South Africa’s taxi industry, which carries an estimated 60% of the country’s commuters, is a multi billion rand pie. It’s no surprise then that both international and local venture-funded startups, like Silicon Valley’s Uber and Cape Town’s Zapacab, are hungry for a slice.
While Zapacab and Uber are essentially using an identical blueprint to pursue the same market segment, Mellowcabs is trying something different. The Franschhoek, Cape Town-based startup is planning to offer free last mile transportation by bringing the web’s advertising model into the real world.
Despite the growth in car use, public transport and walking are still the predominant “lifeline” forms of mobility for the vast majority of South Africans who commute. 65% of trips in urban areas are less than four kilometres, and it’s in this sector that Mellowcabs is looking to stake a claim — think free, eco-friendly urban micro transport, with a tech-powered advertising model.
Mellowcabs started early in 2012 when Neil du Preez and Kobus Breytenbach kicked around ideas for disrupting the pedicabs (bicycle taxis) industry — an industry which has been operating in Europe, North America, Asia and Australasia for about twenty years and has made a significant impact on the cities they operate in. Du Preez’s other business, Riksha, manufactures a R3500 bicycle trailer which allows children to accompany their parents on rides — it ships internationally. Du Preez and Breytenbach’s latest venture however, is a little bit more high-tech and a far cry from du Preez’s previous job as an agricultural chemist making fertiliser. Breytenbach has a business development and corporate background with stints at Impala Platinum, Standard Bank, HSBC plc — as head of metals and mining, Sub-Saharan Africa. He also served as a consultant to numerous mining and energy businesses including JSE, Foskor and IFML.
The pedal-electric hybrid pedicabs, look like something you might find in Elon Musk’s (Tesla) sketchbook. Initially based on a generic shell from China, mellowcabs have been modified to be roadworthy, says Du Preez. Manufactured in Wellington and assembled by Mellowcabs, du Preez says the Chinese designs are technically bicycles, and are not seen as roadworthy vehicles.
“You can’t legally transport passengers in them,” he says. “We’ve initially changed our cab design slightly for South African conditions, and now we’re making radical design changes, to make it truly individual,” he added.
The roadworthy, SABS/NRCS approved cabs are just as interesting on the inside. Powered by both pedal and electric motor, the cabs host internally geared electrical wheel hub motors that vary in capacity depending on the areas in which the cabs operate.
“In hilly areas where you have sizeable passengers you need a bit of kick. The geared motor allows you to reduce strain on the motor on pull-away, thereby extending motor and battery life. We use programmable controllers to set all the required parameters, for example limiting top speed to 25km/h,” says du Preez.
The addition of bicycle pedals which works through a single rotor crank set extends battery life, and “tells a nice story,” offers du Preez.
“We’ve installed a pick up system, which forces the driver to pedal to engage the motor, and forces him/her to keep pedalling. That being said, it’s really easy, and my mom would be able to pedal a mellowcab,” he quips.
Production of the first vehicles will start in the Western Cape this month and Mellowcabs hopes to construct and operate at least one charging station that makes use of renewable energy sources, such as solar or wind power, every 12 months.
Arguably, the real innovation comes not from the design of the mellowcabs, but in the form of the startup’s advertising-based business model.
It starts off fairly simple. Mellowcabs hopes to offer its service free of charge by attracting large-scale advertisers interested in advertising on the exterior and interior of its vehicles. But, here’s where it gets really interesting. Each mellowcab hosts an on-board tablet computer that runs geolocation software. As the vehicles approach a certain store or restaurant, the software triggers specific adverts — a promotional offer or a monthly special, for example.
Mellowcab remotely manages ad content, which is stored in the cloud. The tablet can also connect to the passenger’s Facebook and Twitter accounts, allowing passengers to snap a picture and load it onto their social media profile of choice — this could enable effective brand identification, says du Preez.
Further ahead, Mellowcabs will experiment with augmented reality.
“We’ve almost completed the development of an augmented reality facility, whereby a passenger can pick up the tablet, and hold it up to, say for instance a historical building, and information about the building’s history will be displayed. The passenger will also be able to choose different language options, making the Mellowcab a virtual tour guide,” says Du Preez.
The tablet also offers a payment platform and vehicle tracking opportunity. Mellowcabs is exploring either Nedbank’s new Pocket POS or Thumbzup’s payment pebble.
Du Preez says that a secondary revenue stream might arise from selling the vehicles to foreign clients, as they will have international road-worthy status. If things don’t pan out, Mellowcabs says that it might opt for instating passenger fares, however.
Mellowcabs is self-funded. Du Preez and Breytenbach have poured an amount of approximately R870 000 into the company. The bulk of the cash was spent on manufacturing the first eight vehicles, SABS, NRCS and laboratory testing, as well as staff.
Du Preez points out that Mellowcabs embodies more than a revenue opportunity.
“We’d like to employ a ratio of 60% youths and 15% women as drivers and technicians. There is a moral initiative to address the wrongs of the past. We have an owner-driver scheme, in which ownership of the vehicles is transferred to the drivers,” he says.
Mellowcabs’s green stance also hasn’t gone unnoticed. Western Cape Premier, Helen Zille showed her support for the startup as a green-run business in her 110% Green Initiative. The 110% Green Initiative chooses green-driven organisations to become part of their Flagship Companies that commit to the growing of the Green Economy.
What about competitors? Du Preez believes Mellowcabs stands in a favourable position, arguing that the startup currently faces no direct competition.
“There is currently no competitor with the same products in South Africa. Mellowcabs has strengthened and secured this competitive advantage by having entered into exclusive operating agreements with all the high-value precincts in South Africa. The only option open to anyone looking to launch and operate a service of comparable quality is to import an American or European product at substantial cost and effort, with the onerous registration process, which includes SABS approval, having to be endured,” says du Preez.
Hinting at South Africa’s delicate and often political public transport operations, Mellowcabs will be marketed to underline its use in a limited radius. Instead of competing with other transport systems such as trains, buses or taxis, Mellowcabs will be integrated with the existing networks, offering last mile transport.
International expansion is a possibility says du Preez.
“Cities all over the world have a need for micro transport, and as our business case is advertising driven, expansion could happen much faster than usual. Most of Sub-Saharan Africa’s advertising decisions are made in South Africa, which places us in the perfect position to secure a revenue line abroad,” he says.
Finally, we asked du Preez about an Uber-type hailing model, to which he replied: “hailing development is on the cards, we frankly just haven’t had the time to work on it. Uber offers a great platform.”