SF startup provides rental vehicles for Uber, Lyft drivers

A San Francisco startup referred to as Breeze is renting brand-new Toyota Priuses to men and women who want to drive for Uber and Lyft.

“There is massive demand from folks who do not very own cars to be part of the ‘ride-sharing’; economic climate,” said Jeff Pang, CEO and co-founder of Breeze, formerly called Zephyr. “We are solving the dilemma of obtaining a lot more drivers on the street.”

Breeze now has 25 vehicles, all totally booked by drivers who answered its Craigslist ads or heard about it from friends, Pang mentioned. Drivers shell out the company $ 20 a day plus 25 cents a mile, typically totaling $ forty or $ 50 a day, Pang stated. Drivers pay for their personal fuel. (Previously it charged $ 50 on weekdays and $ 75 on Saturdays with no mileage charge.)

“At $ 50 a day, we are properly income-flow good,” Pang said.

In which the vehicles come from and what they value are essential concerns that the 2-month-previous organization declined to answer.

“We will not get outright, as that is a capital-intensive, asset-hefty model,” explained co-founder Ned Ryan.

Instead, Breeze rents the automobiles from an unnamed spouse in the automotive business, Pang stated. “Our partnership gives us unlimited access to vehicles for the close to future.” Breeze will switch the vehicles out annually to preserve down upkeep fees.

Who is the partner? “Which is our secret sauce we can not reveal,” Pang mentioned.

Insurance is a large and nonetheless-evolving problem for app-enabled trip providers like Uber and Lyft.

Drivers share cars

Breeze requires drivers to get personalized insurance tied to their rented car and offers them $ 150 a month to cover it. Drivers are assigned to particular automobiles generally 2 individuals share a car with each reserving complete 24-hour days. A single might drive on Monday, Tuesday and Thursday and the other on the week’;s remaining 4 days, for instance.

Pang said there is no necessity for members to inform insurers that they will be driving for the trip companies. Even so, when The Chronicle interviewed 3 drivers, he requested that their final names be withheld. Revealing their full names “would jeopardize their livelihood with the insurance coverage companies,” he explained. “Insurance coverage companies will ban you if you disclose you happen to be carrying out ‘ride sharing.’; “

Pang stated the insurance is made to cover the drivers’; private use of the vehicles. “Uber and Lyft act as the primary kind of coverage while the app is on,” he said in an e-mail.

That is not strictly true. Uber and Lyft have “extra” policies, made to kick in right after the individual policy is exhausted. Also, even though Uber’;s insurance coverage now applies as soon as its app is on, Lyft’;s coverage only commences after a driver has accepted a trip request.

The 3 drivers, Pamela, Luke and Steve, have every single been renting Breeze vehicles for a month or less, and driving full time. Each and every stated they are content with their partnership with Breeze and its pricing. Luke and Pamela personal private cars but said they are too outdated to pass muster with the trip firms.

The emergence of “supply-side feeder” organizations like Breeze validates how swiftly smartphone ride providers have matured, stated Lisa Gansky, founder of consulting company Mesh Labs, which specializes in collaborative economic system issues. She has investments in trip service Sidecar and in peer-to-peer automobile-rental marketplace RelayRides.

Nevertheless, she was taken aback by the enterprise model.

“It truly is difficult to picture that this has either ample margin or scale to be meaningful in terms of revenue,” she mentioned.

She also questioned regardless of whether the insurance was sufficiently robust.

Sourcing concerns

Chris Brown, executive editor of Auto Rental Information, was perplexed by Breeze’;s auto sourcing.

“Who in their appropriate thoughts would rent out brand-new Priuses to a broker who then rents out to a person else for lower rates?” he said. Margins seem “actually thin when you consider that there is an extra layer the guy renting out the Priuses will want to make income as well.”

New autos lose value swiftly. “It does not fairly add up when you think about the amount of depreciation as you place miles on a auto and the expenses of ownership per mile,” Brown mentioned

Pang stated Breeze is pursuing partnerships with Uber and Lyft. Neither of these firms commented. Uber has a pilot plan with Basic Motors and Toyota to help its drivers purchase autos at favorable rates.

Breeze is currently bootstrapped by its founders and hopes to do fundraising soon, Pang said.

Pang, Ryan and third co-founder Charlie Fang have today’;s requisite entrepreneur resumes: They’;ve accomplished stints in company improvement or engineering at firms this kind of as Twitter, Uber, Homejoy and Goldman Sachs. 2 have Stanford degrees. All get turns driving for the ride services to stay in touch with their marketplace.

Pang stated Breeze expects to have hundreds of cars in the Bay Area by year end, all from the unnamed supply. “There are no supply constraints there,” he explained.

Breeze also hopes to increase into other markets, commencing with Los Angeles, but would need to line up a distinct supplier, he said.

Carolyn Explained is a San Francisco Chronicle personnel author. E-mail: csaid@sfchronicle.com Twitter: @csaid

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