What Happens When a Nonprofit Car-Sharing Service Gets Bought By a Major Rental Company?
Car-sharing officially went mainstream earlier this year when the legacy car-rental giant Avis snapped up Zipcar in a $500 million deal. With that move, what was once considered a quirky market niche – strangers, sharing cars none of them own, to run errands! – grew into a serious industry. Of course, that news elicited the groaning that happens any time a subversive idea loses its upstart appeal. On the whole, though, when more car-sharing is available to more people, in more places (with, as companies like Avis can provide, more infrastructure), that's good news for anyone who's been behind the idea for years.
Now this week brings another acquisition that feels arguably even more bittersweet: Avis competitor Enterprise announced yesterday that it was acquiring IGO, the Chicago nonprofit that pioneered the concept there more than a decade ago. As we've previously written, nonprofits have had the room to test the limits of car-sharing with an eye solely toward the goal of advancing alternative transportation. They can experiment with ideas that might not make money, like expanding service to low-income residents, or integrating it with public transit, or structuring it around electric cars.
We don't yet know whether Avis, or Enterprise, or any other for-profit company will ultimately focus as much on these goals that have less to do with the bottom line and more to do with transportation equity and environmental impact. Until now, for example, IGO has enabled members to use debit cards in addition to credit cards, a crucial logistical detail for bringing low-income users who may not have credit cards into a car-sharing system. Enterprise previously acquired the nonprofit PhillyCarShare, which had a similar option. But Enterprise now requires credit cards in Philadelphia.
IGO has also pioneered a partnership with Chicago's public transit agency, with members able to use one smart card to access separate accounts with both systems. That deal reinforces the idea of car-sharing as an extension of public transit for commutes that often span multiple transportation modes. But it's a little harder to imagine how such an arrangement might work between a public transit agency and a private car-rental company (IGO is hoping to work this out in the coming transition).
"Originally when IGO started, there was this idea that we always wanted [the concept] to be adopted by the private market and grow to scale," says Sharon Feigon, IGO’s chief executive officer. She does not mean by this, though, that IGO was always aiming for a corporate acquisition. "Our idea was always to grow to scale. What we learned over last couple of years was that it is not that feasible to grow to scale as a nonprofit."
This means that IGO, started as an offshoot of the Center for Neighborhood Technology, is now letting go of its experiment so that it can serve more people.
"Basically the way we view it is that we started car-sharing, we brought the idea to Chicago, it was a pilot project, there was a lot of skepticism, and we didn't know if it would work," Feigon says. "It worked, it grew, it got a following, it’s done really well. And now it’s gone mainstream, and we need to grow it a lot more. That’s where the private market is effective. They have the resources to make it a lot bigger and a lot stronger. That’s what we are wanting for IGO. It’s kind of like your kid grows up, and you've got to send them out there."
IGO has sold its cars, its parking locations, its member list, its intellectual property, its staff and even its name to Enterprise for an unspecified amount. But the CNT nonprofit that created it will still exist – albeit under a new, not-yet-determined name – to work on the next innovation that will enable people in Chicago to "live well without owning a car." The nonprofit has kept, for instance, the solar canopies that cover and charge its (former) electric cars. The proceeds from the sale to Enterprise will be folded back into the nonprofit for this purpose, supporting whatever the next new thing winds up looking like.
"It’s premature to say what the next one is going to be," says Kathy Tholin, CNT's CEO. "This is such a fast-changing world of innovation, we’re taking stock of where we can have the most impact. We are interested in peer-to-peer car-sharing, and we will be engaged in some form in its development."