A chain-smoking driver talks on the phone while driving a beat-up car. His passenger is sweating, both because of the erratic driving and the absence of air conditioning – it’s either broken or not there at all.
Until just a couple years ago, that used to be what an average taxi ride in Ukraine was like.
But things are changing now.
Seeing the huge gap in the market for proper taxi services, tech companies that position themselves as “Uber-like” have started coming to Ukraine. The real star of the market – Uber, the most expensive tech startup in the world in 2015 – launched its services in Kyiv on June 30.
Now, after three months of operations, in a rare interview, Uber Ukraine CEO Arkadii Vershebeniuk tells the Kyiv Post how the multibillion-dollar company is faring in one of its newest markets.
First interest
Uber had actually been eyeing the Ukrainian market since 2013. But then the country was rocked first by the EuroMaidan protests, then Russia’s occupation of Crimea, and then by the kindling of the Kremlin’s covert war on Ukraine in the east.
So the company decided to hold back.
Kyiv launch
But by the end of 2015, Uber felt that the situation had more or less stabilized, and the company started working on localizing the product for Ukraine.
“We wanted to make sure we were aligning with all of the stakeholders, and there were no misperceptions,” Vershebeniuk said.
Traditionally, Uber rolls out in a new market silently – the company doesn’t announce when its app actually goes live, and waits for early adopters to test it out. But in Ukraine there was so much media interest that this approach was impossible, according to Vershebeniuk. The company was working on smoothing out the kinks in the service right up to the official launch date.
While Uber is still only present in Ukraine in the capital, it’s been successful in Russia, where it launched in the late 2013 and has expanded to 17 cities since then.
According to Uber Ukraine CEO Arkadii Vershebeniuk, Uber drivers have little in common with the stereotypical Ukrainian taxi drivers.
Local offices
By having a local presence, the startup can tailor its service to conditions in each particular city. But, according to Vershebeniuk, Uber’s success has nothing to do with the number of staffers in its regional offices.
He said some people were amazed that the headcount in Uber’s in-country offices is usually one twentieth of that in the offices of its competitors. The staff in Kyiv, for example, numbers fewer than 10 people.
“But we do way better than all those other guys,” Vershebeniuk said, saying that this was largely due to the company’s technology, which was originally developed in 2009 when the company was founded. It started its services in 2011, San Francisco being its first city.
A Ukrainian touch
The cost of a ride in Kyiv is cheaper than in the U.S. – the fact explained by the much cheaper cost of living. A 10-kilometer ride in Kyiv will cost less than $3, while in California the fee will be around $12.
Another specialty of the Ukrainian market is that many Ukrainians are still afraid of revealing their banking data online, meaning they’ve been choosing to not use the Uber app, which requires users to link a bank card to pay for rides.
So on Sept. 23, Uber introduced a cash payment option for Ukrainians.
“A lot of people said, ‘Oh, Uber is ditching its business model.’ Well, we’re not,” Vershebeniuk said. “Ukraine is not unique in this.”
In fact, Uber first launched its pay-by-cash option in Manchester in the U.K. Singapore, Dubai, Prague and many other markets now have the same option.
Another change in Ukraine was to lower the production date of car models that can be used by Uber drivers to 2001.
Initially, only the drivers whose cars were produced after 2008 were allowed to work for Uber. But soon after the launch in June, when many users complained that too few cars were available, the company lowered the production date bar while still demanding that the car was in a good condition.
“We always set the bar based on what’s available on each market,” Vershebeniuk said. “In the States, when I’m renting an economy car, it’s at a minimum a Hyundai Sonata. Here, (Sonatas) come under UberSelect (a premium service).”
Atypical taxi drivers
Uber drivers have little in common with the stereotypical Ukrainian taxi driver, said Vershebeniuk. That’s because the Uber platform enables anyone to use their car to make some extra money – for 30 percent of drivers, it’s a part-time job. These drivers often are educated professionals or business owners.
“On the other hand, I do know of cases of people starting out with Uber as a part-time thing, and then converting into full-timers,” Vershebeniuk said. “That’s because this is an economic opportunity.”
He claims that the salary of a full-time Uber driver can reach Hr 40,000 (over $1,500) per month, while an average salary in Kyiv is just Hr 7,936, according to the job search website www.work.ua.
The company hasn’t disclosed the number of drivers it has in Kyiv.
The company might not even know the exact number of drivers itself: Uber doesn’t actually employ any drivers. Instead, the drivers must register as private entrepreneurs, or be employed by an Uber partner company, like UberLine and UberDrive.
Ways to improve
“Uber is a very perfectionist company,” claims Vershebeniuk.
The app’s mutual ranking feature that allows passengers to rank drivers and vice versa, was designed to continually increase the quality of the service.
Vershebeniuk takes out his smartphone, launches the Uber app and shows his own rating.
“It’s 4.8 – almost ideal.”
Kyiv Post staff writer Denys Krasnikov can be reached at [email protected]. The Kyiv Post’s IT coverage is sponsored by Beetroot, Ciklum and SoftServe. The content is independent of the donors.
