This is a story about a taxi app - but it's not a story about Uber.
The other day, a red light on the dashboard of my car turned on. The light was accompanied by a warning that said ‘check coolant’. So I did, and the coolant was 99% full, but I topped it off just to make sure everything was hunky dory. I got back in the car, and lo and behold, the red light was still there.
I decided to take my car to the garage to see what some professional help could do to solve my problem. With my wheels gone, I decided that I would need to ride the bus. By chance, I saw that the app that I was using to check the bus schedule, Moovit, suggested I order a cab with Gett (formerly known as Gettaxi). I had heard good things about Gett, so I decided to give it a whirl.
I allowed my device to see my current location, and after some brief scanning, it told me that my cab driver would pick me up in 5 minutes. When my cab driver picked me up almost exactly 5 minutes later, I hopped in and admired the ease with which I had just grabbed this taxi. No need to wait on the side of the road, no hassle. Impressed by the service, I started to ask my driver about Gett - how do they make money? Does the driver like working with them? The answers to my questions were unexpected.
I was told that what drives (pun intended) Gett’s business is leasing hardware, not software, to taxi drivers. Gett provides a specific tablet that they rent out to taxi drivers on a monthly basis to the tune of roughly 100 $ a month. On top of that, there is a fixed charge that Gett charges per trip taken, regardless of the price of the fare. It seems curious that taxi drivers can't buy their own cheap tablet and place the Gett app on it. Here lies the genius of this revenue model. Gett produces proprietary software that routes each ride request to respective passengers. This software is accessible to drivers exclusively on Gett’s tablets. This is both a creative way to leverage their software package, and a tested and successful hardware subscription model. Similar deals are familiar to those of us who have signed a multi-year contract for the pleasure of using a smartphone.
I later ordered a taxi and again it arrived within 5 minutes. My fascination with Gett piqued by my last conversation, I dove into yet another interrogation. We started discussing the impact Gett has had on the local market. In short, it has decimated the traditional taxi business. Regular dispatch services can't keep up with Gett, according to the driver, "everyone is on Gettaxi". Gett offers drivers the most rides, as they are plugged directly into customers' pockets through the app. Drivers have minimal time where they need to be searching for passengers. According to the drivers, the real key is the customers, as Gett's business is focused primarily on its customers. The app makes ease of use a primary focus. Additionally, while drivers may pay a premium for using the service, passengers receive a fair price. For example, the first time you pay via credit card you get an automatic discount of almost 10 dollars.
Gett has leveled the playing field; now an algorithm chooses objectively who to route each ride to. This is in stark contrast to the old dispatch system, where the friends of the people running dispatch would get more lucrative journeys. Gett's traction with drivers, combined with its slick service has proven too much for the traditional taxi industry. This has intimidated the industry to such an extent that they themselves have tried to create a taxi hailing app. Their app had backing from some impressive financial corporations, but the result of this project has yet to bear fruit.
Finally, on my last trip of the day, I was ready to become an advocate for Gett. I liked how easy it was to hail a taxi, I liked the drivers, and the drivers themselves seemed to appreciate the service as well. I relayed these thoughts to my driver. and his surprising response was, "ýou should be using Uber." I was taken aback, saying "what do you mean, why?" Until recently, Uber had not even reached the local market, hence my surprise. "Yes, they just began offering their services here, and they are offering 50 % off of any ride that you take that is up to about 30 dollars." I was stunned for more than one reason. First, I had known that Uber was a massive global player, but had no idea they had arrived locally. Second, offering 50 percent off almost all rides is something that is nearly impossible to compete with. If Gett had decimated the market, then Uber was looking to decimate Gett. Gett has received 200 million dollars so far in funding, whereas Uber has received roughly 7 billion dollars. This may yet prove too much for Gett to handle.
Gett has had to rethink what it does to compete. It has decided to pivot toward a ‘get anything immediately’ model. Gett has started using its cars as a delivery service, bringing goods, such as champagne, to people at the press of a button. They also intend to expand their delivery services in the future to include other items. Time will only tell whether these deliveries gain traction. Successful startups often take an established industry and make it obsolete through the use of technology. This is called disrupting the industry, and this is what happens when the disruptors are disrupted.
Photo credit: http://www.publicdomainpictures.net/ by: Lebin Yuriy