The right partnership can cause entrepreneurs to create a new company that achieves much more success than originally envisioned. When Antje Danielson and Robin Chase put together a business plan for a car sharing arrangement, they were only planning to launch the operation in their native Cambridge, Massachusetts.
Danielson devised an idea for car sharing in 1999. She understood how to establish the logistics and had contacts in the auto sales business. Partnering with Chase, who had an MBA but was then a stay-at-home mom, provided the business acumen. Danielson and Chase were lifelong friends who craved the independence of operating their own business.
A car sharing company seemed easy to start and simple to promote in order to attract customers. The women were aware of similar startup Flexcar, which relied upon a federal government subsidy to maintain low rental rates. Danielson and Chase knew that a car sharing company could gain instant popularity by merely keeping rates below auto rental daily prices.
The women took their business plan to the dean of Harvard’s Sloan School of Management for some guidance. His response was that Danielson and Chase were thinking too small. The concept for the new company had enormous potential. Chase realized that this enterprise would grow much larger than a part-time business to function around her family obligations. But Chase’s 12-year-old daughter applauded the idea and gave her blessing for mom to start the business.
Some research of company names followed. Eventually, Danielson and Chase settled on Zipcar. The new company’s slogan was “Wheels When You Want Them.” The women built a reservation system and auto security system by raising $75,000 from friends and associates. The financing structure they used is a sound lesson for new companies. Funding consisted of a loan that was convertible to stock after a valuation was established with the first venture capital obtained.
By the time the new company was almost ready to launch, only $68 remained in the bank account. An angel investor provided another $25,000 at the last minute in order for Zipcar to have enough automobiles for opening day. Despite the pressure of developing and funding the business, Zipcar has succeeded immensely. By 2012, the company has a fleet of more than 9,000 vehicles and 700,000 members.