The Wheels on the Bus Go Round and Round [Updated]

The first part below originally posted in the “MENA’s Digital News, Week #11” yesterday, but then things escalated over night and an update was due. 

Original thoughts: 

Did we reach a new battle frontier: king of the mass-commute sector? 

Let’s face it, taxi ride hailing is not for everyone. It’s expensive for the majority of populations to adopt on daily basis, especially in emerging markets. The opportunity is even more alluring when combined with the lack of (or deteriorating state) of public transport in these markets. 

But it all happened too fast: 

Targeting the same demographic: Halan (mentioned above) also just closed Series A round, to provide motorcycles and tuktuks on-demand. 

The shuttle services are of course not unique to MENA, Grab (Singapore) has shuttle service offerings since last December 2017 and recently expanded that service to include school and airport shuttles. Of course it’s truce with Uber in Singapore has helped focus it’s efforts on serving new segments instead of burning cash on competition

Mass commute is a space that ride-hailing companies have tried and failed to crack in the past, so it’ll be interesting to see who will acquire whom first. 

The Update:

After I published the newsletter yesterday, Halan (حالاً) announced at RiseUp Summit that the CTO of Uber was part of their latest Series A round, and will be joining the board of the startup.

Lyft announced it has filed for an IPO (rushing to beat Uber), only to find out that Uber had filed “secretly” on the same day! 

Lyft has been the slow and sturdy of the ride-hailing race in the US, that does however mean that they have yet to expand beyond the North American continent, and that their valuation is also much less that Uber’s; according to Bloomberg: ~$18M-$30M.

This puts even more pressure on Uber to pick up its performance, burn less cash and put their money where their PR is to hit a valuation that can bring returns to the last round of investors (Softbank & co.) at that IPO. The “rumored” valuation has increased two fold in less than a year, which is absurd in millions, let alone in the double-digit billions! 

Valuation earlier in the year was $65B, we’re now hearing of IPO at $130B! 

So, what does Halan’s investment mean? The battlefield is geared up and ready. 

I’m not concerned about Careem’s ability to ride this through. Uber will be aggressive from now till IPO (~March) to gain its valuation, however you cannot operate at that level of aggression forever and avoid bad publicity, especially given the records on Uber’s work environment. 

However, there will be victims in this race. Swvl has a carved vertical and is looking at a different growth trajectory than both giants (Uber has failed Asia and Careem is still conquering broader MENA). It will face the wrath of SEA emerging markets, but there’s plenty of space in there to deliver and grow. It is also not too late or too big to get acquired by the regional giants or global ones. 

Buseet, may be a tempting acquisition for either giants, to help consolidate their fleets and decrease competition. And that’s only looking at the Egyptian market. There are dozens of smaller ride-hailing apps, Ousta, TemTem, Marhaba, Tirhal, etc in neighboring markets that may get snatched up or wither in this grid-lock. 

Or dare I say, the battlefield starts looking so tempting that we see more giants move in? 

What stops Rocket Internet, through Jumia’s massive reach, from expanding EasyTaxi in North Africa, as a stepping stone into more MENA markets?

Or Didi from expanding it’s partnership (and investment) with Careem with a big move into MENA by, I dare say, acquisition? Didi has partnered with Taxify to corner Uber out of markets,  and with the bullish growth of the Chinese tech giants, it’s not a far stretch!

(after the arrest of the Huawei CFO two days ago, I’m sure Xi Jinping would be happy to watch a US company suffer a little)

You can check my post on the Uber-Careem merger rumors here: Can Working Smart & Local Compete With Global Giants Burning Investor Money – Part 2: Careem vs Uber

Also, other opinions of the topic:

Competition heats up for Cairo’s ride-hailing apps [Wamda]
Opinion: Why Uber and Careem should merge [menabytes]