Why Transit Apps Are Revving Up

Obviously, Matt Carrington, the director of marketing at Taxi Magic is a little biased, but the numbers tell the tale, too: Every fall, the new iPhone comes out, the weather gets worse and people want to take cabs more.

If you're feeling spicy, you might poke around with your iPhone and try one of these new transit apps to book a cab -- after all, who wants to stand on the stoop, take their hand out of their pockets and hope a cab drives by and notices?

These apps have a very obvious appeal, and you don't have to work for a company that makes them to see that.

To find out more about the market, how it works and where it's headed, I gave Carrington a call.

First off, just so we're all on the same page, what do you mean when you say "taxi app?"

Matt Carrington: We're a nationwide booking platform where a rider will be able in 50 of our US markets to open up our app, hit a couple of buttons and in that time they'll be able to secure an order for a taxi. You can book for real-time, which means a nearby taxi with availability will be assigned to come pick you up and you can also schedule a ride for in the future.

What are some trends in this market?

Matt Carrington: There is a lot more competition in this space right now. I think it speaks to the ability to use mobile technology to provide a better service in ground transportation and I also think it just speaks to the opportunity that's in this space. You can get online and you can get plane ticket or a hotel room pretty quickly, you can get a rental car. One thing you haven't been able to do from your computer to your phone is order a ride. It's a real ripe area for innovation and that's why you're starting to see a lot of interest in this space. A lot of the venture-capital and investment dollars are flowing into this space to back that up. We think that that's great because we've been in the space for a long time. We have a very large footprint in the U.S. and in Chicago. Competition is good because it means that the end user, the riders, are the ones that win. They get a better overall experience. The drivers these taxi cabs and the fleets that support them, they're happier because the drivers are making more money and the fleets have happy drivers. So, as this technology really takes hold and more users adopt it, it's a win-win-win scenario.

What will it take for it to "take hold?" How are you measuring and tracking that? Just by users?

Matt Carrington: When you work with fleets like we do, you can take a look at what the overall traffic is for booked rides that a fleet will have. And so a fleet has hailed rides and dispatched rides. Hailed rides are going to be rides that someone just runs out onto the street and waves down. A dispatched ride is more like when you would call based on a phone number that they've marketed or advertised around the city or in the Yellow Pages and then you'd place an order for a vehicle, and then the vehicle would get dispatched to come pick you up. The fleet can easily track dispatched rides. It can't as easily track hailed rides because that's really just at the driver's discretion based on what he sees on the street. So, one measurement of overall adoption that we'll use is taking a look at the total number of dispatched rides that the fleet has, and the number of Taxi Magic rides that constitute those dispatched rides.

So, a few years ago, at our best fleets, we were pulling just a few percentage points of their total number of dispatched rides and that's just because the concept was new and the mobile-adoption rate was lower. We're doing much, much better now. We don't share the exact number, but it's much better than what it's been over the last few years. What you can see is it's continually increasing. It's more than doubling from year to year, which is great, and it's going to continue to do that as more people get smartphone technology with a GPS component that's going to allow us to know exactly where they are and as they get more comfortable, just the behavioral act of booking a cab from a smartphone rather than making a phone call.

Since we're speaking of trends, what's on the horizon and right around the corner? Who seems to be leading the way towards turning those corners?

Matt Carrington: In order to win this space, it all comes down to customer experience. So, whoever can really provide the best user experience is really going to be the one that wins. Our companies are building two-sided markets: We're connecting drivers with riders. So, our ability to be able to provide a good experience on both sides is going to allow us to get widespread technology adoption. That allows us to scale rather quickly.

What differentiates the Chicago market from any other in this sector?

Matt Carrington: The one thing I will say about Chicago is you can tell as far as overall availability that you might have in the backseat of a taxi at any given time matching up against the demand that is kept up at specific time. In some cities, where you have really low rates of taxi availability given per capita of population, it can throw the market out of skew. So, San Francisco is a great example: It's got a lot of people, it's got very diverse neighborhoods and terrain, it has very few taxis relative to that. So, when you have peak times, it becomes a really poor experience to be able to get a taxi. I think that's why we've been a lot of competing folks, whether it's black-car services or ride-sharing services crop up in San Francisco. They have a technology-forward population but they also have a taxi problem.

We see Chicago as being one of the most balanced tech communities in the country. It's very spread out. IT's very diverse. There are lots of different neighborhoods, but there are a lot of cabs. And so it's immune to some of the very real supply constriction you can see in other areas. We look at our numbers very rationally, which is great for us because we don't have any breakdowns like we would have in a city like San Francisco, where sometimes you just don't have any backseats that are available but you do have a lot of very real demand coming in.

When a new device like the iPhone 5 comes out, how does that impact things for you? Does it at all?

Matt Carrington: There are two things that happen around this time of year that really cause our numbers to go up: usage of our application and total taxi rides taken. One is there's just a seasonality effect in the taxi industry. People are more willing to walk during the summer, it's nicer outside. You don't have a lot of college students in school at that point, so they're taking fewer taxi rides. During the September/October months, that seasonality shifts. It starts to get colder, people take more taxi rides, people travel more for business, less people are on vacation -- so we start to see a lot more usage at that point. And then you combine that, it's almost like an injection of steroids when the new iPhone comes out every September because everyone wants to re-up their apps. What you realize is that all the iPhones get cheaper subsequently, so you have more people opting in at the lower level, and then you have a lot of first-time iPhone users who will wait and go get the iPhone 5, in this case. So, we certainly see a lot more traffic in this time of the year because of those two factors. 

David Wolinsky is a freelance writer and a lifelong Chicagoan. In addition to currently serving as an interviewer-writer for Adult Swim, he's also a comedy-writing instructor for Second City. He was the Chicago city editor for The Onion A.V. Club where he provided in-depth daily coverage of this city's bustling arts/entertainment scene for half a decade. When not playing video games for work he's thinking of dashing out to Chicago Diner, Pizano's, or Yummy Yummy. His first career aspirations were to be a game-show host.

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