You probably haven’t heard of Chariot, a San Francisco based shuttle service that operates a fleet of Ford Transit vans in San Francisco. Mass transportation inside San Francisco is generally effective if you go from the financial district to Mission or if you try to make your way from Oakland to SoMA, thanks to the BART service. But going from east to west or vice-versa is generally a nightmare. Cheap public buses are the best options, unless you want to indulge in the much more expensive alternative of Uber or Lyft.
Chariot, which was established only two years ago, is operating a transit shuttle service that is powered by an app and helps people commute better in the city. That means faster than buses and cheaper than an Uber rides. The Chariot fleet contains 100 Ford Transit vans with 15 seats each and hee shuttles go around San Francisco, changing their trajectory with every new call they get from users. Stations are located around the city with removable signs on the pavement so that the company can change stations when the demand changes.
In its two years of existence, the Y Combinator graduate startup raised $3 million from a list of investors that seems to be taken from the first episode of the second season of HBO’s Silicon Valley: Major Baseball Ventures, the Winklevoss brothers, and Maven Ventures.
HBO's Silicon Valley, "Sand Hill Shuffle" (2015)
Since last Friday, though, Chariot from San Francisco is just another transportation app that have been snapped by an automobile giant. This time the buyer is the oldest car company you can think about: Ford, the 113 year old automobile giant from Michigan who spent an unknown sum of money for the acquisition, which was probably not a fortune.
Two years ago a new CEO came to office and he shook the company from the upside down, totally revamping successful car models and pursuing an Uber-esque transportation-as-a-service model. With Chariot, who is already working with Ford vans, it’s a good start, and the auto company also wants to combine that with a bike sharing service based on Motivate. The next year, Chariot will hit 5 more cities in the US and Motivate will operate 7,000 shared bikes in the Bay Area.
Ford is not alone in the search for an on demand car service. GM already invested half a billion in Lyft, Toyota in Uber and Volkswagen bought minority stakes at Gett for $300M. Another interesting trial that should be noted here is Mercedes, who has partnered with Via Transportation, a NYC based shuttle app that shares some similarities with Chariot.
Via is waiting for you. Photo: Assaf Gilad
Via and Chariot are on demand apps that match vans with passengers. A Chariot can carry 15 passengers while a Via can carry seven and their pricing strategy sits in the mid range between cheap bus or subway and a more expensive Uber, Lyft, or cab, and they both offer the social experience of commuting together with multiple passengers.
Via made much progress: It is a company based on a deep mathematics and algorithmic grounds that maximizes the capacity of each van without adding more vehicles to the fleet, and this what makes Via one of the more efficient pieces of software for fleet management on earth.
The key is the “dynamic trail” that matches random passengers on the street and the transit’s trail. Via has to calculate all that data together with the traffic and allocate on a real time basis passengers with vehicles that change their route dynamically. Thus, the algorithm can change the pick up location if a certain street is blocked, for example. Via reports that on the peak hours, 90% of the rides are shared by at least 3 passengers and the rate of rides with 5 passengers and above has multiplied itself since 2015. This is much more than Uber.
This is what allows Via to offer cheaper prices than other car sharing apps. A New-Yorker can pay Via on average 30%-50% less than what Uber or Lyft charges. Taking an Uber ride from Upper West Side to Midtown might tear from you 15$-20$. Via’s drive will cost you 5$ and will take approximately the same time.
Chariot doesn’t have all this. The routes are based on demand from riders but are pretty fixed. After the Ford acquisition deal, Chariot promises to be more algorithms based so that trips will be scheduled in real time. Just like Via.
Via raised $137M dollars from VCs. Chariot raised only 3. No question that Ford went on the easiest deal: it compromised on a smaller company worth much less and operates only 100 vans in a part of the city. In comparison, Via has 1,000 drivers in NYC, Chicago and Orange County. But Via is probably too big to get acquired as it's probably worth half a billion dollars or even more. On the other side there are plenty of companies that will seek to invest or even buy such an activity so we, at Zirra, assume that its investors are pretty calm.
Zirra estimates Via’s valuation at about 500-600 million dollars worth. The benchmark exit valuation can rise to 800-900 with an exit probability of 30-40% within no more than 5 years.