I know that it is hard to believe that there could be a more popular app targeting the taxi industry then Uber. But the unbelievable is real in the Baltics, where there is an app named Taxify, which is for taxi drivers as well as taxi users.
Currently, it is getting even more popular, since some legal issues helped them getting media coverage. For example, one driver in Riga was arrested by the police couple of weeks ago. His car was confiscated due to the fact that he has been involved in illegal business. The truth is that this is just the new business model offered by Taxify – ridesharing. And it makes this situation to be one example of how startup industries change the world. It takes time for other traditional industries and institutions adapt to rules set by newcomers.
Taxify is currently operating in 8 countries in Europe and it has 3 local partners in Georgia, Mexico and South-Africa. It is a leading taxi booking app in Eastern-Europe with over 500,000 users and many millions of rides in 2015. Taxify is growing really fast – from about 10 to 20% each month! The company’s mission is to expand its services and provide a reliable, affordable and convenient ride with a tap of a button in many cities in Central-Eastern Europe within the next 5 years. So we met Taxify Regional Manager Juris Krūmiņš in Latvia to talk about the new business model as well as current legal issues in the country.
What exactly is Taxify and how did it all start?
Taxify is a technology startup that builds mobile apps for consumers and drivers. The company is also dispatching software for taxi companies. Taxify was founded in 2013 by three guys from Estonian – Markus, Oliver and Martin. The idea came to Martin in summer 2012 when he was visiting Kiev in Ukraine. Locals were ordering taxis there via web service. There were no similar services in Estonia and Latvia at that time although people had problems ordering taxis on weekends and peak hours in Tallinn and Riga. The market there is fragmented – there are over 25 different taxi companies and each of them has a call center and small fleets.
Markus was a 19 years old high-school student who decided to create a mobile app on Martin’s vision. He thought that it could be useful to put all taxis in Tallinn and Riga into one platform. Initial investment money came from families. The prototype had some bugs, but it was good enough to show for taxi drivers and customers – early adopters. The guys got a lot of feedback and started to improve the product.
Luckily Oliver joined the team – he was programmer. This is still considered to be best hire for Taxify so far. Oliver quickly re-wrote code base; it’s being used still. So the Taxify app helps people get a reliable ride with a push of a button. Choose your closest car by price, distance, user rating or car model. You will see the car approaching real-time on the map after confirming the order. Taxify currently operates in all Baltic countries as well as 7 other countries in Europe. Real growth started in early 2014 when the team decided to find investors to finance expansion and hire new team members for new operating cities. The company has raised 1.5M EUR so far from venture capital and angel investors.
What are the main differences compared to the better known taxi startup Uber? Are you competitors? How are you planning to win the competition?
Taxify is offering a reliable ride with both – licensed taxis and private drivers (ridesharing). And this is the main difference. Currently 80% of Taxify drivers are taxis and 20% are private drivers. There is a strict quality control before accepting somebody as a new driver. There is 2-way feedback system to rate drivers and clients. We are keeping only the best and most active drivers. Taxify is also offering several payment options – cash, card payments, mobile operator billing and corporate agreements. It all has worked out successfully for us, because we are market leader in Baltic countries.
We did a pilot project in Riga on ridesharing. We added a few dozen private drivers to the system. Over 12,000 users have taken rides with ridesharing drivers in Riga. Clients were really happy with the price and service quality and immediately understood the added value of such model. We got lots of support in social media from different influencers, politicians and regular users who moved around the city. Ridesharing drivers got average rating 4,86 of 5 stars max, which is higher than average taxi drivers. Private drivers are able to get additional income with the Taxify just by logging in the system and taking few rides per day.
What legislation issues did you have in Latvia with ridesharing?
Everyone who is willing to carry passengers in Latvia needs to have a license. Ridesharing as a new concept is not regulated yet. Thus the current legislation supports current taxi companies and violations can result in fines by police. So we arranged the meeting with Riga City Mayor Nils Ušakovs. He provided support for the ridesharing concept and agreed that Latvian laws should be updated. Tax authorities were also supportive as long as we can cooperate and ensure that the drivers are paying taxes. And we can! We will meet other stakeholders in Latvia to introduce ridesharing and we really hope to find a way and change the legislation to legalize it here. Overall we see good trends in Baltic countries and Europe where authorities becomes more open to innovations and changes.
How is Taxify doing in the other markets it is currently operating in? Some more legislation issues or other problems that usually come along with new technologies in the market?
Estonian President and politicians are very supportive for the new technologies that improve services and create transparency for consumers. So we have lots of support there. Changes in the new Transport Law are already sent to Estonian Parliament. Vilnius Mayor is also very supportive towards ridesharing and changes in Transport Law are currently discussed in Lithuanian Parliament.
I would say that current market leaders are the ones who are against changes and innovations in the market. We are potential threat to their market share! But there are always going to be people, who will prefer to drive with traditional licensed taxis. And Taxify is a tool for taxi companies as well! It can help them to adapt to new modern technologies, increase number of rides and increase fleet efficiency by connecting closest drivers to the clients. It should result in faster pickup times, less fuel consumption and higher hourly income for drivers.