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How Fast Can This Thing Go, Anyway?

Griffith began by assembling focus groups made up of people who knew of Zipcar but hadn't signed up. Consumers, he found, either perceived the service as inconvenient--the nearest car might be several blocks away--or were concerned that they couldn't depend on a nearby car being available when they needed one. Griffith realized the company had to change the way it placed cars around town. He divided each city into zones--neighborhoods, more or less--filling one zone at a time with about a dozen cars and marketing heavily in the zone before moving to the next one. He created what he calls "pods" of Zipcars--clusters within a parking garage or lot, so if one nearby car was reserved, another one would be available. He also assigned each zone a fleet crew, bicycle-riding guys who pedal out to handle minor problems.

This was a big change for Zipcar. In the past, the company had simply nabbed parking spots wherever it could. If a renter didn't return a car at the appointed time and someone else had a reservation, someone at the company would try to figure out where the next-closest available car was or would even drive another car over. It wasn't so much that this system wasn't working but that the process couldn't support many more new members. "We shifted all of our thinking," Griffith says.

The Boston overhaul, for example, began by dividing Zipcar into 12 zones. "Each individual neighborhood has its own flavor," says Dan Curtin, who has run the Boston operation since 2004. Curtin put different types of vehicles into the different zones. Cambridge got Priuses--the residents there tend to be activist and left-leaning--while tony Beacon Hill got Volvos and BMWs. The zone strategy also helped Curtin figure out each neighborhood's use pattern: Harvard Square users, mostly students on a budget, tend to use Zipcars for quick errands, while Back Bay users might rent one for a weekend to drive to Cape Cod.

Griffith rethought the company's approach in New York as well. Before he arrived, Zipcar had about 35 cars scattered around Manhattan and Brooklyn. Griffith pulled most of them into one neighborhood, Manhattan's Chelsea, where the population is dense and youthful--the kind of people who often need a car for a few hours. The New York team covered this small area with marketing, rather than getting lost in the chaos of approaching the city as a whole. "Within a couple of months, application rates were way up, and they were all coming from that one area," Griffith says. This hyperlocal marketing also emphasized that, unlike other rental cars, Zipcars were in your neighborhood. "We were like the coffee shop or the dry cleaner," Griffith says. Breaking down the system let Griffith first fix and then replicate what he was doing in individual neighborhoods.

2 Before You Get Big, Get Tech

Before Zipcar could handle more customers, Griffith knew, it had to have technology that could scale up without much human interaction. On the consumer end, Griffith decided he could live with the system created by Chase, her co-founder, Antje Danielson, and Roy Russell, Chase's husband and Zipcar's chief engineer. Griffith was especially struck by how easy they had made things for renters. To join Zipcar, you pay an annual membership fee of $50. After checking your DMV record, the company sends you a credit-card-size Zipcard that's radio-frequency identification, or RFID, enabled. When it's time to reserve a car, you simply go to Zipcar.com, enter the date, time, and duration of the rental, and Zipcar delivers a list of cars arranged by distance from you. For most cities, you can get at least a few cars nearby at any given time, for around $10 an hour or about $70 a day. Select the car and the system alerts the vehicle that you and your RFID card will be showing up. Go to the car, wave your Zipcard in front of a reader on the window, and the car unlocks and the engine is enabled; the keys are inside. Insurance and gas (a prepaid gas card stays in the car) are included.

But Griffith was less satisfied with the company's back-end systems. He asked Russell to create a system that could generate better data on things like car usage rates. Meanwhile, Russell continued pushing his team. He had upgraded the in-car computers so they could send readings back to Zipcar wirelessly and worked on a new alert system. Now, when a check-engine or dead-battery light goes on in a car, that light triggers a "ticket" system that alerts the appropriate fleet manager via e-mail. When drivers go over the 180-mile daily limit, they are billed automatically. Cleaning crews also have access to the reservations system so they can see when cars are idle and go clean them. (Russell left the company in 2006.)