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“Hailo”
Hailo - BUSINESS MODEL:
Hailo represents an “exemplar” market place business model in the transportation industry that mobilizes
location technology.
The model is an app for mobile phones along with the supporting infrastructure that links (a) people wanting a
taxi (they have the app on their phone) to (b) individual taxi drivers supplying taxi services (who also have the
app on their phone). The app not only mobilizes mobile phone technology, but also satellite location technology
because it pin-points both customer and potential taxis on the mobile phone display. The complementary
aspects of the business model include web-sites, customer lists (of both taxi customers and individual
consumers for use by the firm that runs the model), and ancillary services for taxi-drivers.
HISTORY – The exemplar firm and others:
This London based firm was founded in November 2011 by three London taxi drivers with a personal interest
in deploying technology to improve the service for taxi drivers. The company, which has about 200 employees,
had annualised sales of over $100 million, and has raised about $90 million from investors. As of April 2014 it
operates in 6 countries and 16 cities, with over 1 million registered passenger customers. In London, in 2013, it
has served 5m passenger journeys through 14,000 black cabs.
Hailo was neither the first nor the only important firm that offers this taxi location service: others include
Taxipal, Uber, Get Taxi, Lyft and Gett, all which have slightly different competing offerings, and Easy Taxi which
is like Hailo but focusing on the Latin American and African market. Hailo is singled out as a useful exemplar
because it built an app that addressed drivers’ concerns, and built a community of cab drivers to support it.
CUSTOMERS - who are they:
The business model represented by Hailo connects TWO groups of customers – (1) people (consumers) needing a
ride “immediately” with (2) available taxi drivers.
The taxi customers to the business model typically operate in only one city, but there is capacity to have global
customers. (Currently, the real Hailo operates (only) in large cities such as London, Toronto, Chicago, Barcelona,
and, as of this year, New York.)
ENGAGEMENT – value creation proposition (including network effects):
As said, the value proposition is to connect potential passengers with empty cabs faster and more efficiently
than rival methods such as calling for a cab on the telephone, logging onto a website, or hailing in the street.
Hailo allows the potential taxi driver and passenger to communicate directly with each other, and ascertain
things such as waiting times, and capacity in the overall system, and the speed and reliability of the system is
potentially better than other systems.
The taxis benefit when there are more passengers on the system, and vice-versa the passengers benefit from
having more taxis on the system. Currently there are few “direct network effects” – passengers do not benefit
from seeing others on the system, and likewise drivers have few direct benefits apart from sharing live traffic
information between themselves. These benefits may emerge in time: for instance the customer rating systems.
DELIVERY - the value chain:
Hailo is a service, and the products related to the service include an app that runs on a smart phone to connect
those needing a taxi with taxi drivers, and a website. When a consumer launches Hailo on their phone, they
automatically see on the map where Hailo-connected taxis are. The “hailing” takes place by clicking “Pick Me Up
Here,” at which point drivers are offered the opportunity to “Accept Hail,” get your location information, and
pick you up. The mechanics of Hailo’s operation run on a complex algorithm that takes into account the taxi’s
location in relation to the would-be passenger, how long (including traffic) it would take to get there, and, most
Written by Stephen Newbury under the direction of Prof Charles Baden-Fuller, Cass Business School, City University London (c) 2014;
support of Building Better Business Models funded by EPSRC (EP/K039695/1) and partners gratefully acknowledged. Reproduction only
with permission.
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important, whether the driver has the app.
A taxi driver can sign up through the website for free, at which point their phones become embedded in the
network of Hailo users. As well as receiving passenger hail requests they can also see bursts of passenger
activity and traffic conditions in map view, useful information created by the Hailo taxi driver community.
The app and website has been developed in-house by Hailo’s engineers, incorporating GPS location feeds and
utilising mobile smartphone handset technology. From a marketing perspective, raising awareness of the
service has been key. This has involved stunts like using key investor Richard Branson to celebrate 3 million
London journeys and applying entertainment marketing to taxis, which hasn’t been done before. MONETIZATION – value capture
In London, Hailo takes 10% commission of the total fare including any tip, with a minimum commission that
varies by time of day with a minimum fare of £10 at evenings and weekends. The current mininum commission
varies between £0.80 and £1.50. The pricing model is different depending on the market. For example, in
Ireland the driver pays 12 per cent, in the US, where cabs are a lot cheaper, the passenger pays a fee to use Hailo
and in Japan we use fleets and the fleet pays.
Written by Stephen Newbury under the direction of Prof Charles Baden-Fuller, Cass Business School, City University London (c) 2014;
support of Building Better Business Models funded by EPSRC (EP/K039695/1) and partners gratefully acknowledged. Reproduction only
with permission.