02/28/2013 01:19 pm ET Updated Dec 06, 2017

Flywheel App Used By Cabs To Fight Off Uber And Other Competitors

Entrenched in a bitter turf war against hire-a-car startups, Bay Area cab companies have formed an unlikely alliance with a local cab app, using the high-tech tool to dispatch rides and beat back competition from popular taxi alternatives.

Flywheel, a mobile app that lets riders order a cab from their smartphone and track its arrival, is one of the few cab apps embraced by an industry rattled by tech-savvy services like Uber. Redwood City-based Flywheel has befriended cab dispatchers, struck deals with fleet managers and wooed its way into about 700 cabs in the Bay Area without drawing the ire of state regulators.

"This is the wave of the future, and it's going to be the way taxis are dispatched and used by a larger and larger portion of the public," said Mark Gruberg, founder and manager of San Francisco Green Cab, the first cab company to partner with Flywheel.

Flywheel contracts directly with cab fleet owners who agree to use the app in addition to the fleet's own dispatch system. The company says it is in thousands of cabs in 15 cities across the country, including San Francisco and Oakland. In a few weeks, the company says, it will announce a deal with 400 cabs in San Jose.

"Our focus is specifically working with the fleets and working with city governments, making sure everything is fully regulated," said Flywheel Chief Marketing Officer Brogan Keane.

That could soon change. Since Flywheel was founded in 2009, the e-hail space has become increasingly crowded. The popularity of donation-based rides and the promise of thoroughly vetted drivers and clean cars from Uber, a San Francisco-based app company that dispatches black town cars and taxis, are luring riders away from city cabs.

As Flywheel looks to other revenue sources, Chief Executive Officer Steve Humphreys says his company could end up battling state regulators. Flywheel will soon begin marketing the app directly to limousines and taxi drivers when it can't strike a deal with fleet managers -- the very tactics that have caused trouble for Uber.

Uber recruits individual drivers and doesn't have deals with the cab companies, which has earned it the ire of many fleet owners.

Flywheel, which currently only works with certified city cabs and drivers, provides cab companies with smartphones to install in every car, although the driver chooses if he wants to take a Flywheel call. Drivers who accept a call and don't show up are blacklisted. Passengers pay an extra 60 cents for the ride that Flywheel keeps.

Drivers say Flywheel helps them reach customers in remote places and get more fares on otherwise slow days. DeSoto Cab General Manager Athan Rebelos is a fan of anything that helps keep his drivers busy -- and making money.

"Then they can afford to pay us a lease," he said. "We'll have more cabs, and we'll have more drivers, and everybody gets to make some money. And everybody's happy."

But cabs say the number of riders using Flywheel is a drop in the bucket. Flywheel provides less than 200 of DeSoto's 5,000 daily riders, Rebelos said. Gruberg said Green Cab drivers get fewer than six calls a shift through the app -- average shifts yield about 20 calls. And drivers at San Francisco Town Taxi, which started using the app this month, get about one call each shift.

Flywheel started under the name Cabulous but admits its technology was clunky. Last year, it changed its name, improved its technology and honed in on improving relationships with cab drivers and owners.

But while Flywheel worked behind the scenes to woo the cab industry, ridesharing companies were preparing to pounce on taxi riders eager for change. What many customers say they want is not just a new way to hail cabs but an alternative to dirty city cabs and rude and unreliable drivers.

In a Facebook comment to the Bay Area News Group, Josh Fathollahi wrote that he prefers donation-based SideCar to Flywheel.

"You can pay whatever is fair," he wrote. "If the driver was late or rude, you can deduct from his fare, or you can add more for exceptional drivers. It makes it so the drivers are genuinely trying to get you to your destination promptly and provide great customer service."

The state Public Utilities Commission last fall fined SideCar, Uber and Zimride, which operates Lyft, $20,000 each for violating rules that govern so-called "charter-party carriers," such as taxicab companies and limo services. Zimride and Uber have signed agreements with the commission to continue operating while the state reviews ridesharing rules.

Uber's general manager Ilya Abyzov said cab companies are complaining because they haven't had to compete before and neglected to upgrade their technology.

"They've had a state-sanctioned monopoly," he said. "They're not used to competition. They're not used to technology."

But the appetite for better mobile technology is growing in the cab industry, which until recently has had little more than two-way radios and call centers. Cab fleets are experimenting with their own apps -- DeSoto plans to release an app this summer but say they will continue using Flywheel because of its national reach.

The San Francisco Municipal Transit Agency is preparing to pilot a municipal cab app which will provide location, status and driver information for every city cab. SFMTA spokesman Paul Rose said the city plans to release the data in the next few months to a limited number of developers, and Flywheel is among the bidders.

"It's not so much the technology as it is the business relationships," said Flywheel CEO Humphreys. "We're already in relationships with the fleets, we're training the drivers on site. (The other) apps don't know the industry."

Contact Heather Somerville at 925-977-8418. Follow her at ___