The Future of Personal Transportation Will Be Shared (Part 4)

Posted on 17.05.201617.05.2016 Posted in Personal Transportation, Ride-SharingTagged Personal Transportation

In the future, every car is going to be part of the future personal transportation service. If there’s a vehicle with available empty seats going to same direction than you are, the chances are that you’ll get onboard with that car. Things are changing – the younger generation no longer sees owning a BMW as something cool, but however, getting from place A to B with just a few clicks on your iPhone is something they want. There are already several startups offering services to get you from A to B but they are struggling with various problems, and to be honest, the current services are not yet truly disruptive either. Yet based on the initial success of these services one may be assured that there is also a true revolution in the personal transportation coming up. Strong resistance from the traditional taxi companies and taxi associations is only one proof of that.

In the previous three posts the problem, solution and a practical example to future of personal transportation were discussed. In this post it’s discussed whether the currently existing taxi industry is able to respond to the challenge or not.

It’s quite likely that people will even in the future want to get from place A to B. It’s also likely that the most convenient method of transportation is often selected. Some of the trends indicate there might be room what I call Personal Transportation Service as the younger generation may no longer want to own a car, at least in the cities. The revolution starts with one-off rides and currently the taxi industry is perceived to be under attack. Startups are offering taxi-like services with Black Cars and even with people’s own private car (so called community-driver approach). It’s not going to stop there, however. These one-off rides are only small part of the actual traffic volume in commuting, for example. Obviously, if convenient public transportation is available, that’s also high volume service.

Being a pioneer means fighting challenges

The startups offering new solutions are facing numerous challenges related to pressure to decrease the price, supply of drivers and last but not least, the strengthening opposition of the incumbent taxi industry. The service concepts are likely to need ridesharing options in both the Black Car and community-drive approaches in order to offer rides for such a price that would enable mass-adaptation of the services. That will introduce another problem for the new kids on the block. Currently, the startups are using drivers are “contractors” and drivers are not actually employed by the Black Car companies. That was recently ruled to be acceptable as the drivers can choose their own hours, are not restricted by geographical limits and are free to accept/reject any trip offer. The inevitable addition of ridesharing option to the service concept will partially change that. When offering ridesharing trips (actually, taxi-sharing), the business reasons are likely to dictate that the driver mainly must accept any trip offered for him and the driver’s app will tell where to go next to pick up or drop off somebody. So the chances are it’s one step closer to employer-like activity.

Smart taxi companies would be winners, if they’d choose to

All this represents a huge opportunity for the existing taxi companies, if they just choose to be a bit less reluctant against new innovations than they are now. In many countries, the taxi industry is highly unionized, dispatching logics vary and the industry sees the inefficiency as a good thing as more taxis get passengers. That’s unlikely to continue, increasing prices after decreasing demand is not a thing to do in normal market economy.

Any taxi company with reasonable number of vehicles could start their own ridesharing service and start offering innovative services. That would require changes in the attitudes but in the long run might save the industry before the self-driving taxis take over. At least would offer good resistance. There was an interesting concept marketed by a german Taxmobil company last year. The idea was to offer a flat-rate taxi service in Frankfurt for just 48 euros per month. The service is not up and running yet so nobody really knows whether it’s for real or not. But the idea is interesting so it’s likely that one day somebody will actually do it as well.

It’s highly likely that even an innovative incumbent transportation company would (or will) go wrong by figuring out with their management consultants that the primary factor for a user when choosing how to commute/travel would be just the cost of the trip. Couldn’t go more wrong! They might be also be convinced that creating ridesharing software for that service would be relatively easy, just combine some algorithm guys with a coding team. Wrong again! That’s a great formula to lose money, market and the momentum, nothing else.

So it’s that easy. Oh wait, maybe not. There must be a reason why this is not done in massive volumes yet. And what is the right approach then?

The Future of Personal Transportation Will Be Shared (Part 3)

Posted on 10.05.201609.06.2016 Posted in Personal Transportation, Ride-SharingTagged Black Car, Personal Transportation, Ridesharing

In my previous posts, both the key problems and solutions of the existing Black Car and Community Driver services were discussed. Now it’s time to see how they actually would work.

