BlaBlaCar is one of Europe’s big tech successes. The French ride-sharing firm recently raised $100m from US investors, but co-founder Nicolas Brusson says its focus will remain on growing at home first.
Who remembers hitch hiking?
Back in the 1970s every young person (and some not so young) would stand by the roadside, thumb raised, hoping for a free lift.
And motorists were happy to oblige.
Then ‘fear of strangers’ all but wiped out the practice. When the media and Hollywood keep saying that every hitcher (or indeed, driver) is a murderer, motorists drive on while hitchers suck it up and buy a train ticket.
So hitch hiking disappeared. But the urge to help others (and get a free ride) didn’t.
Happily, technology and the idea of the ‘sharing economy’ came to the rescue. Thanks to innovators like France’s BlaBlaCar.
Founder Frédéric Mazzella conceived BlaBlaCar in 2006 after failing to get a train ticket home one Christmas. He sensed the time was right for ride-sharing, and teamed up with fellow student Nicolas Brusson to buy a website that connected travellers and drivers.
It was not an overnight success. Drivers and passengers were left to handle payments themselves, but this led to self-perpetuating mistrust when either side failed to turn up.
In time, BlaBlaCar evolved the right approach – managing the payment element but setting prices low. In essence it developed a community-minded model in which drivers do not profit from the service.
Indeed, the website calculates the distance of a journey and presents a maximum price above which the driver cannot charge.
The service also makes the best of self-regulating ideas familiar to anyone who uses services like eBay. There is a ratings system, which drivers and passengers work hard to keep high.
Also, BlaBlaCar users can select compatible co-travellers based on whether they have pets or are smokers etc.
They can even define themselves by how much they like to talk – Bla, BlaBla or BlaBlaBla.
It’s an admirably fair-minded and ecological approach. And the price cap also has commercial advantages, sparing BlaBlaCar from some regulatory and insurance issues.
This has helped the firm to avoid some of the PR headaches of Uber and Lyft (it also helps that the mostly long-distance nature of BleBlaCar ride-sharing has kept it away from conflict with taxi firms).
Today, the company is on its way to becoming one of European tech’s genuine unicorns.
As of September 2012 there were 2.4 million members. Now it has 10 million members in 13 countries using one million registered cars.
Those 13 countries are all in Europe; BlaBlaCar has deliberately stayed away from the US.
But this hasn’t worried investors. In fact, last July the firm completed the largest VC round ever by a French startup – raising $100 million from Index Ventures, with existing investors Accel Partners, ISAI and Lead Edge Capital.
Clearly these big hitters believe BlaBlaCar’s ride-sharing ethos can go global and achieve a multi-billion dollar valuation.
We asked Nicolas Brusson, COO of BlaBlaCar, about the challenges of being a European in a US-centric tech space.
Which tech sectors is Europe best placed to grow?
I’d say that any consumer related product – leisure travel, food and so on – has a huge potential market in Europe. The big issue we have is that most Euro companies do tend to focus only on their domestic market, which limits their expansion.
But it’s kind of changing. Look at Spotify and some of the big Finnish games firms like Rovio or Supercell and others – these are massive companies built from Europe.
So first it will be D2C but in time we will see more B2B type companies.
Do you agree that European companies have lower valuations?
Probably. It’s hard to know because most are private companies. When you hear about these mega rounds in the US, it’s because, even today, they seem to have more potential because of the sheer size of the US market.
That said I’m not a big believer in the idea that Europe is somehow underfunded. There is a lot of early stage and angel funding here. We sometimes have a ‘grass is greener’ view about the US that is not necessarily true.
I spent seven years in the US. It’s not that easy there either.
Once you get to a certain scale it changes and investors show a lot of interest. We raised $100m from Accel and Index with no promise to grow in the US. The argument about Europe v US is all a bit irrelevant at this stage.
What about the attitude to failure in Europe?
Actually, I think this is a bigger issue than funding. One of the differences we still do see is the culture of trying and failing in the US. There’s more of a stigma around failure in Europe.
It’s changing very fast though. I didn’t even know the word ‘startup’ when I was studying engineering in 1994 to 1999. That’s how much things have changed. The best MBO graduatess now see startup culture as something they want to be part of.
The number of people wanting to start companies has changed so much in the last five years. It’s amazing to me. The seeds that have been planted could bring some very exciting developments in the next three to five years.
Regulation is helping too I believe. Think of telecom regulation: roaming charges are finally disappearing. It’s slow. But it will create a more homogenous Europe and that will be good for innovation and commerce.
Does European tech promote itself enough? Do you think that successful companies like Booking.com should be better known?
Booking.com is interesting. It may be the best acquisition ever. It’s a genuine European giant, from the first era of the web, and ahead of huge competitors like Expedia and so on. But maybe the fact that Booking.com was acquired probably affected its profile.
The point is if you succeed in Europe, you can become a global success. Companies like Spotify and SoundCloud are known globally, but perhaps there are too few of them.
What I hope is that they become very large public companies – independent successes with European HQs – and that they then reinvest in the local ecosystem. If they can create lots of millionaires like PayPal, who then go on and create their own successful companies, it all becomes self-fulfilling.
Which European company do you think will have the highest market cap in the next three years?
You’re looking for category leaders redefining a space. And I’d say that Spotify – and to a degree SoundCloud – are doing this. They’re changing the way we consume music and they’re doing it all over the world.