Postmortem of Hailo’s failure: Top lessons to learn from a failed taxi booking startup

Postmortem of Hailo’s failure: Top lessons to learn from a failed taxi booking startup

The last decade has seen some great rivalries among the top techpreneurs. Most of these came from the field of smartphones, software, and hardware. However, there’s one sector which took a huge jump since the end of 2009.

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I am talking about the rise of on-demand taxi booking companies. The advent of taxi-hailing applications like Uber and OIa has completely disrupted the taxi industry.

The industry which used to function in a traditional manner for almost a century had now undergone a complete metamorphism.

Earlier traditional taxis were devoid of any technological aid which made it unsuitable for today’s fast, busy, and tech-savvy commuters.

Uber identified this problem at the earliest and came up with its On-demand taxi service in San Francisco in the year 2009.

Since then it has never looked back and today it stands as the most successful taxi booking startup till date with its global presence in over 60 countries.

Uber is not the only one that made it big. Companies like Lyft, Grab, Ola, Didi Chuxing, and many others made its mark. However, only Uber was able to get the tag of a “global company”.

That’s just the one face of the coin. The other face of the coin isn’t that bright and inspiring, in fact it’s gloomy and hopeless.

Apart from the names mentioned above and some other successful companies, the app-based taxi industry has been brutal.

There are countless startups which endured a prolonged struggle to make it big. And most of them were forced to shut down.

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So, why did this happen? What was wrong with them? Why they couldn’t make it big like the other taxi behemoths? We’ll try to answer all these questions in this blog by taking Hailo and TaxiForSure as our case studies.

Autopsy of Hailo’s failure

Hailo was an Uber-like taxi booking app based in the UK. It was founded in 2011 in London. Hailo was operational in over 33 cities worldwide.

In 2013, Hailo tried to enter the New York’s taxi booking market with a massive funding of $100M from investors. Not to forget that Hailo then already had 30,000 drivers and 2.5 million users.

So, what exactly went wrong?

Poor research

To start a successful business, one must conduct a proper market research. Hailo seemed to miss out on this basic step.

Hailo thought that drivers in New York won’t be any different than that of London. Which ultimately turned out to be a horrendous assumption.

Not only that, they also ignored the fact that New York differs from London on various factors. And these factors shape many things about the users and the drivers.

For example, the drivers in London are highly trained and habituated to use the smartphone. It’s because the routes in London are complicated and the usage of smartphone thus becomes inevitable.

However, that’s not the same for the drivers in New York. The Big Apple has regimented and simple routes which allows the drivers to navigate efficiently even without a smartphone.

Technical issues

To make matters worse, Hailo also faced a few technical issues. One of them was of the payment integration.

The Payment processors that were used in the New York city were of outdated technology. Due to this Hailo found it extremely difficult to integrate its services with it.

Moreover, Hailo also made a false assumption that the taxi drivers of New York would require help to find out the fares.

Turns out that wasn’t the case. Finding fares was never a problem for the drivers at all. The assumption that Hailo made regarding the requirement of a mobile app backfired as it was not necessary for their targeted audience in New York.

Neglecting competitors

When Hailo set-up its business in New York in 2013, the first mistake it did was of neglecting the competition from the other taxi booking app services.

Initially, Hailo planned to target the Yellow cab market so that it can infiltrate the network of existing drivers and make them download their app to eventually connect them with their potential riders. However, they failed terribly.

Even after being operational in New York for two years, Hailo were only able to sign up a miniscule fraction of the city’s total 40,000 yellow cab drivers.

Hailo’s strategy to only focus on the Yellow cab market left the higher end of the market to Uber which was the only company then serving that segment with their luxurious black cars.

Lessons learned from Hailo’s failure

There’s only good thing about failed startups, that give you important lessons to learn for the future entrepreneurs. So, let’s see the lessons that we should learn from Hailo.

Never compromise on market research

As stated earlier, market research is a crucial element which you should never take for granted. A proper research allows you to identify what the key problem is and how will your service be able to solve it.

Moreover, you should ensure that all your business objectives are properly aligned with the demand in the targeted market.

There’s no margin for a technical error

If your startup fails purely because of the unpredictable nature of the market then it’s understandable because it’s something which is out of your hands.

However, if you fail due to technical errors, then that can’t be forgiven. There’s absolutely no margin for any technical errors because even a small error can have massive repercussions.

Poor planning and decision making won’t bear good results

To be a successful startup, it’s imperative to come up with a sound planning and decision making. Without these two, the chance to make it big are meagre.

Conclusion

Hailo is a best case for any entrepreneurs as it has so many lessons in it. Hailo teaches us that we should never take market research and technical aspects lightly as it can prove to be fatal.

Moreover, you should never make assumptions for a new market by comparing it to any other market as there are several factors that you have to consider.

Hailo thought that their strategy in London would work smoothly in New York, but it turned out to be exactly opposite.

So, to succeed you must stick to the basics and try to invest more on the market research which would turn out to be beneficial for you.

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Shahid Mansuri
Shahid Mansuri
Shahid Mansuri Co-founder of Yelowsoft, one of the leading Taxi Booking software development company in 2017. It is known for developing Taxi Dispatch Software of unmatched quality. His visionary leadership and flamboyant management style have yield fruitful results for the company.