Don’t want to spend a lot of money on an Uber but still want to be faster than a transportation bus that is stuck in traffic the whole day? You should get in a Chariot van! According to CEO Vahabzadeh, “Chariot is a great way to take the risk off our table and get the community involved in putting together better commuting options for themselves” (Techcrunch, 2015).
At first sight Chariot was ‘just another’ transportation service that managed 15-passenger vans in Austin and the San Francisco Bay Area. Passengers could pay for one-time-only rides but they could also go for the subscription option whereas the number of rides is unlimited. However, there is one major difference in comparison to the traditional transport companies. Where the routes of the traditional busses are getting determined by the city councils and the firms themselves, Chariot is using the wisdom of the crowd in order to determine the best routes. This new business model has led to an expansive growth of the company over the past years, and they are not willing to stop (Techcrunch, 2017).
In the Bay Area for instance, public transportation during rush hour is slow, overcrowded and not satisfactory in terms of convenience. At Charity commuters get the option to put forward a new route through the platform that seems more attractive than the existing routes. If at least 14 other people feel the same about this route, Charity will consider taking up the route in their portfolio, making the public transport more flexible than ever. The service at this moment is such a solution that in the end it could funnel away 30% of the public transport revenue alone. However, the San Francisco supervisors are in such a difficult situation that they have no other choice than supporting this startup (Techcrunch, 2015).
Now your question is; why doesn’t Chariot just use services like Waze whereas traffic and other information is just obtained by other road users? (which is another form of wisdom of the crowd by the way). Well, knowing about the particular traffic situation is one thing, but it is even more valuable if you know what person will benefit from this information. A commuter reveals his/her profile by sending information to Chariot that not only will be used to dodge traffic, but it also will be used to lay connections with other commuters. This way it would be possible to deliver the same personalized experience, for a big group of people. As shown in figure 2, this is therefore one of the purest forms of Value Co-Creation (Saarijärvi et al., 2013).
Given the fact that the idea itself is quite simple, Chariot was certainly not the only one offering these services. Uber, Lyft, Night School, Leap and Loup are among those companies that are forced out of the market Chariot is operating in. Whereas the latter three were failing due to financial issues, Uber and Lyft were suffering from a strange loophole. Because Chariot is using vans instead of busses, they are more likely to receive licenses, insurances and other requirements according to California law (Forbes, 2015). However, as this problem seems quite solvable (when the concept gets rolled out to other states/countries or when Uber is going to use vans as well), it is expected that also in this industry the strongest competitor will survive. Now, since Ford Motor Company recently has acquired Chariot, it might come to an interesting fight.
Forbes (2015) forbes.com. Available at: https://www.forbes.com/sites/scottbeyer/2015/09/08/chariot-wins-first-round-of-san-franciscos-private-transit-battle/#52c6dfa063e6. Accessed on 01/03/2017
Saarijärvi, H., Kannan, P. K., & Kuusela, H. (2013). Value co-creation: theoretical approaches and practical implications. European Business Review, 25(1), 6-19.
TechCrunch (2017) techcrunch.com. Available at: https://techcrunch.com/2017/01/09/fords-chariot-ride-sharing-service-will-expand-to-8-cities-in-2017/ Accessed on 01/03/2017
TechCrunch (2015) techcrunch.com. Available at: https://techcrunch.com/2015/01/26/chariot-new-route/ Accessed on 01/03/2017