Mobile Applications

How Spain's Cabify has made Latin America the centre of its business

Latin America is becoming a vibrant battleground for ride sharing and carpooling apps. The market has several major players in the field vying for market share. Uber, the global behemoth, is active in several countries while native players like Easy Taxi from Brazil are making strong inward gains and last year, acquired competitor Tappsi for greater consolidation.

For Spain’s Cabify, the market is still ripening. The Madrid-based company raised $120 million last April in a Series C round led by Japanese e-commerce giant Rakuten. The funds have been invested heavily in expansion across Latin America.

Its strategy for expansion targets Spanish and Portuguese speaking markets. It’s already got a strong foothold in its home country and has since launched in several cities in South America, Mexico, and the Caribbean.

“We see ourselves as a Latin company that’s founded in Spain,” says Ricardo Weder, head of growth for Latin America.  While it has operations in Spain and Portugal, Cabify has placed a huge emphasis on Latin America.

“Latin America has a lot of potential in spite of instability in the region. We do believe that in the medium and long term, Latin America is going to grow.” For these reasons, companies and markets will continue to “struggle a bit” in the short term but he’s confident that Cabify’s bet on the region will pay off; Weder declined to give any numbers on drivers or users though.

This instability has been a bugbear for all kinds of business throughout the region, from economic downturns to political unrest in countries like Brazil and Venezuela.

However while Latin America may be referred to as the same market, it’s made up of several different parts that need to be understood.

“Many times people outside of the region see [the countries] as pretty similar. Of course we share a lot of common things like language, with the exception of Brazil, but we have a lot of differences,” says Weder.

“Countries like Chile and Argentina are completely different to countries like Colombia and Peru. It is very important when you want to go into the region of Latin America to really consider the local culture, the local way of doing business in each of the countries.”

The “cultural clashes” between the various countries is the biggest stumbling block for any company trying to make sense of this big market, especially a European or North American company with little or no prior knowledge of the region.

“You have to take into consideration all the barriers of the culture,” says Weder. Some cities are much more open than others. Taxi/ride hailing apps have faced fierce pressure from the traditional sector in major cities like Rio de Janeiro. On the policy end, regulators have jostled with both sides of the debate – Mexico City was the first to enforce regulations against Uber – with little or no uniformity to be found country to country.

Cabify started operations in Uruguay in mid-November as the country’s regulations have created an even playing field for ride sharing and taxi apps that will be a huge benefit to Cabify, according to Weder. It has banned the payment of additional bonuses or subsidies to drivers as such schemes favour bigger companies that can afford such bonuses as a way to entice drivers.

“The case of Uruguay is pretty interesting. I believe in my point of view that it is one of the best regulations in Latin America for our industry. They strive to have a balance between the local markets and new companies coming into the countries.”

Cabify’s main competitor is of course Uber. Uber is active in dozens of cities in South and Central America. It has faced its own slew of regulatory problems and protests in the region from the traditional taxi sector. Perhaps most surprisingly, Uber hasn’t exerted quite as much dominance in this region as it has in, for example, Europe or North America. Argentina for example proved a testy market for Uber where its launch was delayed by red tape and for months operated with no license.

Brazil’s Easy Taxi is a major native player in the region. It’s been backed by Rocket Internet and in late 2015, it merged with Colombia’s Tappsi to create yet another sizeable frontrunner in the LatAm industry. Easy Taxi has a global reach but after the merger, it ceased all operations in Asia to focus more and more on Latin America.

While Cabify will not disclose any figures, Weder says that they have made good on launching in the “critical markets” so far. Now it is considering launches in Bolivia, Paraguay, and Central America but the company isn’t committing to any timeframe.

However there is one key lesson we have learned in the world of taxi apps in Latin America – an early foothold makes all the difference, even against Uber. Regardless, Weder likes the competition.

“We do like to have more competition. We do believe that the more alternatives people have, the more competitors that are in the share mobility ecosystem, the faster people [to adopt] will [no longer] own a car. That will make the industry bigger and all of us are going to gain.”



Also read:
Thrashing Uber: The rise of two local taxi apps in Latin America


« The CMO Files: Alan Cohen, Illumio


India takes the tough path to digital payments »
Jonathan Keane

Jonathan Keane is a freelance journalist, living in Ireland, covering business and technology

  • Mail


Do you think your smartphone is making you a workaholic?