Taxi App Wars Heat Up As Hailo Challenges MyTaxi in Spain

One of the world leaders in cab-hailing mobile applications has just arrived in Madrid and Barcelona to challenge the local leaders myTaxi in the battle for taxi app market share.  Founded in London in 2011, Hailo is the self-proclaimed “taxi magnet” smartphone application that has operations in 11 global cities and claims to pick up a new passenger every 4 seconds.  In NYC and London, they are the darlings of the venture scene raising more than $50 million in funding from likes of Union Square Ventures, Accel Partners, Wellington Partners, Atomico Ventures, and the one and only Sir Richard Branson. 

But gaining traction the Spanish taxi app marketplace may not be an easy task as Hamburg’s myTaxi team has been growing their user base in Barcelona since late 2011 and in Madrid since last fall.  Like Hailo, myTaxi circumvents the pre-existing networks of local taxi fleets and targets individual drivers.  In a down economy, many taxi drivers are actively seeking new channels to increase pickups and stabilize fluctuating daily revenues.  In that sense, the market is perfect for a new technology startup to offer a mobile solution and myTaxi has seen considerable growth signing up thousands of taxi drivers in Barcelona and Madrid. 

However, without a contract, taxi drivers are able to use multiple services to increase rides without breaking any agreements.  That means, whichever app is winning the download race in the app store is the one that will come out on top.  In fact, it might be a late-mover advantage for Hailo that myTaxi laid the groundwork of training drivers on using new technology to find rides.  Moreover, all loyalty goes straight out the window when business is heavy.  Anyone who tried using their phone to hail a taxi during Mobile World Congress this year can tell you it was a futile effort as drivers quickly opted for commission-free rides from people on the street hailing the old-fashioned way.  As customer service will likely be the determining factor of staying power in this industry, these companies must find a way to keep their service consistent and reliable, especially when Sonar comes to town.

On functionality, both myTaxi and Hailo offer 2-click taxi hailing on their mobile apps using GPS to track your location and a built-in mobile payment system so, as long as you have your smartphone, taking a cab will be a cashless transaction.  One subtle, but potentially important, difference between the two companies is the revenue model.  Hailo collects a 10% commission on every fare while myTaxi charges a flat €1 fee for each ride, always paid by the driver.  That means with most short distance cab rides in Barcelona, Hailo may be the slightly cheaper option for drivers, however they will certainly prefer to go with myTaxi for airport fares or other longer distance locations.

Interestingly enough, there’s a darker threat to market value often overlooked by startups eager to disrupt a stalled industry: the black-market incumbent also known as the Mob.  For as long as automobiles have offered rides-for-hire, there has been a middleman connecting them with customers.  Hotels, restaurants, bars, and nightclubs all participate in an underground network of hushed partnerships using envelopes stuffed with cash to make sure the concierge or hostess calls a specific number when a patron needs a ride.  And don’t think they haven’t noticed the newcomers entering in their turf.   Since they don’t really “exist” in a legal sense in the first place, they’re not going to hire a lawyer to solve their disputes with an overzealous startup.  They have their own means to handle that.

Regardless of the hardships of training drivers to use new technology or dodging not so subtle swipes by the mob, startups like Uber, Hailo, and myTaxi for finding a driver are changing the livery industry forever.  As myTaxi’s journey began much earlier (relatively speaking) in June 2009, they are considered the pioneer and European market leader, especially for Germany, Austria, and Spain.  However with Hailo raising so much capital to focus on the largest global cities, the gap is quickly being closed.  According to the new Barcelona CEO, Carlos Lascorz, “Hailo has led to almost 5.25 million taxi rides covering a distance equivalent to traveling to the moon and back 15 times.”

What do you think?  Will myTaxi’s first mover advantage be enough to sustain as market leaders or will Hailo’s gigantic marketing budget catapult them to the top in the battle for first in the Spanish taxi app war?   Which app do you prefer?

Or perhaps you just prefer Bicing.