Back to Basics: Innovating the transportation market

I am still thinking about our event with Rio Ferdinand and Justin King, ‘The Second Half’, which was just over two weeks ago. I was standing outside with two colleagues as we were ready to go home after dinner and the three of us had our phones open – I was calling  Uber, Elliott had Lyft searching for a car, and Maria was using Hailo to track down a cab from where we stood in front of the Soho Hotel. Little did we know, that there was a truck blocking one of the streets in Soho – and therefore getting any taxi would be difficult. I could have hitched a ride with Rio in his purple courtesy Bentley for the night, but we happen to live in opposite directions!

Interestingly, all  three of us were trying to do the same thing – get a car to pick us up on demand – and we were all using different apps to do so. They all promised low prices, cars that would arrive quickly, courteous drivers and cashless rides – all things that we’ve become accustomed to. So why were we all using different apps to achieve the same thing?

When Uber first launched in London back in 2012, it was the best thing ever – the rates were cheaper than black cabs. A driver in a nice, clean car with bottled water would arrive within minutes, and it was the first app to allow customers to travel without touching their wallets – except of course, for having an account with the likes of Addison Lee or Meadway (which was still a hassle though, because you had to call).  With nearly US$50m in funding before its launch and a business model based on freelancers, Uber had the capacity to grow quickly – and it did, with a recent investment of US$3.5bn from Saudi Arabia’s Public Investment Fund.

In the four years since then, the mobile ride sharing market has exploded. Uber’s biggest rival in the western world, Lyft, launched in New York City in 2014, three years after Uber’s entry in 2011, but has grown quickly, with ridership up 500% in the past six months. In China, ride sharing app Didi Chuxing is valued at approximately US$20bn, having gained Apple’s largest minority investment at US$1bn in May.

15% of the top 20 tech ‘unicorns’ are transportation apps

The battle between the giants, in addition to smaller companies such as Gett and Hailo, has led to a flurry of quick moves to win over market share. Uber’s drastic price slashes in over 100 US cities earlier this year led to a price war with Lyft, with prices dropping 15% in New York City – even at the expense of making a profit. And yet even with fierce competition, in the list of 165 ‘unicorns’ (startups valued at over US$1bn), three of the top 20 are transportation apps, with a combined valuation of US$83bn.

Karhoo’s founder, Daniel Ishag, calls the new ride-hailing app a ‘game-changer’

But amid all of the uproar in the digital ride sharing market, it’s exciting to see something that brings tech back to the basics. Having just launched its testing phase in London last month, taxi aggregation app Karhoo promises to give users exactly what they’re looking for. As the Expedia of ride sharing, the app features a vender-neutral, open platform which allows any cab fleet operator to be shown in a list of results when users enter their destination, which is sorted by pickup time, price and vehicle type. The list is full of familiar names, including ComCab and Addison Lee, and the driver that arrives is professional and licensed, vetted for safety and confident in London’s tricky roads.

Using Karhoo means that customers could face sacrificing a cheaper price for a quicker arrival time, or vice versa. But in the age of hopping into a stranger’s car off the street, there’s comfort in doing it the old fashioned way – calling a driver from an established fleet. Karhoo’s fixed prices, without any surge costs, combined with the ability to book a car days or months in advance brings a modern twist to the traditional way of getting somewhere with a cab.

“Karhoo is a game-changer giving the generation the smartest way to choose and book a cab ride” – Daniel Ishag, Karhoo founder and CEO

The company has signed with 50% of all yellow taxis in New York City and black cabs in London, and 70% of Singapore’s 26,000 cars. With nearly half a million cars on the road, Karhoo’s model is definitely scalable – and with offices in London, New York, Los Angeles, Singapore and Mumbai, we’ll be seeing more cities on the launch list soon.

“Karhoo is to taxis what Expedia is to flights and travel. Because we aggregate fleets we actually have much more inventory, which means we can essentially offer solutions at any time” – Wouter Witvoet, Karhoo chief of staff

I spoke to Wouter Witvoet, Karhoo’s chief of staff, who said that riders are drawn to the app as travellers are to Expedia: the price comparison proposition is a complete novelty in the ground transportation industry. By aggregating a city’s fleets all together, customers can make an informed decision about which cab to take, with a selection ranging from the cheapest saloon cars to the most expensive executive option – and the side-by–side comparison forces operators to be competitive.

“Karhoo levels the playing field by offering consumers freedom and choice to choose the ride that’s right for them and suppliers the opportunity to compete in a growing market” – Wouter Witvoet

London’s black cab population has resisted changing its model or pricing structure to go head-to-head with Uber, rather choosing to stage a series of dramatic protests, like the one that blocked Westminster for an hour and a half in February. But like the red telephone box, the black cab is a world-renowned symbol of London’s heritage – and one that we cannot afford to lose. Karhoo could prove to be the solution they need to stay relevant – but more importantly, could they also influence them to be more flexible on their pricing model?

It can be difficult at times to reconcile passions for both tech and for tradition: surely as tech continues to innovate, it will write over history? But that needn’t be the case. As Karhoo is showing us, tech can be used to enhance history, to make it more accessible and convenient – and that could be exactly what a strong piece of heritage needs to stay relevant and present. | @MoiraBenigson | @TheMBSGroup