The Tale of the Taxi Apps

Recently, my prof invited the country head of EasyTaxi for a guest lecture. It was quite insightful. He gave lots of information about the taxi market in Singapore. The most interesting takeaway from the lecture was the answer to a key question in many people’s mind; what is the revenue model of taxi apps? There are currently 2 ways to earn money for EasyTaxi. One is mass marketing/PR campaign. He gave the example of Johnnie Walker providing mass sponsorship of taxi rides to discourage drink driving. Second, is simplifying company payments for taxi rides. This applies to corporate workers who can claim their taxi rides, it will save the company lots of money to streamline the process.

Today I used GrabTaxi and took a cab. Had a little chat with the driver about the taxi apps, and surprisingly, I learnt even more than the guest lecture! I told the driver I have a few of those apps on my phone, so that if one app tells me there’s no cab during peak period, I can easily try another app. He said it’s different for the cab drivers. Each app company set a bonus target quota to reach, that’s why he is loyal to GrabTaxi (so does most of his colleagues). GrabTaxi offers a bonus of $888 in cash and $80 in credit if they hit 210 rides from the app per month. That’s a lot! That’s why they focus on one app (no idea why GrabTaxi and not others), to try and hit the target. Then he said there’s a lot of competition among the apps, which is extremely good for them. For example when Uber offered free rides, GrabTaxi offered a one day deal for the drivers, tiered bonus: 15 rides $28 cash, 25 rides $55 cash and so on (fake numbers). So all the cab drivers just chiong to use the GrabTaxi app. (Uber has Uber app and UberTaxi I think, but cab drivers can use either). Then I was thinking, wow that’s why Uber’s supply couldn’t meet the demand on both occasions. And that caused super big backlash for Uber, since reliability is a big factor for taxi apps. Then he said something which the guest lecturer also said. Cab driver: who spam money, first to buay dong then who lose. CEO: the company with a higher burn rate and finishes the venture capital first will lose out.

An interesting thought came to my mind. For businesses that connect 2 parties, should they focus on the side giving the money or the side receiving the money? There are so many businesses that have such a business model now. It is easy to understand that when the network on one side is strong, the other side will follow. But not easy to decide, where to plunge the money. For this case of taxi apps, it seemed like GrabTaxi is outperforming by focusing resources on the ones providing the service. Nevertheless, only time can tell which company will dominate the taxi scene.

A thank you gift for whoever took time to read what I had in mind haha. The CEO said can use the promo code “EasySMU” for a $10 discount. I haven’t tried it yet though.