MyTaxi’s Hailo purchase proves Daimler’s strategy

The purchase of 60% of Hailo by MyTaxi, owned by Daimler, confirms what I saw during my visit to the company’s Stuttgart headquarters at the end of January: the company’s strategy is focused on a future in which quite simply, people will be buying fewer cars and less often, meaning they will use other means to move around.

In reality, the operation is a share swap with no money changing hands. Daimler acquires 60% of Hailo at its current share price and the company keeps all its shareholders, who have pumped $100 million into it over successive financing rounds, and in return receive shares in the new MyTaxi. Hailo now operates under the MyTaxi brand, and its current CEO, Andrew Pinnington, becomes the new CEO of MyTaxi. The CEO and founder of MyTaxi, Niclaus Mewes, will oversee Daimler’s activities in passenger transport.

The deal makes sense because the two companies’ operating areas are quite distinct: MyTaxi is active in Germany, Australia, Italy, Poland, Portugal, Spain and Sweden, while Hailo has a strong presence in Ireland, Spain and the United Kingdom. Spain is the only territory where the two companies overlap their presence.

It’s unusual to see a large motor manufacturer not only predict the future, but to try to position itself through an ambitious strategy that combines acquisitions and intra-creation. Faced with a competitor like Uber, which will obviously respond vigorously, most companies will simply try to apply so-called non-market strategies such as using lobbies, regulators, the courts, etc, to try to deal with a new competitor.

Daimler’s strategy, which I would compare to Schumpeter’s destructive creation, includes acquisitions such as RideScout or MyTaxi in 2014, as well as joining internal developments such as Car2Go or Moovel, the multimodal mobility app. The strategy has generated a constellation of people and know-how distributed throughout a range of areas: while relatively young companies such as Car2Go still work out of Daimler’s headquarters, Moovel has just moved into some very upscale offices in the center of Stuttgart, while MyTaxi continues to operate from Hamburg.

This is all about the future urban mobility, which increasingly points to the use of walking and bikes, as well as taking in car sharing, ride sharing, public transport, or different types of taxi service. While MyTaxi and the recently purchased Hailo use licensed taxi drivers, companies like Uber operate through professional chauffeurs or simply by using P2P where they are able.

Among the questions relating to urban mobility is whether the privileges given to the owners of taxi licenses, which is to say that they are the only vehicles that be hailed in the street, or setting aside taxi ranks or providing special taxi lanes actually do anything to reduce traffic, or simply create more problems. This is no trivial matter: while taxi apps allow clients to be picked up in a specific place, allowing them to see their taxi’s progress as it arrives, hailing in the street means that there are a lot of cars circulating slowly around, using up lanes near the curb, sometimes stopping abruptly or making a U-turn, all while they wait for a fare, which is completely inefficient.

Apps make sense: they give passengers greater security, can be paid for simply, establish contact with the driver, and in general are more transparent. In the case of cities, they could definitely improve traffic flow. Should all taxi-type transport services only be allowed to function on the basis of apps or phone, so as to avoid having too many empty vehicles circulating inefficiently?

Applications such as Hailo and MyTaxi are clearly looking to copy the Uber and Lyft model. The purchase of Hailo by MyTaxi is clearly a response to Uber’s rapid global growth, matched by Didi Chuxing in China and Asia, and a bid to grab a significant part of the urban passenger transport market.

What’s perhaps really noteworthy in all this, at least from the perspective of a business school teacher is that one of the main players in all this is the company that actually built and sold the first motor vehicles more than a century ago.

(En español, aquí)