Is Ride-Sharing Company BlaBlaCar a Threat to Uber in Europe?

Source: BlaBlaCar

Ride-sharing startup Uber has recently been slammed with lawsuits and criticism for not providing benefits – or even minimum wage – to its drivers who are classified as independent contractors, and therefore not under the protection of many employment laws. French courts upheld a law that effectively banned UberPop, the company’s non-professional driver service in France.
To add its list of problems, competition has heated up for Uber with the recent fundraising round of BlaBlaCar, Europe’s top ride-sharing company.

What Is BlaBlaCar?

BlaBlaCar is a Paris-based long-distance ride-sharing company. The three founders – Nicolas Brusson, Frédéric Mazzella and Francis Nappez – started the company in 2006. Over the past nine years, they have grown it into the largest ride-share service in Europe.
The company has expanded throughout Europe primarily through acquisitions. In April, BlaBlaCar acquired German-based Carpooling.com, which was the world’s second-largest ride-sharing service.
It currently has 2 million active users and operates in 19 countries, including Spain, Russia, India, Mexico, Turkey, France, Germany and the U.K. BlaBlaCar is planning a launch in Brazil this year.

Another Unicorn Is Born

BlaBlaCar made headlines when it was added to the list of “unicorns,” or startups that have over a $1 billion valuation. In January, Fortune magazine debuted its list with 80 startups that made the $1 billion cut. Today, there are already more than 130 and BlaBlaCar is among the newest to the list.
BlaBlaCar closed its Series D round earlier this month. It raised $200 million, bringing its valuation to $1.6 billion. It has raised $310 million to date.
With more and more companies hitting the $1 billion valuation, it is putting upward pressure on other tech startup valuations as well, making some investors wonder if this is going to be another bubble to burst. Although, remember these are companies in the private sector that are receiving increasingly high valuations.
With its recent fundraising round and Uber’s own troubles in Europe making headlines, people have wondered if BlaBlaCar is yet another competitor that Uber will to face.
But looking at the growth of BlaBlaCar, the valuation does make sense. The company is seeing remarkable growth in emerging markets, even more than it predicted when entering the new markets.
However, while Uber and BlaBlaCar both focus on ride-sharing, there are key differences that will prevent another ride-share market battle, like we have witnessed with Uber vs. Lyft.

3 Ways BlaBlaCar Is Fundamentally Different Than Uber

1. No Inner-City Rides: Uber is an alternative to taxis. BlaBlaCar is an alternative to trains and planes. The average BlaBlaCar ride is 213 miles. It does not provide a platform for inner-city rides. BlaBlaCar is the 21st century version of hitchhiking, providing long-distance transportation between cities.
2. No Profiting: Unlike Uber, the drivers are not driving in order to make a profit. They already have a scheduled trip to a different city, and drivers use BlaBlaCar to offset the cost of fuel, tolls and wear on the car by offering any open seats in their vehicle. BlaBlaCar sets a maximum price on journeys to prevent any profiteers. This is big advantage to BlaBlaCar, as it will not be plagued with the same taxi regulations that Uber has been facing. Because the trips are more sporadically planned and a way to offset costs, there are no full-time drivers that could be considered employees – the other big issue that Uber has been facing in courts.
3. No Plans for U.S. Expansion: BlaBlaCar is currently not in the U.S. market, nor does it have any short-term plans to enter it. Its focus is currently in emerging markets where there is less disposable income and fuel prices are higher, increasing the incentive to share your ride. BlaBlaCar stated that in the U.S. fuel is relatively cheaper and ride-sharing is not as widely accepted, and therefore not a market that it will focus on at this time.

Uber can rest easy for now. BlaBlaCar’s market segment is different enough that it will not pose a major threat to its short-distance ride-sharing counterpart.

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