How Google’s Entry to Ridesharing will Disrupt the Disruptors (Uber & Lyft).
And no, this has nothing to do with BlaBlaCar & Co.
Google just creeped into the ridesharing transportation space from the best backdoor possible. This was done with RideWith, a ridesharing service powered by Waze that went into pilot in Tel Aviv last week.
It was just last Monday during my lunch break that I saw the news and jumped off my chair out of excitement. I was thrilled to read on tech.eu that Google & Waze are stepping into Ridesharing in the same way we’re approaching it. Not the term hijacked by Uber & Lyft, ride-sharing, the real deal.
First, let’s start by a quick who’s who and what’s what.
- Waze (9 years old), is an Israeli unicorn, which was acquired by Google 2 years ago for 1.3$ billion dollars, and I’m a big fan. The company’s core product is a social GPS app that helps people outsmart traffic by crowdsourcing traffic data via GPS and helping one another reroute and get to the destination faster. Their video explains what they do very elegantly.
- Uber (6 years old), on the other hand, is an on-demand car hailing service, which sends you a professional driver with just a tap of a button on your smartphone. Uber’s excellent and speedy execution has allowed it to expand globally within 5 years, reaching a whopping 50$ billion valuation and raising more than 5.9$ billion dollars from 43 investors including Google itself.
- Lyft (3 years old / 8 years old if you account for Zimride), is very similar to Uber in terms of core product offering. However it has a more personal, friendly and community based approach (which again, I’m a big fan of). Major differences in Lyft include the fact that you sit in the front seat, fist bump the driver, and it’s usually cheaper than Uber. A driver on Lyft can do this for a living, just like in Uber’s case. Lyft on the funding front received more than a billion dollars from 22 investors.
- BlaBlaCar (9 years old), is a Paris-based inter-city ridesharing platform that is probably the biggest in the world. The platform operates in 18 countries, including Turkey, and completes more than 2 million rides every month. BlaBlaCar does the real ridesharing, that is sharing someone’s ride to a destination they are already going to, and paying for their trip’s expenses (gas cost, tolls, etc…), however it does that between big cities. BlaBlaCar has raised more than 120$ million dollars to date.
- Volt (1 year old), is an Istanbul-based early-stage startup that is focused on the inner-city ridesharing space. This is the exact space Waze got into in Tel Aviv last week with RideWith. Inner-city ridesharing connects any car owner with passengers going in the same direction, inside cities and not between cities, and helps passengers pay for only the trip’s cost. The 2 services are built in a way that doesn’t allow the drivers to turn this into a business (the case for Uber & Lyft) but rather pick passengers up on their way to work or home. This, which is yet to be proven, will be the ultimate solution to traffic.
So in short, Uber & Lyft are car hailing apps (mobile only). BlaBlaCar is an inter-city ridesharing platform (both web & mobile), and Volt (Istanbul only) & RideWith (Tel Aviv only) are inner-city ridesharing apps (mobile only).
What Volt & Waze Are Trying to Achieve
Speaking from the Istanbul perspective, a city with 20 million people, mostly young and internet savvy, more than 80% of the cars in traffic here have only the driver. Car owners spend roughly 18% of their incomes on car ownership while they drive only 4% of the time. Car owners, who are one of the main causes of traffic, waste on average 2 hours every day driving, a time better spent with family or at work. This costs the Turkish authorities more than 2.2$ billion dollars of wasted resources every year.
What Volt in Istanbul and RideWith in Tel Aviv are trying to achieve is to connect any car owner with passengers going in the same direction, help them share a ride, and split the cost in a non-commercial transaction (i.e. without the driver making profit out of this).
So instead of adding another car to traffic (with the hope that one day you’ll give up yours), Volt & RideWith will connect you to people already in traffic, already going in the same direction with 4 empty seats, and all what you have to pay for is their ride’s cost. This is huge because it provides incredibly affordable transportation while solving the traffic problem instead of contributing to it.
The reason why this might turn out to be disrupting for Uber is the fact that splitting the cost of the ride is 50% cheaper than Uber Pool / Lyft Line, the startups’ most affordable product lines. This model also doesn’t promise employment. Volt and RideWith are not adding cars to traffic, instead they’re optimizing the occupancy and utilization of empty seats.
That’s a win-win-win for the driver, the passenger, and the city.
The Argument Against This Model
The biggest argument against inner-city ridesharing is that it won’t be as reliable as a professional driver who just attends to your request. The financial reward (or the benefit) for the car owners is way too small on a per ride basis to keep them engaged with the platform. Yes, as a car owner, you can earn up to 500 TL (200$) a month simply by using these platforms on your way to work or home, but that depends on you sticking around on the system long enough till the market place liquidity is reached and picking up a passenger every time you drive.
If that’s not hard enough, the problem is even tougher to crack when you take into consideration the fact that inner-city ride matching is technically by far more difficult than inter-city ride-matching (BlaBlaCar) or inner-city car hailing (Lyft & Uber). Take a look at the below dynamics:
- Inner-city ridesharing is real-time, with a zero buffer for planning.
- Inner-city ridesharing requires advanced algorithms for matching rides. It won’t send you the nearest driver, it connects you with a driver already going in that direction.
- Inner-city ridesharing has to be map based, while inter-city has to be list based. This is exactly why Waze & BlaBlaCar, though having a similar approach, will never clash because of these different dynamics at play.
The Solution is a Game
Volt’s approach to this problem is very similar to Waze’s approach, obviously minus Waze’s community size and algorithmic capabilities. Both services turn the driving experience into a game open to all car owners, and that’s the core ingredient needed to make inner-city ridesharing possible based on our our learning in the past year.
Here’s how Volt’s doing it:
- Effortless Driver Experience: car owners can say they’re driving by tapping just one button.
- Real-time, Map-based: car owners appear in real-time on the map showing their destination.
- Gamification: car owners earn Volt Miles for every KM they travel. Miles earning accelerates if a passenger is picked up and if a ride is successfully completed.
- Instant Gratification: Volt Miles can be swapped with gifts from companies that are sponsoring Volt’s effort in solving the traffic problem.
- Financial Reward: Picking passengers will not only help car owners earn more miles, but most importantly, earn back all the expenses they spend on driving.
- Of course all of this comes on top of the social experience one gets from sharing their ride with someone instead of driving alone. This is also crowned by a very positive feeling of being part of a solution, instead of being a contributor to a problem.
Waze’s major success can be highly attributed to their fantastic engagement of drivers through a gamified platform to solve big city problems. The striking similarity between Volt & Waze’s RideWith approach can be traced back to my admiration of what Waze & Foursquare achieved through gamification. It also has to do with how I was inspired by Jane McGonigal on how games can be used to solve real world problems. I highly recommend you watch her inspirational TED talks here.
We’ll be launching Volt 2.0 by end of July in Istanbul and I’ll be updating you through these blog posts on how our mission to solve Istanbul’s traffic is unfolding.
Back to mission control now.