David Vs. Goliath? Inside The Gett-Uber Battle Over Mobile Taxicab Services

By Daniel Asper, NoCamels August 11, 2015 5 minutes

Taxi cabs on the streets of New York City. Courtesy

It looks about as close to David vs. Goliath as you can get in the business world: Israeli company Gett is battling it out against the world champ Uber for the title of Israel’s transportation king.

Currently, Israel’s Gett is the go-to mobile application for ordering rides from your smartphone in Israel. Uber, meanwhile, a San Francisco-based company, is the global incumbent for these services. Dominating the industry since 2009 and valued at a staggering $50 billion, Uber makes Gett, a $2 billion company founded in 2010, look paltry by comparison. And while Uber is available in 300 cities, in 55 countries, Gett operates in roughly 50 cities across four countries at the moment.

There’s no doubt that Uber is the giant, so does Gett stand a chance at keeping the lead on its home turf?

Both Uber and Gett (formerly known as GetTaxi) classify themselves as technology companies that use their mobile applications to connect people who need a ride with drivers who can pick them up. At the touch of a button, you order a ride, which is then automatically charged to your phone. So, what separates these services from traditional taxi companies? Many believe it’s a combination of a few things: simple ordering from an app, real-time GPS tracking of your ride, focus on customer service through a driver rating system, and cashless payments through syncing your credit card to the app.

Moreover, many investors see business potential in new, modern methods of transportation, which has contributed to the sky-high valuation of Uber. Its game-changing service Uber X gives anyone with a car and a clean background check the ability to pick up and drop off anyone who orders a ride. Uber calls this “ride sharing” and it has taken the industry by storm, allowing individuals to make money while they run errands, giving customers 24/7 access to a “green” carpooling service that’s cheaper than the regular cab fares, typically by 20 percent.

Uber X reduces costs to consumers because it eliminates the fees that taxi drivers must pay to lease a medallion (the rare permit that gives drivers the right to operate a taxi and pick up street hails) and a vehicle. With Uber X, Uber and its drivers simply split revenues on a per-ride basis, effectively cutting out the middleman – taxi unions.

Head of Uber Israel: Our service is better for consumers, taxi drivers

NoCamels recently sat down with Uber Israel’s General Manager Yoni Greifman to discuss Uber’s recent entry into Israel and the opportunities and challenges of introducing a new service like Uber X. “Many taxi drivers have significant additional costs that don’t have to be there”, Greifman told NoCamels. “For example, they pay roughly $380 per month to lease their medallion and that doesn’t even account for the vehicle. Then, they may need to lease a taxi-licensed vehicle which will cost an additional $1,150 per month. With Uber, those costs are basically eliminated because drivers use their own vehicles. Even if they end up charging less per trip, overall revenues increase.”

Since Uber X cuts costs for drivers and therefore increases their revenues, more and more drivers are embracing Uber’s new model. “In New York, for example, many taxi drivers are switching to Uber X because they can earn more using their own vehicles,” he says.

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Unfortunately for Uber, Israeli authorities have yet to approve its Uber X model for regulatory reasons. The Israeli transportation code requires all drivers operating a taxi service to have a taxi license, and Uber is technically considered by law to be a taxi service, but not Uber X. That’s why individuals can’t legally be paid for carpooling in Israel. However, this has been the case in almost every market Uber has entered, and the company has managed to get these regulations changed in some countries. Now, they want to take on the Israeli Ministry of Transportation.

“Uber’s goal is to make transportation as reliable as running water,” Greifman says. “If we can use the current transportation assets in a more efficient manner, you won’t need to own your own car. You’ll feel comfortable that if you go to our app you’ll have a cheap, reliable, safe transportation option. This is Uber’s vision around the world.”

Conversely, Gett’s traditional business model in Israel is based on signing up drivers who are already accredited taxi drivers and giving them access to customer orders directly through the Gett mobile application, which is in compliance with Israeli transportation law. However, Israeli taxicab stands (dispatchers) have been hit hard over the past couple of years, with hundreds of drivers leaving them for Gett – in order to cut out the middleman. NoCamels reached out to Gett, which didn’t comment.

Duking it out in the desert

These companies aren’t only competing for dominance in the land of milk and honey; the battle for Israel appears vital for Uber’s expansion into the Middle East, and critical to Gett’s survival. Recently, Gett upped the ante, making arguably the most game-changing move in the company’s history. Over the coming months, Gett plans to roll out a new suite of on-demand services, which would allow customers to order products and services in addition to rides: For example, a plumber, a pizza, or even an in-office haircut. In addition, it will reportedly battle Uber for business accounts by offering fixed-price rides in New York City.

One strategy Uber is famous for is its “pop-up services,” which are based on local events and are meant to create brand awareness. Late last year, on Rosh Hashanah (which celebrates the beginning of the Jewish new year), Uber took orders and delivered fresh challah bread in Tel Aviv. Most recently, on Israel’s Independence Day, the company delivered hummus and pita bread at a flat rate of 10 shekels.

Uber is now in the process of gaining brand recognition in a country that has traditionally used Gett. Greifman admits that “there is definitely strong patriotism built into every Israeli,” but says “we’re trying to make Uber an Israeli company.”

Both Uber and Gett, however, may soon be experiencing steep competition from another ride-sharing app, RideWith. Employing the superior travel-tech knowledge of its acquired Israeli company Waze, Google recently announced it will launch a pilot of its ride-sharing service in central Israel. The service will synchronize between Waze users and eager carpoolers who live and work in the same location.

There are many ways to look at Uber vs. Gett and the future of Israeli transportation. The truth is, both companies are more like David than they are Goliath, slowly changing the vast, complex world of transportation. Their local challenge (as well as their global one) is to liberate Israelis – whose major cities are as congested as any other big metropolis – from their transportation and parking woes.