Two big online taxi services entered Ukraine in 2016: U.S. firm Uber and Russia’s Yandex.Taxi, pouring huge investments into their roll-outs at the 42-million-people market.
But they weren’t the first internet-based taxi service in Ukraine. The market had long been dominated by a home-grown business — Uklon.
The Uklon app and website launched in 2010, when Uber was registered but wasn’t yet operating. But now that Uber expanded into Ukraine, Uklon has been dubbed an “Uber clone.”
This is offensive and unjust, says Uklon founder and CTO Vitaliy Diatlenko.
“Uklon and Uber launched almost simultaneously,” Diatlenko says. “We did it in Ukraine, and Uber in the states.”
There is one major difference between Uklon and its goliath competitors. While Uber and Yandex are losing money in Ukraine, Uklon is making a profit.
Money pours in
Uber, the world’s most expensive startup, which attracted $8.8 billion in investments, can afford to go spend big to beat away competition in around 570 cities around the world. But Uber has reportedly run up big losses as well, and so has Yandex.Taxi, even with its comparatively modest network of 46 cities in central and eastern Europe.
Uklon is even more modest still, with just 10 Ukrainian cities in its network. But unlike its bigger competitors, the company says it’s earning money, not losing it.
“It’s not billions of dollars, but enough for bread and butter,” Diatlenko says.
He won’t reveal any specific numbers though.
“Profit isn’t something they’re pursuing now,” Diatlenko says of Uber. “They’re trying to lure more app users — I suppose this is what their investors want from them.”
He said he had anticipated competition from Uber and Yandex.Taxi even before they started their Ukrainian roll-outs in June and October respectively.
“They soon might be in Chukotka (Russia’s northernmost federal subject, in the Russian Far East) with sleighs in the snow, if they keep receiving money like that from investors,” Diatlenko said. “It was clear that they’d come to Ukraine very soon.”
Diatlenko said the arrival of big competitors has forced Uklon to hit the gas on some innovations.
Soon, however, there could be one less competitor for Uklon — on May 16 Ukrainian President Petro Poroshenko placed Yandex.Taxi’s future in Ukraine in doubt as he signed a decree to update the list of companies and persons that fall under Ukraine’s sanctions against Russia. And even though Yandex.Taxi isn’t on the list, most other Yandex services are, including maps and navigation tools used by drivers.
Anyway, says Diatlenko, the competition has stimulated Uklon to develop.
“(At first) we did not rush to improve, as we were alone in the (market),” Diatlenko said.
It’s been almost a year since the competitors entered the market, which Uklon had had to itself. But while the Ukrainian media scrutinize every step of the foreign tech giants, covering their launches in every city, Uklon has to pay for ads to announce new cities becoming available in their app.
In fact, Diatlenko even claims Uklon took its first order before Uber did.
Market with no rules
Dumping, groundlessly low prices, no regulation — this is how the Ukrainian taxi market works, and that’s not completely a bad thing, according to Diatlenko.
“It’s a bit chaotic, but this is a good thing for innovations.” Market conditions like these give players a lot of freedom, Diatlenko says.
The Ukrainian internet-based taxi service market is concentrated around Kyiv in terms of client numbers. Donetsk was a close rival to the capital in the past, but the market there collapsed after Russia launched its war on Ukraine in the Donbas.
Diatlenko says it is sometimes a challenge to adjust his service to the specific requirements of his clients, which he says differ depending on the region. The characteristics of drivers and clients are varied even within the borders of one country, he says.
Unlike Uber, Uklon has not attracted a lot of investment, which has meant that it has been slower to launch its services in new cities.
“It’s difficult without money from the outside — offices, drivers, adjusting the business processes, support, marketing. So we’re going slowly.”
All the same, in spring 2016 Uklon launched on its first foreign market — in the Georgian capital Tbilisi. But Diatlenko says it’s harder to work there, because of the mentality of the Georgians — he says Ukrainians are more responsible.
