London black cabs: I feel your pain, but Hailo has the internet on its side

Profile picture for user ddpreez By Derek du Preez May 25, 2014

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London black cabs are an institution in the capital and the iconic vehicles are recognisable the world over. With the first Hackney licences dating back to 1662 for horse drawn carriages, residents and visitors to London have been using the 'cabs' as a form of transportation for almost 400 years. However, as we have seen with many other age-old industries, the internet and mobile are now disrupting business models, causing tensions to run high and traditional black cabbies are being forced to decide whether they are going to modernise, or fight against adapting to digital technologies and competition.

My take: adapt or die.

The source of the tensions is a mobile application called Hailo, which for our state-side readers is very similar to San Francisco based Uber. Hailo wasn't the first mobile application that sought to connect travellers with cabs in London for a cut of the price, but it was started by three taxi drivers and a couple of entrepreneurs that took a different approach to previous attempts. Instead of trying to get passengers to sign up for the service, Hailo targeted the drivers. Check out this quote from the Guardian from an interview with Ron Zeghibe, chairman and one of the founders of the app. He said:

"We could have the best 21st-century technical solution in the world but, unlike a lot of tech startups, this is grafting technology on to a 400-year-old industry. If you think for a minute that you can walk in and slap this technology [on] and get [drivers] all to say 'wonderful, you saved our lives', you are smoking dope.

“You really do need to understand how that business operates, its mindset and how we can work best for [the drivers]. The problem, I think, was that most of them looked at getting the customers. We flipped that on its head. With the help of these guys on the inside we realised that what it is really about is building the loyalty [of] the driver base.”

Since it launched in late 2011, the service has grown from 800 to 14,000 drivers and has proven a great success. Everywhere you go in the capital you see the yellow Hailo sticker on the back of black cabs. The popularity stems from the fact that not only did the app solve a problem for people seeking an easy way to find transportation on the busy streets of London, but it also provided the cab drivers with an alternative that gave them some digital improvements to their jobs. For example:

  • Hailo includes credit card payments, where most cabs were previously operating on a cash-only basis
  • Social networking features are provided to highlight which areas of the city are busy and which are quiet
  • Accounting functions included to easily process how much has been earned

A backlash is brewing

So Hailo has been pretty successful to date, both from a B2B point of view, as well as B2C. However, the company hit the headlines this weekend after it announced that it would now not only be catering for licensed black cabs, but extending its reach to private hire cars, which are traditionally cheaper, but don't provide a premium service (often don't know where they are going, for example). To say that cabbies aren't happy about the move is an understatement. Hailo's London offices were vandalised with the word “Scabs” scrawled its walls and the police were called after a fight broke out. Steve McNamara, general secretary of the Licensed Taxi Drivers' association, said:

"There's a lot of resentment and anger out there.

"When the app was set up it was done so under the idea of supporting black cab drivers, and they saw it as fighting back against the private hires. So now the guys just feel betrayed. There's a huge amount of frustration.

"There's been various incidents all over town, and I know there are guys down at garages now peeling the Hailo stickers out of their cabs. What we're saying is if you don't want to be a part of it any more, then just leave."

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However, in an open letter to licensed taxi drivers, Hailo's Zeghibe said:

"There is no point burying our heads in the sand - people want a choice.

"When we started, it was a straight fight between taxis and private hire. Now, it's not so simple. These are tough times that call for tough decisions - and that means doing what's right, not what's popular."

London cab drivers are now also planning protests in June with the emergence of other apps like Uber, and other cities across Europe are trying their best to ban their existence in order to preserve how the current industries operate.

Verdict

  • I really do feel for black cab drivers in London – this is an industry that has been around for hundreds of years and yet it did adapt when it was confronted with the emergence of smartphones and new technologies. They took to Hailo because of the benefits it brought, but are now facing competition from cheaper alternatives and other apps. However, cab drivers need to remember that the internet isn't a private members club and if Hailo didn't make moves to include private hire drivers, other apps will emerge that do, and itself will then be threatened.
  • You can't stifle the innovation that the internet brings and Hailo is doing what it has to do to survive. Good on it.
  • Yes, black cab drivers will probably face price-based competition for its services via Hailo, but they already face this competition outside the realms of the internet - they are just going to have to learn that this competition also exists within digital. Some people will always prefer to catch black cabs because of the quality service they provide, and they should continue to play on that. Consumers should, however, still have the choice.