Zoomy says it has signed up more than 2300 drivers

Zoomy co-founder James Fisk

A homegrown rival to Uber seems to be gaining serious traction, and the startup says it's able to endure years of losses as it gets established, thanks to a major investment from an NBR Rich List family.

Zoomy, a home-grown rival to Uber, says it now has 2352 drivers in Auckland and Wellington – and it's adding 100 a week, chairman Ben Unger says.

That means it's smaller than Uber's New Zealand operation, which this morning said it had 6000 "driver-partners."

But it's still starting to develop some serious scale.

When I first tried Zoomy, back when it founded in 2013, it wasn't a great experience. Its software was fine but, as Sam Morgan said about the wave of knock-off rideshare startups at the time, "Just because you can make an app, it doesn't make you Uber." I waited a long time, only to see a driver, once one appeared on Zoomy's map, turn around and disappear once he'd got halfway to me. 

Zoomy gave me a free ride as a make-good but the startup didn't seem to be gaining much traction with its model of partnering with traditional cab companies. It slipped out of my mind.

Fast-forward to 2018.

Since the New Year, a growing number of people on my social feeds suddenly started talking about Zoomy.

Then after an NBR in-studio interview with the founders of touchscreen company Eight Development, I asked if I could get a ride back to their office in Newmarket. They said they had Uber'd down. The discussion went onto Zoomy, so we decided to take a Zoomy ride back. It went fine, with the ride arriving in a couple of minutes.

The driver, like many in the Zoomy stable, also worked for Uber.

The downsides of their status as contractors to Uber is often highlighted.

But Mr Unger points out an upside is that Uber drivers can also download Zoomy.

Our driver to Newmarket said he takes Zoomy rides when they come up because the New Zealand outfit pays a little better.

Mr Unger says Zoomy takes 15% of the ticket vs the 25-28% taken by Uber*. The chairman says Zoomy is slightly cheaper than Uber but claims its real advantage is that it makes less use of surge pricing – though that must be a mixed blessing for drivers. 

Of course, having a third as many drivers as Uber doesn't mean you get revenue that equates to one-third of Uber's business.

Our Zoomy driver to Newmarket said he got three or four Zoomy rides for every 20 Uber rides.

Uber says it has 450,000 active users (as defined by taking a ride within the past three months). Zoomy has had 88,000 app downloads, Mr Unger says. He couldn't immediately give an active user figure.

Mr Unger arrived at Zoomy in 2016 and became the sole director as Investment company Windhaven bought a 90% stake. Though a series of trusts (and boy, you'll need a lot of patience if you follow the trail through the Companies Office), Windhaven is ultimately controlled by Berridge Spencer, scion of the $750m Rich List Spencer family.

The size of the Spencer investment, and Mr Unger taking sole control of the board, suggests something of a rescue operation.

However, Mr Unger says Zoomy was making decent progress, notably through a partnership with Corporate Cabs.

The business is still not making a profit, and Mr Unger indicates it might not for some time but also that it will be given some leeway.

"We make multi-year investments. We're in it for the long haul," he says.

The Spencers are best known as toilet paper magnates, but these days the family company has a wide spread of investments. Mr Unger also chairs ProCare, a recruitment and personnel company in the community services industry in Australia and New Zealand age-care provider Ulitmate Care Group. He's also a director of organic foods company Amoro Foods, among other Spencer holdings.

Why Zoomy?
What drew the Spencers to Zoomy, especially given it had no tech holdings?

Mr Unger says he likes the taxi industry, and that the Spencers have always done well out of a related investment, in Taxi Charge (run co-operatively with traditional taxi companies; the Spencers have sold down their stake).

That's well and good. But Uber is losing money hand over fist (the US giant was $US4.5 billion in the red for 2017). Zoomy is losing money.

Search for profit
Both companies are now reasonably well established. How will either ever turn a profit?

Mr Unger does not address this point directly but he does say that Zoomy will begin its first proper mass marketing at some point over the next couple of months (the chairman has no PR that NBR is aware of and did not solicit an interview; I contacted him after I got curious after my aforementioned ride to Newmarket). The company is just filling in a few gaps. Currently, South Auckland and Lower Hutt are light on drivers.

He says Zoomy is finally at the stage where it has enough drivers to guarantee a quick response time (but not so many that drivers are starved of work; it's a tricky balance).

Today, Zoomy's average fare is $12.

It has reached an agreement with Auckland Airport, but not yet Wellington Airport.

Mr Unger says that unlike Uber, Zoomy has no pllans to specifically target the business market.

Keeping drivers happy
Mr Unger says Zoomy drivers are happier, which leads to better word of mouth.

Pressed for why, he says primarily money. "Finance is a driver's lifeblood, and we pay a bit better."

But he also claims Zoomy is better at communicating with drivers (a recent mini "strike" saw an Uber driver lobby group call the US company "faceless").

The chairman says it's not uncommon for drivers to work for Zoomy, Uber plus a lower-end taxi company like Discount Cabs, but that they give the most positive ride experience for his company (and when it raised it on Twitter, Zoomy did get largely positive notices; a notable dissenter was Geekzone's Steve Biddle; see the thread here).

That good communication comes from just five Zoomy staff.

Mr Unger is surprised when I tell him Uber has 30 New Zealand staff at its Kingsland, Auckland headquarters (an interview with Uber NZ general manager Richard Menzies will run later this week).

"Maybe we need to hire some more," he says.

The Spencers can afford it.

* Uber NZ comms lead Nicky Preston says: "We charge a 25% service fee for GST-registered driver-partners and 28% for non-GST driver-partners. The service fee includes everything that Uber offers i.e. ongoing app/product development, 24/7 support for both drivers & riders, marketing services etc."

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