Taxify trying to save the cab companies

Photo: Martin Ilustrumm

App created by young entrepreneur Markus Villig has already been used 300,000 times to get a taxi in Tallinn.

Only 20 years of age, the Taxify founder and CEO Markus Villig has been into inventing software for these past 3.5 years, having graduated from Tallinna Reaalkool – the Secondary Science School – as a student in a class specialised in the very art of programming. To find use for what he learned at school, Mr Villing took part in several Garage48 events for start-ups.

«The school gave the skills and the Garage48 events provided a way to apply these,» he explains.

The cab app idea, this year’s official Best Smart Application in Estonia, was not the immediate first. True to the start-up tradition, for a while he tried all kinds of stuff. 

«For example, for half a year I was into making a mobile version of the e-School i.e. the m-School, but the first serious project – one I’m engaged in full time – is the Taxify,» he said.

The app itself is quite simple. For a person wanting a ride, the smart phone displays a list of taxies nearby (of companies involved in the service) complete with price lists, their distance from the seeker, and the rating based on client recommendations. Having made his selection, the taxi driver gets a call sign in his smart device. It the driver agrees to come, the orders sees a confirmation. Also, on a map, he will be able to follow the taxi as it approaches. Doing this for the first time, the user gets registered by his phone number; from then on, Taxify will automatically detect his location.

A welcome extra

For the person getting a cab, use of Taxify is free of charge. The company makes money from taxi service providers, by way of monthly or order-based fees.

That Taxify is more comfortable and faster that calling the various telephone numbers is evidenced in its popularity – in a little over a year since it was established, in Tallinn alone taxies have been hailed via Taxify over 300,000 times.

Even though the app bypassed the dispatcher – a cab is ordered without mediation of the taxi company – the local taxi companies rather see this as an extra option for their drivers and have given them free hands to use or not to use.

«I do not believe that with a company operating under a trade-mark the dispatcher-guidance would totally disappear. There are lots of vital situations that cannot be solved by an app; also, there are the contractual clients with whom the differing processes are more complex,» said Tulika Takso board member Anne Rebane who is not a Taxify-user because an app fitting her Nokia telephone has not yet emerged. 

Like the taxi companies, taxi drivers also view Taxify rather as an extra option.

«When you take a client to Viimsi [Commune, next to Tallinn – edit], for instance, you may wait forever for an order via the dispatcher. But, in areas like that, Taxify may really come in handy at times,» a taxi driver employed by a large company, asking to remain anonymous, told Postimees. «But for the taxi companies the apps are quite a nut [to crack]. In an ideal world, there would be no need for them (taxi companies – edit) – just the fees to use the logo have grown dear as crazy these past years, to say nothing about the rest.»

Mr Villig believes that even though within the upcoming 15–20 taxi dispatchers might indeed not totally disappear, but market share of trips mediated by them will shrink from current 90 percent to 10 percent or so. 

At the moment, Taxify service is available in Estonia’s larger cities and in Riga, Latvia. In Estonia, the company employs about a dozen people. Abroad, the company also has its people in Helsinki, Vilnius and Minsk, while it is targeting Stockholm, Amsterdam and some city in the USA.  

The time is ripe

«Actually, preparation is quite a lengthy process. To begin with, you must do market research on the location; then you recruit the people and enter into agreements with local taxi companies. One you have the contracts, and the taxi drivers are «trained» to use the applications, one can enter into marketing of customer base,» explained Mr Villig, adding that in several places they have entered the final i.e. training the drivers phase.

According to the Taxify founder, the taxi companies have realised that the market is changing and if they want to stay in the competition, the old way isn’t the way. «Had we come out with the idea two years back, no company would have listened to us. But in the situation today with applications like Uber and Hailo (apps connecting people with cars offering ride-service – edit) gaining popularity fast in the world, the companies have realised: if they do not join us now, in a couple of years they will perhaps have been eaten out of the market,» thinks Mr Villig.

According to him, the Taxify advantage before the foreign companies is that it focuses not on single taxi drivers but on companies.

As assessed by the CEO, by end of year the company might have 10,000 – 15,000 users in each city where they have planned to expand this year. In addition to that, they might have preparations underway to expand into seven-eight cities more. As for the turnover, Mr Villig predicts some €100,000 – 150,000.

Taxi service changes

The smart device and app boom, kicked into gear a few years ago, has turned many a traditional business segments upside down. Taxi business is increasingly impacted by the novel solutions of which Uber, Lyft and Hailo are the best known.

Uber, started five years back in San Francisco, has its own car fleet and those interested are connected to drivers via smart devices. The Lyft network, also based in San Francisco, can be joined by any driver who wants to have people filling their empty seats – the company has no cars of their own. The UK born Hailo differs by hiring licensed taxi-drivers to drive people around.

All three operate via a smart application where, in addition to ordering cars, monitoring their whereabouts and grading the performance, it is also possible to make payment for use of it. The latter, says Mr Villig, should in times to come also be added to Taxify.

The taxi companies offering traditional taxi services in major cities have reacted rather painfully to the coming of the apps. This June, Europe saw tens of thousands of taxi drivers take part in mass demonstrations and traffic jams to protest against the Uber app. In several nations like the USA and UK, taxi driver organisations have sued the apps and some cities have imposed limits on their use.

Even so, European governments have not managed to take a united stand regarding the market situation – while a court in Brussels took a decision in April banning use of Uber by private drivers at threat of fines up to €10,000, London transport agency ruled in that use of Uber to get driven around is an activity totally legal.