June 10, 2013
Where customer experience and analytics meet, in real time
For a while now, I’ve been using Hailo as a European poster child for innovation in the context of big data analytics. Due to the level of interest generated by this example, and the number of questions I’ve received along the way about Hailo, its technology and business model, etc., I decided to put together this blog post rather than write loads of separate emails.
Ironically, I’ve not actually been able to use Hailo myself (much as I would like to), as I have neither an iOS or Android-based smartphone. I have, however, met lots of people who’re using Hailo as customers, and I’ve also spoken to taxi drivers about it. I have yet to meet anybody who isn’t a fan.
For those of you who don’t know Hailo, it’s an app that allows you to hail a registered cab from your smartphone; as it was started in London, it’s often also called “the black cab app.” With the company founders being three London cabbies (black cab drivers), the entire service has been uniquely focused around the needs of the two main participants in a taxi ride: the customer and the driver.
For the customer, Hailo provides not only a very easy way of ordering a taxi (a couple of taps on the screen, after one-time app download and registration), it also increases personal safety in a variety of ways: no more roaming streets late at night looking for a taxi; only licensed cabs are admitted to the network; and once the job has been allocated to a taxi, the number plate of the vehicle as well as the name and a picture of the driver are sent to the customer’s smartphone. An estimated time of arrival is given (typically within 2 minutes), and the customer can track the progress of their cab on their smartphone. There’s of course also added convenience and greater comfort (no more standing in the rain waving madly while occupied taxi after occupied taxi roars by). Payment is made automatically via a preregistered credit or debit card; customers can also preset the amount of tip they wish to give. Cash payments are possible as well. After completion of the journey, the customer is sent an email confirming the journey details and amount paid.
So what’s in it for the driver? For a start, potential extra revenue. For example, estimates suggest that a driver may not be carrying a passenger 50% of the working day. Hailo not only provides the opportunity for extra revenue through passengers using the app, but also makes available extra services to driver, such as real-time alerts; an app that allows them keep track of their fares, miles, and downtime; and a chat facility that allows them to communicate with other Hailo-registered drivers. Drivers appreciate all of that, but they also cite as a benefit “extra safety” when picking up people at night. They also like the fact that they can switch off Hailo when they don’t want to be available to the network, and there is no monthly fee (unlike with the radio networks, which levy a monthly subscription).
As of April 2013, Hailo had 30,000 registered drivers worldwide, including more than 11,000 in London (which amounts to more than half of all black cabs). Hailo works very hard on due diligence in all the locations where the service is active, or is in the planning stages, and complies with all local rules in terms of accreditation, security, etc. Hailo will only work with drivers licensed to pick up passengers in the street (i.e., not minicabs), and relies strongly on word of mouth to recruit drivers into the network. This is also where the difference with services such as Uber comes in: Hailo works with existing driver networks with the intention of helping them generate extra revenue, and has no ambition to compete with them.
And a few more stats: as of April 2013, Hailo had more than 400,000 registered users worldwide and had facilitated 3.6 million passenger journeys.
So how does Hailo generate revenue? Clearly someone has to pay. Who pays differs by city, dependent on a number of local factors such as fare levels. In London and Dublin, the service is completely free for the customer; the cabbie pays a percentage of the fare to Hailo. In the US, customers will have to pay a small fee (likely $1 to $1.50; perhaps $2 during peak hours).
And what about the technology? This is where the big data bit comes in. Once the customer has tapped on that smartphone app to signal their requirement for a taxi and their GPS location has been transmitted, an enormous amount of real-time analytics takes place to match the location of the customer with that of the nearest driver; the job is then allocated to the most conveniently placed cab, and once the job has been accepted, the relevant details are transmitted to both driver and customer and the journey tracking starts.
The algorithms for the matching, dispatching, and journey tracking were written by Hailo’s own developers; the back end is Java-based and runs on AWS. The data store is Cassandra. Hailo also uses real-time analytics from another London start-up, Acunu, to get a view of where all cabs are at any moment in time, whether they’re carrying passengers, etc.; the Acunu software sits on top of a Cassandra database.
What about startup financing and funding for continued growth? The company was launched in November 2011 by three London cabbies and three tech entrepreneurs; seed capital came from Wellington Partners and Atomico. Since then, Hailo has raised $17 million in Series A funding in March 2012, from Accel Partners, and $30.6 million in Series B funding in February 2013, led by Union Square Ventures, with Richard Branson and KDDI also participating.