London taxi app Hailo has agreed to a merger with MyTaxi, the ridesharing company Daimler bought two years ago.
The deal will see Hailo as a brand come to an end. Its app and services will be rebranded to MyTaxi by mid-2017, Hailo says. It’s a disappointing conclusion for a company that’s been visible on the streets of London since 2011.
Hailo was started in London in 2010 as a group effort between three technology entrepreneurs and three taxi drivers. The app worked in a similar way to many other taxi apps: You say where you want to go, and a Hailo taxi comes and takes you there.
Crucially for London, though, Hailo worked with black cabs and used its taxi driver cofounders to build a close relationship with cab drivers. That’s an important relationship, and one that Uber has repeatedly struggled to form.
The company expanded from the streets of London to also cover Ireland, Japan, Spain, the US, and Canada. But it was Hailo’s US expansion that caused huge problems inside the company.
Hailo arrived in New York in 2013 and tried to use the same model in the city as it had for London: Working with local cab drivers to launch its service. The US was a major market for Hailo, and it raised $30 million (£22.8 million) from prominent US venture capital fund Union Square Ventures, as well as Richard Branson.
A lengthy article published by Fortune in 2014 explains that Hailo failed to build a close relationship with New York cab drivers like it had in London. Uber dominated the more expensive town car market, so Hailo was left to try and make money from cheap rides. It didn’t work. Hailo was forced to lay off 40 employees in New York and the disastrous US expansion eventually led to Hailo CEO Jay Bregman leaving the company.
Shahar Waiser, CEO of Hailo competitor Gett, told Business Insider in July 2015 why he thought that Hailo had failed to gain traction in New York:
“The problem that Hailo experienced in the US — it’s my personal opinion — is that they chose to work with yellow cabs in Manhattan. The way it works in New York is a little bit different. In Manhattan there are only yellow cabs, so people don’t need an app to hail yellows because they are available. They need black cars when they are outside of Manhattan. And second, they want to have a black car in Manhattan for when yellows are unavailable. If you work only with yellows, the only time you will use an app like Hailo or Gett is when yellows or busy or it’s raining. And exactly at this time when you need them, yellows will not be responding to requests because they have so much work on the streets. So they just made a wrong choice in the supply, nothing else. And statistics show they had 80% rejection on the orders.”
Hailo had tried to crack the US and failed. It pulled out entirely and focused on its existing markets. But soon money problems were looming. The Independent reported in 2014 that Hailo made a loss of £21.5 million that year after it ploughed cash into expanding to new cities around the world. Hailo said at the time that it was “purposely unprofitable” due to investments in technology and marketing.
And in 2015 we reported that Hailo was in talks to raise a crucial new round of funding. If the new money didn’t come in then it could have had to make hard decisions about the number of staff. It was working with New York banking company LionTree Advisors to create a pitch that was attractive to investors.
Eventually Hailo announced in October 2015 that it was dropping its private hire licence, the legal agreement needed to run an Uber-like service. It stopped offering rides from private vehicles and instead went back to only black cabs. The private hire experiment, which it had been running since 2014, was abandoned.
The conversations that Hailo was having with investors turned from fundraising talks to outright acquisition negotiations. Now, Hailo has officially announced that it will merge with MyTaxi. The company will be run from MyTaxi’s head office in Hamburg, Germany by Hailo CEO Andrew Pinnington. MyTaxi will bow boast 100,000 drivers in over 50 cities around the world.
That’s certainly an impressive network, but it’s still a sad end for the British taxi company.
NOW WATCH: China just finished building the world’s largest radio telescope to detect life billions of light years away
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.