Zipcar’s IPO: A $1B Subscription Economy Success Story

by Kyle Christensen, Senior Director of Product Marketing

 

It started in the technology sector, as new business models often do. Salesforce.com offered a completely different approach to buying software. Why throw down millions of dollars for servers and CD’s when you could subscribe to software, delivered as a service, over the internet?

 

This week we saw yet another proof point that the Subscription Economy is taking over. No, not with news of another SaaS company assuming leadership in a technology sector (although SaaS will be 85% of all new software by next year.) Not with an old guard media company transitioning to a new digital subscription strategy (that was last month.) We see it in an industry that’s not exactly known as “bleeding edge”: The automotive industry.

 

This week Zipcar announced an IPO at $18 per share to raise a total of $174.3 million to expand the company’s network (currently over half a million subscribers.) And the market promptly drove the share price up to $30. That’s a $1 billion valuation. It’s no wonder. Why drop $30,000 on a single car that you’re stuck with for the next 5-10 years? Leasing was the next step in the evolution…you pay only for the value of the car that you use for 2-3 years. But that still doesn’t deliver the true value of the Subscription Economy. You’re still locked into one vehicle, with no room to ramp your usage up or down. Then Zipcar came along and figured it out, fully embracing the concept of cars delivered as a service. Take a station wagon to get groceries on Thursday, grab a convertible to cruse the coast on Friday, then pick up an SUV to shoot up to the mountains on Saturday. Plus you’ve got gas-as-a-service and insurance-as-a-service bundled in. You pay more when you need to ramp up your millage and time, or you can throttle it back if you need to. Not a bad option with gas prices being what they are today.

 

It’s that subscription flexibility that’s tied to both the service you get and the price you pay that has customers demanding new subscription services across technology, media, communications, and now transportation. Congratulations on your success in the Subscription Economy, Zipcar! We can’t wait to see who’s next.

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