Red Cab, the blockchain startup that has just announced Egypt's Initial Coin Offering (ICO)
By Valentina Primo/ Startupscene
Egypt’s coastal town of El Gouna looked as vibrant as ever, brimming with entrepreneurs and makers as they gathered at the TU Berlin campus for the Vested Summit last May. As we walked towards the newly launched co-working hub G Space, a pink Uber tuk-tuk swiftly rode by. In this seaside town, dotted with pastel-hued houses and bougainvilleas all around, transportation takes on an entirely different shape.
“In a country like Egypt, there is huge potential in the transportation business, but it’s dominated by giants,” says Walid El Gendy, pointing out the Red Sea area as a new hub for innovation in transportation. Indeed, it was in the nearby city of Hurghada that the entrepreneur created Red Cab Egypt, a car hailing service that uses blockchain technology to allow customers to transact through tokens. “We launched in 2017 as peer-to-peer transportation, but we asked ourselves: how can we provide something new to the market?” He says, as he recalls the inception of the company, just a day before publicly announcing their Initial Coin Offering (ICO) - a type of crowdfunding based on offering investors cryptocurrency in the form of tokens.
“We studied the market for a year and saw huge potential in the blockchain,” El Gendy explains. “First, it hasn't been penetrated yet; there is no transportation startup that actually entered into the blockchain field. The question was how we can tailor a business model that suits the blockchain, make the community grow, create a community and get profitability,” he says, triggering a slew of different questions.
So how did you launch it?
We decided to build what we call network dominance. What's the network dominance? It’s the balance between supply and demand. What's happening now in the market is that car hailing services buy the supply and then the demand. So they give coupons for the customers to use the app and give free rides, and they give guarantees and bonuses for the drivers, which at the end of the day cost the business money. But it is the customer who pays for all these expenses at the end of the day. In this business, it is ‘the chicken and the egg’ situation, because you don’t know what comes first: getting the customers and then getting the rider, or getting the drivers and then getting the customers. So what we have tailored is the network dominance; getting the supply and demand at the same time. We have a system of tokens, whereby drivers earn more tokens the more miles they go, and customers get tokens are they refer to people; this is how you earn tokens - which we call Red Sea Tokens - in this community.
But how are drivers getting rides without customers?
The existing business model is that when you use the app you get guarantees - a specific amount of money that you take just for opening the app. For the driver, as long as you're using the app, you are actually generating tokens. And for the customers, as long as you are referring people, you are getting tokens - which are like bonuses or points. So you're filling in your wallet once you refer people, and as more people get into the network and grow the community, you're getting more money. In the case of drivers, the more you use the app and the more you use more miles, the more you get money. What we have created is the community creates the supply and demand, because it's a peer-to-peer transportation solution. We have decided to create the platform for people to create community and then monetise from the data.