The Drive To Change Your Business Model

How this startup became the world’s largest car rental company by lightening its physical assets

Greg Moran, CEO and co-founder of Zoomcar

Your business model: does the phrase send shivers down your spine?

A shift in business model is often absolutely necessary but also downright terrifying. Greg Moran, cofounder and CEO at Zoomcar, knows this well. But he also knows what it means to cross the finish line — and see results.

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Zoomcar, a car rental service located in India, went through a remarkable change in their business model. Following in the footsteps of the sharing economy, Zoomcar evolved from owning a large fleet of on-demand rental cars to getting rid of their physical assets in favor of a car sharing model. And it’s working — Zoomcar has expanded to more than twenty cities in India.

The rule for successful transitions

When it comes to smooth business model changes Greg sees one essential guiding rule:

If you have core guiding principles, a change in business model doesn’t have to mean a total restart.

He explains: back in 2013, when Zoomcar was figuring out the fundamental pillars of its business, the team spent a lot of time refining what would define them upfront, and shape the company in the long run. It was crystal clear to both Greg and his co-founder that the most important principles for their ride-providing enterprise were:

1) Very, very convenient access.

The team’s focus was born from the need to provide strong access points throughout the city. They thought about how they could achieve being hyper-local, offering cars where people lived or worked. “To get to the level we were working to provide, we wanted to reach as many at 50, 60, even 70 different pickup points throughout the city from the outset. We mapped out universities, office locations, apartment complexes with the right demographics — the works. When we launched, we wanted to launch already delivering the promise of access around every corner.”

2) Excellent high-quality service, customer- and product-wise.

In emerging markets like India, Greg realized that once the company premise started to be adopted the potential copycats would move quickly. To maintain momentum, and to avoid an explosion of competitors, they’d have to provide a stellar product from the start to set them apart. Zoomcar made it their mission to provide high quality cars, excellent cleaning services, and fast interaction with their platform from the get-go.

Interestingly, neither of their guiding principles were particularly centered on a specific business model. Either principle is compatible with a variety of car sharing models, from full ownership (where they started) to a light model focused on the platform and brand. They chose to start with an ownership model in order to control the entire customer experience, where they could ensure their head of the pack factors like cleanliness, maintenance, and car servicing. “Through having this control, we could start out building a brand that was synonymous with convenience and quality.”

The choice did not rule out a different direction once the client relationship was established. This flexibility would ultimately make the transition to a new model much smoother.

The drive to change the model

Major changes need a catalyst. In the case of Zoomcar, the change or die issue was supply. The demand for a rental car service, the first of its kind in India, was insane. Greg recalls constantly trying to add more cars to the fleet. It became increasingly difficult to continuously add supply as quickly as was being demanded, especially given the financial structure of a startup, which is usually strapped for cash. The small team with limited capital couldn’t keep up, and were fast approaching a point of letting potential customers down — directly in conflict with Zoomcar’s two principles, access, and service.

This ultimately was the catalyst for their business model restart. Greg realized that changing the business model to a fleetless, car sharing platform would actually be more in line with the original, core intent of his company. Zoomcar began engaging users to become associates, and therefore contribute their own cars to the marketplace on a part-time basis. With this model, they could keep up with the demand in a way that would benefit associates, users, and the company. This new approach further strengthened the brand promise of excellent service and local reach.

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So… where’s the happy ending?

Having made the brave choice to sell their fleet and switch to a car sharing model, Zoomcar quickly lightened their physical asset load and gained enormously. They have experienced explosive growth, and the startup has brought the lessons of the sharing economy to the untapped Indian market in a matter of a few years.

With the change of direction, they were able to achieve three major KPIs:

1. Hyper-local service. With car sharing, Zoomcar would automatically be in the most convenient locations, (as associates’ cars were naturally in hubs of activity) which had been their primary goal in the first place.

2. A different kind of control. While Zoomcar had always focused on quality-control through owning the cars, they could now control their product through technology. They built out their platform, providing more tools like tracking and moderating insights to put car monitoring on the ground, ensuring a great user experience.

3. Reduced costs and accidents. When focusing on the platform and not the fleet, Zoomcar added analytic functions like examining car parts to determine the risk of breakdown, and reduce accident risks through deep technology. They currently pull in millions of data points for each car, doing significant computation, collecting huge amounts of data, that will help Zoomcar understand better the health and wellness of the car. This strategy reduced costs dramatically.

When implementing the new business model, Zoomcar had the outcome in front of mind. This point is relevant to any startup switching gears, and isn’t always easy. Greg says it best: “You’re always juggling between three helmets: you’re juggling between very fast growth, you’re juggling between cost control and you’re thinking about customer user experience. You have to really be thinking about your key KPI in each of those three axes to stay focused.”

Greg’s takeaway

“I think you have to have a certain fanaticism about the quality. Because any marketplace, you are always going to have negativity potentially that can arise if the experience isn’t very, very strong. And so I think that’s where you really have to make sure that you have a rabid sense for quality, above everything else.”