zipcar had 860,000 members and around 10,000 vehicles across five countries — proof that selling access to a car by the hour could become a business worth half a billion dollars.
Why it lands
- Hourly billing matched the real unit of city travel, so a short errand cost a few dollars instead of a day's rental.
- Membership plus technology — online booking, card-based unlock — made the car feel like a service rather than a rental counter.
- Parking cars in neighborhoods created density: customers walked minutes to a car instead of traveling to an airport lot.
- It let people give up a second car entirely, turning an environmental motive into an economic deal.
What it did
By 2004 the fleet covered Boston, Cambridge, New York and Washington; by 2013 Zipcar had 860,000 members and 10,000 vehicles in the US, UK, Canada, Spain and Austria, and Avis paid $491 million to buy it. The hourly model made 'car sharing' a consumer category and a template for the sharing economy.
What you can take
Change the unit of sale to match the job: a city trip takes hours, not days, so billing by the hour turned a car from an owned asset into a service — making the network, not the vehicle, the product.
Since then
Zipcar grew through the 2000s, merged with rival Flexcar in 2007, went public in April 2011, and was acquired by Avis Budget Group for $491 million in January 2013. Both founders left early — Danielson was pushed out in 2001 and Chase in 2003 — so neither ran the company that made their model mainstream. The hourly membership format was copied worldwide, and car sharing grew from a Cambridge experiment into the foundation of later mobility startups such as Getaround and Turo.
Sources
- Zipcar creator looks toward bigger challenges
- Driven: how Zipcar's founders built and lost a car-sharing empire
spotted an error? The archive wants to know.
Your turn
You just read one. Describe the brief you are staring at, and see who has been given the same problem.
Free account · 3 free questions · no card