I was lucky enough to check out the DX3 digital marketing conference today and among the booths that were plugging the latest and greatest was the booth for the app, Hailo. I’ve heard a lot about Hailo and the whole mobile transportation trend, which for me, is dominated by Uber.
Basically, Hailo is an app that allows you to hail a cab from one of their participating taxi drivers and it also allows you to pay for the ride using your credit card through the app. Uber is similar, but instead of having taxis, they use town cars (think the blacked out sedans that the president rides on) or SUVs (Finally! We can fit more than 4 people in 1 car!) and it also allows you to pay via credit card using the app.
I asked the very nice person handing out coupons for Hailo rides to give me the pitch and I also told her how I’ve used Uber before. The main selling point for her was that Hailo does not charge the premium that Uber charges, which is about 20% and the size of their fleet of cars was the 2nd largest in the city (vastly outnumbering Uber’s town cars and SUVs).
To me, Hailo’s thesis that people want a more convenient way to get a cab is fundamentally flawed. For the most part, I’ve never had to call to get a taxi in my neighbourhood, or most of the areas that I go to. Having the ability to make pay via credit card through the app is nice, but that’s not really the major pain point that people have.
The reason that Hailo will fail and Uber will win is because people fucking hate cabs. I cannot personally recall a single time where I was pleasantly surprised by a cab. I may have liked the driver, or it might have been cheaper than I expected to get from point A to point B, but for the most part the experience sucks.
Here are several reasons just off the top of my head:
- They don’t even try to hide the fact that they do not drive the fastest route.
- I have to ask if they take credit, which is a formality in the first place since all cabs are equipped with credit/debit machines (or an old school ticketing system which just scream “fraud”) and 50% of the time they get incredibly sketchy and say “Cash Only”.
- They do ghetto things such as ask for “flat rates” aka. off the clock prices which are usually above market price.
- Good luck if you live in the suburbs.
Whenever I use an Uber, things are vastly different. The cars are unmarked and in immaculate condition. The people that drive the cars seem to take pride in presentation of the vehicle. Every single person who has taken an Uber with me is immediately infatuated with the service. As a matter of fact, I have actually (drunkenly) taken an Uber to meet up with a lady instead of a cab because I wanted to appear more “baller” when I met her.
The major lesson from this is that that I think startups needs to take into consideration the product that they’re actually serving and not just adding features that help the distribution of the product. In Seth Godin’s amazing Startup School podcast, he makes an amazing point, which to paraphrase, states that the price barrier for a product is 1 cent. It’s either free or it’s not. If it’s 1 dollar it might as well be 10 dollars and if it’s 10 dollars it might as well be 20. As soon as the customer makes the choice to pay for the actual good, it really doesn’t matter how much money they give you.
I might be completely wrong with Hailo. Maybe they put their participating cab drivers through rigorous testing and perform constant quality checks. The problem is that I’ve already had a bunch of terrible experiences with cabs and they don’t seem like the best product to build a business on.
Hopefully that Hailo coupon I received at DX3 can pivot into a better product – in the recycling bin.