November 21, 2015 - 12:01 am ET
SUNNYVALE, Calif. -- Mercedes- Benz had a particular group of young customers in mind when it launched Boost, an Uber-like shuttle service, in 2013. They couldn't afford luxury cars, and they did not even have driver's licenses.
They were children, and they simply needed to get to soccer practice.
Boost, created by Mercedes-Benz's Business Innovation division, has given 10,000 rides in the Silicon Valley suburbs since 2013. Parents use a smartphone app to reserve spots for children on a Sprinter van, paying about $20 per ride.
The company designed Boost to solve a problem its customers face. Many come from affluent, dual-income households; for them, leaving work to serve as an after-school chauffeur comes at a steep cost.
"These are people with more money than time," Rasheq Zarif, who manages the project, said in an interview at Mercedes-Benz's r&d center in Silicon Valley. "A lot of them were not aware of how much time they really spent driving around and waiting."
At first blush, Boost might seem like an odd business venture for a luxury-car brand such as Mercedes-Benz. Yet the German automaker also was among the first to embrace economical car-sharing. The short-term rental service Car2Go, owned by parent company Daimler AG, operates fleets of Smart ForTwo city cars in 30 urban centers in North America and Europe, with more than 10,000 cars and 1 million registered users worldwide.
Mercedes after class
Mercedes-Benz's Silicon Valley r&d center is testing Boost, an Uber-like service that takes children to activities after school. Here are the details.
Basic idea: Parents reserve and track rides for children on a mobile app.
Eligible riders: Children ages 5 to 15
Vehicles: Sprinter vans with booster seats, children's books and sickness bags
Employees: 1 driver and 1 concierge per van
Pricing: $22 per trip before bulk discounts
Locations: Palo Alto, Calif., and 5 nearby suburbs
Source: Mercedes-Benz R&D North America
Boost shows that Mercedes-Benz also is fixated on building mobility services for the sprawling suburbs where many of its American customers reside.
"There are so many mobility service companies trying to solve the urban problem, including Daimler," Zarif said. "Our role is to find the next challenge, and the next challenge is the mega-suburbs."
This mentality has taken Mercedes-Benz in unexpected directions.
At the Silicon Valley r&d center here, employees grappled with the technical challenge of building back-end software for trip reservations and routing as well as customer-facing software that allows parents to track the whereabouts of their children.
Employees also learned to properly outfit Boost's vans for children, with joke books, children's music, first-aid kits and sickness bags. To ensure security, the company runs background checks and drug tests on drivers and onboard concierges. It also requires them to agree to a Department of Motor Vehicles program that notifies Mercedes-Benz if the driver gets a ticket.
Dealing with children can be difficult, especially at the end of a long school day, when the arrival of a shuttle often forces them to leave their friends on the playground.
And dealing with parents can be just as difficult. This isn't just a simple business transaction, after all; some parents or teachers like to chat with the concierge. So there is a time buffer built into every pickup.
If it grows, Boost could help Mercedes-Benz's existing business. For one thing, it could breed loyalty with suburbanites who buy a Mercedes-Benz and come to rely on the brand for help in other facets of their life. It also could help sales of Sprinter and Metris vans, just as Car2Go has created a market for the Smart ForTwo.
Yet it seems likely Daimler wouldn't run an expanded Boost itself, the way it runs Car2Go. Rather, it would license the software platform to reputable bus operators that understand the business and can provide superior service.
"School buses are a hyperlocal business," Zarif said. "For a big entity like us to try to do it locally would be a huge challenge."
Zarif's team came up with the idea for Boost in July 2012. After three months of research and pitches to management in Stuttgart, the project got the green light. It launched in April 2013 with a single Sprinter van.
The inspiration came from research into the suburbs at the Silicon Valley r&d center.
"Options like public transportation and car-sharing are reduced in the suburbs because of low density and, to some extent, because of values," said Eric Larsen, head of the society and technology group at the r&d center. "So we asked ourselves: What are the possible unmet needs that people have for getting around in the suburbs? To a large extent, it's people who don't or can't drive."
Children rose to the top of that list. Also ranking high were people who can't drive because of a disability and older people who have dialed back their driving.
Along with Boost, Mercedes-Benz is testing a commuter shuttle program called RanchRide in the Southern California towns of Ladera Ranch and Rancho Mission Viejo. Developers who build sprawling housing tracts often must pay for new roads. Mercedes-Benz thinks subsidized commuter shuttles may attract homebuyers and ease traffic, reducing road costs and making shuttles irresistible to developers.
Susan Shaheen, a professor at the University of California, Berkeley, who studies shared mobility, said services such as Boost and RanchRide could shake up patterns of car ownership. If parents no longer have to pick up children from school, they might commute by mass transit instead. If a two-car household can make do with one, it might be willing to spend more on that single car and go for a luxury make such as Mercedes.
"Some people might argue that the suburban market is even larger than the urban core market," Shaheen said. "I think we're going to see more experimentation there."
You can reach Gabe Nelson at [email protected].
