How borrowing a car led to a successful start-up

Car-sharing clubs are not a new idea, but the connectedness that the web provides has made it easier to build a large-scale operation, as Essec graduates Alexandre Grandremy and Gary Cohen have proved with their business, Deways.

The Problem

Essec Business School, where Grandremy and Cohen met in 2008 during their masters studies, is on the outskirts of Paris, where public transport runs less frequently and to fewer places than in the centre of the city. As a result, the pair found getting about was an issue. Students may crave the freedom a car offers but often cannot afford to buy one.

“The idea of launching a car-sharing platform came up because I didn’t own a car and began to regularly borrow Gary’s Smart car for day trips and weekends,” Grandremy says. “I wanted to give Gary back proper compensation and assessed the actual cost of borrowing his car.”

The Solution

Grandremy and Cohen soon realised other students might be interested in sharing cars. They started to develop the technology to do this online, operating as a social network in which users could share details about where they wanted to go, what vehicles they offered and the quality of the cars they hired. The business evolved into France’s first peer-to-peer car rental service.

If you are looking for a car to rent in Paris, for instance (the company has expanded its operations to offer rentals in Marseille and Lyon too), you go to deways.com, type in your location and available cars will appear on screen with trust and feedback references from previous rentals. Users can book a car in a minute, Deways says. The car owner receives an SMS and email, upon which they can approve or decline the booking request.

The rental contract and insurance are covered by Deways for the period of the rental, cutting down the administration normally involved in hiring a car. The insurance covers major risks for car owners too, encouraging them to advertise their vehicles with Deways.

“The community aspect of Deways allows for more trust between car sharers – an important factor in a sharing situation,” Grandremy says.

How the service was developed

The founders quickly realised that the problem they were solving was not just an issue for university campuses but that the system held appeal for many people living in big cities.

Building trust is also a big part of Deways. The service remains a community-centred car-sharing platform, allowing people to connect with one another by affinity, focusing on common interests such as hobbies, their profession or their school, with the aim of creating more opportunities for “human connections”, even as it spreads across the country, Grandremy says.

“Our team encourages car owners to build their own community of users in their neighbourhood or at work using Deways’ self-marketing tools,” he adds.

“This allows for more trust between users and can mean more stable revenues for car owners. It also lowers Deways’ dependence on search engine advertising, which is very costly for a start-up and affects the profitability of its structure.”

The community aspect of Deways allows for more trust between car sharers – an important factor in a sharing situation

Both the founders say they wanted to become entrepreneurs, having grown up in families where people worked as freelancers or started companies themselves. But they also admit they did not imagine their big idea would be renting cars.

“Alexandre is an engineer in energy systems and had in mind to develop a business in renewable energies,” Cohen says. “I was about to develop a business in phone systems. We created Deways, our first business, based on a system that was answering our own needs.”

In 2012, after completing a proof of concept at a few of the better known French business school campuses, the founders raised €1.2m from Eyal Aronoff, the US-based co-founder of Quest Software, and in grants from the French government.

Deways has more than 13,000 users, including drivers and car owners, and predicts this total will pass 20,000 in the next four months. The founders expect the business to be in profit by 2015.

What next?

Cohen and Grandremy are raising more financing to expand operations. They also face competition from car-sharing services that are expanding across Europe from other countries, such as US-based Zipcar, which already has a large presence in the UK.

“We are looking for investors with vision who believe, like us, in a more collaborative and efficient world where every car owner can finally not only be free from the economic constraints of [ownership] but also turn it into a business opportunity,” Grandremy says.

“With our community approach, we will extract all of the sleeping value of our millions of cars and bring it back to the car owners.”

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Jargon buster: ‘disruption’

Being “disruptive”, when expressed by a start-up’s founder, refers to the act of forcing one’s way into a niche, bludgeoning the existing competition with a new method of delivering a service and generally injecting greater efficiency into something people have done or used since time immemorial.

In this sense, the word “disruption” can be paired with any industry and the start-up team will sound plausible, such has been the effect of the internet in scaring corporate bosses in even the most low tech of businesses. Disruption fits an age where the internet is changing everything, from the way we shop – Asos has disrupted high street fashion, for instance – to how we move around, as in the case of Zipcar and Uber’s disruption of the car and taxi markets. The worldwide web is the ultimate disruptive change in this context.

While this may all sound great, a problem arises when it seems every start-up is using the word to describe what it does.