Let’s get back to the original problem. People want to get from place A to B as easily as possible. Time is money so riding all day is not an option, but still the cost of the trip is one of the key factors to consider in order to expand the utilization of these services. Just lowering the prices is not going to work as soon nobody would be driving these vehicles. Self-driving cars may solve this problem one day but not quite yet. The solution is to utilize better the existing seat capacity in the vehicles by means of the ridesharing. And the same principle will apply even when drivers are no longer needed as there are, after all, too many vehicles in many cities in the world on the roads already and the seat utilization is going to be more and more important part of the solution.

A bit longer ride but a lot more affordable

So how would this work from the end user’s point of view when using a transportation service? The smartphone app would simply have an additional “ridesharing” option which the user (passenger-to-be) can select while ordering the trip. The vehicle chosen by the system could be a car already going into same direction with another passenger. Or, it could be an empty car which will pick up another passenger along the route. Instead of the usual pickup in for example 10 minutes the vehicle may arrive in 20 minutes and the trip may take a bit longer than a direct route would take. For example, if the direct route from A to B would be 20 minutes, the shared ride might take 30 minutes. You could also order a trip based on the latest arrival time in the destination, a handy way to to ensure you don’t get there late even in case of ridesharing.

In exchange for an opportunity of chatting with somebody (who actually might be your Facebook or LinkedIn contact) you’d be saving money. Instead of non-shared price of (for example) $27 you might be paying only $15. And best of all, the driver could be earning more than what he had made otherwise. You might also meet new faces, and experience life in a totally new way. True win-win for all the parties, and a cure for the driver problem as well.

Every car is part of the personal transportation network

Ridesharing as an integrated part of those transportation services where another person is your private driver is just the beginning of the new era in the personal transportation. The next obvious step would be expanding the concept to every other vehicle moving on the road. It’s likely that increasing taxation on the vehicle usage will motivate even those driving with their own car to take passengers along the route – as long as the trip duration of the driver (who owns the car, after all, and can therefore get some benefits…) is not extended too much. Maybe the tax man will get really innovative and taxes will be higher for those not participating these new personal transportation service concepts. You can think about this as a huge system where the destination of every car is known in advance. You’ll be matched to such a vehicle which fits not only your destination but may also matches your social profile (Facebook, for example) – especially in case of carpooling.

Finally, real-time carpooling for commuting and and any other personal transportation need becomes a reality. And you no longer book “a carpool trip” with your mobile phone but you rather indicate with your smartphone a desire to get somewhere. Carpooling with somebody will likely to be the cheapest travel option but in order to ensure you always get to your destination, the other alternate transportation services (taxi-sharing and taxi) will be needed to offer you this guaranteed ride. Otherwise you might still need your own car. But who will own those private cars with whom can you carpool? If driving your own car requires you to be wealthy, will they take you as a passenger? Whether the future is not changing that fast is yet to be found out.

But who’s has a chance to be the Black Swan of the future personal transportation services? Read about that in my next post.

The Future of Personal Transportation Will Be Shared (Part 2)

Posted on 03.05.201617.05.2016 Posted in Personal TransportationTagged Black Car, Personal Transportation, Ridesharing

In my previous post, the key problems of existing Black Car and Community Driver services were discussed. Now it’s time to consider the solutions.

The solution is simple. Let’s integrate a really smart ridesharing backend to these services. This is the answer to the challenges related to demand, supply, pricing and quality. Even though some of these startups already call themselves as “ridesharing services”, they are actually not. In my opinion, ridesharing means a service where the ride is shared by people all traveling from different addresses. So taking two persons from A to B by a community-driver is not ridesharing in that sense, but simply a taxi trip driven by a driver. And whether this driver is a professional driver or community-driver does not really make a difference.

What’s true ridesharing like?

In true ridesharing model the vehicle (car, van, minibus) is picking up and dropping off passengers in such an order that nobody needs to take too long extra ride because of other passengers. But at any time there may be one or more other passengers in the car. In the real-time ridesharing service people wanting to get a ride are matched in real-time to any suitable vehicle already in motion, but carefully avoiding not extending the trip duration of those people in the vehicle already too much.

