What are the new challenges for the sharing economy? Interview of Frédéric MAZZELLA, CEO, Blablacar – DigiWorld Economic Journal

DW Economic Journal: What is your definition of the sharing economy? And can you remind us of the starting point of your BlaBlaCar project? Do you see BlaBlaCar as part of the sharing economy?

Frédéric MAZZELLA: There’s no unanimous definition of the sharing economy, but for me the concept covers the notions of sharing an underused individual asset with a peer-to-peer community. In the case of BlaBlaCar and BlaBlaLines, our new app for short daily commuting journeys, cars are still massively suboptimal today.

The idea of BlaBlaCar came to me when I had to travel from Paris to my parents’ home in Vendée at Christmas time. Because I’d left the booking till the last minute, all the trains were full. Luckily my sister, who lived in Rouen, made a detour to pick me up. On the way, I realized that the vast majority of cars were empty, apart from the driver. So there were actually seats to go to Vendée, except that they were not in trains but in cars! When I arrived, I didn’t sleep for 72 hours: I was obsessed with the idea of making these empty car seats available. So BlaBlaCar was born out of a personal need.

And the idea has come a long way since then: BlaBlaCar now has 50 million members in 22 countries and represents the world’s largest long-distance carpooling community. Not only is BlaBlaCar part of the sharing economy, but it was clearly one of the pioneers. When I started the adventure in 2006, the term “sharing economy” didn’t even exist! Rachel BOTSMAN popularized the term after 2010 with a book that has since become a reference: “What’s Mine Is Yours”.

In our previous exchanges, you have tended to insist on the notion of trust at the heart of the digital economy. Can you elaborate on your analysis but also illustrate it by explaining the successive provisions you have made to enhance trust on the part of drivers and passengers?

Trust is indeed a notion that fascinates me because it takes on a fundamental dimension in our society.

Without trust, there is no exchange, so no trade or economy.

The issue is all the more important for the whole of the sharing economy, which must succeed in building trust between individuals who do not know each other beforehand and are nevertheless ready to share, for example, a journey in the case of carpooling. Fortunately, digital has taken a new leap in building interpersonal trust.

BlaBlaCar sums up the building of online trust with the acronym D.R.E.A.M.S.:

• Declared: members have to declare information (photo, name…) on the platform
• Rated: after each journey, driver and passenger(s) leave opinions about each other, visible to the whole community
• Engaged: Online payment before the journey leads to commitment on the part of passengers
• Active: A member’s activity and history are visible
• Moderated: We check a lot of the information ourselves (phone number, email)
• Social: Members can associate their BlaBlaCar profile with their profile on social networks

To delve deeper, we conducted a study on the subject with 18,000 members in 11 countries, with Arun SUNDARARAJAN, professor at NYU Stern and author of “The Sharing Economy.” Among many things, we asked respondents to rate the level of trust they give to people they know from 1 to 5. The results are highly convincing. Indeed, 88% of respondents rated a BlaBlaCar member with a complete profile almost as high as the percentage of respondents who granted this level of trust (a rating of 4/5 or 5/5) to a friend (92%) or a family member (94%)! This was far higher than for colleagues (58%), neighbours (42%) or social networking (16%). For the first time in the history of mankind, people can trust each other without having previously met, thanks to the trust they build through a digital platform.

Which sectors have the most suitable characteristics for the development of initiatives based on the sharing economy?

Spontaneously, I’d say, all sectors where there are individual assets that are of value and have a price, that are underutilized or where sharing them generates additional value. Collaborative consumption is in fact an economy of optimization where access takes precedence over property.

The underlying phenomenon is in fact the platformization of exchanges, which facilitates networking between individuals on a large scale and today applies to six main categories: goods (Drivy, BlaBlaCar, AirBnB, etc.) money (Kiva, Kickstarter, LendingClub), skills (TaskRabbit, Upwork, Uber and other VTC platforms for drivers, etc.), knowledge (Wikipedia, coursera), network (Facebook, LinkedIn) or content (Spotify, Netflix, YouTube).

Platformization therefore enables optimization, which is why some of the biggest platforms today concern transport and housing, two particularly high items of expenditure for private individuals.

Take cars for example. They spend 96% of their time parked, 0.5% in traffic jams, 0.8% looking for a parking space and finally only 2.7% of the remaining time going from point A to point B, which is what they were designed for. And of this 2.7%, we note that 3 times out of 4, there is only one person in the car, the driver. France has 38 million vehicles whose average annual cost is around €5,000. If we make the calculation, this amounts to about 200 billion euros or around 10% of the country’s GDP. So we use a quarter of 2.7% of a resource that costs us 10% of our national wealth; the waste is massive! This is one of the reasons for the rise of carpooling and, more generally, of the collaborative platforms that can help to resolve these imbalances thanks to the three fundamental technologies of databases, search engines and connectivity. Also, if we look closer at home-to-work commuting, underutilization is even more glaring, when we see that vehicle occupancy rate is 1.05. In other words, 19 out of 20 cars that go to work every day are only occupied by the driver and have at least 3 empty seats! That’s why we’ve just launched our new BlaBlaLines app, to make the car a new form of public transport.

