This 1001 Startup Idea from YoStartups is to develop a blockchain based ride sharing platform which can decentralize the entire business of ridesharing and give power back to the on-ground drivers of the company.
Market Definition for 1001 Startup Ideas – Blockchain based Ride Sharing Platform
The basic premise of every shared economy platform is to facilitate the use of underutilized resources and create more value for the ecosystem. But when we consider the case of Uber, Lyft, and other ridesharing platforms, things on the ground seem to be different. These platforms have become less transparent and highly regulated.
Between the most significant ridesharing services across the world, there are about 5 million drivers, out of which Uber and Didi Chuxing hold about 70% of the market share and the rest 30% is distributed among the other ride-sharing services like Ola, Lyft, etc.
It is estimated that the annual turnover rates for drivers at any of these ridesharing platforms are as high as 40-50%. It can be contributed to the fact that Uber and Lyft both at the time of sign-ups advertise high hourly rates of $25-$35/hr which also includes platform commission. These estimates of earnings have no research or data to support their credibility, so drivers are often left disillusioned when they get average rates of anywhere between $10-$20hr. The drivers often stay only for the bonuses which they get on sign-ups or on completing some milestones, but once the bonuses are gone, there are no incentives to stay.
The consistent fare cuts over a period of last three years have reduced the incomes of the drivers, and now the drivers are working longer to earn the same money or even lesser.
Assuming that most of the drivers stay on the platform, because the platform authenticates both the rider and the driver securely, basically matching supply and demand, creating a layer of trust by processing payments and handling other issues. If these can be facilitated without Uber and other similar platforms being in the picture, the entire value proposition these companies offer to its users is lost. This is what a blockchain based ride sharing platform can provide, connect riders and drivers without the middleman, enabling drivers to make more money and riders to pay less.
Competitor Analysis for 1001 Startup Ideas – Blockchain based Ride Sharing Platform
Lazooz a start-up based out of Israel has already started experimenting with the blockchain based ride-sharing concept. It has built an app for collecting driver data with their riding patterns and also for a referral to grow the network of the community using the platform. Both the parties are currently compensated with zooz tokens native to the platform. Once the platform reaches a critical mass, it will be enabled for use in the local community.
Another blockchain based ride ridesharing startup was born when Uber and Lyft were forced to leave Austin after losing a fingerprint legislation. They claim to be the world’s first and only peer to peer ridesharing network, and their operational expenses are zero making them the most efficient ridesharing start-up.
The drivers can earn tokens on completing trips, enrolling other drivers or helping grow the networks. They are planning to make an ICO in early 2018 on the Ethereum Network.
Pain Point and Target Audience for 1001 Startup Ideas – Blockchain based Ride Sharing Platform
The annual turnover rates on any of the popular ridesharing platforms like Uber, Lyft, etc. is as high as 50% due to their inconsistent policies for incentivizing drivers on the network. At times the drivers are barely earning minimum wages with no benefits. The rating system is heavily biased in favor of the riders and not the drivers in spite of providing better trips and services consistently. The main problems according to RSG due to which Uber drivers quit as highlighted by the blog are the Rating System, Fare cuts, Uber pool, and customer-centric approach.
As per, Paolo Tasca, a Director at the UCL Centre for Blockchain Technologies, and Mihaela Ulieru, President of The Impact institute the business models of the so-called shared economy giants like Uber are designed in a way to benefit the customers & promoters, and not the people creating value for the platform, i.e., the drivers. The centralized platform owners are in complete control of the business network and can dictate terms without consulting the drivers, whereas on a blockchain based platform all the operational expenses and profits can be split among all the stakeholders making it more sustainable.
Value proposition for 1001 Startup Ideas – Blockchain based Ride Sharing Platform
The value proposition of a blockchain based ride-sharing startup over other popular ride-sharing apps would be following;
– Drivers can decide their fares individually or in group based on supply-demand, and no intermediary is involved in the process
– The identities are authenticated and encrypted over the blockchains; the start-ups can integrate social media profiles of both riders and drivers to build online reputations which can benefit both drivers and passengers. The drivers are compensated based on their service and customers based on their behavior.
– The profits can be shared equally among all the token holders by a pre-configured smartcontract algorithm on a blockchain network
Business Model for 1001 Startup Ideas – Blockchain based Ride Sharing Platform
The proposed start-up will have to launch an online blockchain platform for ride-sharing. The platform will be built to work with a specific cryptocurrency designed to work on this platform, wherein the drivers get rewarded with native cryptocurrency for contributing more to the platform, like enrolling other drivers for a flat referral fee per ride, completing more trips, etc. The customers/investors benefit as the company grows because the value of the native currency rises with the increasing transactions.
The company can also start paying dividends proportionate to the native currency holdings with a smart contract algorithm on the blockchain platform.
Way to Market for 1001 Startup Ideas – Blockchain based Ride Sharing Platform
The company will have to launch a two-way online marketplace, where both riders and drivers can interact and negotiate the pricing on the trips. Initially, the platform should be currency agnostic (both fiat and crypto) till the platform becomes stable and reaches a critical mass. Once the platform becomes stable, the platform can create both authenticated driver and rider profile and launch their tokens which can be traded for cash and other services on the platform.
Milestones for 1001 Startup Ideas – Blockchain based Ride Sharing Platform
The company will have to launch a pilot program in their native cities and onboard a group of taxi drivers who can help the company fine-tune its platform for both rider and driver.
As the platform will be open source, the start-up will have to start developing relationships with local partners for business expansion for a fixed referral fee of the platform’s native currency.
For most of the blockchain based platforms to be successful, they have to run on their cryptocurrencies to scale up. The company will have to look at an option of ICO in the future for the platform to scale up.
Investment Needed | Blockchain based Ride Sharing Platform
The proposed start-up can raise funds about $50,000 -$120,000 either for a nominal stake in the ICO. Some of the blockchain accelerators that can be approached are IBM Blockchain Founder Accelerator, Blockchain Trust Accelerator or Digital Currency Group (DCG).
Team Capability for 1001 Startup Ideas – Blockchain based Ride Sharing Platform
The team will need a blockchain application developer with hands-on experience in modern cryptography. The other core team member should be from the fleet management industry who has had considerable experience of onboarding drivers in the past, as he can leverage his relationship with the drivers to enroll them on the platform.
Investors/Expert Take | Blockchain based Ride Sharing Platform
As per IBM, elimination of an intermediary to conduct business could disrupt the business model of the most massive technology backed sharing economy companies like Airbnb, Uber, eBay, Amazon, etc.
The blockchain is the only platform which provides all the benefits of an online marketplace without the middleman. Blockchains are more decentralised as the data is not proprietary to a centralised platform. In a blockchain, the shareholders create value for the entire ecosystem rather than the corporation, entity or platform. It’s like real democracy in a business which is made by the people, for the people, and of the people.
But the problem with decentralisation is that it gets trickier when you start trying to figure out background checks and identity verification, but some of the new blockchain companies have started digital authentication by adding permission layers to the existing blockchain principle to solve this problem.
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