"Globes" has named GetTaxi as the most promising company for 2014. This is the 10th year that "Globes" has asked investors, entrepreneurs, and venture capital figures to rate the 10 leading startups. GetTaxi shot up into first place this year.
GetTaxi founder and CEO Shahar Waiser recently revealed on Facebook some of the figures for the taxi application that is taking the industry by storm. The company's sales turnover is expected to total $100 million this year, and 400% growth is expected in 2015, a figure that takes its sales turnover to $500 million.
These figures can pave a safe road for GetTaxi to a Nasdaq IPO, but at this stage, the company prefers to remain privately held. In August, the company announced a still incomplete $150 million financing round. Market sources estimate the company's value at $2-3 billion, but Waiser elects to put on the brakes at this point. "We're not commenting on the value," he says in a special "Globes" interview, "but there is a benchmark in the market that could indicate approximately where we stand. One of our competitors, Lyft, raised money a year ago at a $1 billion value, and they have grown since then. We're bigger than they are, so you can estimate where we're at."
GetTaxi is still overshadowed by Uber, which entered into head-to-head competition with it on two fronts this year, in New York, and in the local Israeli market, where GetTaxi dominates.
GetTaxi's huge fund-raising round, which, as mentioned, has not yet been completed, will enable it to take another step towards fulfilling its potential and boosting competition in the industry. There are plenty of taxi hailing and public transport applications in the world, but Waiser estimates that in the next stage the market will consolidate and only the big players will survive. "Today, GetTaxi is number two in the world, after Uber. There's a market worth billions here, and a few companies will lead it. It very much reminds me of the telecommunications market, which became a market of a few giants like AT&T, Verizon, France Telecom and some others."
The big money that will accrue to GetTaxi will serve it for expansion to new target markets in addition to New York, London, Moscow, St. Petersburg and Israel, where it is active today, but that is only part of the strategic plan.
"With a fund-raising round like this, we will certainly go into the acquisitions market. In theory, when you raise amounts like this, part goes to organic growth and part to non-organic growth," he explains. All the same, with the company expected to turn over $500 million next year and become profitable, raising money isn't an obvious step. "If today, for every dollar I put in, I manage to make five, then it would be the stupidest thing not to take money now. Precisely because the model works, you want the cash," he explains.
Anyone who thinks the current round will be the last before an exit is likely to be proved wrong. "I don't think this will be the last round," Waiser says surprisingly, after raising $207 million, including the current round. "You take money as long as you can," he says.
One of the most intriguing arenas, and the latest market that GetTaxi has entered, is New York. The business in the Big Apple is not profitable, in contrast to the other markets where the company operates. "It takes time, generally two-and-a-half years from the launch date until to reach profitability. We have been there a little over a year," says Waiser, but hurries to clarify: "We are profitable in 22 out of the 24 cities in which we operate. There's no company in our field that makes a profit, including Uber."
Uber is GetTaxi's nemesis today, in New York, in Israel, and in other markets. GetTaxi manages to lead in the local market and in a more important market like Moscow, but is light years behind Uber when it comes to valuation. In June this year, Uber raised $1.2 billion at a valuation of $18.2 billion (after money), but Waiser is convince that the huge offering actually sheds light on the industry and helps the other players, even though, on paper, they provide a fairly similar service.
"There's a huge technological difference between GetTaxi and competitors like Uber and UK company Hailo," he says, "Today, our product is considered number one, and it's far better than Uber. The technological advantage is in functionality and usability. Our product is much simpler and more user friendly, but also more rich in features, such as ordering a taxi for a future time, and particularly for enterprises in managing taxi orders for employees."
The US, he says, may be a different story, but in Moscow and in Israel, GetTaxi's dominance will not be broken by competition from Uber. "The reason that we succeeded in Moscow and Israel is that we were busy with GetTaxi and not with the competition. We believe you have to know what's right for the company and the users, and not be concerned about competition. In Moscow, we have been operating for two-and-a-half years versus eighteen months for Uber, and the year made all the difference. We have 9,000 taxis there, compared with 130 for Uber."
In Israel too, Waiser isn't worried about his US rival. "Clearly, being first is important, but after that there's the product itself. People open Uber and see a less good application. They ask themselves, "Is there national coverage, do I have to wait two minutes for a taxi or ten, do I find the application convenient or not, are there special process or not? So you ask yourself these questions and say, 'To heck with it, enough'".
According to Waiser, the story in New York is similar, even though Uber is the market leader there by a considerable margin. "It's tough for us in New York. It's very hard for a second player to get in there, but we are slowly managing to distinguish ourselves. We have a solution for enterprises, which Uber hasn't. They can't add it as another feature in order to compete with us because that also means setting up a call center and knowing how to deal with invoices. We have been providing a business service for three years now to leading companies. That's different from a PR announcement that they're entering the business market as well. It's very late to get into that."
Another way of taking market share in New York is by launching limousine rides for $10 from anywhere to anywhere in Manhattan. "We are capable of doing this without losing money and over time. At the moment, we haven't set ourselves a limit as to when it will stop. We did something similar is selected cities in Israel, such as Ashkelon, Ashdod, and Kfar Sava, with a fixed price of NIS 15 within the city and a subsidy of the difference to the drivers."
I took it personally
Most entrepreneurs in start-up companies, particularly in companies that raise large amounts, are compelled to dilute their holdings. Waiser is not prepared to comment on his and co-founder Roi More's holdings, but says the two have more or less maintained their positions in the list of shareholders. "Apart from the last round, we have both participated in every investment round till now," he explains, "As part of this philosophy, I haven't drawn a salary from the day the company was founded." Waiser can afford not to draw a salary from GetTaxi, thanks to his income from other companies he has founded, some of them active in Russia.
So what's next for GetTaxi? Logic would dictate an IPO, but Waiser is clear that all options are on the table, including a private placement. "Public markets don't know how to digest 400% annual growth," he adds.
Another possibility is a sale of the company. "There are quite a few companies that could come into this field. On the one hand, an Internet company like Google invests in Uber and Alibaba in Lyft. At the same time you see Amazon and eBay trying to solve the problem of rapid delivery in the online retail business. On the other hand, car hire companies like Avis or Hertz, that see how their businesses are going down the drain, could be an interesting possibility. I wouldn't rule out car makers like Ford or General Motors, that are undergoing changes in their businesses. I have no contacts with anyone, but there are plenty of names with the potential to be buyers in this market," he says.
Although it has been more than a year since the reports about the company's move to reduce advance taxi ordering fees, and the criticism that followed of its behavior towards the drivers, Waiser still takes it to heart. "I took it personally, even though the criticism of us came out of nowhere. I admire professionalism, but I blow a fuse at when I see the press and media doing the opposite. The media still look for scandal, and we don't feel this anywhere except in Israel.
"In the end, GetTaxi is built on bringing value to the drivers, the passengers, and the city. That's what interests us. We have transparency in our accounts with the drivers. We have a help desk that operates 24/7. All this is built around helping the driver earn more and obtain greater freedom. So yes, workers will always have complaints, but when we ask our drivers directly and not via the media whether they're happy and whether they recommend their friends to join us as GetTaxi drivers, the results are positive. So the bottom line is that with GetTaxi the driver does fewer kilometers and makes the same money he made before on more journeys. He's not tied to the radio, and he's his own boss."
Activity: Taxi hailing application
Founders: Shahar Waiser (CEO), Roi More
Capital raised: $207 million
Investors: Vostok Nafta, InVenture Partners, Access Capital, Kreos Capital, and others
Published by Globes [online], Israel business news - www.globes-online.com - on October 30, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014