E-Hailing Gets Big In 2013. But Which Startup Will Crack The Cab Service Code?

New York City just approved a pilot program that will allow riders to hail cabs on their smartphones, paving the way for app-building upstarts trying to make the journey as enjoyable as the destination.


When was the last time you stepped out for the evening thinking, I can’t wait to hail a cab? The process isn’t exactly enjoyable, but it could soon get a lot easier for millions of New Yorkers. The New York City Taxi and Limousine Commission just approved a year-long pilot program that will allow startups such as Uber, Hailo, and GetTaxi to legally operate apps that will let passengers use their smartphones to electronically hail rides with one of the city’s 14,000 yellow cabs, starting in February.


The pilot is a huge win, at least temporarily, for players in the on-demand car service industry. When companies such as Uber and Hailo began cropping up a few years ago, offering on-demand rides that you could order right from your smartphone, they helped eliminate a lot of the uncertainty that comes with standing curbside, one hand flailing in the air, and not knowing exactly what you’re going to get.

But the for-hired rides industry isn’t without problems of its own. One big issue with smartphone-enabled, pre-arranged rides is it’s very easy for both drivers and passengers to drop out of their digital commitment. If a would-be customer orders a car, then spots a free cab a minute later, what’s to stop her from jumping in and simply hitting “Cancel” on her phone? It’s the same for drivers–en route to a pre-arranged pickup destination, they’re bound to run into curbside hailers who could have meant extra cash.

And although the number of companies in the space continues to grow, none of them have yet figured out how to crack the code so everyone wins and the company profits. It’s a constant state of trial and error and slowly figuring out what resonates with both drivers and riders, says Steve Humphreys, the CEO of e-hailing company Flywheel, formerly known as Cabulous.

One observation Humphreys noticed is that drivers and passengers who talk to each other as the driver is en route are substantially less likely to abandon each other. So the new Flywheel app includes a calling feature that allows passengers and drivers to talk to each other without exchanging numbers. A cancellation fee that charges based on how far the driver has already traveled keeps passengers more accountable and likely to follow through on their orders. And Flywheel’s system allows it to lower priority for drivers who are abandoning requests, not accepting hails, or staying within a very limited radius.

The Flywheel app also no longer has a feature of the old Cabulous app called “jump the line,” which let impatient passengers essentially bribe drivers with an extra $5, $10, or $15 incentive to pick them up first. Humphreys said that feature irked customers, who didn’t want to feel like they had to pay extra up front to get from the same Point A to Point B.


Flywheel competitor Uber uses a surge pricing mechanism to incentivize drivers and quell demand during peak hours, but the feature has gotten it in trouble in past with customers on the receiving end of “sticker shock.” So in the new Uber 2.0 app, which it released this week, Uber’s included an “instant quote” feature that provides an instant estimate of how much your ride will cost.

Humphreys says transparency will play a critical role in which apps ultimately gain customers’ trust. “It’s a stranger and you’re about to get in their car,” he says. “How do you build trust and comfort in that? It’s risky and stressful every single time.”

But Humphreys also has faith that as the market matures, consumers will start to think about on-demand cars as the go-to option for how to get around town.

“In 18 months, people won’t recognize the hired ride market because it’s going to be so much better and cleaner and smoother and more reliable,” he says.

It’s too early to tell who will get it right. We’ll just have to, er, ride it out.

[Image: Flickr user TitoRo]

About the author

Christina is an associate editor at Fast Company, where she writes about technology, social media, and business.