Kirill Evdakov and his colleagues at the Boston-based ride-hailing upstart Fasten may not be new to the on-demand transportation industry, but they are the little guys. When they founded Fasten in September 2015, Evdakov and his fellow Russian techies drew on their experience with similar, pre-smartphone businesses back home in Russia and Eastern Europe. One year later they're growing, while differentiating themselves from Uber and Lyft by eschewing surge pricing, showing riders their real-time estimated fare, and taking a smaller cut from their drivers.
After the dominant ride-hailing services pulled out of Austin, Texas, this May over a regulatory dispute, Fasten stepped in to pick up the slack. Meanwhile, in their hometown of Boston, the company just opened a "Drivers' Lounge" at 123 Beach St.
Crain's caught up with Evdakov in August for a look at how things are going at Fasten one year into business.
Why start a ride-hailing company now? It seems like the market is well-served by Uber and Lyft.
I don't think it's well-served, for drivers especially. I've been involved in this space at least five to six years—just in a different part of the world, particularly in Russia and Eastern Europe. Ride-sharing has been around for 20 years—people just did it a different way, using their own vehicles to pick people up. So we've been in this business for a while. We started doing this when cash was the only option to pay. To start driving, the driver had to come to the office and pre-pay, so it meant the driver saw himself as a paying customer, and there is much more of an attitude of customer service toward the driver.
What we're seeing here is this multi-billion dollar industry which is based on completely mistreating drivers. Ride-sharing companies here, they don't care about drivers so they ignore their needs and they treat them like a commodity. So we started with a different model. We charge them 99 cents flat for each ride. At the end of the day, people drive to make extra money. Nobody drives for fun, nobody drives to meet new people. And so our drivers make more while our customers are paying less and we're taking less for ourselves. The primary goal for us was to do it right for drivers, as well as riders. We also have higher quality standards—only cars 2005 and newer.
Have you had trouble acquiring new drivers? What has growth been like lately?
There is no such thing as an Uber or a Lyft driver—drivers are just drivers. You re-acquire a driver after each and every ride. Drivers drive for two, three companies at the same time. The only way to create a great experience for a rider is to make sure that the driver will be willing to do so, and that's what we do by treating drivers differently.
Before the summer when things slowed down a bit, we grew 300 percent from quarter to quarter in Boston. In Austin it's much higher because there's no big competitors for us.
Is the goal to expand to more and more cities, or to specialize in places like Boston and Austin where you see an opportunity to edge out Uber and Lyft?
It's important to understand the specifics of each and every market. That's why we're not expanding right now. Of course we plan to expand, no question. We're doing it one by one, carefully, and then making sure that once we establish operations on the ground that we have the best customer service for drivers. Our main thing is to be the best company with the best customer service for drivers, because they deserve better treatment. We take the least money for ourselves, which means that we need higher volumes.
I take your point about attracting new drivers by giving them essentially more take-home pay, but how are you going to win the war for customers? Because Uber and Lyft aren't going away.
Absolutely not, why would they? But with ride-sharing there is always room for several companies. I don't take that winner-take-all mentality. This is an essential service. Yes, the size of the company and their technology matters, but at the end of the day it's real people and real cars. There is a lot of things to do differently and I'm surprised that all other U.S. companies all believe that charging a percentage from drivers is the only thing to do. There was a lot of innovations on top of this model, but nobody was trying to be innovative in the business model.
Why charge a percentage? Eighty percent of the ride's cost is driver's time. There is no legit right for us to charge drivers so much when we establish that connection between rider and driver. Our services cost less, and drivers appreciate this. It makes service more affordable for riders. This is just the right way to price ride-sharing services. The long game for us is just to grow with the market because the market is fairly new, and there is enough room for a lot of companies and there is a lot of things to do in the future.
How will the recent changes in ride-hailing regulations in Massachusetts affect your business?
I think it's pretty reasonable. They just want to make sure that the company is safe, so they are doing their own background checks. We don't have experience with this yet. We do our own background checks. In Austin, our drivers are fingerprinted in accordance with regulations there. It does not hurt our business model—it's not a deal-breaker for us. I don't think we have any problems with the regulations in Massachusetts.