This interview was originally published in Society 3.0
Over 1 million clients and more than 25,000 drivers – that is Taxify. The international company, headquartered in Estonia, is one of the leading ridesharing apps, which operates in 25 cities and 18 countries in Europe, Western Asia, Africa, and Mexico. I recently had the opportunity to interview Martin Villig, co-founder of Taxify, who is an active startup community enthusiast, co-founder of the Estonian Startup Leaders Club, and the Garage48 Foundation.
Society 3.0: How would you define the term ‘Sharing Economy’?
Martin Villig: “The sharing economy in its purest essence involves sharing assets such as your car, house, tools, etc. with others to get some extra income and increase utilization of your ‘mostly standby’ items. As we know, then the average car is utilized only 7% of the week – so there is loads of potential to put those standby assets to use.”
How did you get the idea for Taxify and what made you realize your idea?
“I got the idea for Taxify while I was visiting Kiev, Ukraine, in 2012. I was mentoring the Garage48 hackathon, where people can turn their ideas into prototypes in just 48 hours. It was the first time I ordered a taxi over their internet-based service, and I really liked the user experience. After returning home to Tallinn, I talked with a few friends and started to realize that [the] taxi business in Tallinn was very inefficient. There were up to 35 smaller taxi companies hidden behind call centers, and it was a real pain to get a taxi during peak hours. You could easily spend an hour calling 5-7 taxi companies and ending up without a car. So I started looking and the problem and started Taxify. We wanted to become taxi aggregator at first – we later turned it into the ride-hailing app we know today. Today, Taxify operates in 25 cities and 18 countries, being probably the most efficient ride-hailing platform with just €2 million of funding, compared to billions others have raised.”
Where do you see the opportunities of the ‘Sharing Economy’ – for consumers and workers?
“For workers, the sharing economy providers offer many new opportunities regarding flexibility, choice, and extra income. There are very few (if any) jobs where you could work fully on your ‘own’ schedule – even most the simplest jobs such as bartending follow pre-planned shifts. However, ride sharing platforms like Taxify create this opportunity. In case you have a spare hour, you can just go online and offer a few trips.
For consumers, the sharing economy gives a much wider choice compared to existing traditional industries like traditional hotels or licensed taxis. If we look at western markets, we can assume that hotels and taxis provide good quality, but they are often pretty expensive, almost luxurious and unaffordable. There are always situations or consumers, who would prefer a cheaper service and also accept a less high quality. So I think the variety of choices are important, as consumers have diverse needs and expectations.”
Where do you see the obstacles of the ‘Sharing Economy’ (for consumers and workers), and how do you think they can be overcome?
“Regulatory issues are the biggest problem. Some markets try to set unreasonable rules on purpose to avoid open competition. I honestly believe that most industries and services can operate with self-regulation, and this also means fair competition between platforms and sharing economy service providers. If one platform becomes too dominant in its industry, it might not operate in the best interests of its consumers and workers.
“Another important aspect to me is the amount of immigrants who would like to work, but often face challenges entering the job market due to the language and other barriers. Currently, governments have to pay social benefits for those people, and that is costly. By legalizing sharing economy services and operating via new technology platforms, many of those people could get flexible job opportunities and pay taxes for the government. It would be a win-win situation for everybody: an alternative is offered to those who would like to enter the job market, consumers get more affordable services, and governments can turn their cost into income”.
Why do you think that some countries are more likely to participate in the ‘Sharing Economy’ than others?
“As I work in the ride-sharing and taxi industry, we see big differences between very liberal markets such as the Baltics, Russia, Eastern Europe, and Africa compared to ‘older and more conservative’ countries such as Germany, Spain, Italy, Denmark, and Sweden. In liberal markets, the taxi service available is very affordable and widely used vs. highly regulated markets consider taxi service as luxury service. It seems to be a powerful lobby from incumbent taxi companies and associations, who prefer locking their market share via regulation and not via good service & quality.
“I strongly see that the European Union should set clear rules for open competition and discourage countries to over regulate specific industries against consumer interest and business freedom. To put it straight – there is no need for taxi licenses as it was 10-20 years ago, as today’s technology allows much better and real time evaluation of any service provider compared to licenses checked once every 3-5 years.”
What other developments would you like to see in the ‘Sharing Economy’ space?
“I am hoping that the European Union and local governments start a regulatory review, meaning they strongly consider if all current regulations are truly needed or should actually be replaced. In my opinion, there should not be any regulation when it is not making the service better for consumers. It is an ambitious vision, but I truly believe that most of Europe and world is over-regulated and should be liberalized.”
Where do you see the ‘Sharing Economy’ in 10 or even 20 years from now on?
“Today most people still work in a traditional working model, which means they work in an office from 9-5. However, I see this model shifting in the next 10-20 years. The work will become much more project-based, and people will have multiple jobs or roles e.g. by being a DJ, a garden designer, and paragliding instructor – all at the same time. The work as we know it today will change, and the sharing economy will become an integral part of this mix.”
What would your advice be for people who would also like to enter the market with their ‘Sharing Economy’ business model?
“People should look around: when they see a lack of service in a particular area, they could come up with a new business model. In can say that it is much easier to start a business today than it was ten years ago. Technology is becoming a commodity, and the key element in utilising it is smart performance. Small players could compete with global corporations if they choose one particular niche and do it well. So be creative and just do it!”