All posts by sagatorseke

Rethinking Ridesharing … For Kids?

Nowadays, through just a few taps on your smartphone, you can get a ride to your desired destination from your current location. This is because innovation and technological advancements, paired with the widespread ownership of smartphones, have given rise to peer-to-peer centralized taxicab platforms. These app-based platforms match demand (people who need a ride) with suppliers (people with cars), and set prices to facilitate transactions. (Proserpio & Tellis, 2017). Today, the global ridesharing industry has been valued at over $61 billion, with projections that it will grow to $218 billion by 2025 (Curley, 2019).

With major players like Uber and Lyft dominating the market, who have a combined market share of 98% in the US for example, it’s difficult to see the space or need for new entrants (Molla, 2018). But there is one group of riders who are underserved in this market – kids. Namely, kids soliciting ridesharing services, or parents requesting it in order to shuttle their kids to activities. This seems like a convenient way for busy parents to get their kids from A to B, but there is a major problem – it’s simply not allowed. Account holders on Uber and Lyft must be 18 or older and cannot request a ride on the behalf of minors, unless they are accompanied by an adult (Heilweil, 2019). Uber and Lyft simply don’t have the certificates or insurance necessary to allow unaccompanied minors, and don’t want the liability that comes with it (Gibbins, 2018).  So how are kids supposed to get where they need to go when their parents are busy?


This is where HopSkipDrive enters the picture. HopSkipDrive is a California based ridesharing taxi cab service, founded by three moms, catered specifically to minors. It was founded in 2014 by three working moms struggling to get their kids where they needed to go. (HopSkipDrive, 2019) With initial funding of $14.1 million, their objective is to make a difference in the lives of kids and parents by providing a safe and dependable way of getting kids where they need to go.

How It Works

On the app, parents can request a ride or preschedule one up to 8 hours in advance. For reoccurring activities like after school sports, parents can save rides and ‘repeat’ them. If kids from many families are all going to the same destination, the app has a carpool feature which will coordinate the pickup of kids from several locations for a discounted price. (HopSkipDrive, 2019)

In addition to servicing families, HopSkipDrive also offer ridesharing services to schools. By working with school districts, they are able to unlock opportunities for substantial business growth (Roof, 2018). Schools can book drivers for field trips or students who require special care, with just a few taps. Furthermore, if a school bus isn’t completely full, it can be a much cheaper option for schools to hire HopSkipDrive services instead. (HopSkipDrive, 2019)

HopSkipDrive Mobile App

To ensure the safety of kids using the service, HopSkipDrive puts it at the center of everything they do. Drivers are referred to as “CareDrivers”, who double as caregivers. To be a CareDriver, you need to be over 23 years old, have at least five years of childcaring experience,  a clean driving record, as well as a car that is no more than 10 years old (HopSkipDrive, 2019). Furthermore, drivers are required to pass a multi-agency background check, which includes fingerprinting, before they are officially registered on the app. HopSkipDrive also allows parents to provide detailed pick-up and drop-off instructions, and CareDrivers will confirm a predetermined ‘codeword’ and date of birth with each kid they pick up. Furthermore, all rides are monitored in real time by the HopSkipDrive team. (HopSkipDrive, 2019)

Efficiency of the Business Model

There is considerable demand from working parents to get their kids to activities efficiently and safely and with little time for preplanning. HopSkipDrive allows parents to organize rides for their kids whenever the need arises. On the other side, drivers are able to use their own cars, and spare time, to earn extra money. HopSkipDrive drivers can earn up to $30/hour, which is about three time more than Uber or Lyft drivers (Gibbins, 2018). Many parents are willing to pay the premium price for a safe service, and it is often cheaper than getting babysitter. There is however less flexibility regarding working hours for drivers on the HopSkipDrive app than on Uber of Lyft. This is because kids are in school all day and for the most part require rides in the early mornings, with requests only picking up again in the afternoon. Furthermore, a large number of rides on the app are prescheduled. (Gibbins, 2018)

There are clear internal rules and regulations in place to ensure the safety of kids, like strict behavioural guidelines as to how drivers are supposed to interact with the kids they are driving (HopSkipDrive, 2019). Unlike Uber of Lyft, HopSkipDrive has certificates and insurance necessary to work with minors, and a $1 million liability coverage (HopSkipDrive, 2019). There are legal measures that drivers must go through, namely drivers in California must register with TrustLine, which is a state database for nannys and babysitters. On the one hand, this restricts the number of potential drivers considerably because many do not fit the requirements, or do not have the time to go through the registration process. On the other hand, it may in fact open up the ridesharing industry to potential drivers who otherwise wouldn’t have considered it. HopSkipDrive drivers are almost all female, and either mothers, babysitter, teachers or so called ‘empty nesters’, who feel safer driving for HopSkipDrive than Uber or Lyft, and enjoy caring for kids (Heilweil, 2019).