You quickly began to internationalize your service. From the experience of BlaBlaCar in several countries, can you identify the markets that are more or less favourably disposed towards the sharing economy?

France is already well positioned. Carpooling has become part of everyday life: 40% of 18-35 year olds are registered on BlaBlaCar. Paris is also the number one Airbnb market. And finally, we can note all the flourishing start-ups in France in this field: Drivy in private car rental, Ulule and KissKissBankBank in participative financing, GuestToGuest in home exchange, Younited Credit in private loans. I could also cite initiatives such as Autolib’, Vélib’ or CityScoot that are shaping urban mobility for the years to come. Overall, Europe is at the forefront of these issues, and the European Commission published a European Agenda for Collaborative Economics in 2016. Some emerging markets also show strong potential. The current most dynamic BlaBlaCar markets include, for example, Russia and Brazil.

Based on specific uses, exchange platforms sometimes go on to develop new services or even expand to new sectors. Have you already evolved the service of BlaBlaCar and do you have any plans to extend your services in the future?

BlaBlaCar’s strategy has been built up in several phases. The first was obviously to construct the service and demonstrate the viability of the model. The second was gradual international expansion in Europe and beyond. Today we are entering a new phase: building an ecosystem that provides new services to our community. Thanks to a community of more than 50 million members today, we can indeed obtain innovative, very advantageous and exclusive services.

With this in mind we have launched a long-term car rental package in partnership with Opel and ALD. We also offer, with AXA, an offer to buy an excess buy-back product in case of an accident at €2 per trip. Finally, we are also trying to meet the high latent demand for a carpooling solution between home and work. We have just unveiled BlaBlaLines, our new carpooling application for short-distance trips. While BlaBlaCar is used more for occasional journeys of between 80 km and 800 km, BlaBlaLines is designed for commuting between 10 km and 80 km. We therefore cover a very wide spectrum and allow our community to travel more easily and make even more savings.

How do you see the evolution of other models of car transport sharing such as providing private or public vehicles through platforms? What do you think of the huge investments made by several players in the “driverless car”?

The car ownership model hasn’t changed in 100 years. The popular belief seems to be that, within a few years, a fraction of mobility players will have gigantic fleets of driverless vehicles, available on demand for private individuals.

Is this forecast realistic? I’m not sure. I think that many people will still want to have their own car, for comfort and practicality, but also because the new ownership models, enabled by shared use, will make access to the car more affordable and free of constraints.

It is becoming increasingly clear that car ownership is not necessary in urban centres, where public transport and on-demand mobility services can meet travel needs in an appropriate way.

But for the millions of people who live outside big cities, or who want to travel outside the city frequently, it’s another story. Almost 80% of long distance trips (100-800 km) in Europe are made by car, as this is often the most affordable and practical solution. The alternatives offer less granularity outside cities, and are often more expensive. The car is often an extension of the personal space that people like to be able to use freely.

I think this trend will be boosted by the advent of driverless cars, as they will transform lost time into productive time, devoted to entertainment or work, while retaining the initial financial and practical advantages.

In the near future, we could imagine a world where car sharing finances its access. This is in line with the partnership we have announced with Opel and ALD, the European leader in long-term leasing, to offer BlaBlaCar ambassadors (our most active members) exclusive access to a selection of unique car deals, including leasing on very favourable terms, warranty and maintenance, with €20 extra savings each month that they offer carpooling.

I think ultimately, in the future the smart car network will be decentralized, widely distributed, and will be based on individuals. Car ownership will gradually be replaced by the service car, itself financed by shared use.

In recent times there has been rising debate between exchange services such as AirBnB and tax authorities to determine at what point the making available of an asset by a private individual should require filling in a tax return for standard taxation. Does BlaBlaCar have any points of discussion with the relevant authorities in certain markets?

No, because the issue is relatively easier to solve in our case given that we are a platform based on the sharing of road costs (gasoline and tolls in particular). So there is no concept of income for drivers who are private individuals and not professionals and who only amortize part of their costs. BlaBlaCar is not an on-demand service. On the contrary, the drivers make the journeys on their own account and share the costs with their passengers. Also, the amounts received by drivers are capped.

Therefore, a tax return is not necessary because there is no income. Moreover, because of the concept of cost sharing, third-party civil liability insurance covers all passengers.

It was obviously necessary to explain the specificity of this model to the authorities in each country, but today it is well established and clear to all concerned.