The technological solution to the ridesharing may come from a rather surprising direction. There are thousands of vehicles in the US alone being part of real-time ridesharing services right now, taking huge number of people from place A to B every day. Some of these systems are quite advanced: trips can be ordered at the last minute, passenger is promised rather small pickup window (15 minutes) and the promised trip travel time is kept as good as possible. As the passengers may sometimes be late, or not show up at all, and the traffic may cause extra delays, the system is continuously optimizing everything in order to enable the service operator to make the maximum profit while keeping the trip “quality” promise given to every customer. Where are these services and who are using these services? These services are actually those operated under the ADA regulation (Americans with Disabilities Act) in the US. It says that transit authorities must provide comparable paratransit or other special transportation services to individuals with disabilities who cannot use fixed route bus services, unless an undue burden would result. In many cases the most cost-efficient means of arranging this is with demand-responsive transportation (DRT) service. Some of these services are really advanced. You can book a ride with relatively short notice if you like, the promised pick-up window is only 15 minutes and your trip is not extended more than certain extra duration. Most of the orders are made with a telephone call, but there are really no reasons why the booking could not be done with a smart phone or a web service. The magic behind the curtains is the full-automatic real-time matching and an optimization software that requires no human intervention. Not all the paratransit services are this good yet, but number of those is increasing every month. The state of Pennsylvania is showing good example and has successfully implemented large number of advanced DRT systems already.

Introducing Economy Class of personal transportation

So what happens when the companies in this field will implement true ridesharing? People will use their iPhone just like now to order a trip. But instead of having only one option available (the current “ride alone” option) there will be another option available, “ridesharing”. Another way to call these two travel classes would be to call them “Business Class” and “Economy Class”. In the business class you travel with more comfort while in the economy class you give up some comfort for substantial savings in the ticket cost. The difference being of course that unlike in the air travel, in ridesharing the trip duration for economy class may be a bit longer than in the business class.

So how would it actually work? Read more about that in my next blog post.

The Future of Personal Transportation Will Be Shared (Part 1)

Posted on 26.04.201617.05.2016 Posted in Personal TransportationTagged Black Car, Personal Transportation, Ridesharing

This currently ongoing change in the mind setting of people no longer valuing owning a car so much means there is a huge opportunity fulfilling the need to get around. And where there is an opportunity, there are startups aiming to give the best solution for the problem. Currently there are two principal ideas on the market to solve this problem: using professional drivers with a nice black cars or not using professional drivers but letting anybody in your neighborhood take you there with his own car.

Drivers want to earn more, not less

In some of the black car services the pricing depends on supply and demand of trips that particular moment (i.e. “Surge Pricing”). It’s a good model in the sense that it enables the drivers to earn more, even after possibly a heavy middle-man commission. An opportunity to earn more is a good reason for many drivers to join the service. However, the increasing competition means increased pressure to lower prices in the hope that the additional trip volume will cover the difference. Just lowering the prices is not a cure, however, and it inevitably means that the profit of both the driver and the middle-man alike are going to be far from what they are now. Nobody wins in the price war.

Startups solving the problem with community-driver approach are betting on the fact that people want to freelance to drive people around in their own car. This peer-to-peer transportation is now legal in California, and more than a million rides have been taken with these services. Some of these services are operating in a way in the gray area in regard to the business model as the passenger is expected to “donate” money in the end of the ride, not to “pay”. Also these companies with community-driver approach are testing the peak-pricing to offer drivers an opportunity to earn more. But if prices go up, the demand goes down.

Given the price pressure caused by the community-driver approach to the black car services, one of the companies in this business has expanded into this community-driver model as well. The rumors whisper that there may be some aggressive recruiting going on from the competing services. Lack of enough drivers seems to be one of the bottlenecks for the expansion.

The current “new” taxi services are not that disruptive yet

Right now these services are a replacement for a regular taxi rides, but not yet a replacement for high-volume personal transportation services such as commuting. So it’s no surprise that the taxi associations are fighting heavily against all of these new models of the personal transportation. But the real volume (and needs of this younger generation) also calls for modern, new kind of solutions for commuting. Let’s admit it, ordering your own black car for your daily commuting is never going to be a mainstream means of transportation. It’s simply just too expensive. Nor relying on community-drivers as that may not be reliable enough, you should always be sure you get a ride to work (and back). And proper public transportation is not everywhere so this is still maybe one of the directions to go.

