Annabel Palmer talks getting about town with Justin Peters, founder of minicab price comparison website Kabbee
OUR City’s cabbies have been hit hard by the recession. London residents’ trips by licensed taxis and private hire vehicles (combined) fell by an estimated 23 per cent between the 2007-08 and 2008-09 financial years – and have yet to pick up. It is not surprising. Taxis are a leveraged indicator of consumer sentiment: if people are tightening the purse strings, these luxuries are the first thing they cut back on.
But Justin Peters – founder of Kabbee, the price comparison and booking service for minicabs in Greater London – thought it was the perfect time to enter the industry. First, the London cab market was still worth £3bn in 2011, so if you can innovate successfully, it could be very rewarding. Secondly, it’s in a recession that a price comparison website could become more meaningful. And finally, “Kabbee is a logistics business in which you are often dealing with scarcity. You need supply. Today, fleets are keen to grow their business and attract customers, and my company helps them do just that.”
Kabbee enables users to save money and read other Londoners’ reviews. It lists fares from 50 licensed firms, with access to over 4,000 drivers. Since its 2011 launch, there have been 3m quotes made through the website and app. It is free to customers. So the business model involves taking a low commission.
But the idea for Kabbee was formed long before 2011. In 1998, Peters left a City job trading interest rates to research the minicab industry, build his brand, and meet with the big companies to pitch his model. However, the “timing wasn’t right; the risk was too great.” So he put Kabbee on the backburner, returned to the City for eight years, and then invested in a small cab company in north London. He grew the company from a 10 to 50-car fleet, gaining industry experience that would prepare him for reverting to his initial objective: a price comparison website.
Most entrepreneurs confess that the biggest challenge they have faced was access to capital. Not Peters. Kabbee has “never had a problem raising money,” which Peters attributes to a number of factors. He had a wide network that he was unafraid to tap, for example. But more importantly, he invested the initial finance in the business – so when he spoke to investors they knew he had put his money where his mouth is. By the time he approached investors, the technology was almost ready and he had fleets of cabs on board. “It wasn’t an investment based on a business plan, we were almost ready to do an end-to-end transaction,” he says. So why seek the funding and relinquish a portion of the business? “To launch a business-to-commerce brand, at some point you need a large injection of cash for advertising.” Kabbee has raised £3m thus far from two rounds of funding. Investors include the backers of Betfair, Ocado, and LOVEFiLM; and the second investment round was oversubscribed.
The second biggest challenge most entrepreneurs face is finding the right people. The first person Peters took on was a software developer, who built the technology for the Kabbee app. and has remained at the company ever since. “I can’t say every hiring choice I’ve made was correct, but on balance, 90 per cent have been spot on.”
So what challenges did Peters face? “The hardest thing is having the stamina to keep going. It is relentless. We’re combining logistics, technology, marketing – all at the same time as growing a team and dealing with investors. The requirement to be so switched on, all the time and for so long, was unexpected. I wouldn’t plan to do something like this again for that reason.”
If he can continue to fine tune the service and attract new customers, Peters is optimistic that he will have a model that is exportable globally. But for the moment, the priority is to find a solution that works for Londoners.
CV JUSTIN PETERS
Company name: Kabbee
Founded: June 2011
Company turnover: N/A
Number of staff: 20
Job title: Chief executive and founder
Studied: Finance at Birmingham University
Reading: Humboldt’s Gift, by Saul Bellow
Favourite business book: Titan, by Ron Cernow
Talents: Staying calm and motivating the team to keep going
Heroes: My grandfather – a great entrepreneur
First ambition: To be Spiderman
Motto: “It’s all going to be ok”. I hope this will soon become: “It’s all ok”
Awards: I won a pancake competition when I was 13, but I should have won the School Economics Prize.