Assumptions behind the failure of Hailo
Knowing that the mobile app market is extremely competitive, I did some research to find apps that were considered “major failures” over the years.
One that grabbed my attention was Hailo, which arrived in New York in early 2013 to allow users to hail taxi cabs. It was launched in London 6 years ago and did amazingly well as it enabled more than 3 million rides for passengers by May 2013. When its branch office opened in New York, the company already had 2.5 million users and 30,000 drivers. Despite gaining such impressive traction and even having $100 million in funding from backers, it was forced to leave the U.S. market shortly after due to several reasons.

Hailo meant to take the yellow cab market and get existing drivers to use their app to connect with potential passengers. It didn’t work — only a small fraction of New York’s 40,000 drivers signed up for Hailo. Where did this highly anticipated business go wrong? Why did it work in one location but not in another? A lot of questions arise from this case study.
- It worked here so it’ll work there: Hailo was wrong to assume that the yellow cab drivers in New York were the same as their British counterparts. London is known for being one of the world’s most confusing cities due to the tangle of their streets, so most drivers carry smartphones (which are must-haves for an app). Those in New York, on the other hand, often don’t need smartphones due to easy navigation of the city’s planned grid layout. Hailo also made a faulty assumption that New York taxi drivers needed help finding fares, but this wasn’t the case. In fact, it wasn’t a problem for them at all. Turns out that the mobile app wasn’t as necessary for this specific audience as they hoped it would be. Additionally, the company faced technical issues after entering the new market, realizing the need to redesign their services to integrate with New York taxi companies’ outdated payment processors.
- What we’re offering is better because it’s different: When Hailo was ready to launch in New York, a bunch of other similar services were also lined up and Uber was its biggest competitor. The company’s original plan was to offer amazing prices while focusing on the yellow cab market, which left the higher-end market to Uber. However, it ended up losing the competition when Uber came out with even better prices (especially for its UberX service). Although its competitor had to recruit new drivers, 50,000 drivers around the world are added to the service per month. Meanwhile, Hailo has 60,000 drivers worldwide in total.

Conclusion: Hailo is a prime example of why market and user research are so important in mobile app development. From its failure, we can learn how essential it is to uncover assumptions and generate hypotheses during the research process. The company could have avoided some of their mistakes if they had done more research to gain a better understanding of the market they were entering along with their users.
Thanks for reading!
