I’ve been asked by hundreds of drivers about the Taxiapp investment: – why we made it; how it’s structured; and why it’s good for the industry. Hopefully this will answer your questions.
Why did we invest?
Various reasons which are all connected. If it works, then it’s a good investment. It will only work if it’s great for drivers. And if it’s great for drivers, then it’s also great for London and for the thousands of people like me who want to be able to book a black cab via an app and not risk the job being cancelled for a job off the street. That’s the key. Making sure a Taxiapp booking is good financially for the driver today, and good for the Black Cab industry tomorrow.
There are two ways to do that:
- Keep commissions low and find ways to encourage customers to tip more often and more generously; and
- To make drivers owners of the business, so when it’s successful, they share in that success financially. More on that below.
How much did we invest?
It wasn’t millions, but it was hundreds of thousands. And it wasn’t just me. The investors also included my neighbour and his closest friend; one of my brothers (also my old business partner); and my cousin’s husband. Quite a tight knit group!
Where’s the £ going – what is the investment being spent on?
- Tech – sorting out the tech was the main cost. We needed a stable app which we now have. And then we needed the ability (financial and technical) to keep making the app better and better for customers and drivers.
- Management – putting in place and paying for an experienced management team. This includes an MD who has run and scaled tech businesses before and a product manager for the app as well as a support team for everything else involved (admin, marketing, accounting etc).
- Communication – there’s no point doing all this without telling all the drivers what we are up to and attracting customers.
To be clear – NONE of the investment went to the founders of Taxiapp. £0. The investment was all about giving Taxiapp the critical support and expertise it needed to sustain and then grow itself. There is no way any of us would have invested, if that wasn’t what the money was being spent on.
So, what’s the legal structure?
The founders were clear and adamant from the outset. They would love us to invest, but we could only invest if we committed to various principles – which we quickly christened the “not-Hailo” principles:
- No sale of the business
- No private hire
- No increase in commissions
The delay in investing was working out how those principles could be enshrined in the business. The Company structure is as follows:
- Taxiapp is owned and operated by a limited company called Taxiapp Partnership (London) Limited.
- Taxiapp Partnership (London) Limited is owned 58% by Hackney Carriages Limited and 42% by Taxiapp Drivers Club Limited.
- Hackney Carriages is owned by a mixture of founders, investors and management.
- Taxiapp Drivers Club is a company limited by guarantee. It is owned equally by every driver who downloads and uses the app.
There are three fundamental decisions that need the consent of Taxiapp Drivers Club (the company limited by guarantee and owned by the drivers). These are the not-Hailo principles referred to earlier. Without the drivers’ approval, we can’t introduce private hire; increase the commission rate; and change the constitution, so that the drivers owned less than 42%. The only way the constitution could be changed is if a majority of drivers themselves voted for it.
If Taxiapp is successful then it will also be profitable. 42% of all profits would be payable to the drivers. And that’s the magic benefit to all of the structure. As investors we will only make any money on the investment if the drivers also make money. It’s the right model for the London black cab market which is the reason we made the investment.
I realise some of this is slightly technical, but I’m very happy to answer any and all questions that you may have on the legalities.
Please email me at firstname.lastname@example.org
Yes. Taxiapp only works as a business if we get enough registered drivers regularly turning the app on and accepting jobs. We have made a great start, but we need more drivers and more passengers. We have made the investment; stabilised the tech; and put a management team in place. The rest is up to you.