App for that: London is a centre for taxi app makers

Here’s a scenario familiar to many urban professionals: it’s late, you’re tired and you desperately want to get home. You call a cab company and the operator says a car is on its way. You wait. And wait.

You call the company back, and are put on hold, and wait, and wait and wait.

It seems an old-fashioned way to run a business in the digital age, but now a group of technology entrepreneurs is trying to bring the process of hailing a cab into the 21st century by turning customers into dispatchers.

The concept is simple. If you have a smartphone, it is likely to have a built-in global positioning satellite service (GPS) feature that can determine your location. If a taxi driver has a smartphone too, the only thing you need is a platform for the two of you to communicate.

In London, where smartphone penetration is high, the competition between app developers has created a vibrant new hub for the technology, and provides a glimpse of what is to come for other big cities.

Some apps, such as Hailo, LDNTaxi and GetTaxi, are geared to black cabs. Others, such as Kabee, focus on minicab companies. Addison Lee, London’s biggest minicab company, developed its own app last year, which it says has generated £10m of cab bookings.

Hailo, which launched in early November and operates on the iPhone, has been backed by the founders of Skype and Wellington Partners, funders of Spotify, among others. It has been called the Facebook for taxi drivers because users can see the profile of the cabby they have selected.

Hailo is positioning itself to compete with London’s radio cab services. The company has raised £750,000 in seed funding and plans to expand to New York next year.

GetTaxi, which was started by Russian-Israeli entrepreneur Shahar Smirin in Israel, is similar in concept but targets both corporate clients and individuals. It has received $9m in funding from Russian-born billionaire Len Blavatnik, of Access Industries.

The company launched its London operations in August and now has more than 187 corporate clients. It plans to launch soon in Paris, Rome, Milan and Moscow. “We have had franchise inquiries from all over the world, but we want to do the UK first and we want to keep the brand,” says Neal Fullman, chief executive.

According to Steve MacNamara at the Licensed Taxi Drivers’ Association, London cabbies have welcomed the apps. “Anything that puts bums on seats,” he says.

But the challenge for the taxi app entrepreneurs is achieving a balance of supply and demand. For any of these applications to work for the user, there has to be at least one taxi driver nearby using the same app, which means a critical mass of cabbies needs to sign up to the service.

Neither company has reached that point. Hailo says it has more than 2,100 cab drivers using its iPhone app, 500 registered to use its forthcoming Android app and 43,000 consumer downloads. GetTaxi, which launched its consumer app this week, says it has about 500 active cab drivers with its GPS devices installed in their cars, and another 1,000 ready to go live.

That may not be enough. One tech-savvy consumer who tried using Hailo this month was left stranded when there were no cabbies in the area to pick up his signal.

To get around this, both Hailo and Get Taxi are advertising heavily. In the latest edition of Taxi, the trade magazine, GetTaxi has three full-page ads.

For the cab drivers, it is a matter of “he who gets there first dominates”, says Mr Macnamara, adding that only one app will emerge as the taxi app of choice.

For now the competition is set to get tougher – which is music to any urban professional’s ears.