- The Washington Times - Tuesday, August 30, 2005

America Online founder Stephen Case today will announce that he is steering in another direction.

Mr. Case plans to disclose he will buy a majority stake in Flexcar, a privately held company based in Seattle that rents cars by the hour.

Mr. Case co-founded America Online Inc. in 1985, helped it become the biggest U.S. Internet service provider, and merged it with Time Warner Inc. before stepping down as chairman of the company in May 2003 in the wake of the disastrous deal.

In April, he started Revolution LLC, based in the District, which will take over Flexcar for an undisclosed sum.

Mr. Case will name former Chrysler Corp. Chairman Lee Iacocca to the car-rental company’s board of directors.

Revolution “is really trying to get people to think about a different approach, whether it be healthier choices in what they eat, in terms of fitness or other ways to lead a simpler or more fulfilling life,” Mr. Case said. “This is another option.”

Flexcar, owned by Mobility Inc., has a fleet of 450 cars that it rents out in five U.S. cities: Washington, San Diego, Los Angeles, Seattle and Portland, Ore.

Mr. Case, 47, said he became interested in Flexcar four months ago while walking past one of its parking spots at 17th and O streets Northwest, near Revolution’s offices. He used the service several times to reach meetings throughout the city.

His investment will help Flexcar expand, said the chief executive of the six-year-old company, Lance Ayrault.

Flexcar has 30,000 members who rent cars. Within five years, Flexcar expects to have 1 million members and a fleet of 20,000 cars, up from 450 today. The company isn’t profitable.

Its primary competitor is Zipcar, a Boston company with 45,000 members and nearly 700 cars. Zipcar operates in the Boston area, New York City, White Plains, N.Y., Hoboken, N.J., Princeton, N.J., and metropolitan Washington.

Zipcar has raised $10 million in venture capital.

Flexcar received a $4 million investment last year from American Honda Motor Co. and Bristol Bay Native Corp., a holding company based in Alaska. Management planned to use the money to fund new technology, buy cars and boost membership.

Both Flexcar and Zipcar were founded in 1999 and have marketed themselves to people in congested urban areas who rely on public transportation, but need a car occasionally.

“The idea that maybe you don’t have to own a car if you only need one occasionally may catch on, just like time-sharing caught on in real estate,” Mr. Case said.

When he announced plans to start Revolution, a privately held holding company, Mr. Case said he would commit $500 million of his own money to fund the venture. Plans included using the money to invest in health care service companies and resort properties.

In July 2004, Revolution bought a 50 percent stake in Denver company Exclusive Resorts LLC, then bought another 30 percent stake in the company in November.

Revolution also has invested $20 million in a company that produces yoga instruction videos. Revolution announced this month it would invest the money in Gaiam Inc., based in Broomfield, Colo.

Revolution also has made investments in Miraval — Life in Balance, a resort and spa company in Tucson, Ariz.

• This story is based in part on wire service reports.

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