FlightCar (YC W13) Raises $5.5M Round to Expand and Hire

While free parking is appealing for many users, it’s definitely not for many others because unlike Airbnb, the value of their possession (in this case, their car) is variable while the compensation (free parking and $10/day rented out) is fixed in the sense that it is pre-determined.

With Airbnb, the compensation is variable and is set based on the owner's perceived value (which factors in the 'emotional piece of mind’ too among other things). It’s essentially a market based approach, and to get a wider acceptance from the supply-side, that’s what FlightCar needs to incorporate while preserving simplicity.

As an optimist, I believe the creases will get ironed out eventually. It’s not going to be easy (never is) and it might take some time, but it will happen. Here’s a structure that comes to my mind:

Tier 1 – Free parking and $10 for every day the car is rented out (like they have now)

Tier 2 – Pay $X per day to park and Receive $Y for every day the car is rented out, where X is the market rate which in SFO’s case is $18 and Y is the daily rental-price you name.

Because if you park on the street outside of the apartment where you live (which is many people, btw - very few people have a dedicated parking spot), then chances are you will get ticketed if you are gone while there's street cleaning happening. To prevent that from happening, you would have to arrange with your friends to move it while you are gone, or you would have to pay someone to do it. In the first case this is an inconvenience, in the second case it's an expense, and the downsides of letting someone else behind the wheel of your car are the same as renting it out.

Speaking for the Bay area, public transportation here is shockingly bad, even for something as routine as getting to the airport. For someone living in the valley to get to SFO (about 40 miles), a taxi can cost anywhere from $50-$80, and the public transportation alternative takes anything between 2-2.5 hours, 1 bus, 3 trains, some distance walking with your luggage, and about 15 bucks. Oh, I forgot to mention that trains are once an hour, and there are a total of 3 distinct operators for the bus and train systems who are totally uncoordinated with each other.

Not surprisingly, most people who value their time prefer making a 35-minute drive at their convenience, and paying about $12-$18 per day of parking.

Nailed it... "ownership turned out to be largely a hack people resorted to before they had the infrastructure to manage sharing properly"

Ownership is just an idea to align consumption with stewardship. The idea that owning stuff is "right" or "good" is just a cultural phenomenon, and not one shared by all cultures (e.g. Native Americans).

I think you could do a lot worse in trying to find a start-up idea than to ask yourself "where is there excess capacity that can be shared."

Parking, housing, office space, cooking, people-to-do-tasks, storage space, server space - this is the sharing era.

It's not so much that ownership is a hack, or that sharing will replace ownership, but that as technology improves the transaction costs for trading property rights decreases, allowing "ownership" to be treated in a more fine-grained way than previously possible.

You can see a fairly pure instance of this situation in spectrum management (which is a common area used to study property rights because it's easy to deal with theoretically). In 1960, Ronald Coase said we should break off big chunks of spectrum and sell it off for exclusive use, just like we do with land. Transactions in those rights will help achieve efficient allocations of resources, but there is a limit at which transaction costs dominate and optimal allocations aren't reached. If you think of something very coarse-grained like frequencies for broadcast radio, you're likely to get efficient allocations via trading of property rights. If you think of something very fine-grained like allocation of frequencies to a cell phone as it travels through a busy intersection, the idea of doing micro-transactions to yield an optimal allocation becomes intractable in the face of transaction costs. But as you make the transactions cheaper, through technology, it becomes more practical to do micro-transactions.

This basic phenomenon is generalizable to pretty much any situation where you have property rights that are coarse-grained out of accounting convenience. If you can make it cheap and easy to break off little chunks of the property right and trade in them, you'll achieve a more optimal allocation of rights. That's pretty much exactly what AirBnB and FlightCar are: not sharing, but ways of breaking off a piece of a coarse property right and trading in those little pieces in a fine-grained way.

Trends in property law and home ownership in urban areas seem to indicate that as rules and safeguards are developed for sharing more effectively, the rate of sharing increases dramatically.

Condominiums, for instance, seem like a crazy type of building if your system of land ownership is feudal, but they're a practical necessity if property value skyrockets and more population housing is needed in a dense area.

One of the main shifts in social structure occurred around the 1890s to 1920s, and was largely predicated on the difficulty associated with sharing issues in urban life, and the lack of rules to mediate that type of space sharing. Debates at the time about how to accommodate these issues were rather fierce, but mostly forgotten now. Our current laws regarding nuisance and abuse of rights are both hacks of the property system to make urban life work. Karl Polanyi's Great Transformation is a fantastic book which recounts the shift, if anyone is interested.

I'm interested in seeing what types of norms and rules would need to exist in order to fulfill the infrastructure requirement that you mention. Additionally, I wonder if certain areas of the world are already normatively primed for sharing, and whether or not they could become springboards for a more global shift.

We're not looking to leave the airport vertical actually. About half of all rental volume takes place at airports.

The article points out that the airport rental car business is a $10 Billion market...I don't think they need to worry about leaving this scenario (market/vertical) anytime soon nor do I think they need to worry about scaling.

Disrupting a $10B market will keep them busy for quite some time before really having to worry about other scenarios (or other verticals).

Thanks for the reply. As you mention, a day or two without being rented would definitely swing it more in the car owners favor. Perhaps the best idea is just to bring a car so ugly no one would rent it!

I think this only works if the benefits outweigh the potential costs. Crashing a car, getting a rental, and purchasing a new car are all unwanted headaches that are more likely in this model vs some screwing up a room in the airbnb model.

As to the model, honestly it was just one quick thought in a stream of conscience purposely meant to be a contrast to the sharing model, or leveraging an under utilized asset - nice phrasing.

A company out to get me free parking is a company after my own heart. In no way was I challenging the AirBnB/sharing/your model, I agree with you and pg the model I describe would not work specifically b/c "shelling out dollars", yet there is value if a valet model cost $18 once and a trip was longer than 48 hours, which sounds like your not meeting a demand so much as your making one.

Keep working on great things.