Moses Annenberg
0
All posts from Moses Annenberg
Moses Annenberg in The Greatest Power is Political Power,

Meet Silvercar, The Startup Trying To Shake Up Airport Car Rental

No paperwork, no queuing at fluorescent-lit counters at midnight, and no bizarre pricing tricks. The Austin-based company is taking a shot at a stubbornly old-school industry.

Silvercar

The idea came, as so many have, on the golf course. Or it might have been in the clubhouse, just after a round a few years back, when a group of friends on a golfing getaway looked out at the parking lot and spotted the white Dodge minivan their airport rental car company had "upgraded" them to.

"It was like, 'How did we draw the white minivan for our Cool Guy Golf Weekend?'" Luke Schneider told BuzzFeed News in his office in downtown Austin, a bright second-floor loft space a few blocks from the Texas State Capitol building. "The thought was, what if there was a car rental company where all the cars were the same, and it was a great car, not a crap car? This all started from just one too many bad experiences at the car rental counter."

The result is Silvercar, the nearly three-year-old airport car rental startup based in Austin, of which Schneider serves as CEO. With nearly 100 employees and operating in eight airports across the country, mostly in the sunbelt (places like San Francisco, Phoenix, Miami, Dallas, and Los Angeles), Silvercar uses a mobile app to allow customers to book, access, unlock, and pay for their rental car — always a brand-new silver Audi A4. Everything is done through the app, and always for a fixed price: $89 a day during the week, and $59 on weekends.

The business eliminates paperwork, rental counter lines, fees for add-ons — like an extra driver fee, which Silvercar does not charge — and the gratuitous charges for refilling gas tanks, which often run north of $9 a gallon. The service also ditches the need to catch a shuttle bus to the rental lot — users hit a button in the app when they're getting ready to leave the airport terminal, and a car and driver pick them up and drive them to the lot within minutes.

Perhaps most important for some, there's no risk of ending up with a minivan, or any other less-than-desirable ride.

"One of the things that really pisses people off is not knowing what car they're going to get. We call it PT Cruiser roulette," said Schneider, who was poached from his role as chief technology officer of Zipcar by Silvercar co-founders Todd Belveal and Bill Diffenderffer shortly after their lightbulb moment on the golf course. "The airport car rental industry hasn't innovated in probably 40 years. We thought we should do away with counters, lines, and do it all on a mobile device, and take the brain damage out of getting to your car."

Schneider was uniquely qualified to build the Silvercar technology from scratch — at Zipcar, he was responsible for conceptualizing and building the popular urban car sharing service's mobile app, before rental giant Avis Budget swooped in and bought Zipcar in early 2013. Earlier in his career, Schneider spent years at Ford, where he worked on bringing new technologies into cars and helped create the first online marketplace to sell Ford models.

In isolating the variables around booking, paying for, and easily accessing a rental car, all while ensuring it's the same vehicle each time, Silvercar has capitalized on what car rental experts say is one of the most critical factors to long-term success in the industry: differentiation.

"In this business, it's been argued that the car rental industry is a commodity business, that the customer looks at every rental company the same," Neil Abrams, founder of car rental industry consulting firm Abrams Consulting, told BuzzFeed News.

"It's a battle that the rental operators continue to fight: to create differentiation. What's unique? Why am I special? What does our company have that another company doesn't have? Silvercar is a unique model: It's all done through smart devices and they're renting the same car at the same price, meaning they have one vehicle that makes up their entire fleet. That's their differentiator."

Silvercar / Via

Late one recent Thursday evening, it took a BuzzFeed News reporter a little more than 10 minutes to exit the sliding doors of Austin International Airport's main terminal, catch a ride from a Silvercar concierge to the company's offsite lot, scan into a Silvercar with an iPhone, and hit Interstate 35 on the way into the city center. There were a few minutes of curbside waiting and a bit of fumbling with the windshield phone scanner, but the process certainly beat waiting for a rental car shuttle or standing in line at a fluorescent-lit counter as midnight approaches.

The Silvercar experience, as Schneider calls it, is certainly resonating with a number of frequent business travelers throughout the country. In the last year, Silvercar has experienced 30% growth month over month and an average of 1,000 of app downloads per day. The company is planning to expand "aggressively" into more markets this year, including Atlanta, Seattle, and Chicago.

At its current locations, Silvercar has managed to wrangle frequent car renters away from the upper echelons of loyalty programs at some the biggest names in the industry.

"I've been a Hertz customer for years, in the Hertz President's Circle, so I always got upgraded," AnnaMarie Daniels, vice president of regulatory and clinical affairs at health care company ReVENT Medical, told BuzzFeed News. "At Hertz that means you want an economy car, and they give you a minivan. I would show up late, tired, wanting to go to sleep, and the car would be dirty and have literally roll-up windows, but there was no alternative."

One day in December 2013, as she stood in line for express security screening at Los Angeles International Airport, Daniels saw an ad for Silvercar and decided to give it a try when she got to San Francisco. "The cars are just brand new and they're clean; you get the same model every time so you don't have to figure out how to try a new model. They also have bluetooth for your phone. I'm really spoiled — it's just so nice that they pick you up smiling and everything is new."

Daniels, who was introduced to BuzzFeed News by Silvercar, said she now uses the company an average of three times per month on her frequent business trips to the Bay Area. "I just love them," Daniels said. "I can't imagine changing unless they do something stupid."

Because Silvercar is still young and growing fast, it doesn't face the same amount of pressure to maximize profitability as the three largest car rental companies that dominate the $20 billion a year market — Hertz, Avis Budget, and Enterprise.

Much like the commercial airline industry in the U.S., the airport car rental industry has been consolidating for decades with these three major companies controlling 98% of the market, stifling competition, and resulting in little investment in new fleets, bad service, arbitrary price gouging, and fee add-ons, and a lack of technological innovation, all to keep expenses low and profits high.

"The car rental companies are still pressed to maximize profitability, which comes down to taking a risk, meaning overbooking," said John Thomas, a partner in auto rental industry consultancy Wilkinson Thomas Consulting. "So not getting the size or the model that you reserved is always a challenge because car companies are pushing the envelope of utilization, meaning customers are able to book a midsize car, when only a small car comes back in time."

Silvercar's guaranteed consistency of getting an Audi A4 every time eliminated this exact kind of guess work for Craig Lee, a business development executive for an Atlanta financial services company, on his bimonthly airport car rental endeavors.

"I travel to Dallas a lot for work, and that's where they were, so I gave it a shot," Lee, a Hertz and National veteran, told BuzzFeed News. "It's really more about, for me, just enjoying the Audi and the comfort and the convenience of getting into a car and getting moving, and I actually save time. It's mindless and I have the car that I want."


View Entire List ›