This business model of ridesharing for kids has not been met without difficulties. Several similar platforms, like Shuddle and Shepherd, have shut down, despite receiving  considerable funding initially. These platforms sited issues stemming from the driver vetting and registration process taking too long, and failing to secure more funding after running into financial difficulties (Heilweil, 2019). In 2017, Uber piloted its own program for teenagers ages 13 to 17, but eventually shut it down after little success. This stemmed mainly from the fact that regular Uber drivers were used, who received no extra training or guidelines as to how teens should be transported  (Heilweil, 2019).

The Future Ahead

Building a ridesharing business is already a difficult and expensive thing to do, and adding kids into the mix doesn’t make it any easier. Despite the challenges noted above, the market for kid’s ridesharing is continuing to grow, with HopSkipDrive securing another $7.4 million of funding just last year (Roof, 2018). However, HopSkipDrive is not without competition and Zūm, another ridesharing platform for kids just raised their total funding to $70 million, and is already present in three States (Dickey, 2019).

Due to the somewhat uniform schedules of children, it’s a questionable whether drivers on kids ridesharing platforms will continue to get enough work on the average day. Because of this, it could be essential for these platforms to expand their businesses further than just parents requesting rides. The future of ridesharing for kids could be to sell rides directly to schools, largely replacing traditional school busses, something these platforms have already started exploring (Pinsker, 2018).


Chuang, T., 2018. First “Uber for kids” ride service launches in Denver by three moms, including one who grew up here. [Online]  Available at:

Curley, R., 2019. Global ride sharing industry valued at more than $61 Billion. [Online] Available at:

Dickey, M. R., 2019. Zūm, a ridesharing service for kids, raises $40 million. [Online] Available at:

Gibbins, P., 2018. Comparing the Top 4 Rideshare Apps for Kids. [Online] Available at:

Goldstein, M., 2018. Uber And Lyft: The Cost And Benefits Of Disruption. [Online]  Available at:

Heilweil, R., 2019. THE TRICKY BUSINESS OF MAKING RIDE-HAIL WORK FOR KIDS. [Online] Available at:

HopSkipDrive, 2019. About. [Online] Available at:

Molla, R., 2018. Lyft has eaten into Uber’s U.S. market share, new data suggests. [Online]  Available at:

Pinsker, J., 2018. What Is the Future of Getting Kids to Soccer Practice?. [Online] Available at:

Proserpio, D. & Tellis, G. J., 2017. Baring the Sharing Economy: Concepts, Classification, Findings, and Future Directions. [Online]
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Roof, K., 2018. HopSkipDrive raises another $7.4 million for its Uber for kids business. [Online] Available at:

The Role of Customer Investor Involvement in Crowdfunding Success

This is a review of the paper “The Role of Customer Investor Involvement in Crowdfunding Success” by Philipp B. Cornelius and Bilal Gokpinar (2018).


One of the greatest challenges for entrepreneurs is securing outside funding for their ventures. So nowadays, an increasing number of entrepreneurs turn to novel sources of funding for their projects. One of the most prevalent alternative ways of raising money is reward-based crowdfunding, where the project is financed by a vast number of small donations (Kraus et al., 2016). In return for their pledge, funders receive a reward which differs among projects and the size of the backer’s donation – for instance, the reward can be receiving the product before it enters the market, purchasing it at a discounted price, or even an exclusive dinner with the project creators themselves (Mollick, 2014).

The obtaining of funds through crowdfunding is usually done via platforms such as Kickstarter. Kickstarter is the largest reward-based crowdfunding site, and since its launch in 2009, almost 160,000 projects have been successfully funded with the help of over 16 million backers (Kickstarter, 2019). In addition to collecting funds, project creators are drawn to crowdfunding platforms to get access to potential customers, gain an initial impression of demand, sell their goods and gain feedback from funders. Funders on the other hand, in addition to accessing an investment opportunity, gain early access to new or exclusive products, and may feel as though they belong to a community or philanthropic cause (Tsekouras, 2019).

Theoretical Background

Reward-based crowdfunding is characterised by a unique role of customers co-financing the project. In a traditional buyer-seller context, customers purchase a finished product, and the only information asymmetry they need to take into account is an inaccurate or misleading product description. However, when participating in a crowdfunding campaign, as funders, customers support the production of a product that is usually in a prototype phase or does not exist yet. They take on the risk of a product being different than promised, or not produced at all, for a promise of a future reward. As a result, they turn into customer investors – as they invest in a product in order to receive benefit at a later stage – and a buyer-seller relationship transforms into a principal-agent relationship where customers act as principals, and project creators as their agents (Cornelius & Gokpinar, 2018). In this case, it is possible that customer investors actually provide some of the benefits and support received from institutional investors.   However, the effect of this relationship shift remains unclear: do customers, as investors, really impact funding success apart from backing it financially? Can project creators actually benefit from customer inputs?

