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Taxi app competition shifts into overdrive

07/06/2012

 

Software developers compete to build the first smartphone app allowing riders to pay for—and even hail—a cab. Venture capitalists hope to cash in, but only one company is expected to win access to the $2 billion highly regulated market.

The competition to transform the New York taxi cab experience is shifting into overdrive.

The race began in March, when the city’s Taxi and Limousine Commission put out a request for proposals to develop an application that would allow passengers to pay fares with smart phones. More than a dozen tech companies showed up for the informational meeting, and have until June 14 to submit their ideas.

Among the competitors are Hailo and Get Taxi. The two developers are already competing in London, where Hailo says it has 4,500 registered users while Get Taxi’s signed up 1,000.

“We are very driver-focused,” said Jay Bregman, co-founder and chief executive of Hailo, which is based on a boat in the Thames, and which recently opened an office here in Chelsea. In March the company received $17 million in new funding from Accel Partners to expand its operations.

GetTaxi, which is based in Tel Aviv, Israel with operations in Moscow and Israel as well as London, announced on Wednesday that it has secured $20 million to support a New York City launch.

“We have an enterprise solution for businesses,” said Jing Wang Herman, a JPMorgan Chase & Co. veteran who was recently named CEO of GetTaxi USA. Companies keep accounts directly with GetTaxi and employees never have to bother with payments or receipts, she explained.

The two-year-old company’s financing comes from its original backers, Access Industries, a global industrial and investment firm run by Len Blavatnik, which owns Warner Music, and the company’s founders, Shahar Waiser and Roi More. The investment brings GetTaxi’s total financing to $30 million.

Though the request for proposals process has been cause for grumbling among tech companies, some of whom would have preferred to let the free market pick the winner, New York is prized territory for any taxi-related business. Yellow cabs alone generate more than $2 billion in annual revenue from fares. The winning company will make its money from transaction fees—a tiny fraction of the fare—charged to the driver.

In addition to letting passengers pay for a yellow cab ride with their phones, the winning app should also offer a host of other, seamlessly integrated services.

They include the ability of passengers to locate nearby available cabs or other for-hire vehicles, find other passengers for ride sharing, report lost property and provide feedback to the taxi commission. The app must be made available free to passengers and at no cost to the city.

Both GetTaxi and Hailo say their systems can do all that and more.

Ms. Herman, whose love of taxis led her to get a hack license, said GetTaxi allows users to hail different cabs, such as hybrids or wheelchair-accessible cars. The app can also be used in different languages, and offers live customer service around the clock.

Mr. Bregman said one of the references in its request for proposals will be from an advocate for the disabled in London who co-wrote an article praising the service.

The company is hoping to launch its system in yellow cabs and livery cars. It would also like the app to work with the city’s green apple-colored outer borough cabs but that may not be an option: Last Friday a state judge issued a temporary restraining order stopping the city from issuing new borough taxi permits. The yellow taxi industry has argued the process of creating the new cabs was flawed.

The taxi commission expects to pick a winning smart phone app by November. The company will then have four months to get its system up and running.

Though the taxi commission will offer the winner an exclusive contract, both companies say they are planning on sticking around New York no matter what happens.

“There are many ways to launch in New York,” Ms. Herman said.

Mr. Bregman seems to agree. “We’re going to launch this service notwithstanding [what happens with the request for proposals],” he said. “In London, eight apps launched at the same time ours did, and some of those businesses are no longer around.”

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