A year ago, navigation app Waze made a risky bet on carpooling, a type of commuting that has waned since its heyday in the 1970s. It launched Waze Carpool, a dedicated app that lets nonprofessional drivers offer rides to people who are traveling on a similar route for a nominal fee. So how’s it been going? Pretty good it seems, according to some statistics the company released on October 10th to celebrate its first year in the carpooling business.

Waze says carpool customers completed more than 550,000 rides globally last September. (Waze Carpool is available in the US, Mexico, Brazil, and Israel.) The company predicts that it will cross 1 million monthly rides by early 2020. Carpool customers in the US collectively drove 25 million miles last year, which the company estimates helped reduce carbon emissions by 20 million pounds, thanks to combined rides. But Waze would not reveal the total number of people who are using the app, nor would it comment on its retention and turnover rates.

“We have what we think is a magic number,” Josh Fried, head of Waze Carpool, said in an interview. “And that is four rides… If we get you into one carpool, and then you end up completing four carpools, you stick [with the service].”

Waze defines a carpool as one driver plus one rider, though earlier this summer, the company updated the app to let drivers pick up more than one passenger at a time for a maximum of four riders. Drivers are paired with riders with nearly identical commutes based on home and work addresses. And drivers and riders are limited to two rides per day. This is not a money-making service; rather, it’s an attempt by Waze to test the waters in the growing ride-sharing market.

To be sure, convincing Americans to carpool is exceedingly difficult, especially in an era of cheap gas and more convenient services like Uber and Lyft. CityLab recently reported that Waze has been sending teams of employees to WeWork locations bearing tacos and other free goodies to persuade young professionals to download the app.

Carpooling has been on the decline over the last several decades. In the 1970s, in the midst of a gas crisis, around 20 percent of Americans shared rides on the way to work; now, that number is around 7 percent. Both Uber and Lyft have tried to get their respective customers to share rides with varying degrees of success.

Fried said Waze Carpool is seeing a lot of success in markets like the Bay Area, Seattle, Washington, DC, and Dallas. “But that progress is not enough,” he added. “We want to be a major mode of commute transportation in these cities. [So that means] building a service that reaches many, many more people, and finding a way to make these carpools more sustainable.”

That’s going to be difficult because Waze doesn’t make any money on carpooling. Riders are charged a maximum rate of 58 cents per mile, which is the current IRS reimbursement rate for business travel by car (up from 54 cents last year). The idea is to reimburse drivers for driving-related costs, such as gas, and nothing more. A driver could get up to $19, depending on the distance and the number of riders in the car, while most riders end up paying less than $5 per ride.

To get around this problem of profits (or lack thereof), Waze is partnering with major employers to promote carpooling to their workers, like the aforementioned WeWork / taco event. These companies “invest” undisclosed amounts in Waze Carpool, and Waze, in turn, gives limited free rides to their workers. Meanwhile, Alphabet gets a revenue stream, which helps justify keeping Waze Carpool up and running. The company says it’s also working with Amazon, AMD, Santa Monica Proper Hotel, Old Navy, and Samsung.

Carpooling is just one mode of transportation, and increasingly, there is a highly competitive race among big tech firms to transform their respective apps into one-stop shops for all modes of transportation. Uber just launched a major redesign with the goal to become an “operating system” for cities. Lyft just killed the feature that allows other apps, like Transit, to access its bike-share systems.

Fried said that Waze Carpool is “laser focused” on drivers and optimizing its shared ride service. That said, he hopes carpooling can become a mode on par with other popular transportation services. “If we can get people comfortable with leaving their cars at home, then you can take a multimodal trip that involves public transit, a Waze carpool, and a scooter on the other end, to make a seamless door to door experience that doesn’t involve you driving a car,” he said. “And that would be great.”

~source