Capital proves to be a fare city for the fast-accelerating taxi app Hailo
Tech CEOs often say that they love Dublin. The people, the food and the craic are all charming, they say. What they sometimes mean is that they like a low tax rate and a decent supply of labour. But in Jay Bregman's case, the affection for Dublin may be real. Without any tax avoidance gimmicks, his smartphone taxi-calling company Hailo is booming in Ireland's capital city.
"Some days, we do more business in Dublin than we do in London," said Mr Bregman, co-founder and chief executive of the company. "We do about 15,000 trips here a day and the service is profitable."
For the uninitiated, Hailo is a free smartphone app that allows people to order a taxi in Dublin, Cork, Limerick or Galway. Its charm is that it shows the user where the nearest taxis are at any one moment. It also allows them to pay for the trip by credit card, using the app service. And it's considered to be fairly secure, as taxi drivers have to sign up for the service to benefit from it. In Dublin, it has spread like wildfire.
"Out of 10,000 taxi drivers in Dublin, about 6,000 have signed up with Hailo," said Mr Bregman. "We have over 50pc penetration in other Irish cities, too, and the app has been downloaded 325,000 times here. We think that one in ten Irish people have used Hailo to call a taxi at some point. By this time next year, we expect more than half of all Irish taxi drivers nationally to have signed up."
For taxi drivers, it's a relatively simple deal. There's no registration fee or contractual obligation. Hailo takes "around 10pc" of each fare through the service.
That means that if the average Dublin taxi fare is €20, Hailo is taking in around €30,000 per day – or just under €1m per month – in revenue from Dublin alone.
Furthermore, there are no tax-related shenanigans at play here, either. Despite trading in 12 different cities worldwide, Hailo is resisting using its Dublin base as a tax-administrative centre.
"I guess that it would be a nice problem to have to be big enough in revenue terms to worry about tax efficiency maximisation," said Mr Bregman. "No, we're not tax resident here and don't have any immediate plans to be."
At some point, that could change. The company has taken on $50m of funding since it launched two years ago. Its backers are global tech-financing heavyweights, including the same funders as Facebook and Spotify (Accel Partners) and Twitter and Tumblr (Union Square Ventures). Richard Branson is also an investor. At some point, there will be pressure to ramp up reach and revenues. When that happens, accountants start to think again about their taxation options.
But for the moment, aside from expanding the service's geographical reach, Hailo is currently pondering new types of market, said Mr Bregman.
"We recently hired someone from (Farmville social gaming firm) Zynga to look at how we can apply our business model to other markets," he said. "That doesn't just necessarily mean transportation. For example, one market we won't be going into is the tow-truck business. This is because a tow-truck is something that people rarely have to use."
Do taxis help the economy? Mr Bregman is adamant that they do.
"We're actually stimulating economic activity here," he said.
"If you think about it, the convenience of the app is getting people to book a taxi in fifty-fifty scenarios where they could have considered walking or taking some other mode of transportation. That's good for taxi drivers and it's also good for stimulating economic activity."
He said that the service was proving to be a major threat to existing taxi firms, which sometimes "charge hundreds of euro in exchange for a certain guaranteed amount of work".
Mr Bregman is doing his best to spread the Hailo brand around Dublin's Web Summit, with promotions, competitions and a couple of stage appearances today and tomorrow. The company maintains a small office here led by general manager, Tim Arnold.
"Ireland is our fastest-growing territory," he said. "We love it here and I think it shows."