Let’s get back to my initial point on every vehicle becoming part of the personal transportation service. If we take a step back and take a look of these services from a bit further away, all we see is cars with one driver and one or more passenger traveling from place A to B. It’s not that disruptive yet, actually. And in order to increase the usage, the price should go down but that would mean there would be even less drivers (and that’s a bottleneck already now) as drivers want to earn more money rather than less money (ugh, not surprising). Using community drivers is currently not a solution either as that to a certain degree decreases the degree of certainty actually getting a car at all.

So what’s the solution? Read more about that in my next post.

Personal Transportation is being disrupted. That’s the fact. It’s either an opportunity or threat for your transportation business.

Posted on 21.05.201431.08.2015 Posted in Future, Personal Transportation, Ride-SharingTagged Personal Transportation, Ridesharing2 Comments

Let’s make a forecast for year 2020. Yes, I know, forecasting the future is challenging. Big changes in our life rarely are actually consisting one big change but rather series of smaller steps that suddenly surprise us. Typically we’re overestimating the changes happening in the near future and underestimating what will happen on a longer term. And so called black swans are (by definition) almost impossible to forecast.

Let’s start with data-driven approach. Statistics, that is.

Personal transportation is the second largest household budget item in the US. Thus, there is motivation to find alternatives offering the same convenience level but for less money. At the same time, the proportion of young adults with a driver’s license has fallen both in the US and other countries. It means that there is increasing demand for personal, affordable transportation services.

Taxi apps are becoming popular but it’s just the surface

Uber, Hailo and others are enjoying success in new kind of ways to order a taxi. You can be sure that you actually get a cab, you can see the vehicle approaching on the map on your smartphone and payment is done conveniently with the pre-registered credit card. The initial users consists mainly wealthy people and more importantly, wanna-be rich people. Drivers also earn more in this model so they naturally like it (for now).

Simple mathematics shows, however, that this model may not economically be feasible in the long term. Competition is getting tougher (pressure to lower the costs) and at the same time the drivers want to earn more (pressure to increase the fees). Self-driving cars are only a partial solution. It may take the expense of the driver out of the question, but it’s not enough. Congestion and space on the road still remain, calling for other solutions.

So it’s safe to estimate that these companies are after something much, much bigger thing.

Incumbent transit operators suddenly face two disruptions simultaneously

New companies want to change the rules of the game, effectively wanting to change the regulation. For the end-users all this is visible in the form of easy-to-use mobile app enabling you to order a taxi. That’s the official appearance of the business. Customers will protest against any authority taking actions to take down these new players (as they offer so convenient service).

More money is spent on lobbying and other activities aiming to change the regulation. Incumbent players cannot invest the same amount of money to fight the lobbying. So it’s likely that the regulation will change.

At the same time, the self-driving car revolution (another disruption) has potential to make more and more taxi drivers unemployed. It’s not an overnight change but will happen.

The incumbent players need to change the mode of operation

Fighting two disruptions (self-driving car and disappearing/decreasing regulation) is impossible at the same time is practically impossible. The rules of the game will change, and one needs to change oneself as well.

First, it’s important to understand the situation. Only then the right solution for the problem can be created. Some players have for example thought that Uber’s service is all about ordering a taxi with a mobile phone. So they created their own app to offer the same technical functionality, with no measurable visible success.

Second, a proper solution has to be created. As Marc Andreessen famously forecasted, software will change everything. Now it’s transportation segment’s turn to be disrupted. Acquiring software skills is suddenly a must. At the same time, some companies have spent millions in creating working solutions for this segment. So it’s likely that starting from scratch is bound to fail, especially if there is no “software culture” in the house already. The fundamental change is much bigger.

Third and maybe most importantly, these incumbent players need to change the corporate culture as well. They have to start thinking in a disrupting way themselves. That’s the major difference between corporations and startups. In a corporation you’re fired if you make a mistake. In a startup you’re required to make mistakes, learn, iterate and win. This inevitably means new people are needed to manage this change. No manager with corporate background can manage this so external people with entrepreneurial background are needed to cultivate the new model.

Self-driving vehicles combined with ridesharing just might be the future of urban personal transportation

French engineers already pioneered this concept long time ago but now they are adding the “social graph” of Facebook to the equation and they may have a winning combination.

http://gizmodo.com/is-this-ride-sharing-smart-minivan-the-future-of-self-d-1542547679

Released earlier this year at the Geneva International Motor Show, the Akka Link & Go 2.0 is an autonomous car that’s designed to be social. It has all the technology that allows it to drive unaided by humans—cameras, lasers—and it can transform from human-driving to computer-driving mode by retracting the steering wheel and pivoting the drivers seat around to face the back. But this is the interesting part: The Link & Go 2.0 has an integrated system which connects multiple passengers over a network to help with carpooling and car-sharing.

