Roy Russell is vice president and No. 1 IT guy at Zipcar, a Cambridge, Mass.-based short-term rental car company...
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that is six years old and profitable with annual revenues of $15 million. Talk about managing traffic. Russell has to make sure 50,000 registered members can share 900 cars in 28 cities across the country using wireless access cards. Today's technology provides Zipcar's competitive edge. Here Russell talks about the early Zipcar days, as well as his new lost-and-found service.
This is such a unique business. Where do you get the software?
Russell: The software was largely developed in-house, largely based on open source packages. We've had the luxury of being able to develop software for a business that was growing organically. That means we were able to build a prototype system. We weren't sure exactly what we wanted but had a reasonable idea. We threw together something very quick. It took us a few months.
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Russell: I think it was at about 1,000 members that we said alright -- no significant improvements will be made to the existing system. We're going to spend the next six months putting a solid foundation in place. We knew we wanted to support a large number of cities. We wanted to support thousands of vehicles, though at the time we probably had 40 cars. And what's going to happen when we have 100,000 customers and are running 24/7? We stepped back and said 'OK, what do we need to do to build something that can scale?'
Again, it was the luxury of organic growth. We had 1,000 members, and we could see could see we'd have 2,000 members in six or seven months. We had the luxury of stepping back and to spend a lot of time working on the underlying database. That was maybe six months. Then one Sunday night we switched over to the new system.
What did the new system have that the prototype didn't?
Russell: It had Oracle as the back end. It had an architecture that had a reasonable set of middleware -- where we had separation of business and data. We had a much more secure system. We had factored into that serious scalability, not just in terms of more transactions and more data -- but also from the user interface side, especially on the back office.
How did this idea get started?
Russell: We were inspired by European versions of this. Little mom-and-pop operations in Europe with quaint European ways of doing things -- 20 cars and lock boxes and little log slips you'd fill out. We looked at that and said, 'Well maybe that works because you can trust your small population of 200 or 300 people that might be using this small fleet of cars.' But we wanted to come at it with the big American approach that would allow us to go out and raise money -- because you could build a substantial business off of this.
Convenience being the key?
Russell: The reservation system had to be really easy to use. Access to the car had to be brain-dead simple, reliable and secure.
So that laid out the constraints on the system we had to build. We had to put wireless things in the cars because the cars had to be scattered all over the place. They needed the wireless component because that was the only way we could figure out how to build a secure system. How can you possibly keep track of how far people are driving if it's not automatically recorded?
Were there any early missteps?
Russell: In the early system we put out, we hadn't finished all the development of the wireless stuff, so people would go to cars and assume that everything was working like magic. But, in fact, if they had gone to any car, at any time of day, they would have been allowed access. But nobody knew that. Again, it was starting out very small, and there weren't any bad apples, so it was OK.
How are Zipcar's online reservation features unique?
Russell: It's a location-sensitive system. That is, when you go to reserve a car, the system knows where you live; it knows where you work; it knows the places you visit; where your cousin's house is, where the gym is -- all the locations you've told it about. Because of that, it knows what cars are near those locations. You tell it, 'I want to book a car tomorrow afternoon near my house.' And it will tell you, 'OK, these cars are available at the times near your house.'
It is scalable, because as we add a location -- and we're constantly doing that -- or deleting a location, it happens automatically. So we don't have to constantly tell people, 'By the way, there's a new location.' Because for people to remember all the locations, that's just crazy. But it's done in a subtle way. Every person who comes in to reserve a car gets a slightly different interface.
A key to automation is reducing human transactions. What's an example of how you've done that?
Russell: Lost and Found. People are always leaving things in the cars, cell phones, BlackBerrys, gloves, their Prada sunglasses. And people are always finding that stuff. We used to get lots of calls for that. I lost my cell phone! I found a cell phone! What the heck, we're getting lots of lost-and-found calls! This is starting to cost us real money, and what the heck are we supposed to do? So we had a policy -- if you find something, leave it in the glove box.
Then we put in place a big, simple, lost-and-found system for members to report the items online. You can report an item lost or found only in one of the cars you've used in the past 30 days. You go to the Lost and Found, and the only cars you can see -- in terms of what you want to report -- are the cars you've used.
Then it's like a match?
Russell: If you've found something, you can report it found. If you've lost something you can look at what's been reported found in the cars you've used. And that takes us out of the loop. The member then has to book a car for the hour. Booking it is the only way you can guarantee the car will be there. The number of calls went down to next to nothing.
What about things like snow removal or street cleaning? Does that make your job tougher?
Russell: We don't put cars on streets that are going to be hit by street sweeping, because operationally you'd be sending out the flying monkeys to move the cars. You've got to simplify.
Now, as the business evolves, the system changes. In Boston, we recently had a partnership with IKEA where we wrapped a half-dozen cars with IKEA advertising. That allows us to offer the cars to members for a discount. We wanted those cars used mostly for short trips, and so did IKEA, so we said, OK, the pricing will only have the discounted hourly rate -- and not the daily rate. It's a good deal.
What did it mean for IT?
Russell: We had to put into the system enough messaging up front to prevent two things: One, when the members got their billing they weren't really disappointed, because they booked it for 48 hours and ended up paying an hourly rate -- and two, that when they got to the car they didn't say, 'What the hell is this? This is not a Zipcar.' We took photos of the individual cars. We made sure that you could see on your reservation what you were going to get and we put in one intermediate step telling customers to be careful, that car can only be rented for an hourly rate.
It was a complete success. I don't think there has been a single complaint.