Uber confirms expansion into Estonia

Photo: Mihkel Maripuu

Yesterday, the US car-sharing start-up Uber confirmed plans to expand into Estonia. According to Central and Eastern European regional head Jambu Palaniappan, they have come here to be considered a serious global player.

We were out in the streets of Tallinn, asking folks what they knew about Uber. Not much, let’s admit. Who are you, and what are your most popular services?

Uber is a technology company helping cities organise transportation. We are offering our services in over 310 cities of the world. The essence of the service is connecting clients to drivers. We have lots of products – such as the UberPop carpooling product helping you share the expenses on your car with other people. For instance, if you and your neighbour want to drive to the same place, the Uber platform will help connect you and then you may share the expenses. On various markets we have other services as well, like premium products with fancy Mercedes cars. Recently, we also began to look into the aspect of distributing food.

So do you expand into Estonia or not?

Estonia as a country is very intriguing for me. I don’t know much about Estonia, I just arrived 12 hours ago (the interview took place yesterday morning – edit), but I have heard that you have this huge interest towards technology. Already, I have heard of the paperless state and e-elections, about how WiFi is a human right. This is amazing, not everywhere do we see things like this. For Uber also, the goal is to seek effectiveness in transport via technology. Therefore, Estonia is a very logical place for us to operate. So we are definitely coming. As for the timing, we may say it’s soon. For us, it is important that we have a local team in every city were we operate. This is important to understand the local market and be successful. Thus, we are currently busy putting it together, the fist locals have been hired.

Estonia is small, in Tallinn the distances are not long, and we already have plenty of quite cheap taxis. Why do you still want to come?

For me, it’s a very simple question. Uber’s ambition is to offer its services all over the world. Meanwhile, there is this obvious connection between mobility, effectiveness, technology and Estonia. So I think it is outright hard for us to say we are a global company or seriously represented in Europe if we are not in Tallinn. What’s more, we do already have several thousand users in Estonia, even though we are not operating here yet. For me, this is a good indicator of the potential of the market. You may be small, but meanwhile a very influential and interesting market.

Do you view Estonia as a place suitable to test new products?

To test new products, this is an interesting place for the very openness – both by the government and the consumers. One reason we are here is meeting representatives of the government and the state. So far we have been very well received and this shows Estonia’s attitude towards business and technology. For me, this provides the security that Estonia is a good place to test and try out future products of Uber.

Estonian taxi drivers aren’t too overjoyed at your plans. They say Tallinn is saturated with cheap taxis. Will their income now be over?

For consumers and drivers alike, Uber offers additional options. In many cities, we cooperate with taxi drivers and people can use our platform to also order a taxi. In a growing city, I think all these options ought to exist to move about – take a taxi, ride a bike, walk, use Uber. In most of the cities we have entered, the taxi business has stayed the same – Uber has simply added an alternative. We view it as enlarging the pie i.e. the market.

So turns out you’ll be robbing clients from the Estonian start-up Taxify?

Taxify is a wonderful company and they have a good product, one we have also now been able to try for ourselves. This is wonderful, for the people here are used to call a cab vie smartphone apps. This is one way that technology has already seeped into people’s lives. They are a good company and we are looking forward to competing with them. 

What are the products you intend to introduce in Estonia?

We are still looking into what would be the product strategy to use. In terms of value, UberPop is definitely a very interesting service for consumers and drivers alike, as well as for the city and the state in the broader sense. But in most of the nations, we adjust our service according to the local conditions. In many markets we offer several services. The talks with your government, also about UberPop, have been among the most open we have ever experienced.

How do you select the UberPop drivers? Are there just totally random people, like the licensed taxi drivers claim?

Becoming an Uber driver is a highly complicated process – before coming to us, they need to secure a certificate from punishment register (criminal records database). In addition to that, they will need to pass a thorough interview where we will be able to assess if they are fit to be Uber partners. But the Uber drivers also have a feedback system – after every ride, client has to assess the driver. Thus we will very quickly learn who are the good drivers, and who will need to improve the quality of their car or their skills. In the latter case, we are able to offer them the needed training. So the people are being constantly checked, not just at one point in time. So I’d say Uber has a higher quality standard than most in the field.

Can Uber still be called a start-up?

I’d say Uber consists of 300 start-ups. In every city where we operate we are a start-up. Even in Estonia, we have a little place in a shared office. Of course, in the global plan we are a large company, we have our headquarters in San Francisco, but we maintain and value the start-up kind of approach.

When do you plan to get listed?

At the moment, we are focussing at growing the business.

But how is Uber doing anyway, financially?

We are not a listed company, so we keep these indicators to ourselves.

But are you even making a profit?

We are not talking about it. As I said, we are currently focussing on growing the business and East-Europe is a fastest-growing region of ours.

Taxi drivers preparing for barricades

Regarding the Uber car-sharing service, more scandals have popped up in media than one can count. Their drivers have been accused in rapes, running people over, and on top of it all several European nations have recently banned their UberPop. In numerous nations, local taxi drivers have marched against Uber, being robbed of their customers by the technology company – the car sharing service averaging a price cheaper by a quarter as compared to taxi rides.

Estonian taxi drivers are rather current with Uber, and are not excluding protests. «If it would help at all, I’d definitely come out to the streets, because I’m for order and not for anarchy,» said Raivo, a taxi driver.

According to him, the local Estonian taxi-service mediating start-up Taxify is playing according to certain rules, but Uber would probably be causing total anarchy. «I would never just embrace it, no – never. If possible, it must nationally be banned. It would be more peaceful, than to have to suffer the consequences go through it afterwards,» thinks Raivo.

Another taxi driver, Lembit, agrees: Uber, he says, is some weird service. «We have been discussing that, should this come, things will be worse yet. There a very many taxis in Tallinn and the problem has become relatively serious. I have been doing this for ten years and now the income is worse,» lamented Lembit.

Toivo said progress is fine but it is questionable how Uber is picking their drivers. «There are heightened requirements for those offering public transportation service – they need to have the corresponding experience, they need to have passed the corresponding courses, they need to have knowhow and good health. To my knowledge, Uber is using unchecked individuals. They just enter a contract and the individual will drive for money,» described Toivo.

What troubles Toivo is that the Tallinn taxi service has been badly criticised as it is, and the entry into market of unverified drivers may serve to further flare the complaints. «A strange thing, this is,» thinks the taxi driver.

COMMENT

Kristen Michal, economy and infrastructure minister

Estonia is open to new digital solutions aimed at offering innovative services. Uber is in use in 19 nations of Europe and is interested in entering Estonia. We are interested in services of good quality and corresponding to Estonian rules for the customers. The new Public Transport Act, entering into force in the fall, allows, parallel to taxi transport, to offer occasional services by way of business in small cars, provided the driver has a corresponding activity licence; this will also create flexible conditions for Uber to offer its services in Estonia. 

At the meeting with Uber executives Mark MacGann, Jambu Palaniappan and Mateusz Litewski, we agreed that in near future Uber will present its stands on how to operate on our market in accordance with Estonian law. The executives assured us that for the speedily developing company, excellence of services is vital and they will not settle for less in Estonia. Should Uber begin to operate in Estonia, this may benefit both customers and providers of the service – the existing and the new ones. We are open and excited.

Uber

Established in 2009

Headquarters in San Francisco, USA

Valuated at $41.2bn, thus the second most valuable start-up in the world.

Operating in 310 cities of 57 nations.

Source: Postimees