Tada bets on zero commissions to upend global ride-hailing industry

For over a decade, ride-hailing has been led globally by industry heavyweights Uber, Lyft and Grab. With the pressure to finally turn profitable came steep commissions charged to drivers and passengers.

Kay Woo, founder of blockchain-based ride-hailing startup Tada, says he believes that model is fundamentally broken, as drivers are being squeezed and users are paying more than they should.

“Here, Uber and Lyft are charging about 35 percent commission, or sometimes like 45 percent commission, and on top of that about 15 to 20 percent is tax, so if I paid $100 from Manhattan to (LaGuardia Airport in New York), drivers normally get about $40 or $45,” Woo said in a video interview with The Korea Herald, speaking from New York last week.

“So this is one of the reasons why I decided to provide our service in New York City.”

Since the startup launched its ride-hailing service in New York on March 3, the Tada CEO and founder has been going to the LaGuardia Airport parking lot, where hundreds of ride-hailing drivers sit idle in a designated waiting area, eating meals and killing time, sometimes for two or three hours before receiving their next call.

“The system is completely broken but it’s actually very good for me to go there, talk to the drivers and explain about Tada and then everybody is open to join and they start downloading the app and submitting documentation,” he said.

According to Woo, about 300 new drivers a day on average have been signing up for Tada since last month. The key draw for drivers: no commission fees.

Founded in Singapore in 2018, Tada operates under MVL, a Web3 mobility ecosystem that uses blockchain infrastructure for transparent incentive distribution. Based on this, drivers do not have to pay commission, but instead pay a small, flat transaction fee of 60 cents per ride. With over 5.8 million registered users and 150 million rides completed, Tada has facilitated about $1.56 billion in driver earnings so far.

"When customers compare our price against Uber or Lyft, they're going to see a difference of 20 to 30 percent," said Woo.

"It's too good to be true. But then they'll start comparing the price between Uber and Tada instead of Uber and Lyft. That's how we penetrate the market. … What we need to do is to try to build a habit for them to compare the price. So we allow them or help them to try (our) service with a coupon. One or two trials of our service to see the price difference is good enough."

According to Woo, Tada has been experiencing 50 percent year-on-year growth while making a profit. The company posted a gross merchandise volume of approximately $500 million last year, operating in Singapore, Cambodia, Vietnam, Thailand, Hong Kong and the US.

Regarding a potential plan to go public, Woo gave a four-year window, as the company is currently making a profit while leaving the door open for the company’s cryptocurrency asset MVL to be settled with the system circulation of cash flow.

“We are confident to take over up to 15 percent of the market share (in New York) in two to three years and by that time, we are going to cover major cities on the east coast and then the west coast as well,” he said.

“And then maybe in five to 10 years, we can actually flip the market to become the No. 1 player (in the US).”

Asked about the possibility of Tada reentering the Korean market — it is a separate company from the Korea-based one of the same name — Woo said the right moment may present an opportunity when there is a clear pain point.

“So Kakao (Mobility) actually has built a very efficient ride-hailing market and their market share is almost like 95 percent,” he said.

“Back in the day when we tried to enter the Korean market, Kakao had its fee level set very minimal, so there’s no pain point. When drivers and users do not have any pain points, your service is like a vitamin. When you sell vitamins, you’ve got to persuade people. You have to spend a lot of money to persuade people.”

However, Woo is looking into the Korean market now, which he described as a “high pain point market” in not only the taxi industry, but also the designated driver sector with high commissions. Adding that Tada wants to “disrupt” the market, he hinted that the company is open for collaboration or even mergers and acquisitions.

“So eventually, we want to cover the whole world,” said Woo. “After New York and the US market, we are looking into the African market as well. Our team is preparing to penetrate into two countries: Kenya and Nigeria. It’s going to be completely disruptive of the existing players.”

Woo, who had failed multiple startup projects prior to Tada, shared his experience when he started a company in 2012 to build a location-based social sharing service, a product he wanted to make but that eventually failed because he did not address the problems that people were facing.

He underlined that the question should not be about how much a company can earn when turning brilliant ideas into a reality.

“So if you want to be a billionaire, that is actually a very strong reason you could fail,” he said. “If you chase fame or money, you are meant to fail. That’s what I learned. Ever since our mission became solving the problem of mobility industry and we became quite indifferent on making our own fortune, interestingly, money has been actually coming to us.”

Pointing out that Tada has focused on solving the problems of drivers and this opened up a bevy of different opportunities, Woo said Tada takes care of drivers as its customers and drivers take care of riders as their customers in a triangular relationship.

"Everybody needs this painkiller. And in every corner of the world, soon enough, we're going to be there."

The Top 100 Global Innovators series spotlights the trailblazers shaping Korea’s future across a range of industries — from bold entrepreneurs and tech pioneers to research leaders — whose innovations are making a global impact beyond Korea. More than a celebration of success, the series offers a deeper exploration of the ideas, breakthroughs and strategies driving their achievements. — Ed.