Bolt, the Uber rival formerly known as Taxify, is taking a significant step this week in its effort to build out its transportation-on-demand business across the biggest cities in Europe and Africa, which currently covers 25 million users in 30 countries and 100 cities: it’s finally opening for business again in London, the biggest ride-hailing market in Europe.
“Finally” and “again” are the operative words here: the Tallinn-based company had launched in London as far back as September 2017 – nearly two years ago – only to shut down its services after three days, when Transport for London, the city’s transportation regulator, started to investigate the terms of its license.
It turned out that not all was right in the state of Estonia. To roll out its services more quickly, Taxify (as it was then known) had acquired a London firm with a license valid until 2019 and had launched its own service using that loophole. At a time when TfL was decidedly unhappy with Uber and was already fielding complaints from politicians, a drivers’ association and union reps over Taxify’s launch, the writing was on the wall and Taxify shut down its service.
Slow and steady wins the race
Bolt’s run-in, and eventual cooperation, with TfL underscores the shift we have seen in the transportation market over the last few years in London, which has changed from a hacker mentality of “move fast, break things” to “slow and steady wins the race.” (It’s a lesson Uber learned the hard way.)
“So far, there has been a monopoly, which leads to the same problems of higher prices and poor service,” Bolt’s CEO and founder Markus Villig said in an interview this week. “We are here first to fix that, but it will take two to three years to do so.”
Launching with a car-only service in London (it has other transportation products, such as scooters, in other cities like Paris), Bolt is – even before adding in that three-year fix-it plan – nevertheless coming to the market relatively late.
Uber has been active for years and is just one of a number of incumbent private car-based ride providers, which include other on-demand transportation services like MyTaxi (owned by Bolt’s investor Daimler) and Gett, other fleet-based providers like Addison Lee, a plethora of local mini-cab firms and, of course, independent Black Cab drivers.
But with late arrival also comes a more knowledgeable approach built on the experience (and vast operating costs) shouldered by others.
First and foremost, Villig said the new and improved Bolt will be hoping to woo away both drivers and passengers with competitive discounts based, it seems, mainly on undercutting dominant providers.
On the driver side, Bolt will change a 7.5% commission for the first two months before switching to a 15% commission, which it claims is up to half of what other firms charge, and works out on average to 10% more earnings than driving with competitors.
On the passenger side, Bolt will be launching with a 50% discount that will then default to regular rates that will still be between 5% and 10% cheaper than competitors’.
Price competition is not the only area where Bolt is making a modification. There is also a big change in the app’s safety features: specifically, it will launch with a “panic button” that will let both passengers and drivers alert Bolt and police if they feel they are in danger, and also to alert Bolt’s trust and safety team to open a ticket and address the problem.
Villig said that this safety feature is not a default in every market where it operates. It is a variant of a feature that Bolt uses in, for example, its South African business “where safety is also an issue” and while it was not directly mandated by TfL, Villig noted that it pointedly asked about safety features and so this was included, along with other new features, such as sharing details of your ride with a contact.
Safety will also extend to increased vetting of drivers before they ever join the platform – again, to a level higher than in some other markets that have not had track records of safety incidents.
Better service comes at a price
Drivers getting better commission, passengers getting lower prices, and vetting getting increase all translate into one thing: more money needed to fuel the machine. Villig said that Bolt itself would be absorbing those costs.
“The operational costs are higher than in other cities, but the opportunities are so large and there is such a need for an alternative, that it made sense.”
That will, inevitably, mean more funding. Although it has already raised around $185 million – with $176 million of that coming last year in a round led by Daimler that valued Bolt at $1 billion – that will run down fast through launches and the extra operational costs associated with them.
(Uber and Lyft’s books, now open to the world post their public listings, detail the hundreds of millions of dollars that ridesharing efforts can potentially cost companies before they can hope to turn a profit.)
Indeed, we confirmed in May that Bolt was indeed raising another round at a valuation of over $1 billion. This week, Villig said that it has “nothing to announce” on that front just yet. In addition to Daimler, the company is backed by Didi (the Chinese ride-hailing giant) and, ironically, Uber, by virtue of its Didi divestment deal in China,
While expanding beyond motor vehicles might be putting the cart before the horse, so to speak, Bolt does have plans to stay for the long run and use its positioning to become one of two market leaders. That will also eventually take Bolt to other modes of transportation beyond cars, but using a light-touch approach.
“All we want on micro-mobility is to be a platform,” Villig said. “W don’t want to own hundreds of thousands of bikes and other vehicles. The question is: how do we enable all that to appear.” He anticipates that Bolt will start to offer bikes – and other other transportation forms as regulators allow them – by next year.