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Comment by pg | Hacker News Reader

These guys are Airbnb-like in another way too: as with Airbnb, I initially thought this was a bad idea. What changed my mind was when I emailed all the YC alumni to recruit users for the closed beta, and large numbers of them immediately and enthusiastically signed up.

There is clearly something to the "sharing economy" that everyone is talking about. There will be glitches along the way, but I'm pretty sure this idea is here to stay. Considering the value of the assets involved, it could be the big economic story of this decade.

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There is a clear value add for people coming into a city who don't want to rent a normal rental car. But I'm not sure the same value add is there for people renting out their car, unlike Airbnb. If the maximum you can obtain for renting out your car is < $100, is that really what your emotional peace of mind (your car being ticketed, trashed, and scratched, loss in blue book value) is worth?

Don't forget the cost of parking at the airport. If you're gone for 10 days, that's almost $200.

Yes, the free parking is the big appeal for users, not the money they could make if their car is rented out.

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.

While I think this is a good approach, since the service's main drawbacks involve cosmetic damage, it makes sense to launch using a payment model which favors lower-end cars. Once the damage issues are adequately addressed in practice Tier 2, or an equivalent, might become more attractive.

why wouldn't you just take a cab vs paying that much for parking

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.

while a valid use case, I wonder if its the norm and how big this market is.

I wonder how familiar you are with urban living in the United States. At least within my circle of family and friends, this is very common.

I've lived in the two largest cities in the US. I'm very familiar with urban living. In NYC everyone takes cabs and don't own cars. In LA everyone drives and can hire very cheap cars to lax or shared shuttles. Its hardly a problem in either of the biggest urban centers in the US.

"In NYC everyone takes cabs and don't own cars." - Jesus man, have you ever been outside of Manhattan? If everyone in NYC doesn't own a car, why are there so many fucking cars there all the time?

I grew up in Queens, in huge apartment buildings. Everyone there has cars with street parking that they have to move every time street sweeping comes around.

I did exaggerate , but the fact that parking is so hard.. kills the other side of the equation for the company in why would anyone rent the car.

Then why do rental companies exist?

With all due to respect, I think I am done with this thread. Perhaps it is unintentional from your side, but I feel like I am arguing with someone who willfully exaggerates things to get a rise out of me.

In Houston, at least, many apartment complexes have parking lots or parking garages. You may not necessarily have a specific assigned spot, but you can park in the garage.

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.

The emotional peace of mind is the exact thing that FlightCar and Airbnb are creating by encouraging this aspect of sharing. Yeah shit can go wrong with your car--that's with anything sharing-based though. As the saying goes, "Shit happens". But at the end of the day, sharing is a good thing and people are opening up to the aspect of it more and more. Essentially, the idea that you are sharing with others is the peace of mind. Hasn't warmed up with everyone, but it has with some and will continue.

As someone else pointed out, I'm sure FlightCar will change their pricing as it gains more traction. For now, the pricing is just a reasonable and simple model.

If there's one thing I disagree with from PG's comment, it's his prediction that this could be the economic story of the decade...no, it has the potential to be the economic story of the century. Not FlightCar by itself, but all these companies disrupting different industries through the simple idea of sharing--it's revolutionary and still young.

You're right, but I always try to underestimate things.

It would be pretty big if ownership turned out to be largely a hack people resorted to before they had the infrastructure to manage sharing properly.

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.

I think the concept is brilliant, but how does it scale out? So, they implement this at major airport and then what? The whole model is predicated on the fact that you know your car is being unused because you are physically incapable of accessing it.

So let's think of scenarios - you park your car for the day for work so you rent it out. What happens when there is a emergency, or you need to pop out for a quick errand? What happens when the person returning it shows up late? The reason you buy a car is for the convenience to be able to transport yourself from A to B, at any point that you need to. I just see so few scenarios, except for traveling out of your home location, that could warrant this model scaling out to other scenarios. The number of airports is very static too.

Personally, I would much rather see good public transport take off in over congested cities like SFO, NYC, etc. I see a business model like this as fixing the wrong problem.

Assuming they reduce all of the liabilities (which is 100x harder to do with mechanical items as opposed to an apartment/house) then I definitely see this taking off. On the flip side, I suspect margins will forever be razor thin in order to be competitive and the growth will halt when no new scenarios beyond airport parking can be found.

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).

A search on flightcar shows results allowing 90 miles/day. At $28/day ($10+$18 in parking savings), thats $.31/mile. At $18/day ($10+$8 parking) thats $.20/mile. This is probably the worst case. Most people wont drive 90 miles everyday.

The federal reimbursment rate is $.55/mile. You have to pull gas reimbursment out of that because like normal rental cars (I assume) flightcar renters pay for their own gas.

A conservative estimate based on 20 miles/gallon and $4/gallon is $.20/mile in gas cost. Each mile the renter drives using your vehicle thus costs you $.35 in wear and tear and depreciation.

An alternative data point would be car lease mileage overage fees. They are commonly $.15-$.25/mile and are supposed to represent the extra depreciation of the vehicle.

So its in the right neighborhood of value to the car owner but probably doesnt represent much profit and may not be worth the hassle.

For brand new cars, FlightCar honestly comes out to about even as you mentioned. Though, our ordinary car is an '08 Prius, which has depreciated enough in value (as cars depreciate quickly!) to make our service a definite positive. Also, our utility will probably never really be 100% (Hertz for example is doing a lot to increase their's and is at 65% or so I believe). So your car most likely won't be rented for everyday you're gone.

We do try and make the experience way better than traditional airport parking. We drop you off and pick you up in a town car and we give you free Starbuck's coffee before you fly and after you land! You also don't come home to an outrageous bill!

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 tried to bring my 95' Camry with broken door handles, windows that don't go down, oil leak, and no paint on the hood to rent with FlightCar ... but it didn't qualify. Not surprisingly, they have quality standards :-p

Playing Devils Advocate - could it be that Airbnb is making all similar ideas seem like good ideas?

As far as I can see, the potential is not so much about the airport rental stuff, because that market is "quite" small, but a very strong use case to launch out of and to get momentum to become the AirBnb for cars and to surpass getaround, relaycars, DriveNow etc.

We're actually just focused on airports. That's half of the market!

Hm very interesting, but how so? The average person probably doesn't use their car because it's at the airport for 200h/year, but doesn't use their car for 8000h/year in total, where it could be used by someone else.

It's probably easier if you can have a car for 10 days straight instead of just an afternoon, but that's where you want to be or not?

I know you have thought about and/or already have a strategy to deal with the opposition from rental companies. Care to share some details? I'm curious as to how long it will take for them to start using their legal muscle, and industry connections.

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