Access the Zipcar case study from Bridges
r‘ MYRA HART
MICHAEL I. ROBERTS
JULIA D. STEVENS p
C O O O
Zipcar: Refining the Busmess Model
It was October 14, 2000, and Robin Chase was leaving yet another meeting with potential,
providers of capital for her fledgling. venture, Zipear. Chase was CEO and cofounder of ’ the~
company, which she and Antje Danielson had started some 10 months before. The idea behind
Zipcar-ma sophisticated form of car sharing-was simple, yet potentially revolutionary. Chase and
Danielson had conducted some initial research during late 1999, and by the end of that year, the two
had developed a business plan. They had incorporated in January 2000 and raised their first $50,000
from one angel investor.
By June of 2000,‘the two entrepreneurs had leased 12 cars and were ready to open for business in
Boston. By October, the fledgling company had 19 vehicles, nearly 250 members, and the founders
had raisedmand spent-«wan additional $325,000 to fund the early stages of operations. Yet, even with
this demonstration of viability, Chase and Danielson had not succeeded in raising the equity capital
they needed to really grow Zipcar.
Beginning in early 2000, Chase had made a series of presentations to potential investors in Which
she sought $1 million in capital to prove the business model in Boston and, eventually, to set the
stage for expanding the business to other U.S. cities. Potential investors seemed intrigued and
enthusiastic about the Zipcar idea. While Chase hoped to close on this first round of financing in the
fall of 2000, she continued to look for funding alternatives because the money was not yet in the bank.
At the end of October 2000, she and Danielson would have the opportunity to make their pitch at
Springboard 2000 New England, a venture forum for women-led enterprises. Chase commented: ”I
am anxious to raise this funding and focus my energies on really trying to grow Zipcar. I want to put
our best foot forward with the VCs who will be at Springboard. I need to review our presentation
and make sure we’re making the strongest argument we can on why this business deserves funding.”
Background
In September 1999, Chase’s friend, Danielson, returned from a trip to Germany with an idea for a
new start-up. While in Berlin, Danielson had been impressed with a car-sharing concept that seemed
to be catching on across Europe. Under this new concept, car~sharing companies provided short-
WMW_
Professor of Management Practice Myra Hart, Senior Lecturer Michael J. Roberts, and Research Associate Julia D. Stevens prepared this case.
This case draws upon portions of an earlier case, “Zipcar,” HBS No. 802-085 (Boston: Harvard Business School Publishing, 2002), written by
Professor Myra Hart and Research Associate Wendy Carter. HBS cases are developed solely as the basis for class discussion. Cases are not
intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
Copyright © 2003 President and Fellows of Harvard. Coilege. To order copies or request permission to reproduce materials, call 1600-5454685,
write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be
reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means-electronic,
Read and analyze the case study
Answer the questions below
4 pages, double-spaced, maximum
No late gagers will be accegted
Questions:
What experience gag skills did the Founders bring to Zipcar? How did they divide the
work of running the company? Are you confident in their ability to run a ”new”
company? Why or why not?
What was the company’s ”value proposition”, or the compelling reason(s) consumers
would rent a car from Zipcar? How did the company expect to make a profit?
What was Chase’s marketing communications approach to consumers? Do you agree
with her strategy? Explain.
Look at Exhibits 4 and 5. What changes do you see in the numbers from 1999 to 2000?
Why were these changes made do you think? What conclusions can you draw from the
numbers in Exhibit 5 that gives you confidence or doubt about Zipcar’s future?
Chase and Danielson struggled to raise money from friends, family and investors. This
initial money was spent fairly quickly and the founders realized they would need $1.3
million to adequately launch the company. Why so much money? And, why do you think
they had difficulty raising money?
Chase must pull together a convincing investor presentation about Zipcar for
Springboard 2000 New England. What are the _5_ key points she should make to attract
potential investors?
New companies often face unusual problems compared to mature companies because
they have no history to reference. Looking back on the case study, what were the
unique problems faced by the Founders? How were these problems solved?
If you were a potential investor, what additional information would you want about the
company? Would this be a good investment (risk versus reward) if you had the right
information? Why or why not?
Google” Zipcar and determine from a business article(s) what Avis Rental Car Company
has done with Zipcar since it bought the company in early in 2013. Do you think this was
a good investment for Avis? Why or why not?
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