It all began on a summer night in 2010, when 47-year-old Nikos Drandakis, a business consultant specializing in new technologies and media, was stuck in a remote part of the northern Athenian suburb of Kifissia and couldn’t find a cab.
“As I looked at a map of the area on my iPhone, I thought how great it would be if I could see the locations of the nearest taxis,” he told Kathimerini recently.
That was the first hint of his idea for Taxibeat, a mobile and Internet application for calling a taxi that greatly changed the taxi market in Athens when it was launched and has already expanded to Paris, Rio de Janeiro, Sao Paolo and Mexico City. The company recently announced that the London-based venture capital fund Hummingbird Ventures is to invest some 3 million euros in the scheme.
“We are looking to expand quickly,” Drandakis said, arguing that the taxi market is changing dramatically all over the world. “If we wait to enter these markets with our own capital, after we’ve started to turn a profit, we will lose valuable ground.”
Drandakis said that the comparative advantage of Hummingbird Ventures over other prospective investors is that it has “people with experience, who are giving us the know-how to build an international technology company.” Taxibeat’s collaboration with Hummingbird is indicative of the speed with which the Greek start-up, which was established in 2011, has transformed from a local endeavor into a business with international ambitions.
The path to expansion has not been obstacle-free, however: Drandakis had no prior experience in starting up a business and coming up with the initial capital in a period before the European Union-backed JEREMIE (Joint European Resources for Micro to Medium Enterprises) program was a process that took several months. Penetrating the market was also no easy matter.
“I visited all the taxi stands in Athens and got to know the drivers individually,” Drandakis said, adding that he now has representatives doing the same in every city into which Taxibeat expands. Going around in Athens, the crisis worked in his favor.
“The drivers were in dire need of clients. We offered a service that would increase their clientele without them having to pay a regular subscription,” the Taxibeat CEO said.
Taxibeat charges drivers who subscribe to the service for each fare they book. Initially the drivers paid 0.50 euros. Today they pay 10 percent of their total fares.
Another big help for Taxibeat was the emergence of a start-up culture. In the first few months of its existence, for example, the company was housed in CoLab, the first co-working space set up for new businesses in Athens. The first batch of start-up money came from Openfund – the predecessor of Openfund II, one of the four investment capitals of the JEREMIE program – as a result of a start-up community Opencoffee event. One of Taxibeat’s first investors was Nikos Moraitakis, then an executive at Upstream and now CEO of the recruitment software developer Workable.
Drandakis hopes that new innovative companies and investors with expertise in the field will emerge from the Taxibeat team, which comprises a number of shareholders in the company.
The most fascinating part of the Taxibeat story, however, is how it has transformed the taxi market in the Greek capital. There was a time when taxi drivers would try to charge their customers extra even for air conditioning and the customer had no way of evaluating the driver, meaning that drivers had no motivation for improving their services. Taxibeat offers users the name and profile of their driver as well as a ranking composed of customers’ evaluations. In the past year, 800 of the company’s fleet of 2,500 cabs have been equipped with Wi-Fi.
“The most important reforms in any market are achieved mainly through technology,” Drandakis said.
And it is true that Taxibeat has managed to change the sector more significantly than its liberalization under the terms of Greece’s bailout agreement with the country’s creditors did, and this without all the drama between the government and cabbies back in 2012.