Hailo pulls out of North America because of too much competition

15 Oct 2014

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Taxi hailing app Hailo is pulling out of the North American market, after determining competition with similar services and marketing costs in North America far exceeds its ability to make a profit.

The company had recently attempted to raise its profile in the face of its two largest competitors, Lyft and Uber, by running significant promotional discounts and even hiring the ‘Rent Is Too Damn High’ guy to walk through the streets of Washington, DC.

However, because Hailo deals exclusively with established taxi drivers, rather than hired Lyft and Uber drivers, the cost to hire one of its competitors inevitably worked out to be cheaper than a Hailo cab.

In a statement, Hailo’s CEO Tom Barr said the London-based company will now focus it efforts on the European and Asian markets.

“This has been a difficult decision to make, and we are very sorry for the impact on our colleagues who will leave the company and are doing everything we can to help them with their future careers,” Barr said.

“We and our investors are confident that our sharpened focus on Europe, Asia and services will help us have the biggest possible impact for our passengers and drivers.”

Aside from the increased competition, Barr also spoke of how Hailo’s marketing spend had reached ‘astronomical’ levels, making it ‘almost impossible’ for one company to achieve profitability.

The company had hired 40 staff to run its North American operations, who will now be let go, while the drivers who had been using Hailo will now have to make up the difference with returning to just relying on pick-up fares.

Is Hailo operating in Canada or not?

One confusing aspect to this story has been the reluctance of Canada’s division of Hailo, which operates in Toronto and Montreal, to confirm whether it is indeed leaving despite Barr’s statement.

In his own statement, president of Hailo Canada Justin Raymond said, “In light of today’s news, Hailo Toronto would like to assure its drivers and loyal passengers that we will continue to deliver and support our service for the foreseeable future.”

However, a Hailo spokesperson responded to Canadian enquiries on whether Hailo is to remain open in Canada or not, saying all operations will indeed close.

“Everything is closing, yes. (But) this is not to say we wouldn’t revisit coming back to North America once we’ve built up our base in other parts of the world.”

In another Hailo-related departure, the company’s co-founder Jay Bregman has left Hailo, having decided to go his own way and form a new business.

Colm Gorey is a journalist with Siliconrepublic.com

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