ZipCar, the metropolitan car sharing service, has filed for an IPO. I've never used ZipCar, but as a former NYC resident, I've seen them frequently, and I get the impression that their user base loves the product. In case you're unaware, from the filing:
"Zipcar operates the world’s leading car sharing network. Founded in 2000, Zipcar provides the freedom of “wheels when you want them” to members in major metropolitan areas and on university campuses. We provide over 400,000 members, also known as “Zipsters”, with self-service vehicles that are conveniently located in reserved parking spaces throughout the neighborhoods where they live and work. Our vehicles are available for use by the hour or by the day through our easy-to-use reservation system, which is available by phone, internet or wireless mobile devices. Once the vehicle is reserved, a Zipster simply unlocks the vehicle with his or her keyless entry card (called a “Zipcard”), and drives away. Our all-inclusive rates include gas and insurance so Zipsters can easily estimate the total cost of their trips. Zipsters choose the make, model, type and even the color of the Zipcar they want based on their specific needs and desires for each trip. Upon returning the Zipcar, the member locks the vehicle and walks away, free from the costs and hassles of car ownership. Zipcar provides its members a convenient, cost-effective and enjoyable alternative to car ownership."
I found it interesting that Zipcar later says, ">We target large, densely populated markets with high parking costs and strong public transportation systems."
Now, large densely populated markets: that I understand. Why strong public transportation systems? If you have a strong public transportation system, don't you need cars less? The filing mentions many times how public transportation is not suited to many uses that suit the Zipcar well, but then why target markets with strong public transportation? Similarly, they target high cost of parking markets, because those markets make it harder for individuals to justify buying a car, and thus easier to justify Zipcar. However, it makes it difficult to park your Zipcar somewhere while you're using it (Zipcars have reserved parking spaces, but if you want to drive to a friend's house in the city, obviously, you still need to find a space to park when you get there). I am guessing that Zipcar's target market in these tough parking areas is "errand-runners," ie, people who don't need to park the Zipcar in front of their apartment when they get back, but rather just need to unload the bounty they just picked up at Costco in the Zipcar.
This brings me to the part of Zipcar's business model I never understood, and couldn't gain much insight into from reading their IPO filing: THEIR parking costs. In NYC, it can easily cost $400/month or more to park a car. Does Zipcar get discounts from the parking lots? Or do they just rely on the assumption that they'll bring in revenue that will allow them to shell out massive parking costs?
Anyway, it's an interesting company, with what I think is a fanatical, loyal user base. Of course, the company cautions in a disclaimer:
"We have experienced net losses in each year since our inception, and we expect to incur net losses in 2010. We do not know if our business operations will become profitable or if we will continue to incur net losses in 2011 and beyond. We expect to incur significant future expenses as we develop and expand our business, which will make it harder for us to achieve and maintain future profitability. We may incur significant losses in the future for a number of reasons, including the other risks described in this prospectus, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown events. Accordingly, we may not be able to achieve or maintain profitability."
note: in case it's not obvious, this post is not a recommendation to buy or sell shares in Zipcar