courtesy Flywheel
Rakesh Mathur is the newly appointed CEO of a startup that markets itself as Uber without the assholes. And that means he’s having a very good week.
After the website Buzzfeed published a story saying an Uber executive had discussed the idea of investigating journalists who were critical of his ride-sharing company, Uber looks more asshole-ish than ever, and Mathur’s startup, Flywheel, is ready to reap the benefits.
Flywheel is a taxi-hailing app that works with existing taxi companies, and it has long promised to avoid not only the mudslinging and the sabotage that have characterized Uber’s climb to the top of the startup ladder, but also the surge pricing that periodically ups the cost of its rides. A recent pitch from the company’s PR firm described it as “the no-surge, non-asshole alternative to Uber and Lyft.”
Now, Mathur and Flywheel are expanding into more markets across the country, right in the middle of Uber’s public-relations nightmare.
Mathur is a firm believer that despite the flurry of activity in the taxi hailing space, the traditional taxi industry “is not going anywhere.” In fact, even though the industry is quickly losing ground to companies like Uber, Mathur says that Uber is the best thing that’s happened to the taxi industry. “It made them realize they have to modernize,” he says of taxi companies. Mathur hopes Flywheel can be the company to help the industry do just that.
Mathur says that Uber is the best thing that’s happened to the taxi industry.
It won’t be easy to compete. Though Flywheel has just raised $12 million in funding, that’s paltry compared to the whopping $1.2 billion Uber recently raised. Meanwhile, Flywheel is only operational in San Francisco, with ongoing tests in Seattle and Los Angeles. Uber, by contrast, is live in 46 countries and counting.
Mathur is the first to admit that Flywheel is still tiny in comparison, and yet, considering yellow cabs in cities like New York complete 175 million rides per year, he believes there’s still plenty of room for growth.
‘That Problem Doesn’t Exist’
Flywheel was founded in 2009 as a backend management system for taxi companies. In 2013, the company pivoted to become a ride hailing app, but it kept its commitment to these companies. Now, instead of working with independent contractors like Uber and Lyft do, Flywheel acts as a consumer app that aggregates existing taxi fleets. That means it will never institute surge pricing, a policy Uber created to convince more drivers to get on the road at peak times, because taxi drivers work on shifts and don’t have to be convinced. “That problem doesn’t exist,” Mathur says.
Rakesh Mathur. courtesy Flywheel
Uber does have a similar service, called UberTaxi, but it’s not available in every market. Plus, Mathur says, by partnering with taxi companies at the same time Uber threatens to topple the taxi industry publicly, the company is, in effect, jeopardizing its own drivers’ livelihood. “You can’t bash the taxi industry all the time, like Travis has done in some of his interviews, and still attract the hearts and minds, and pocket books if the people who are driving taxis,” Mathur argues, referring to Uber CEO Travis Kalanick.
Meanwhile, because fleets pay drivers a fixed rate, Mathur says drivers stand to make more money than they would on Uber, which has recently come under fire from drivers who say they’re making far less than the $90,000 annual salary Uber advertises.
Ethics Don’t Always Win
Still, all this hinges on the whether or not consumers actually care how much drivers are making or the fact that one Uber exec might want to spend millions of dollars digging up dirt on tech journalists. Sure, it’s ugly. It’s detestable. But the sad truth is, when it comes down to it, convenience and a good deal almost always trump ethics in a capitalist market. For evidence, see Wal-Mart.
Uber’s executives may have a relentless case of foot-in-mouth disease, and they may run sexist ad campaigns internationally, but when it’s 15 degrees out, and you’re standing in the freezing rain without an umbrella, the app that’s going to win is not the one whose team is the most respectful of women (if only!). The app that’s going to win is the one that can send you a warm, dry ride before your extremities freeze off.
“People are going to go to the taxi apps that give them the right combination of convenience, price, and safety,” says Rajeev Chand, managing director and head of research at the boutique investment bank Rutberg & Co. “Whether that’s a company that’s dubbed by the competition as assholes or a company that has no public face at all. That’s secondary in this market.”
Uber has the scale to be wherever you need it whenever you need it. That’s not to say, of course, that Flywheel can’t be successful. In fact, most experts agree that it’s precisely because of that stuck-in-the-rain example that the taxi app industry is not a winner-take-all market. Mathur knows that as well as anyone. “People will have Flywheel, Uber, Lyft and their hand in their air,” he says. “They’re going to take whichever mode gets them the transportation the fastest.”
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