Bolt

For years, Uber has held London’s ride-hailing market in an iron grip – seeing off legal challenges and competition from the likes of Lyft and Hailo. But that could be about to change. Bolt, an Estonian firm previously known as Taxify, has launched in the capital – and is promising to pay drivers more, and charge riders less.

It’s not the company’s first foray into the UK market. It previously launched in 2017, but was forced to pull its services after three days when Transport for London objected to the fact that Bolt had purchased a company with an operating license, rather than applying for one itself.


Bolt has spent the last two years going through the licensing process properly, and now it’s ready for action. But it is not new to ride hailing. The company was founded in 2013 by 19-year-old Estonian Markus Villig, and began by targeting markets – such as his home town of Tallinn – where Uber was slow to expand. It now operates in more than 30 countries, and has found particular success in Africa, where it offers rides on mopeds as well as in cars – the continent makes up about half of its revenue.

But Uber is already deeply embedded into London’s transport system. It accounts for 80 per cent of all ride-hailing journeys, and is integrated into Google Maps and Citymapper. If you live in London, you probably have it installed on your phone. “London has been for Uber one of their most profitable markets but one without any serious competition,” says Bolt founder Markus Villig. But he has a plan – one that’s worked in many other European cities. Bolt will take a 15 per cent commission from its drivers – almost half of what Uber takes, which means it can charge its riders less. In this way, it hopes to chip away at the $100bn company’s lead over the next three or four years.

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“Bolt’s move into London will be making Uber – so far largely unchallenged in terms of serious ride-share competitors – a little nervous,” says Alyssa Altman, a transportation expert at consultancy Publicis Sapient. “While Bolt is causing a stir, its key differentiator against Uber is lower fees and commissions. If Uber is unable to make a profit at 25 per cent commission and current fee levels, it seems unlikely that Bolt is putting forward a sustainable model for the long-term.”

Villig disagrees, and says the key to Bolt’s success will be keeping costs down. “We design the company to be as frugal and cost effective as possible,” he explains. Unlike Uber, which has huge numbers of staff based in expensive cities, the bulk of Bolt’s software engineers are in Estonia and Poland, and it only employs a handful of people in each of the cities where it operates. It isn’t ploughing funds into the development of autonomous vehicles and flying taxis.


“We did not have the luxury of a monopoly but had to find out ways to compete from the get-go,” says Villig. Bolt says it is the most efficient company in the industry when it comes to return on investment, and that it has therefore not had to rely on external funding in order to grow to the same extent as its bigger competitors. Uber still loses billions of dollars a year, and a 2016 report found that it was subsidising journeys to the extent that investors were actually paying more than half of the cost of people’s trips in some cities. London has been one of the few places where it’s actually profitable.

This doesn't mean it will be easy for Bolt to make money though. Bolt will also have to subsidise journeys in the initial phase of its time in London, in order to attract drivers and passengers onto the platform. It’s offering riders up to 50 per cent off their first ten trips on the platform, and says rides will be between five and ten per cent cheaper on average after that.

Villig says he expects drivers to begin using the app alongside its competitors to fill in gaps between rides, but then to switch over completely as more riders download it. “That’s what we’ve been doing in every city we’ve gone to,” he says. “In most cases we’ve gone to a city with a dominant, greedy player and we’ve found that word of mouth is good enough marketing channel, as long we keep providing better prices.” It’s a strategy that has helped Bolt displace Uber in about half of the 30 countries in which it’s operating, and Villig says it will be difficult for its bigger rival to react by cutting prices – particularly as it now has to appease shareholders who expect a move towards profitability.

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However, Bolt's initial attempts to get into London didn't work out. Branded as Taxify in 2017 it started operating without having a direct licence to do so. The move was criticised by union representatives, MPs, and the Licensed Taxi Drivers' Association. At the time it claimed to have 3,000 drivers in London. At the time GMB's Steve Garelick wrote a letter to TfL questioning whether the company was “fit and proper” to have a private hire licence.


This time around Villig has said around 20,000 drivers have shown in interest in Bolt, with people then needing to pass background checks at the company's office.



London is becoming an increasingly saturated marketplace – the French ride-hailing app Kapten arrived earlier this year, and another shared mobility platform, also called Bolt and focussed on electric scooters, is hosting a London launch event today. Bolt wants to integrate shared bikes and scooters into its app, although Villig says it will look to build links with local operators rather than putting its own vehicles on the streets as Uber has done.

That presents a challenge for new companies in getting traction, but also means they can learn from the missteps of those that came before them (including those from its previous London launch). “When Uber first burst on the scene, their start-up mentality meant they had an equally ‘laissez faire’ approach to regulation,” says Rebecca Crook, chief growth officer at digital accelerator Somo. “The benefit for Bolt is that a lot of mistakes have been made by Uber and others already so they can learn from these quickly.”

Bolt is showing an awareness of the problems that have plagued Uber in the capital. It’s launching with an in-app SOS button that will directly link riders with the emergency services, and will operate a 24-hour call centre for non-emergency situations. “Fundamentally it boils down to company culture first and foremost, and a couple of years ago the culture was that they didn’t really care for the rules,” say Villig, who says the company is bringing European values to the wild west world of ride-hailing. “We’ve taken that much more seriously,” he says – and for Uber, that could represent a serious problem.

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