Could Hailo be too efficient?

Greater efficiency within an economy is not always a good thing. Take the simple example of unemployment, a hot topic at the moment. While it may seem illogical; it’s actually better for an economy to have some level of unemployment, as over employment can cause rapid wage inflation.

I was thinking about this within the context of Halio, a new and popular app that is revolutionising the world of the London black cab. It’s a simple concept: cab drivers install the Hailo app onto their smartphone and sign into the network. Customers also install a version of the app and request cabs by dropping a pin on a map. It’s ingenious for a number of reasons:

  1. I can now request a black cab directly to my office.
  2. I can pay on a credit card - cashless cab journeys increase my chance of taking one.
  3. The cab driver spends less time driving around looking for work.
  4. Hailo take 10%.

The beauty of the business is that with two relatively simple apps it has greatly increased the efficiency of an already popular market. Not to mention the fact that it’s putting a fork up the ass of Addison Lee who could do with the competition.

Then only last week I was on busy intersection in Clerkenwell where it’s normally pretty easy to get a cab. I waited for 10 minutes and nothing came past. Just cab after cab all with their lights out. Now this may well be a chance encounter, but it got me thinking about our over employment problem. What if Halio makes the market too efficient? Could this reduce the ease with which pedestrians can hail cabs on the street? If every driver someday has the app, and rather than driving around with their light on are instead heading to a pickup point, do we then have a market with no slack? No cabs to hail?

The brilliance of Hailo is that it makes black cabs more efficient, but the brilliance of the black cab is that it’s inefficiency made it more useful to people on the street.

Something for you all to mull over.

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My name is Dan, I'm a product manager and entrepreneur living and working in London. Check out my blog archive or read more about me.