After Initial Driver Mistrust, mytaxi’s New Marketplace Model Delivers 91% Job Acceptance Rate, Up From 85%

Introducing a radical new pricing model to an existing business is not for the faint-hearted. Just ask veteran German taxi app startup, mytaxi (founded back in 2009), which last January was preparing to shift into a new gear by switching from a fixed fee to marketplace model pricing in its home market of Germany.

Instead of mytaxi taking a set 79 euro cents fee per booked trip, drivers would be asked to choose the percentage revenue share per journey to give to mytaxi — via a slider that initially allowed them to select a proportion of  between 3 and 30 percent of the final fare to hand over to mytaxi.

The road to this brave new marketplace model did not run smooth, however. Quite the opposite; mytaxi co-founders Sven Kuelper and Nic Mewes found themselves spending “hours and hours” on the phone in the mytaxi call centre trying to reassure sceptical cab drivers who thought the new pricing was a dastardly trick to force them to pour a third of their revenue into the company coffers.

There was even a demonstration of around 150 drivers outside mytaxi’s Berlin office against the new pricing model.

The company responded to the driver mistrust by reducing the maximum revenue share in the new pricing model to 15% (instead of 30%). And, well, by spending a lot of time trying to reassure drivers about why they were shifting to a marketplace model and asking them to give it a go.

Ultimately a union-style agreement was struck among cabbies to universally select the lowest possible revenue share (3%) — which was at least an agreement that drivers would start testing the waters of the new order.

“The taxi drivers were demonstrating against the new pricing model. That was incredible,” Kuelper tells TechCrunch. ”And that was because the pricing model was new, it was something the taxi industry hasn’t experienced before, there were plenty of misunderstandings in the market because it was so new.

“But then at the end of the day most of our taxi drivers said ok we will give it a try — after convincing them via call centre, via thousands of emails. Nic my partner and I spent hours and hours in the call centre trying to explain this new pricing model and what is behind it.

“They were very very sceptical… They were afraid that they couldn’t get any tours if they don’t put 30% inside of the driver app.”

The result of the outreach to sceptical drivers was that most agreed to give the new system a try (some 17,000 of mytaxi’s 18,000 Germany drivers agree — so mytaxi did lose a portion of drivers as a result of the new pricing model).

“In Germany there’s no real alternative to mytaxi except the old traditional dispatch centres. We had 18,000 registered taxis in Germany, and at the end of the day it was 17,000 who said already I’ll give it a try with the new pricing… so we lost around 5% of our taxis,” says Kuelper.

Six weeks on from kicking off its experimental new pricing project, mytaxi has released the first tranche of data on how the model is working — and it shows a small increase in the average commission paid by drivers per journey: 87 euro cents, up from the 79 cent fixed fee of the old model.

This is despite around 50% of the journeys (in February) being assigned to drivers at a revenue share of below 5%. ”We have a price increase, but a pretty low price increase,” notes Kuelper.

But he adds that the new pricing model has been worth the turmoil for another reason: an increase in the job acceptance rate — up from 85% to 91%. 

“Our problem was is we had plenty of bookings — plenty of people who wanted to get a taxi — but we couldn’t assign all these tours because the price was fixed at 79 euro cents. And there were special hours during the day where the taxi driver said ‘no I’m not going to spend 79 cents on a tour because there are plenty of street hails’. And that was our problem — our problem was our success rate,” he says.

“That has shifted really tremendously. We have a huge impact on our total bookings because suddenly most of our bookings really take place — they work.”

mytaxi’s marketplace model is an alternative to the surge pricing system of taxi startups like Uber, which require the customer to accept a price hike if they want to get a cab during periods of high demand.

mytaxi’s system means the price for the customer does not change, but the revenue share for the driver varies based on factors such as whether it’s a weekend or a week day.

“When we have a lot of demand out there in the street, especially during the weekend then the cab price really decreases — then it’s always around between 3% and 5%

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RSA’s Deal With The NSA Reflects A General Mistrust

Here’s how it works when a big company believes that its power is in its girth: They enter this bizarre world that leads them to believe that what comes from their PR organs is enough to float their troubles away. It’s all about denial and avoiding any potential shareholder backlash. And so we come to the sad state of affairs at RSA, the security division of EMC, one of the big-bellied enterprise kings that apparently made a deal with the National Security Agency.

It’s a deal that is now affecting the trust that people have in the company and raises questions about other technology companies and how they have profited from their relationships with the government. It’s fine enough for technology executives to sit down with President Barack Obama like they did last week and say how awful the NSA is behaving. But the RSA’s work with the NSA shows that technology companies need scrutiny as well. The reality: mistrust is spreading, writes security expert Bruce Schneier.

I think about this all the time with respect to our IT systems and the NSA. Even though we don’t know which companies the NSA has compromised — or by what means — knowing that they could have compromised any of them is enough to make us mistrustful of all of them. This is going to make it hard for large companies like Google and Microsoft to get back the trust they lost. Even if they succeed in limiting government surveillance. Even if they succeed in improving their own internal security. The best they’ll be able to say is: “We have secured ourselves from the NSA, except for the parts that we either don’t know about or can’t talk about.”

There’s proof that RSA made a deal with the NSA to use the spy agency’s random number generator as the preferred or default formula in Bsafe, its software for enhancing security on personal computers and other technologies, Reuters reports. This has put RSA in the bright light of scrutiny.  The $10 million deal looks especially bad, considering the connection it has to documents released by Edward Snowden and reported by the New York Times in September. In those documents it was revealed that the NSA formula was actually flawed and had been used by the NSA to create a backdoor into encryption products.

RSA said in a blog post on Monday that it does not  ”ever divulges details of customer engagements, but we also categorically state that we have never entered into any contract or engaged in any project with the intention of weakening RSA’s products, or introducing potential ‘backdoors’ into our products for anyone’s use.” But many in the security profession are just not buying it. Here’s a tidbit from an awesome rant and good summary of what happened from Melissa Elliott, a security analyst and novelist:

September 2013: Revelations derived from the Snowden leak show

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