TRANSPORTATION:

Startup bets that social networking will spur carpool craze

SAN FRANCISCO -- A free Facebook application launched by a pair of entrepreneurs to help college students bum rides at Cornell University has expanded into a viable Silicon Valley startup, counting as clients more than 30 college campuses, Wal-Mart Stores Inc. and Cigna Corp.

Zimride's business is simple: It connects drivers with riders looking to carpool to class or work. More broadly, it tries to capitalize on a social-networking niche at Palo Alto-based Facebook Inc. to help avoid greenhouse gas emissions and get cars off the road.

The company's co-founders, John Zimmer and Logan Green, both 25 years old, are serious about bumming rides and the environmental credentials that come with the territory. Green, a self-proclaimed transportation geek, started the first ride-share program at the University of California, Santa Barbara, before partnering with Zimmer, a Cornell graduate who left Lehman Brothers in 2008 to pursue carpooling full-time.

Backed by $250,000 in seed money from Facebook, Zimmer and Green over the last year have built their software business into a company with six full-time employees, notching deals with Wal-Mart and Cigna along the way. The company has also teamed with the car-share outfit Zipcar to match riders with car renters in major cities.

The idea, Zimmer explained, is to connect riders and drivers in much the same way Facebook connects old friends and family. In the process, the company hopes to "create a new form of transportation" that might spread from campuses to corporate America.

Like Facebook and Zipcar, Zimride has modeled its business from the campus outward, hoping to establish a framework in tight-knit college communities before broadening its approach to urban America. "The college space, we felt, is perfect for the kind of critical density we need with a level of trust," Zimmer said.

But moving on from Cornell, Stanford University and Dartmouth College -- all of them Zimride clients -- could prove challenging. Commuting in the real world with complete strangers is a lot different than getting a ride with a fellow student or professor, raising issues of trust and safety, and there is little to indicate the concept would catch on with Americans who love individual freedom as much as they love their cars.

Zimmer admits the shift is a legitimate concern, but he notes that companies like eBay Inc. faced similar fears associated with mailing $300 to a nameless e-mail address for a DVD player. EBay tackled those problems by building a structured rating system of user feedback, which Zimride hopes to replicate.

"This is going to spread from schools to regions and then across the country," Zimmer said. "But there will be changes to the business model to get there."

Cashing in?

Zimride makes money by selling its software to clients and providing the administrative hosting skills to run it. The company also handles marketing to attract more riders and drivers to its internally built networks.

The college campuses on Zimride's network list paid the company $10,000 each to participate in what Zimmer and Green view as their pilot phase. Zimmer said he is less concerned with making big profits in the short term than with establishing "the easiest-to-use ride-share service" in the United States.

Though terms of the deals with Wal-Mart and Cigna have not been disclosed, Zimmer said Philadelphia-based Cigna has already signed up 1,500 national participants in the last few months. And Wal-Mart has made the service available to its entire work force at its corporate headquarters in Bentonville, Ark.

At this point, Zimride has no plans to charge users by the ride. GoLoco Inc., a competitor, is looking at charging user fees for a similar service, but Zimride for the present is focused on universities and corporations.

Zimmer said the service is most popular at Cornell; the University of Wisconsin, Lacrosse; and the University of California, San Francisco. Cornell ridership tends to spike when there is "a big break" and college kids need a ride home, he said, while UCSF is on the other end of the spectrum, with staff and faculty carpooling from the Bay Area.

CO2 averted

As for quantifying the effect on the environment, Zimride has been tracking the total mileage reported by each college campus on its client list. But because users often do not record all their rides in the system, Zimmer feels the numbers do not tell the whole story.

"If we burden the user with too much reporting back to us, we've seen drop-offs in usership," Zimmer said. "That's something we will continue to work on."

Still, Zimride says that at Cornell, more than 1 million pounds of carbon dioxide emissions have been averted through 4,000 one-time trips, at an average 200 miles per trip, over the last year and a half. If you take this estimate a step further, assuming half the rides were matched with one passenger and the rest with multiple passengers, that translates into 2,000 cars taken off the road, according to Zimride.

At UCSF, the system has posted more rapid results, because commuters there have become avid users. In three months of use, Zimride data indicate the CO2 reduction is approaching 1 million pounds reduced because of recurring trips.

Aside from the $250,000 Facebook grant, Zimride has not yet approached venture capitalists about securing more funds, but may do so next year, if necessary.

Zimmer admitted that he and Green maintain "a very close relationship" with Facebook executives, but Zimride its running is own show as a stand-alone company, not a loose affiliate, he added. "They've mentored us in many ways," Zimmer said. "We're a few blocks away from where they work."

As for state support, Zimmer is not banking on it, but he does support grant funding for campuses looking to ease congestion and aide ride-sharing efforts.

"We're not going to build a business depending on that," he said. "We can continue to serve our partners independent of whether there is state support."

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