Hailo raises $17M – Solving the “duality” problem

Congratulations to the team at Hailo who have just completed a $17M fund raise from Accel, along with previous funders Atomico and Wellington.  I invested in Hailo last year as part of their launch funding and it is fantastic to see the excellent team progress so swiftly in meeting and exceeding their targets.

The key to any investment is a top quality team and Hailo have that in spades led by Jay Bregman.  The other key to Hailo is that they had a great answer for solving the “duality” problem that comes with trying to innovate in the taxi space.  In order to get customers to use a new app to book taxis with, you need to have a large number of taxis; however, to get a large number of taxis, you need to have a large number of potential customers – the duality problem; you need both parts of the puzzle at the same time.  How do you solve this enigma? – Uber, the leading contender in this market up to now, tends to solve this by buying up taxi space, but this gets expensive.  What set Hailo apart for me was the innovative solution they had – first create an app that the taxi drivers would want to use even if there are no customers bringing money.  They created an app that helped taxi drivers monitor their fares, meet up with their mates, note when bursts of customers were available, take credit cards, and more – using this Hailo signed up over 1,000 black cabs in London in months, without having to buy capacity.  Then when they launched the consumer app, users could get a taxi within minutes as they had a large supply – ingenious.  There’s a lot more to Hailo’s success of course, but solving the duality issue was the key.

Many other business models have the duality problem when starting up – finding innovative solutions to solving this, without buying into the market, is a strong indicator of potential success.

About Julian Ranger

Please see http://www.jranger.com/

Posted on April 1, 2012, in Entrepreneurship, J Ranger Investments and tagged , , . Bookmark the permalink. 2 Comments.

  1. Trouble is, they don’t have any paying customers yet. It’s not the app features (all lifted from “Tweetalondoncab”, a Twitter based collective, but if it’s good, why not pinch the idea?) that sell it to drivers, it’s the potential riders. Once they have to sell for genuine money, we’ll see how successful it is. Good luck to Jay trying to persuade drivers it’s better to spend 10 minutes on a Saturday night going for a Hailo fare rather than taking the one with his hand out in front of them.

    • Paul, thank you for your comment – I can confirm that they do have paying customers; however, apologies that numbers and details must remain confidential until the company releases them. An important point is that any Cab driver will pick up a fare in front of them, but the app provides extra income for them in the 40% of their time when there isn’t a fare waiting where they are. The fact that in London if you open Hailo there are always many available Hailo cabs within a minute or two, which is based on cabbies declaring their availability, is I think an indication that Hailo has successfully converted their 1,000+ cabs to regular users. However, all that said, only the next year or more will prove that the model is working sustainably.

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