In the weeks preceding this week’s launching of US company Uber’s taxi-ordering service in Israel, Uber Israel CEO Yoni Greifman’s head was in the clouds: not because the long period of waiting was coming to an end, and Israelis could finally try out the services offered by the $18 billion technology giant, but because of his reserve duty in the air force during Operation Protective Edge.
The military operation delayed Uber’s launching plans and strategy in the local market, due to both the security situation, which left tourists and Israelis at home, and because Greifman was completely unavailable. One week more or less, however, should really not make any difference to Uber. With its truly deep pockets (the company raised $1.2 billion two months ago), Uber moved into the fast lane this week.
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In case you didn’t know, starting this week, Uber has been operating a service similar to that of Israeli company GetTaxi. You download an application, register with your personal particulars and credit card, and order a taxi directly from your smartphone. The classic taxi stand manager is out of the picture. It’s a matter of technology now – developed and launched a year before that of GetTaxi. It lets the passenger see which driver will pick him up, where he is on the map at any particular moment, and other features that could only have been dreamt of up until five years ago.
“Uber really likes markets with technological awareness, and Israel, the start-up nation, is considered a natural place, with a very high smartphone penetration rate, where you can introduce something that’s really new, ” Greifman says. “There’s a big transportation need here, certainly in Tel Aviv and the Dan region, to move reliably and cheaply from one place to another, and that’s the big news we want to deliver.”
“Globes”: Where is the economic potential in Israel, in comparison with European countries?
Greifman: “There are 3.4 million people in the Dan region moving around in the same area. I don’t think the economic potential here is less than in a European city. Uber has been entering a lot of places, and we operate in 180 cities in 45 countries around the world. Tel Aviv is a strategic target. You can see it in the number of downloads of the application and queries we’ve gotten from the public in Israel wondering when the service would be launched here. I really hope that we’ll offer services everywhere in Israel within a year.”
“Open skies” policy
Uber’s first way of recruiting drivers was an “open skies” policy, in which it allowed its drivers to continue working at competing conventional taxi stands, and even for GetTaxi, its competitor.
The conventional stands have no problem with this, but GetTaxi does not allow such openness, and drivers who began working with Uber this week were barred from the service and were called in for a talk at the company. At the beginning of July, GetTaxi’s attitude was different. GetTaxi Israel CEO Mark Oun said then, “I won’t restrict the drivers Uber is using. I won’t keep anyone from working with them.” The policy has changed now, however, and the company is in effect presenting drivers with an ultimatum: us or them.
GetTaxi says the reason lies in Uber’s behavior since its launch in Israel. The Israeli company asserted that people from Uber Israel had ordered taxies through GetTaxi, and had tried to persuade the drivers to come over to them. Uber used a similar strategy in New York against the local office of GetTaxi by ordering dozens of rides at the beginning of the year, thereby overloading GetTaxi’s system in New York, and then canceling the orders after getting the drivers’ phone numbers, all in order to persuade them to switch to Uber.
“The claim that Uber tried to ‘steal’ drivers is irrelevant, because we allow our drivers to work with any taxi stand they like, whether real or virtual, in addition to being Uber drivers, ” Greifman explains.
Uber did not stop there. It recently decided to cancel the 5-20% commissions it was charging its drivers around the world on the price of their rides (arrangement charges) until the end of the year. The company knows very well that money is a significant factor in an effort to attract drivers to its service, even if it involves a temporary discount for the moment.
In addition to the discount, what is likely to help Uber in its competition with GetTaxi is the Israeli company’s dismissive attitude towards its drivers, as indicated in various reports published in “Globes”, among other things. For example, GetTaxi decided to cancel a NIS 5 commission its drivers charged on advance bookings, while at the same time charging them for branded GetTaxi shirts, cargoes, telephones, etc. “You won’t see things like that with us. We’ll work with drivers cooperatively, and we have no intention of charging money for shirts, flags, or things like that, ” Greifman says.
“Globes”: Why should passengers prefer Uber to GetTaxi’s competing service?
Greifman: “Our application has several features that others don’t have, such as the ability to divide payment for a taxi ride if you’re riding with friends, and the ability to share the destination and arrival time with a friend, like the feature that Waze has now. There are more surprises in the pipeline, with other services. For example, Uber launched a pilot delivery service last week in Washington for pharmaceutical products and medications, and I definitely see room for this and other services in Israel, too.”
Still, isn’t competing with a dominant company and product like GetTaxi in Israel difficult?
“In Uber’s DNA, we really like competition, and believe in the right of drivers and customers to choose. Competition is very good for the market. Conditions improve, drivers’ earnings go up, and passenger fares fall. More competitors will follow us, and that’s good, too. It makes us better, and keeps us on our toes.”
Will you overcome GetTaxi’s dominance, and become number one in the field in Israel?
“I never like predicting the future. We’ll do the best we can to deliver something really new and worthwhile.”
Demonstrations from Europe on the way to Israel?
The US company intends not only to compete in the local taxi market, but also to compete in it with the UberX service that it offers in other countries.
This service allows private drivers to accept rides for payment, just like taxi drivers, but without any special license, and without a taxicab. This product provides rides at cheaper rates than a taxi, but usually requires a substantial change in legislation concerning the operation of public transportation services.
Uber’s controversial product recently brought hundreds of taxi drivers out on the street all over Europe out of genuine concern and protest over the damage to their livelihoods. Nor was the introduction of UberX in other places around the world particularly smooth. What about Israel? Minister of Transport Israel Katz recently commented on the matter, saying, “We won’t allow damage to the taxi market. It’s not acceptable for a company to come from abroad and get a license to operate without the same rules and laws applying to all taxi drivers and everyone else.”
Uber asked to meet with Katz on the subject, and is readying a campaign to change the existing legislation in Israel, which does not allow private drivers to provide transportation services for payment. Uber has recruited top campaigners and media consultants in Israel for the purpose, at the cost of tens of thousands of shekels a month (“We’re a serious company, and we want an excellent team to work with us.”). At the same time, Greifman is trying to lower expectations and refrain from commenting on the matter. “At the moment, our focus is on providing the taxi service. If something changes later, we’ll announce the fact, ” he says. With respect to Katz’s remark about Uber and the meeting it requested with him, Greifman says, “I don’t want to negotiate in the media. We’re in touch with him, but when there’s something to say, I’ll say it. We just want to work in cooperation with everyone, and it’s important for us to explain directly who our company is, instead of the messages coming from the media. If Katz wants, we’ll be glad to take him for a trial ride with Uber.”
Published by Globes [online], Israel business news – www.globes-online.com