A 23-year-old university dropout just launched a cheaper rival to Uber in London

Taxify

Ordering a taxi by app has just become even cheaper.

Taxify, an Estonian competitor to Uber, will launch in the city on Tuesday with a 50% discount on fares during September to get people downloading its app.

Like Uber, passengers download the Taxify app, register their number, and order a cab to their location. Unlike Uber, passengers can pay by cash or through the app with a pre-registered bank card.

When Business Insider compared the same journey across the two apps, Taxify came out almost three times cheaper than Uber. A journey from Aldgate East to Angel station would cost around £4.35 on Taxify. Uber estimates that the same journey would cost £16 on Uber X.

Despite a bold promise to take on Uber in London, Taxify is still relatively unknown.

Its founder is 23-year-old university dropout Markus Villig, who started Taxify at home before expanding to 19 markets in Africa and eastern Europe. It's avoided most Western European markets so far partly because of the tougher regulatory environment.

With a new pile of funding from Chinese ride-hailing giant Didi Chuxing in its back pocket, Taxify is now taking on Uber in one of its biggest markets. After London, Villig told Business Insider, Taxify could launch in Paris.

What's to say Taxify won't join the growing pile of startups which tried and failed to take on Uber, like Karhoo and Hailo? Uber is the most valuable private company in the world, and has raised around $15 billion in equity and debt to fuel an aggressive global expansion. It's dominant in London, with 40,000 registered drivers. There are an estimated 22,500 black cabs operating in the city by comparison. Taxify has 10,000 drivers in London either registered or waiting to register.

Villig told Business Insider that Taxify has two advantages. Firstly, it hasn't raised billions in outside investment and therefore has comparatively little pressure to turn a profit and repay its investors, except for Didi Chuxing. Villig said the firm had raised around €2 million from outside investors, prior to Didi.

Secondly, Taxify's pledge to drivers is lower commission fees and better treatment. Specifically, the company plans to take a 10—15% cut from the fare. Uber takes 20—25% commission on fares, something which led around 300 drivers to protest the firm in London in 2015.

"It mainly comes down to experience," Villig told Business Insider. "We're in 19 countries successfully. It's not like we're coming here and don't really know what we're doing.

"We've seen that in the long term, these lower prices make sense. And in the long term if drivers are happy, there's a better customer experience and it leads to us having a higher customer retention."

There are still lots of "buts."

With Taxify keeping prices so low, at least at the beginning, it isn't clear that drivers would benefit much just yet. Drivers are becoming increasingly clued up about how difficult it is to break even when fares are low, but they still have vehicle maintenance, leasing, or financing costs to pay off each month.

Villig said drivers were free to switch between apps and earn more money because Taxify's vehicle requirements were the same as Uber. He added that, on average, drivers earned more than 10% on top of the minimum wage.

Another growing concern with ride-hailing apps more generally is passenger safety. A senior police officer recently accused Uber of failing to report sexual assaults by its drivers, instead reporting lesser offences that wouldn't sully its brand.

Villig said that every Taxify driver registered in London so far had met the local London team. They also undergo 30 minutes of training. "We do everything the law requires, to make sure they have the licenses and so on," he said. There are also safety features inside the app, like sharing your location with a friend.

The firm has taken an unusual shortcut to set up in London. Normally, Taxify would need to acquire an operator's licence from London's transport body, Transport for London.

But the firm told Business Insider it had bypassed this process, acquiring a company which already holds a licence, City Drive Services.

Villig said Taxify had a 200-strong team of employees globally, up from 30 a year ago. He said the company is growing fast, with almost 3 million customers and around several million rides per month. The firm's oversight is small, with a board consisting of Villig, his cofounder, and a Didi Chuxing representative.

Ultimately, Villig's goal might be acquisition, though he stopped short of saying as much.

"Of course, there are lots of interested parties," he said. "But what we want to do is just keep growing, and we'll figure out the financial outcomes in a few years from now."

An Uber spokesman said the firm welcomed the competition, "as it raises service levels across the board."

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