Can This Siberian Entrepreneur Make You Haggle for Your Ride?
WHY YOU SHOULD CARE
Arsen Tomsky believes he’s created a ride-hailing app for freedom-loving folks.
By Dan Peleschuk
A young Egor Fedorov was stunned when he walked into his first interview around a decade ago with his future boss — a big-thinking Siberian whose innovative ride-hailing app, inDriver, is quickly gaining popularity despite its roots deep in Russia’s hinterland. Prepared for the usual range of boilerplate questions (Where did you study? How much experience do you have?), Fedorov, 33, now the company’s chief marketing officer, realized he was in for something entirely different.
“Practically as I walked through the door,” Fedorov recalls, inDriver founder Arsen Tomsky asked: “What do you want to achieve in life?” Tomsky threw another curveball when he asked Fedorov to name the capital of Argentina (Fedorov answered correctly: Buenos Aires).
That’s how the 45-year-old programmer-turned-tech entrepreneur runs his business: human-oriented and globally minded. Launched in 2012 in the far eastern city of Yakutsk, Tomsky’s ride-sharing app has since attracted some 20 million users across a dozen countries. The secret? It empowers both rider and driver by offering them peer-to-peer communication to directly negotiate a price. And it’s all built around a simple principle Tomsky holds dear: “We need to acknowledge that for many people,” he says, “freedom is a key value.”
I’m convinced that Arsen Tomsky is Yakutia’s Elon Musk.
Ilya Korolev, portfolio manager, Internet Initiatives Development Fund
An appreciation of freedom has long been embedded in snowbound Siberia, which was settled centuries ago by enterprising frontiersmen and myriad ethnic groups like the Sakha, of which Tomsky is a member. With a population just shy of 300,000, Yakutsk is regularly dubbed the coldest major city in the world. It’s not exactly a hub for innovation. Resource extraction, particularly of diamonds, remains the lifeblood of the economy.
But that grim environment actually helped spawn inDriver. During one fateful cold snap, when local taxi drivers doubled their prices, social media users scrambled to launch an online group through which they could organize rides on their own terms. Within months, it attracted 50,000 members. Noticing its breakout success, Tomsky purchased the group through his regional IT conglomerate, Sinet, and developed it into a fully functional app.
He was well-prepared for that moment. A natural-born programmer and early devotee of the internet, Tomsky was first turned on to computers when he was given a remote-controlled car at age 9. “I began to realize that there’s a realm in which you can control everything on your own,” says Tomsky, whose student years were marked by victories in local tech competitions. But the Russian economic crash of the late 1990s forced him to switch from writing software for financial institutions to figuring out how to monetize the internet, leading him to found Sinet in 1999. Its flagship site, Ykt.Ru, has become a go-to resource for news, classifieds and more in the Yakutia region (of which Yakutsk is the capital).
Similarly, inDriver was developed with an eye toward connecting residents in the far-flung region while also building a business model that could succeed far beyond Russia’s borders. Skirting algorithms and the much-maligned surge pricing they bring with apps like Uber, inDriver allows riders to haggle the best bang for their buck. Riders propose their fare, and then drivers can negotiate. Drivers, for their part, are given a full preview of the routes and are charged only 5 to 8 percent in commission. (Uber charges drivers 25 percent.)
Calculating and financially disciplined, Tomsky refused outside investment until 2017, when inDriver was ready to break into Moscow and St. Petersburg, maintaining that it’s more important to train a strong, enthusiastic team and remain profitable than to attract massive injections of cash. (Another departure from competitors like Uber.) “Sometimes I hear that it’s better to have 10 percent of a company that’s worth $1 billion than 50 percent of one that’s worth $1 million,” he says. “Well, personally, I believe it’s better to have 80 percent of a company that’s worth $1 billion.”
Today, inDriver is operational in more than 200 cities in 20 countries, with a major foothold in Russia and Central Asia, as well as Latin America. Its priority is to elbow in on markets underserved by giants like Uber — which boasts 100 million worldwide users, to inDriver’s 14 million. Still, Tomsky dreams big: In December, his service launched in New York City, where half the company leadership is now based. InDriver reports that across the globe in the fourth quarter of 2018 it logged one-fifth of the rides of big-timer Lyft — which was valued around $30 billion in its U.S. initial public offering last week.
Analysts believe inDriver’s transparent and market-friendly approach — it’s already one of Russia’s top ride-hailing apps — can easily face down competitors abroad. What’s more, says Ilya Korolev, a portfolio manager at the Moscow-based Internet Initiatives Development Fund, Tomsky’s talent for creativity and innovation can take inDriver a long way. “I’m convinced that Arsen Tomsky is Yakutia’s Elon Musk,” he says. That comparison was only reinforced during our interview, when after waxing poetic about his company’s success, Tomsky admitted that he’s alarmed about the potential dangers posed by artificial intelligence.
The road ahead is hardly smooth. While it may be competitive in foreign markets, times aren’t exactly ideal in inDriver’s native Russia, where economic growth remains stunted by the country’s less-than-open political and business climate. It’s a concern Tomsky himself has expressed. Then there’s the haggling itself: While it’s long been standard in unlicensed cabs across the former Soviet Union, the practice is less common in the West. If riders are in a rush — think New York City, pretty much at any time of day — will they really be in the mood to barter?
Still, Tomsky is optimistic about his innovation. Because in a way, he’s already made his point. “We’ve proven to everyone that it’s possible to create a major international story from a small Siberian city,” he says, “based solely on intellect, talent and motivation.”
Read more: Asian ride-sharing apps speed up to cut men out of the equation.
- Dan Peleschuk, OZY Author Contact Dan Peleschuk