Relationships with drivers
People usually think of tech companies like Uber, Uklon and Yandex.Taxi as employers. In fact, the companies are just providing digital platforms to connect a person with a car with a person who needs one.
That means it’s always difficult for such taxi companies to establish a good rapport with their drivers. In Ukraine, the Uklon-driver relationships have deteriorated since the new players with money came and tried to convince drivers to work for them.
“They provided them with perks (like a bigger salary and bonuses), because they can do it — they’ve got a lot of funds,” Diatlenko said.
The drivers, who wanted to make more money — which Diatlenko says is true for almost every driver — demanded the same from Uklon.
“We couldn’t just give the money away for no reason. Here, we’re trying to conquer the market, not buy it,” Diatlenko says. Eventually, however, Uklon has tried to offer more perks to keep its drivers.
These include the company partnering with petrol station chains KLO and WOG, a range of retailers of car spares, and providers of technical services, insurers, etc.
Uklon founder and CTO Vitaliy Diatlenko poses for a picture at the company’s Kyiv office in April 2017. (Anastasia Vlasova)
Uklon didn’t always have such a close relationship to its drivers. From the company’s launch in 2010 until early 2015, Uklon worked with taxi agencies and, if a client complained, it could not solve any issues with drivers directly.
“The agencies’ goal was to earn money from drivers by all means. They want to get an order and then take money from the driver, and that’s it,” Diatlenko said. “They showed us a Mercedes, but in the end, our client got a Lada.”
That was the reason Uklon started working with drivers directly. Uklon can now rate its drivers, and if they don’t come up to scratch, strip them of benefits, or even kick them out of the system.
Today only few taxi agencies still work with the company.
“Our hands have been untied and we can now take measures,” Diatlenko said.
Funny stories
The modern taxi business is a bit like online matchmaking: someone makes sure two people meet each other, but what happens next is a matter of luck. And Diatlenko says it seems drivers and passengers never stop complaining.
“In a service involving people, nobody will ever be satisfied,” he says.
For clients, the drivers are always third rate, and car condition is never good enough.
“They want a Mercedes for the price of a Lada.”
Drivers, on the other hand, are complaining about low tariffs and impudent clients, who could even “poo in the salon.”
“Yes! There have been cases,” Diatlenko says, and starts telling stories about weird passengers and drivers.
In one, a driver picked several drunk guys. When he dropped them off, they, apart from their belongings, took the spare wheel from the trunk.
Sometimes, Diatlenko says, drivers also act strangely.
There was a case when a driver gave a lift to a woman, she backed separatism in eastern Ukraine and wanted to give the Donbas away to Russia. The driver, in contrast, was a Ukrainian patriot.
“And here she’s calling the Uklon support line in the middle of the night saying that the driver left her in a cemetery,” Diatlenko said. “The client didn’t get the service she wanted. The driver, however, is also a human. He took it very personally.”
Uklon usually asks drivers to avoid situations like these by not discussing political issues. In this case, Uklon has ensured that “that woman will never meet that driver again.”
Delivery services
Uber has launched package and meal delivery services in various countries over last two years, and Uklon recently followed suit.
But now Diatlenko doubts about the rationality of continuing to provide the service. He said that there were many cases of something going wrong while drivers were delivering a package.
“The business is completely different from providing taxi services. The human factor is key, and we can’t control it,” he says shrugging.
One day, a driver had to deliver a cake, but he squashed it by accident. After that, he decided to eat it.
“It might sound cute, but imagine, there was someone waiting for it,” Diatlenko said.
Uklon reimburses such losses, and, according to Diatlenko, there have been lots of them. He underlined that food delivery was always a problem.
“It just looks like another option in the app, but it’s very difficult to put into action,” he said.
Investments
Currently, nobody wants to buy Uklon from Diatlenko, but there are offers to invest. And even if he accepted an offer, he is not thinking of selling the major stake in the company.
“If you sell, you spell the end (of work on your brainchild), and just go abroad to eat coconuts,” he says, and then pauses.
“Nah — I love my job.”
Kyiv Post staff writer Denys Krasnikov can be reached at [email protected].
