With millions of active passengers, more than a million drivers, and a five-year head start, why on Earth would anyone want to challenge ride-hailing giant Uber?
We’re not sure, but Boston-based Fasten has set out to do just that. The startup raised nearly just over $9 million in the spring, and quietly began operating in Boston last month, according to the Boston Herald.
Fasten’s service is identical to Uber’s low-cost UberX service, which employs regular folks to ferry passengers in their own cars, except for a couple of important details. Instead of taking a percentage cut, say 20% to 30%, from each ride, it only takes $1 per ride (or a fixed daily or weekly fee, according to Fasten’s website). For passengers, Fasten can potentially be cheaper because it doesn’t use “surge pricing,” price hikes that kick in when demand goes up. Instead, Fasten says it lets passengers increase their fare offers if drivers don’t accept their ride requests quickly enough. It is similar to what taxi-hailing app Flywheel does in San Francisco and other cities.
Fasten hopes its cheaper prices will make it more attractive, and, therefore, snag enough ride requests to create a viable business. Taking a smaller cut from drivers is intended to attract more drivers to its service.
“People will still love Uber, people will still love Lyft, but there is room for us as well,” co-founder and CEO Kirill Evdakov told the Boston Herald. “It’s not a zero-sum game, it’s not a winner-takes-all game.”
But for all of his optimism, Fasten will face some huge challenges. For one, the ride-hailing market is a game of having enough drivers. People expect to get picked up within minutes, which is only possible if a service has a large number of drivers on the road at all times. Given the draconian battles between Uber and Lyft, Fasten will have its work cut out. Its only weapon right now: its pitch to drivers that Fasten will give them a bigger share of their take.
As for passengers, this could open them up to be discriminated against by drivers based on the length of their trip. Looking at the app and Fasten’s website, it appears to require riders to enter their destination when requesting a ride. Though this can be helpful if they want to get a fare estimate upfront, it can also mean that drivers, knowing they’ll have to pay $1 per ride, may not be so keen to agree to provide a $5 ride, for example. Unfortunately, taxi drivers have also been guilty of refusing short rides.
So while Fasten may be correct that there is space for another rival to Uber and Lyft, it will need to grow to large size to make its math work out. Only time will tell if its marketing and growth tactics will pay off. Sidecar, the once third-place ride-hailing company in San Francisco, eventually shifted to providing delivery services to businesses after the battle with Uber and Lyft proved to be too much.
Subscribe to Data Sheet, Coins2Day’s daily newsletter on the business of technology.
For a take on Uber’s business model, watch this Coins2Day video:
