The following is a Guest Post by Dave Ashton, co-founder of SnapCar, a French startup providing chauffeur services via its iOS & Android application
Today, January 13th (and just like last year on the same day), there is a general taxi strike in Paris. 5000 angry drivers are using their idle cars to block the airports and roads throughout the capital, refusing to pick up passengers and stopping competitive private car services (called “VTC” in France) from doing the same. In certain cases they threaten VTCs with baseball bats to ensure that people can’t get anywhere. The city is paralyzed.
“No one should be allowed to provide chauffeured car services except taxis”, they say. And so while drivers for private car service companies showed up for work this morning, many couldn’t actually do their jobs. This morning, one of our drivers had rocks thrown at his car with a client inside of it. Others threw eggs. Some of our drivers are afraid and it has left our clients – some of whom are young children whose parents trust us to get them safely to school – stranded.
Why would they do this?
On January 1, 2014 a new law went into effect in France solely at the behest of these unions: chauffeured car services like my company SnapCar can only pick up a passenger more than 15 minutes after a booking is made. Even if we arrive in five minutes, which is our goal.
In other words, if your mother calls SnapCar to pick her up and we arrive in five minutes, the law says she must wait in the rain for ten more before she’s allowed in the car. Is that what your mother would want?
You would think that such a law would appease anyone looking to sustain a monopoly (never mind that we won’t follow it). But like a child, angry that the sucker his parents bought isn’t as big or as bright as he wanted, the taxi union is throwing a tantrum. “15 minutes isn’t enough”, they say. “No one should have the right to compete with us at all. Transport is a protected market for us and we own it. We won’t stop until these ‘disloyal competitors’ are out of business.“
It’s a strategy destined to backfire.
In 2011 essentially zero out of every 20 chauffeured car bookings (i.e. taxi, limousine) was booked via the web or mobile application. Today it’s nearly three out of twenty. In five years that number will be far higher. People are accessing chauffeured services from their devices because it’s convenient and secure. They like doing it. As long as taxis refuse to embrace such technology directly, they will continue to lose market share.
Oddly enough the taxi companies are accelerating adoption of competitive services. In Paris – America too (for example in Las Vegas) – these laws are designed to give people no choice but to take taxis.
But French people are not stupid (and probably not Las Vegans either, although that is more debatable): enraged by anti-competitive behavior they are migrating in droves to VTCs because the service quality is high. They can rely on us. They appreciate that they have total visibility into their bookings, that payment processes are automated and – most importantly – that we are grateful to have them as clients, because we know we’re in business solely because they value the service.
Isn’t that what makes any company grow? Provide something people want, need and love, and price it fairly.
The VTC companies have tried to collaborate with the taxi unions and companies. We’ve encouraged them to adopt innovative technologies that will improve their services and attract more clients, even as we work alongside one another in the market. They have refused. Keeping 100% of a small and increasingly irrelevant pie (booking by putting your hand in the air, or putting up with mediocre quality) is more important to some than improving the quality of the pie so that more people will want to take a bite of it. Frankly, some people you just can’t reach.
It’s a battle to the death at the moment between the entrenched taxi monopoly and the tiny but growing French private car service startups. But we know how this one will turn out; we’ve seen it before: By 2019, 19 out of 20 chauffeured car bookings will be made via mobile applications and the web. The taxis will eventually embrace technology to advance their business models. The market will be shared between companies like the VTCs and the traditional taxis, who provide a valuable service that people want. Different levels of service will begin to flourish in the chauffeured car/taxi market, overall quality will improve due to competition, prices will fall due to increased supply, and greater demand will create lots of new jobs. The result will be an ever-so-slight improved standard of living for a whole society.
Everyone wins.
And perhaps by that time the taxi unions will see themselves for what they are sadly allowing themselves to become – the gravediggers of innovation – and will stop going on strike. After all, it just angers the public, gives their competitors more business and makes them look stupid. Either way, we’re not going anywhere.