Did I say this is going to happen in 2020? It might actually happen faster, nobody knows.

What’s the best way to prepare for this revolution of self-driving cars + ridesharing? It’s a no brainer again. Start offering the same service but initially with the drivers. Enter personal transportation business with an existing, simple service (taxi transportation). Then trial with service with non-professional drivers to learn more. Experimenting with ridesharing services is the next obvious step. And once you switch to self-driving cars, you no longer need the drivers. So the fight for the blue ocean market share has already began and some of the public transportation as we know it today, may soon be something we read from the history books.

Guess who might be doing just that?

Ecolane Ranked 4th on Deloitte Fast 50 in Finland

Posted on 22.11.201303.12.2013 Posted in Ecolane, Personal Transportation, Ride-SharingTagged English, Personal Transportation, Press Release

Ecolane USA Inc. today announced the ranking of its parent company as the fourth fastest growing organization in Finland. While the focus of Ecolane’s business operations is predominantly in the United States, the cumulative growth rate of Ecolane’s Finnish entity reached 1,745% over the past five years. The Deloitte listing is based on Ecolane revenue in Finland in 2012, totaling 6.9 million Euros (US$9.3M). On a group level, Ecolane’s growth rate since 2008 totaled 2,203%. Ecolane’s software solution for transit management enables fully automated personal transportation and paratransit services. Based on efficient, secure and reliable technology developed in Finland, Ecolane DRT solutions (Demand Responsive Transportation) are currently used by more than 50 private and public organizations across the United States. “Ecolane aims to offer the most flexible, affordable and reliable choice for transit agencies tasked with implementing demand-response scheduling and dispatch solutions,” said Antti Hannula, Ecolane Chairman and Co-Founder. “Our core differentiator is a superior technological platform, built and perfected by the R&D team located in Finland, and based on the needs of our customers in the United States. We’re proud to be listed among the Deloitte Fast 50 and look forward to further growth and geographical expansion.” Founded in 2002, Ecolane first set out to develop a dynamic online carpooling platform. The business was quickly refocused to empowering better paratransit services, initially in the Finnish and European markets. The US entity Ecolane USA Inc. was founded in 2008, and the region has since grown to be the company’s largest market area. “Since joining Ecolane this spring, I’ve been impressed not only by the extremely fast growth, but by the passion of the Ecolane team to empower people in need of special transport, and to restore their ability to engage with their communities,” said Steve Ross, Ecolane’s US-based Global CEO. “While this is ultimately a technology company, and we’re focused on ensuring reliable real-time operation, underneath is a compelling social mission about people, not software.” The next steps for Ecolane include expansion of sales in the United States, exploring opportunities in further geographies, and developing the next-generation Ecolane platform. “Ecolane’s team is exceptional, close-knit and motivated to continue to build great products,” said Douglas Spears, VP of Product Development based in Finland. “We recently moved our R&D operations to a much larger office space to accommodate both the company’s growth as well as our intention to bring aboard new development and engineering talent.” Deloitte Fast 50 ranks the fastest-growing technology companies based on their revenue growth over a fiveyear period. For the 2013 ranking, Deloitte analyzed revenues from 2008 to 2012. For more information on Deloitte Fast 50, please visit http://en.wikipedia.org/wiki/Deloitte_Fast_500. The listing for Finland in 2013 is available on the local Deloitte site at http://bit.ly/18b7EPE. For more information, please contact: USA: Jonathan Segal, Director of Marketing & Communications, Ecolane jonathan.segal@ecolane.com Tel. +1 610 635 6700 About Ecolane Ecolane is the most flexible, affordable and reliable choice for transit agency managers, directors and decisionmakers with responsibility for implementing easy-to-deploy, demand-response scheduling and dispatch solutions. Ecolane’s software platform restores community engagement to people who might not otherwise have access and mobility. With offices in Espoo, Finland and US headquarters outside Philadelphia, Pennsylvania, Ecolane is a technology leader in the demand responsive transportation (DRT) and the paratransit solutions market. For more information, please visit www.ecolane.com.