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Taxify: A Cheaper Ride Share option to Uber & Grab

With Taxify placing as much importance on drivers, as they do on their riding customers, will the latest ride sharing startup prove a threat to Uber and Grab?

Oct 09, 2017 | By Jonathan Ho

The ride share economy is about to get disrupted by a more affordable alternative than current operators Uber and Grab and they have a 23 year old university dropout to blame. The former undergrad recently launched Taxify. Founded in Estonia, that little North European state which disrupted the world with its pioneering eResidency program, and then created waves once more with proposals of a sovereign bitcoin, the new Estonian competitor to Uber and Grab is expected to overturn the ride sharing industry.

Taxify: A Cheaper Ride Share option to Uber & Grab

Taxify CEO Markus Villig is the enterprising 23 year old. Through the Taxify app, the Estonian ride share firm offers taxis and car services cheaper than Uber and Grab – one key difference is that Taxify offers an additional form of payment – that of cash, making it more similar to Grab than to Uber.

 

The university dropout conceived and launched Taxify from home before expanding into close to 20 markets, avoiding typical Western European markets due to more onerous regulations – so far, the latest ride share company operates in Africa and eastern Europe but recently it attempted an abortive effort to run in London.

Launching in the English capital on 5th September, Taxify took an aggressive approach of heavily discounted fares to get people on board (50%) plus an additional £3 off for people who persuade others to sign up. And just three days later, the ride-hailing app was suspended and Taxify was forced to pull its services from the English city after a challenge from Transport for London alleged that the company lacked the proper private hire licences to operate in the city. According to Taxify, the suspension was unjust as it operated as a technology provider (the Taxify app) and not a taxi company as it offered its services through local hire company – City Drive Services which had its own license to operate taxis.

Eyes on Paris: Can Taxify Succeed?

 

Taxify features a business model that is attractive to both drivers and riders – taking a 10 – 15% commission instead of Uber’s 20 – 35% commission fee while offering its riders and users up to three times less the costs of traditional ride share competitors Uber and Grab.

That said, the ride sharing industry is littered with the corpses of other ride share startups which have tried and failed – Remember Karhoo and Hailo? Luxuo sure doesn’t. Presently, management issues and sexual harassment allegations notwithstanding, Uber is the most valuable private company in the world with raised equity of close to US$15 billion.

“We’ve seen that in the long term, these lower prices make sense. And in the long term if drivers are happy, there’s a better customer experience and it leads to us having a higher customer retention.” – Markus Villig, Taxify founder and CEO, to Business Insider

In terms of drivers, Uber outnumbered Taxify 4:1 at the time of launch. That said, 23 year old Villig was confident that backed only by one major investor – China’s Didi Chuxing, Taxify is not pressured to turn a profit in the short-term in order to provide investor returns. Arguably, none of Uber’s investors are complaining with their loss-leader strategy thus far.

Exactly a year ago, Uber drivers in London won a UK tribunal case which earned them rights to holiday pay, rest breaks and UK National Living Wage, a setback for the firm; even then, Uber continues to be plagued with allegations of poor respect for drivers’ rights in multiple territories. Uber Chief Executive Travis Kalanick resigned in June 2017 – Not exactly Uber’s most preferred example of going driverless.

With Taxify placing as much importance on drivers, as they do on their riding customers and the benefit of direct text and calls versus dropped calls and message errors via Uber and Grab apps, Taxify riders in 25 cities have made few complaints about the company.

Since 2013, Taxify primarily operated in cities where Uber and Grab did not yet have a foothold, giving rise to rumours that Taxify CEO Villig’s exit strategy was merely acquisition however the Estonian ride-hailing service began operations in Paris on Thursday, going head-to-head with market leader Uber once more since their last face-off in London.

Uber, has lost $2.8 billion in 2016 on a turnover of $6.5 billion while Villig claims that Taxify is already profitable. Didi Chuxing currently owns 20% of Taxify.

 

 

 

 
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