Uber has grown in a decade to become the world’s largest ride-hailing company, with a market cap of $74 billion, and handling 14 million rides a day — about the same as driving around everyone in Bulgaria and Laos.
Controversy has dogged Uber, from crime, to complaints of driver exploitation, to tangles with regulators and a founder repeatedly in hot water. Things got so bad that the mayor of London, one of Uber’s largest markets, sought to ban the service.
The bad behavior has created an opening for alternatives as customers search for a more ethical operation. Recently seeking to fill the void is the U.K.’s Xooox, pronounced “Zooks,” which started two months ago.
Founders Darren Tenney and Matthew Breretton, both former cab drivers, hope to build Xooox by offering drivers better work conditions and working closely with regulators, rather that at odds with them. Xooox says it’s self-funded, and that it’s app has been downloaded 3,500 times since its founding.
“I wanted to make sure that we delivered a technology platform, which was fair to everyone across the board,” says Tenney, Chief Executive Officer.
A More ‘Fair’ Alternative to Uber
Unlike Uber, which treats each driver as an independent contractor, Xooox works with existing private hire taxi companies. Local private hire operators, which are licensed by local authorities, can sign up to use Xooox as a platform — plugging their business into it. Once signed up, drivers employed by local companies will be listed on the app and will receive pick-up requests from the app.
It is because of this model as a software layer on top of existing businesses, that the company believes that it can grow sustainably, without the need for cash injections. Still, it says it is in talks with investors about a first funding round.
Gaining traction in a crowded field will be challenging. Pinar Ozcan, Professor of Strategic Management at the U.K.’s Warwick Business School says the company will struggle against Uber’s overwhelming network advantages.
“As one platform starts to grow, it provides an increasing incentive for both providers and users to join that platform rather than others,” she says, “It’s very difficult for a second platform to actually do really well and grow in the presence of that dominant platform.”
Xooox hopes the app will appear fairer based on a few reasons: drivers can set their own prices per mile in real time, responding to demand, and can choose how to split the fee that gets paid to Xooox — whether they absorb it themselves, or whether the cost is passed on to the customer.
For private hire operators, Xooox has built a fleet management tool, enabling them to see where drivers are and where demand is with ease. For regulators, Tenney thinks they have built something unique that could change the industry in the U.K.’s 350 districts.
“All taxis and private hire vehicles are licensed within their own district,” he said. “It’s very fragmented and they’ve never been able to link up and actually deliver a national infrastructure for passengers,” he explains.
To get around this, Xooox has built a portal for local regulators – a means by which they can share licensing data on drivers that doesn’t actually share personal information – and so remains compliant with the tough, new Europe-wide data protection rules. This conceivably means that locally licensed drivers can operate across boundaries.
The cooperation with regulators also extends to the important safety question that has dogged Uber – especially with regard to its high-profile issues with women. In this case, because Xooox is working with existing firms, it is not taking on any of the rider safety concerns itself – instead Tenney argues that it is the job of local authorities.
Still, can the company compete against Uber, whose app has been downloaded from the Google Play 6.32 million times?
Ethical concerns are among Uber’s weaknesses, from the way it treats drivers, to gender discrimination, to systems built to evade regulators. Since its IPO last May, it has been trying to clean up its image – but the scandals still linger.
Might there be an opening for Xooox?
Ozcan points to her research, which found that convenience and financial reasons are major drivers for consumers choosing sharing economy services – with environmental and social concerns coming a distant second.
“If a user goes on there and sees that their average time to getting a driver’s 20 minutes, then there’s no way that they’re going to go for that,” she says.
Is there anything that Xooox can do to break out of the chicken-and-egg paradox faced by all sharing economy apps, of requiring drivers to attract riders, and requiring riders to attract drivers?
Co-founder Brereton points to the geographic advantage the Xooox model has over Uber – which is capable of aggregating local operators in geographic localities that aren’t on Uber’s city-focused radar:
“People can vote with their feet,” says Brereton, though the company won’t commit to any specific targets. “We have the potential to be everywhere in the U.K. We’re in 90 districts actively at the moment, we will be in all 350 – nobody else can do that.”
“It’s being able to go anywhere, walk out of Heathrow and use it. Walk into Aberdeen and use it – go anywhere, you don’t need to know what the taxi and minicab companies are, you can just use Xooox.”
Unfortunately, the only way of breaking out might be to spend some cold, hard cash.
“What I would suggest is that if possible raise a significant amount of money and give serious financial incentives for people to try it, say for a month or so,” Ozcan says. “As soon as traffic picks up, then you can slowly reduce the promotions and then let natural traffic [grow].”
Ultimately, success for Xooox is going to come down to whether it can scale up before Uber reaches down to smaller markets. The model, that enables its software to plug into existing firms could enable the firm to pick up business in areas where Uber is yet to tread. But as for areas where Uber is already the dominant force, it may be significantly more difficult to persuade consumers to make the switch.