Uber's Massive European Competitor Gett Shifts Focus To New York
As Uber doubles down on its investment in Europe and Southeast Asia, Gett is reinvesting its international profits into New York.
If you're not paying strict attention to the ride-hailing industry, you've probably never heard of Gett, Uber's quiet New York competitor. Internationally though, it may be Uber's most formidable opponent. And now the company is setting its sights on the United States.
The relatively new entrant to the New York market has faced off against the ride-hail giant in cities like Tel Aviv, Moscow, and London where Gett (known there as Gettaxi) has a distinct advantage. In 22 out of 24 of the markets it operates in, Gett has become profitable, generating an annual run rate of $150 million in revenue, which ultimately positions the company as the largest international ride-hailing company in terms of revenue behind Uber — which, according to documents leaked to Business Insider, was $1 billion in its top five markets in the United States in 2013.
But as Uber moves aggressively to expand in Europe (Gett's home turf) and the Asia Pacific, Gett is reinvesting its profits into New York — currently the only U.S. market where the company operates.
"By the end of this month I'll be moving to New York," Gett co-founder and CEO Shahar Waiser told BuzzFeed News. "New York will become the best focus of the company, pretty much the only focus of the company because the market size of New York is astronomical."
A large portion of the cash set aside for New York operations will go toward marketing and hiring. The company has previously used its marketing budget to subsidize promotions on both the driver and rider side. In September, Gett rolled out promotional fixed-rate rides throughout all of New York, which included $10 rides in Manhattan. Last month, the company made fixed rates a permanent feature of its service. But the company also plans on rolling out its B2B (business-to-business) service, that is already available in existing markets where the company has amassed a total of 2,000 corporate clients.
Its corporate services (which haven't launched in NYC yet) is where Gett seems to have the largest opportunity. B2B car service revenue represents 30% of the country's $11 billion taxi and limousine revenue, according to IBISWorld. Waiser argued corporate clients value the ability to book a car for a future time and paying fixed prices, and that companies are also less likely to contract with a car service that cannot guarantee a legal supply of drivers — due to the increased liability for transporting employees. While Uber and Lyft both offer corporate products, neither company offers advanced booking or flat-rate features. And although both operate legally in New York, that isn't always the case nationwide.
Although it now operates within the bounds of New York TLC regulations now, Uber entered the New York market before it was technically legal and it continues to face regulatory battles in markets all over the country. Gett views this as a competitive advantage.
"Gett is fundamentally leading this space," Waiser said. "It's absolutely necessary for you to make sure your supply is legal. The company cannot take this liability from the supplier that is not 100% legal. This is one of the important things that will stop Uber from being successful on B2B."
Yet when Uber does face legal challenges, it almost always wins. With its wide network of lobbyists, socially conscious marketing campaigns (such as the recent partnership with Moms Against Drunk Driving), and economic impact reports such as its recent driver study, Uber has been able to effect change among state authorities if not always their local counterparts, as it has in Boston. And the fines it pays for operating illegally barely scratch the surface of Uber's vast war chest of funding.
Uber for Business is available in 45 countries and, according to a blog post, the company has "had thousands of businesses sign up, representing hundreds of thousands of employees. If U4B were a city, it'd be the 3rd fastest growing city of all time by cumulative fares."
But Gett remains optimistic that it can take on Uber in B2B by playing to its customer service strengths (a 24/7 customer care center) and new features (advance booking, and analytics reporting for the companies).
Gett isn't betting it all on its B2B service — which it expects to launch in the next few weeks. Much of the company's focus will be on the consumer side (more than 80% of its rides). By Waiser's own admission, Gett initially struggled to meet the demand it attracted through its promotions and said it took three months before the company was able to strike a good balance between driver supply and demand. Now, according to Pleeth, the company is ramping up on everything, including drivers. Just last week the company onboarded 250 new drivers.
While Waiser wouldn't go into specifics, he told BuzzFeed News the number of drivers in New York is in the thousand, with 20,000 drivers internationally — still a meager number compared to Uber, which reportedly onboards 50,000 new drivers a month.
"We're shifting our global marketing budget to New York," Rich Pleeth, Gett's global CMO and former consumer marketing manager at Google, said. "The obvious question is: Hailo shifted all of its focus on New York, spent $20 million, and totally fucked up and failed and was outpriced by Uber. How does Gett plan to succeed in New York? And the answer is talent. I want to hire people who are absolutely magical who can really run with the brand."
That brand, Pleeth told BuzzFeed News, is that the company is ethical, works with regulators, and can be disruptive without breaking the law. And it's a brand that the company has cultivated since it was conceived in Tel Aviv in 2010.
"I don't like this conversation they created that in order to be disruptive you have to be illegal," Waiser said. "It's a very convenient excuse so they can do the things they do. Gett is very inconvenient to Uber and not just because we're strong internationally. Gett is 100% legal everywhere; [we show] you can still grow fast and still be 100% legal."
Gett also says its drivers are paid twice what Uber's are per minute (Uber still contends that drivers on its platform are paid more because they are paid a per minute and per mile rate) and receive 100% of the tips riders give them.
As Gett shifts its focus to the United States, Waiser said the company has no plans to relinquish its hold on existing markets in Europe. As Buzzfeed News reported, there have been discussions of a global taxi alliance among ride-hailing and taxi apps against Uber. So far discussions have mentioned the likes of San Francisco-based Flywheel, OlaCabs in India, and GrabTaxi in Southeast Asia.
Softbank Capital is an investor in both OlaCabs and GrabTaxi, and recently, as the Wall Street Journal reported, Softbank invested in a third taxi app in China called Kuaidi Dache. With the newest addition, the potential alliance would now cover the majority of the larger markets in Asia. So recruiting a major player, if not the largest player, in Europe for this alliance makes sense.
"I'm not saying it happens tomorrow," Waiser said of the possibility of an alliance. "It just makes sense and things that make sense have tendency to happen. Should it happen or when obviously Gett is a very large company and [is] specifically operating in very critical territories so we will be required to be part of that equation."