Handbrake turn! U.K. based taxi app Hailo is handing in its private hire vehicle (PHV) license in London and going black cab only, which is where the business began — only expanding to include PHVs in May 2014 and causing some irate cabbies to attack its offices last year. But from now (5pm U.K. time today) Hailo will only offer the ability to book black cabs in London.
“As a company founded by Cabbies, Hailo was made strong by its original connections to the taxi trade and we feel we’ve drifted too far from it,” says CEO Andrew Pinnington penning a blog post with the news.
Expanding on this in a phone call with TechCrunch, Pinnington, who has only been in post for around nine months (so was not around when the decision to open up to PHVs was taken), said there are both “emotional” — owing to its origins as a business founded by cabbies — and “pragmatic” reasons for the shift.
He said the reasons Hailo previously opened up to PHVs were to do with ensuring it could appeal to corporate users wanting executive cars, and that it had enough vehicles for hire to meet demand at all times of the day.
“What’s happened over the course of the last 15 months or so as we got more and more into that corporate space… we discovered that actually what corporates are telling us is actually having an extra class of vehicle is, in many cases, just irrelevant,” he said. “So that rational doesn’t really exist any more. And then from a reliability stand-point over time our supply base has strengthened.”
At this point Hailo has some 16,000 registered cabbies on its system in London, according to Pinnington. It’s not breaking out active monthly users in the city at this stage, saying only that it’s been responsible for putting “close to 10 million people in the back of London cabs” over some four years of operation.
He argues the switch to solely offer black cabs positions Hailo to focus its efforts on targeting a different segment of the market vs a certain very well funded PHV competitor; aka Uber. “From a pragmatic perspective it’s the right call to make… It allows us to really stand for something,” he said. “Now we’ve got a very clear position in the market — whereas before we were nether one nor t’other.”
So what is Hailo’s “clear position” in the London market now? Pinnington argues the business does not compete “head on” with Uber because it’s aiming to appeal to the types of users who have other priorities than simply getting somewhere for the cheapest price.
“There are two very distinct types of service here,” he said. “If you are a different type of consumer, if you are a mum and dad with a large amount of baggage and prams, if you have a disability, if you’re blind, if you’re war wounded, if you’re potentially feeling vulnerable — whether you’re a child traveling alone… or whether you are a female who has certain concerns about safety and security, there are lots of different types of consumer who aren’t necessarily just interested in getting from A to B in the cheapest form possible.
“What we’re trying to look at is to say, as a society, we put value on things above and beyond just purely a race to the bottom and doing things as cheaply as possible — so that might be accessibility, that might be safety and reliability, it might be service. It’s not necessarily all about price. It might be businesses who want the most knowledgeable and speedy way of getting from A to B when the city’s snarled up. So there are lots of different reasons why people would choose different types of service.”
“If you allow the market unfettered access — and if you just drive it based on price — then there are certain elements of social, which in a global city like London, will decided that’s not necessarily what we want,” he added.
This week Transport for London, the local government body which regulates cabs and PHVs in London, kicked off a consultation on proposed changes to PHV regulations. Any changes will affect Uber’s operations in the city, but not Hailo’s now — given it has stepped away from the PHV market.
Uber has slammed TfL’s proposed changes as “bureaucratic” and a threat to the current service level it offers in the capital. Asked for his response to the consultation — which includes proposals such as a mandatory five-minute pre-pick-up wait time, and the suggestion that PHV apps should not be able to show real-time availability of cars around the user’s location, Pinnington said: “The important thing to note is it’s a consultation. It’s not a series of regulations they’re going to enforce. There will be strong opinions on both sides.
There’s more than just free market economics to consider here. There’s a societal interest as well.
“We’re going to come down more on the side… of saying there’s more than just free market economics to consider here. There’s a societal interest as well. Instinctively because we’re a modern, high tech, high growth company we don’t shy away from competition. So I’m not looking to stand here and say they should be regulated out of business… It sharpens everyone to have strong competition. That’s healthy for everybody. But what we’ve got to ensure is when we have this debate that more than one side is heard — and the full picture is understood.”
Catering to specific consumer interest groups involves the “cost” of “a little bit of regulation”, he added. “What final form that regulation takes is something that TfL will have to decide on the balance of all the input.”
Pinnington says Hailo has various plans for tech developments for its own service from here on in, including adding more features to its apps — perhaps such as real-time traffic updates and the ability for drivers to track earnings in one place. It’s also trialling a fee-less mobile payment solution for accepting credit card payments for journeys in the cab.
Another area where it’s looking to shake things up is its commission model for drivers. Instead of a flat 10 per cent per job commission fee, as is currently the case, it will be offering a “menu” of options for drivers — such as the ability to pay a small fixed fee per week and then pay a lower commission rate. “What we understand is treating the driver body as one-size-fits-all is a fairly illogical way of approaching the business,” Pinnington added.
He refused to be drawn on whether Hailo is in the midst of raising another funding round — it’s raised some $100 million to date, with investors including Union Square Ventures, Accel and Wellington Partners — saying only that early stage startups are perennially on the funding trail.
In addition to London, Hailo is operational in several other markets globally, including Ireland, Spain, Singapore and Japan — although it retrenched from the North American market last October citing increasing price pressure from competitors such as Uber and Lyft.