The Study

This paper has attempted to answer these questions by conducting a study based on 21,491 crowdfunding projects on Kickstarter, both successful and unsuccessful, over a 7 month period. The authors investigate the effects of customer input (measured in number of comments provided in the comments section of the project) on the success of crowdfunding campaigns – i.e. whether or not the funding goal was reached. They also investigate the moderating roles of a project’s team composition and backer’s distant funding experience, as well as the mediating role of the number of project revisions. To account for potential confounders, the authors also included the following antecedents of success as control variables: number of videos in the project description, the project’s riskiness, whether or not the project is run by an incorporated organisation, a project’s funding goal, previous user engagement and project category.

The authors found that customer involvement, measured in number of comments submitted in the comments section, indeed increases a project’s probability of funding success (seen in Figure 1). In fact, they found that as few as 3 messages from customers increase the average likelihood of funding from 8% to 58%. One of the explanations for this may be the fact that incorporating customer suggestions make the product more customer-adapted, therefore pulling more backers to the project.

Figure 1: Predicted likelihood of funding success at different levels of customer input and distance

Surprisingly, this paper also demonstrates that the input of donors with distant funding experience – that is, backers that have also supported projects from different categories – is particularly beneficial for the success of the project (seen in Figure 1). Intuitively, it would be expected that the feedback of experts in a particular area is more insightful; however, this result may stem from the fact that the donor’s novel, out-of-the-box thinking can suggest solutions that experts from the field may not have ever considered.

The authors also found that individual project creators benefit more from backers’ suggestions than teams project creators, because individual entrepreneurs rely more heavily on mitigating agency costs through customer involvement. Lastly, it was found that the positive influence of customer input on project success is greater when the project creator updates the projects description while the campaign is active (seen in Figure 2). Indeed every project revision was found to increase the likelihood of funding success by 40%.

Figure 2: Predicted likelihood of funding success at different levels of project revisions


A strength of this study lies in its large, comprehensive and unique data set from Kickstarter. This data set includes 21,491 projects, from 138 countries and all 13 project categories. Furthermore, whereas most other studies in innovation have researched only successful projects, this paper uses a balanced set of both successful and unsuccessful projects, thus reducing selection bias (Singh & Fleming 2010; Chatterji & Fabrizio 2011). A dataset such as this one, increases the generalisability of this study’s findings to a diverse set of industries and entrepreneurs.

Another strength of this study is their inclusion of several control variables and an instrumental variable – the release of the Kickstarter mobile app – to improve the validity of their findings. Nine control variables are deployed to account for confounding factors, which cause spurious associations between independent and dependent variables, to ensure that the effect on funding success is likely due to changes in customer investor input (Skelly, Dettori & Brodt, 2012). Furthermore, the instrumental variable reduces the effect of possible endogenous variables, and helps account for unexpected behaviour between the variables creator ability and project quality (Lousdal, 2018).

Managerial Implications

This study not only contributes to earlier academic literature on crowdfunding, but also has direct implications for entrepreneurs, as the findings demonstrate that customer investors can provide some of the support usually received from venture capitalists or angel investors.

Firstly, given the findings that customer investor involvement and input can improve a projects chances of success, entrepreneurs should be open to customer investor’s feedback and actively listen to their suggestions – as this could be the difference between project success or failure. Additionally, as projects have been found to get better as more customer input is incorporated, entrepreneurs should actively change their product descriptions in response to them. When a funding goal has been reached, campaign descriptions can no longer be updated, so it is imperative that project creators incorporate relevant inputs as soon as they are suggested.

Furthermore, although perhaps slightly counterintuitive, entrepreneurs should value the inputs of customer investors with experience in distant categories, as their heterogenous insights could bring considerable value to the project. Lastly, the findings suggest that individual (as opposed to team) project creators may actually reap more benefit from customer investor input and thus should be more open to inputs when interacting with customer investors on the platform.

Chatterji, A.K. & Fabrizio, K., 2011. How Do Product Users Influence Corporate Invention? Organization Science, 23(4), pp.971–987.

Cornelius, P. and Gokpinar, B., 2018. The Role of Customer Investor Involvement in Crowdfunding Success. Management Science, Forthcoming.

Kickstarter (2019). About — Kickstarter. [online] Available at: [Accessed 1 Mar. 2019].

Kraus, S., Richter, C., Brem, A., Cheng, C.F. and Chang, M.L., 2016. Strategies for reward-based crowdfunding campaigns. Journal of Innovation & Knowledge, 1(1), pp.13-23.

Lousdal, M.L., 2018. An introduction to instrumental variable assumptions, validation and estimation. Emerging themes in epidemiology, 15(1), p.1.

Mollick, E., 2014. The dynamics of crowdfunding: An exploratory study. Journal of business venturing, 29(1), pp.1-16.

Singh, J. & Fleming, L., 2010. Lone Inventors as Sources of Breakthroughs: Myth or Reality? Management Science, 56(1), pp.41–56.

Skelly, A.C., Dettori, J.R. and Brodt, E.D., 2012. Assessing bias: the importance of considering confounding. Evidence-based spine-care journal, 3(01), pp.9-12.

Tsekouras, D., 2019. Customer centric digital commerce: Crowdfunding & Consumer-Driven Pricing [PowerPoint slide]. Retrieved from Blackboard.