On-Demand Is Tricky to Build, but ‘Very Much a Net Positive for Everybody’
The on-demand revolution has been in full swing for a few years now, and its presence in our everyday lives, in the form of mobile apps and services, is becoming increasingly normalized.
Rorie Devine’s work for interim.team, which sends interim managers to companies to help improve efficiency and deliver revenue growth, has taken him up close to the unfolding of on-demand within a number of verticals. Devine had previously served as CTO for ride-hailing app Hailo and also on-demand marketplace Bizzby.
Street Fight caught up with Devine (who will be a speaker at Street Fight’s upcoming LOCALCON conference in London on April 21st) to talk about his work in the on-demand space, and where he thinks the industry is headed.
Transportation has been especially disrupted by on-demand. What did you learn about that industry from your time at Hailo?
[On-demand] has really improved service. Depending on what location you’re in — and every city is different; the market in New York is completely different to the market in London, so you have to avoid generalizations — the apps have made services much more convenient to people, so you don’t have to stand out on the street and hope you can find someone. [Transportation apps] have also improved price competition and brought new price points into the market.
What are some of the advantages of working with established networks, like taxi companies?
The Hailo model works with licensed providers that already exist and makes them more efficient, enables them to go to consumers. One advantage is that you can pay on account, with a credit card, or with cash. You can look at a record of your trips. Fundamentally, it’s quicker, it’s better, and it’s cheaper.
It’s all very specific per city. The model in London, for instance, uses the traditional London black cab. These guys spend literally years learning the routes around London, so much so that going through what is called “The Knowledge” actually changes their brain. They’ve got to learn thousands and thousands of routes in one of the biggest cities in the world to become a licensed service provider, so you’re tapping into a network of people who really, really know the best way to get to where you want to go. And not only that, but black cabs can use the bus lanes in London, and other competitors can’t.
In New York or another city, you’re not necessarily going to have that immediate confidence in your driver.
Exactly. New markets are very different from London. Each on-demand service will have markets where it does very well given its characteristics, and markets where it doesn’t do so well.
Hailo launched a U.S. expansion in 2013, but eventually pulled out. We’re talking about how important geography is, how important it is to consider differences between cities regarding on-demand services. What was challenging about the U.S.?
I think it was the point in time. Uber has got very deep pockets, obviously. They’ve done a brilliant job raising their profile and the investments they get. They were definitely using that money aggressively, and giving away [free ride] codes.
When a competitor is effectively giving a service away for free, it’s very difficult to make money. And not only that, but the marketing expense to compete with such a well-funded company — the economics just didn’t stack up. It’s a shame, because it was a good service in New York, and it was starting to gain traction with the taxi drivers. But there’s only so long you can lose money before you have to say “this just doesn’t make sense for us right here and right now.”
Having spent time with multiple on-demand companies, did you find any commonalities across verticals?
On-demand is much harder than people think. It’s supply and demand — you have to make sure companies can grow, and that this growth can be matched. If your supply gets out of sync with your demand, you’re going to have unhappy suppliers; if your demand gets out of sync with your supply, you’re going to have unhappy customers who can’t access the service you want them to use. You have to grow both sides, which makes it twice as hard, and I don’t think people realize that.
Location is key to on-demand, whether it’s local companies adopting on-demand capabilities or outside on-demand companies functioning within a local community, and locations don’t always have the same perspectives on this massive disruption. How do different responses from different locations impact on-demand’s ability to become widespread?
I think overall it’s very much a net positive for everybody. You look at industries that have already been disrupted by it, and they’re quicker, better, and/or cheaper. The only people who would disagree with that are those with vested interests in the regulated markets who don’t want to be disrupted, who want to fix supply or demand or prices and control the market in some way. Some of the more traditional European cities are quite happy with the way things are. But taking a more deregulated approach using on-demand allows suppliers to provide a better service for their customers. It may be quicker, it may be better, it may be cheaper, it may be all three.
Just look at food delivery. You’ve got restaurants and takeaways and consumers — put an on-demand app into the picture, and suddenly you can have restaurant-quality food from your favorite restaurant delivered to your house while the restaurants are increasing their sales. It’s one of those things where the rising tide floats both boats. You’re creating transactions that wouldn’t have existed, so the whole market gets bigger.
What are some industries that can’t adapt to on-demand successfully, or just aren’t suited for this disruption?
The obvious types are the ones that aren’t mobile — the hotel industry, for example. The hotel cannot move to a new consumer. The consumer is still going to have to go there, no matter what an app does or says.
Does on-demand transportation still affect those types of industries?
If you use Uber to go to a hotel, you’re still going to a hotel. What Uber has added into the value chain is just the ability to help the consumer get mobile more easily and more quickly. So is it really that different? I don’t know. By combining services you can do slightly different things, but ultimately that hotel stays where it is. You can probably take some friction out of the hotel industry, but you can’t disrupt it like you can [other industries].
Looking forward, what sorts of trends do you see appearing in on-demand in the next year or so?
On-demand is only going to become more pervasive. It really helps turn the wheels of our capitalist system and increase revenue and business growth. It will go into areas we can’t foresee yet, areas people will figure out a way to apply it to. I wouldn’t be surprised if we get another wave of disruption based on emerging technologies like drones and self-driving cars. The disruptors will become the disrupted in some way. It’s a fascinating time.
Annie Melton is Street Fight’s news editor.
Hear more from Rorie Devine at our upcoming conference on April 20-22 at the Chelsea Football Stadium in London. Click below for tickets!