Taxis and the art of transit

Dubai - Existing models of public transit are ripe for disruption.

HI-TRAC: The author's shorthand for Happiness Index, Infrastructure, Talent, Regulations, Access and Capital. The six pillars that make UAE a great place for a startup. This week, the focus is on Infrastructure. This infrastructure is helping a startup build a profitable and fit-for-purpose transportation system in Dubai.
One of the key opportunities coming out of rapid urbanisation is the provision of affordable and efficient public transportation. Existing models of public transit are ripe for disruption. That's because historical thinking creates an imbalance between fully available point-to-point urban transportation and the cost to achieve it. The bigger the city, the bigger the imbalance.
It is often said that the state of development of a city is not measured by the availability of public transport for the less affluent. It is measured instead by the affluent choosing to ride in buses and trains rather than by cars or taxis. London, Singapore and Hong Kong are great examples of this.
The cost of private cars and taxis are a multiple over the cost of bus or train fare. Yet, in most places, city-dwellers would prefer the much more expensive option because of accessibility. For the same reason, cities quite often have pockets of much higher-priced real estate primarily because of ease of access to public transport. Usually along metro train routes. Or around major intersections of public transit systems.
Based on the historic model, the cost of providing efficient and extensive public transit is expensive. Tunnels need to be built, bus terminuses and train yards must be established, expensive equipment has to be procured. The human resource cost of keeping these systems going is enormous. Therefore, it is quite common that extensive and efficient networks are expensive to maintain. A simple search shows that a city like Shanghai has 14 metro lines, nearly a thousand bus-routes, Mag-Lev trains, 30 trolley-bus routes and two major railway lines.
Farebox Recovery Ratio - a term that indicates how much of the cost of running a public transportation system is recovered by the fare collection. Amongst the world's more developed cities, probably 10 actually recover and make a surplus out of fare collection. For example, the Hong Kong MTR has a fare recovery of 186 per cent according to its 2012 annual report. A similar 2015 report indicates that Amsterdam has a 77.1 per cent ratio. The New York City MTA 2015 report indicates a 51.2 per cent ratio and Beijing has an estimated 60 per cent ratio.
So clearly, the current model does not work financially in more places than the ones in which it does.
The surprising twist in the road
Mobile money and digital payments have shown that the highest levels of innovation come in from markets that have the least. Public transport in the world's less developed cities is usually privately owned, affordable and profitable. It gets the job done. The dala dala system in Dar-es-Salaam, taxi particular and taxi colectivos in Havana, and jeepneys in Manila are based on big cars or small vans running on a grid of fixed, intersecting routes.
Blochin Cuius, economist and entrepreneur extraordinaire, is a Sicilian from Mirabella Imbaccari, a small, pretty town with winding streets. Public transport was provided by a taxi-driver who drove his large car up and down the town (actually it was from Mirabella to the next town), intuitively knowing when people would need his services. His passengers shared the ride. After completing his studies in Catania, Cuius decided to spend a month in Havana, Cuba to get a native command over Spanish. And there he came across the taxi particular.
Working for EdisonWeb, an Italian digital marketing company, he helped develop an in-taxi digital advertising system for a cab company in New York. This gave him excellent insights and the ability to create value through geo-location, customer profiles and other demographic and psychographic data.
The economist in him sensed the opportunity. Unlike taxi-hailing apps like Uber and Careem, Cuius decided to focus on a fixed route model with intersection points, forming a grid that would cover an entire city.
Cuius's brainchild, MVMANT (pronounced movemant - the synthesis of Movement and Ant - from the ant algorithms), brings together Operations Research, artificial intelligence and digital communications. This combination enables riders and MVMANT car drivers the ability to create and fulfil demand in real time. Taxi-drivers can see and confirm demand for rides along their fixed routes. Riders do not have to wait for cars to come to them. They only need to reach a pre-defined pick up point a short distance away at a predetermined time. They pay ahead for the ride through cards, bank accounts as well as the option of cash at the end. The artificial intelligence bot adjusts supply to take into account weather conditions, events, holidays.
MVMANT was amongst 20 finalists from over 600 entries at the FrontierCities programme in Europe. This brought MVMANT to the attention of Mercedes-Benz. In partnership with Mercedes-Benz, MVMANT is launching the app in multiple cities in Germany and Italy. Mercedes is even looking at building a purpose-built vehicle for this use case. The fixed-route nature of the enterprise also allows for rapid conversion to driverless solutions.
The MVMANT grid will enable riders to get from point-to-point at reasonably affordable fares. More expensive than public buses and metro but a lot less costly than taxis or private cars. In the words of Cuius, "MVMANT aims to provide executive class travel at economy class rates."
At the recently concluded Dubai Future Accelerators, MVMANT was recognised as one of 30 finalists out of a field of 2,000 entries. The RTA has taken up the concept and we can most likely expect to see MVMANT cars within this year.
For most serious entrepreneurs, being cash-flow positive at reasonable scale without external funding or debt is an excellent goal to strive for. MVMANT has worked towards this. Although this nine-person company is going places, Cuius wants to keep the momentum going through a self-sustaining model. He is considering some funding in the near future.
Cuius embodies the global entrepreneurial mindset. A young Sicilian, living in Germany and Dubai, married to a lady of Nigerian origin and the father of a two-month old baby.
Print Preview
Cuius's recommended reading is "Zen and the Art of Motorcycle Maintenance" by Robert M Pirsig. It is a powerfully moving & penetrating examination of how we live, a breathtaking meditation on how to live better.
Through the process of a long seventeen-day motorcycle ride with his son and his friends, the author looks at two sides of the human persona. One, represented by his friend, is the 'big picture' approach. The other, which the author seems to subscribe to is the approach which gets in to the nitty-gritty details of how things actually work.
The writer is a director at Vyashara. He's a digital banking and digital financial services evangelist, practitioner, advisor and consultant. Views expressed are his own and do not reflect the newspaper's policy. He can be reached at ves@vyashara.com.