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Summary:

Ridejoy, the ride sharing startup, will soon be no more. It’s the latest startup to try its hand at this difficult market (in the U.S.) and fall short. The same market is growing quickly in Europe.

Zipcar, Zimride Team Up for Shared Ziptrips

When carpooling startup Zimride morphed into the on demand car service Lyft, the company basically threw in the towel on the ride sharing market in the U.S. Now another ride sharing startup Ridejoy, which went through Y-Combinator and had raised $1.3 million in VC funds, has just come to the same conclusion and says in a blog post that it plans to halt its ride sharing operations.

The company says the move was prompted by Craigslist sending them a cease and desist order to stop users from linking to their Ridejoy ride offers and requests. But the real reason they plan to stop the business is because it just didn’t grow fast enough — or show enough growth that VCs usually want. The company says their userbase grew at 25 to 30 percent per month.

Ridejoy

Ridejoy says it’s returned half of the funds it raised. The company’s investors included Freestyle Capital, Lerer Ventures, Start Fund, SV Angel, Founder Collective, Y Combinator, Ben Ling, Owen Van Natta and Joshua Schachter. Co-founder Jason Shen — presumably the Jason who entered the blog post on the Ridejoy site — hasn’t been with the company since March 2013 according to LinkedIn.

If there is a hidden market for ride sharing, and carpooling, in the U.S., neither Ridejoy nor Zimride were able to find it. However a substantial market outside of the U.S. in a city in Europe like Paris, has been able to show growth. Parisian ride sharing startup Blablacar is one of the bigger startups in the Paris tech scene, and it’s expecting to transport 10 million people by the end of 2013, which is about three times the number of people it transported (3 million) in 2012.

BlablacarBlablacar is growing swiftly in countries like Germany (where it recently launched), and Blablacar’s founder Frédéric Mazzella told me in an interview this Summer that soon its users will be transporting about 600,000 passengers per month across Europe. For comparison’s sake, the Eurostar moves 900,000 passengers per month.

Why is ride sharing taking off in Europe and not the U.S.? As I explained in this article, the cost of ownership of cars and driving is just a whole lot higher in Europe than in the U.S. — everything from fuel costs, to congestion tolls, to a lack of parking spaces in cities. Europeans are more eager to bring in passengers to reduce the costs of driving. U.S. drivers also tend to have less trust when it comes to driving with strangers than Europeans do.

Ridejoy gives more details of its imminent shut down in its blog post. They says the website and service will remain around for awhile until it declines in users or gets too expensive to maintain. The company also says pivoting and acqui-hiring just didn’t feel like the right move for them.

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  1. I think there are three contributing causes:

    1. Americans are terrified of one another.
    http://www.newsmax.com/Newsfront/americans-trust-Ap-GfK-poll/2013/11/30/id/539255

    2. Gas is still cheap. http://www.bloomberg.com/visual-data/gas-prices/

    3. Americans work crazy hours and, in many cases, don’t have set schedules. This also affects car pooling, because you can’t always be sure when you’re done with work.

    http://abcnews.go.com/US/story?id=93364

  2. Sean OSullivan Friday, January 10, 2014

    Hey, one thing I really like is how you are using the “ridesharing” term correctly! Plaudits.

    I also like your “new” name for the people who have been incorrectly/distortionately using the term “ridesharing” (Uber, Lyft, Sidecar)… “on demand car service”. That’s definitely better than the traditional “taxi” term that they are closest to in actual function.

    Another note: 22% growth per month is nothing shabby if you’re starting from a decent base of users. At Carma (a ridesharing app/capability where I’m the CEO) we’re happy enough with that level of growth, because it’s about 10x in revenue growth every year. That’s cool with us. We’re in it for the long haul.

    Real ridesharing is a tough problem to solve, but when it takes off in a community, it’s something people truly, truly love. Yes, we’re based in Europe, but we are finding success in the United States as well. Don’t despair. This problem will be cracked in time!

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