- inDrive is a ridehailing app that lets consumers haggle with drivers for fares.
- Founded in Siberia in 2012, the app operates in 48 countries and is about to reenter the US.
- The Silicon Valley-based company plans to have 400 drivers in South Florida by July 20.
Rideshare app inDrive, where customers haggle for rides in Latin America and Asia, is reentering the US ride-hailing market, the company announced today.
Founded in Siberia 11 years ago, inDrive is focusing its US-based rideshare service in greater Miami with a fleet of 5.000 drivers in South Beach, Brickell, Fort Lauderdale, West Palm Beach, and Boca Raton. Many drivers are Uber and Lyft contractors eager to check out inDrive’s promise of letting consumers and passengers negotiate ride prices, inDrive CEO and founder Arsen Tomsky said. Also, there’s no surge pricing, he said.
“We see a lot of injustice in the hailing market in the US,” he said. “American drivers and riders are tired of surge pricing and algorithms deciding who drivers will pick up.” Consumers can expect to save, on average, 20% on each fare after haggling for less than 40 seconds, Tomsky said.
inDrive believes it has a new and potentially compelling way for consumers to hire a driver. But it’ll face an uphill battle in a country where Uber and Lyft are established in the market. And it’s yet to be seen how American consumers might respond to having to make a deal every time they need to order a ride.
Tomsky declined to say what other US markets the company plans to expand to, but it will lean into states “where it is not hard to get licenses.”
InDrive returns to the US after testing with New Yorkers
This will be inDrive’s second attempt at cracking the US market.
The company tested the app in New York City in 2018 but retreated after two months to improve the company’s tech. Also, New Yorkers were too impatient to haggle back then, the company said. But InDrive believes the timing is right to return to the US via Miami.
Tomsky said brand recognition will also be crucial to its success in Miami. Many residents in Miami have family in regions where inDrive is well known, he said. InDrive’s largest markets are Latin America, Asia-Pacific, and Africa.
A rideshare startup based on haggling is born in Siberia
Tomsky came up with the idea for inDrive in 2012 on New Year’s Eve in his hometown of Yakutsk, a Siberian city known as one of the coldest on the planet.
Taxi companies doubled their rates that evening as temperatures dropped below 45 degrees Celsius. Stranded university students who couldn’t afford the fares banded together on social media to create a ride system where customers and drivers negotiated the fare price.
Tomsky, the CEO of a local news outlet at the time, noticed the online rebellion and turned it into a business.
“I saw it was a social phenomenon. I decided to scale it,” Tomsky said.
In 2022, inDrive was the second most-downloaded ride-hailing app globally behind Uber, according to data.ai.
Here’s how rideshare haggling in the US will work
Saving people money on ridesharing and allowing drivers to earn a fair wage is the cornerstone of inDrive’s bid-based business model.
Here’s how it works, according to Tomsky:
- Consumers pull up the app, type in a point A to point B destination, and enter a fare.
- The offer gets dispatched to the closest available drivers.
- Those drivers can make “counter bids” before a final negotiation between driver and passenger.
- The bids include the model of the car.
- The rider cannot counter the drivers’ bids. They can create a new request if they aren’t satisfied with the bids they receive from drivers.
Tomsky said the range of how low or high a bid can be depends on the city, so customers won’t be able to pitch low-ball bids.
Though the haggling might seem like it could take a long time for an impatient American consumer, Tomsky said the reality is that most negotiations take anywhere from 20 to 40 seconds.
Investors made inDrive a unicorn in 2020
In Miami, the company said it will not charge South Florida drivers a commission from July through January 2024.
After January, the company’s 10% take rate will go into effect.
By comparison, Uber’s take rate rose from 23.5% to 28.9% for ride-hailing in the first quarter of this year, compared with the prior period, according to the company’s latest earnings report.
Does this model work financially for inDrive?
“We are financially effective,” Tomsky said, adding that the company expects to become “cash flow positive” in 2024.
Though it started in Russia, inDrive fully separated from its Russian business last year after Russia invaded Ukraine, the company said.
In 2018, Tomsky moved the business to Silicon Valley to be near investors. By early 2021, the company had achieved unicorn status after closing a $150 million investment round with Insight Partners, General Catalyst, and Bond Capital. That valued the company at $1.23 billion.
In addition to ride-hailing, inDrive in other global markets has added new business segments, including freight delivery, task assistance, and package delivery.
Tomsky said he would consider adding new verticals in the US if he sees what he precieves as any injustices.
“In the US, I see great potential for inDrive’s verticals to challenge injustice,” he told Insider. “For instance, in communities where food delivery apps are charging an unfairly high commission, inDrive could challenge that injustice with our fair and transparent pricing model.”
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