Taxi applications are some of the most effective mobile solutions in the app marketplace. The technology that allows users to hail and track a taxi driver has spawned successful companies such as Uber, Hailo and Taxibeat. But the challenges that arise in individual markets, from cities up to regions, make international expansion a tricky road to travel.
Taxibeat, although not well known in the U.S., has gained traction in emerging markets such as South America and European cities like Paris and Athens. The company was founded in Greece in 2011 and has raised $4.5 million in funding to date. Its latest round, led by Hummingbird Ventures, followed on from angel investment mainly from Greek individuals. After launching with an initial fleet of 200 taxi drivers in Athens, the capital city of Greece, the company enjoyed an early growth rate of 40-50 percent per month.
This type of success is common among taxi apps, as the major players in the global industry all dominate their local markets. “It’s been proven that it’s a highly local game,” explains Nick Drandakis, CEO of Taxibeat. “Every company is a winner in their own market. But when they try to expand there are big problems. So it’s too early to tell who is going to be the winner.”
But for Taxibeat, one country and one local market was never going to be enough. After a year of success in Athens, the company set its sights on South America, a region Drandakis focused on because of the problems taxi services encounter there. Taxibeat targets markets where taxis are hard to hail and the service is poor when one does turn up. This strategy allows Taxibeat the chance to drastically improve on existing cab services.
In the summer of 2012, Taxibeat launched in Rio de Janeiro in Brazil, hit Sao Paulo directly after, and then headed back to Europe to tackle Paris. The company most recently deployed its services in Mexico City and will now move on to Peru and Turkey.
Taxibeat’s unique user-review model helps drive the company’s success in diverse markets. While the likes of Uber and Hailo assign taxi drivers at random when a customer makes a request for a cab, Taxibeat allows the customer to select drivers based on reviews from previous users. “Customers enforce the quality of service they want by rating the drivers and then by choosing one based on this rating,” says Drandakis.
The company currently makes a profit in Greece and has almost reached a positive cash flow position in Brazil. Drandakis estimates that it takes around 14-15 months for the company to make money in a new region.
But Taxibeat faces strong competition from the likes of Uber and Hailo. Taxibeat doesn’t see Uber, backed by Google, as a direct competitor, though the American startup operates in the same general space. Uber reportedly brings in nearly $20 million in revenue every week, according to a leaked document obtained by Valleywag. The company operates in a number of cities worldwide, including London, Rome, Tokyo and 32 cities across North America. Hailo is available in 16 cities globally across Europe, North America and Asia, but doesn’t cross paths with Taxibeat in any of them. Expect that to change by early 2015, when Taxibeat goes after the North American market itself.
The taxi app market will always be a difficult sector to dominate worldwide, because cities can be so different and taxi services even more so. But Taxibeat’s strategy of tackling one emerging market at a time, and complementing them with major European cities, has propelled its success thus far. The established players in the North American market can expect to see Taxibeat in their rearview mirrors very soon.