Why Uber’s One-Size-Fits All Approach Didn’t Work in Spain

Walking through Madrid’s Puerta del Sol, the crossroads of the city and Spain, plenty of city taxi cabs line the square’s side streets while ride-share giant Uber remains absent.

Following its ban in Spain in December, Uber faces a list of complaints and regulatory actions across Europe where new ride-sharing apps continuing flooding the transportation ecosystem. On the other hand, Uber operates in numerous cities in the UK, Italy, Switzerland and Ireland, for example.

Many Spanish taxi drivers vehemently oppose Uber but are somewhat more accepting  toward other ride-share startups that have a “legal model” such as mytaxi and Hailo. These mobile ride-share apps, both popular in Spain and elsewhere in Europe, connect travelers with official city taxis that have Spanish taxi licenses.

Cabify, also popular in Spain, connects travelers with drivers using their own cars with private driver licenses. Uber used its own cars without its drivers having Spanish taxi licenses, which led to its ban.

As the Spanish taxi lobby advocates for maintaining Uber’s ban because it creates a disadvantageous climate for them, some drivers believe there are already too many authorized taxis in the country. Skift recently spoke to Jaime Novoa, founder of the Madrid-based Spanish startup blog Novobrief, one of the largest English language publications covering the Spanish startup ecosystem.

Novoa discussed his views about Uber’s future in Europe, its entrance into the logistics industry and other issues.

An edited copy of the interview follows:

Skift: What’s your take on the Uber ban in Spain, which is similar to what happened in other EU countries like Germany during the past year. Do you think this was the right move for Spain?

Jaime Novoa: UberPop was really popular in cities like Madrid and Barcelona. It’s the low-cost version of UberX in the U.S. and allows any person with very few background-checks to drive people around the city in their own cars without a taxi license and also lets people split the fare with multiple passengers. This model is illegal in Spain and many European countries.

When people say the government should have made things easier for people in Spain and other taxi services, I don’t think Uber would have created as much noise as it did if it went the legal way. It knew it would be shut down sooner or later. UberPop was a big publicity boost in Spain.

The Spanish government, based on pressure from the taxi lobby, demanded that Spanish Internet Service Providers block Uber.com, which is similar to what happened in Turkey with YouTube recently. Now the Uber desktop and mobile sites are blocked in Spain, which has its own ethical implications.

For example, I’m planning a trip to New York next month and I couldn’t load the page to find out how much my trip from JFK Airport to my hotel will cost. But I live in Madrid and I’m still able to view and download the Uber app.

Skift: What kind of solution do you think the Spanish taxi driver lobby is looking for?

Novoa: I honestly don’t believe they know what the solution is themselves. There have been reports that Uber will be approved again in Spain because it’ll start making its drivers get taxi licenses. Personally, I don’t know what the solution is and I wish there was a free market for these transportation apps but the taxi drivers don’t want that.

One of the things that taxi drivers in Spain complain about the most is that there are too many of their own taxis on the road and not enough business for all of them to survive. Right now there are about 16,000 taxis in Madrid and the taxi drivers say there should be 4,000 fewer taxis in the city.

Skift: Do you personally miss Uber and from what you’ve heard in Madrid do you think it’s been missed? Who are Uber’s main competitors in Spain?

Novoa: I miss the competition and I think Uber would have pushed the prices down. I remember when Uber was active in Spain that most of its clients were people coming from the U.S. or elsewhere that used Uber in their home countries and wanted to use it in Spain. On the whole, I don’t think people are missing Uber in the big cities in Spain.

Hailo is really big now in Spain and so is mytaxi, they both have at least 4,000 drivers in the country and are only in big cities.

I think Uber makes much more sense in cities like San Francisco or Los Angeles where the public transportation system is based on driving. But I think a lot of people in Madrid and Barcelona have forgotten about Uber, to be honest, since we already have great public transportation with our metros in both major cities.

Skift: Earlier this month EU regulators said they’re trying to decide whether Uber is a transportation or tech company. What are your thoughts on this apparent debate?

Novoa: Uber’s always branded itself as the intersection of lifestyle and convenience. Right now they’re a transportation service and they should be regulated as such. I think it could enter the logistics space, such as things like food and product delivery, and that’s already happening in Barcelona where people seem very happy with UberEats. The logistics industry in Spain hasn’t changed in many years and Uber seems to be doing better than how traditional delivery services have done things.

Skift: Where do you see the most opportunity for Uber and other ride-share startups in Spain and Europe? Is the the logistics industry you mentioned?

Novoa: With UberEats, Uber is trying to apply the PostMates model, which is a U.S. company in the logistics and delivery space letting users ship any item within a city for same-day delivery. I hope Uber or someone else comes into Spain and continues building the logistics space.

BlaBlaCar is another big player in this space in Europe which is like RelayRides in the U.S. BlaBla lets you share your car with other people going to the same place as you, and its drivers are saying this isn’t illegal and that they’re just covering costs of the trip.

I know a lot of people who have done this in Spain and enjoy it. I think this works better in Europe because distances are shorter and I think both BlaBlaCar and Uber are very different. One is more social and one is all about taking you from A to B in a few minutes.

Skift: What about Uber’s massive $41 billion valuation? Do you think that number is fair?

Novoa: I’m not sure if that’s a fair valuation. It’s such a young company and they’re making a ton of cash and it was very rare to see a startup earn $2 billion when they were only two years old a few years ago. But how they did it was an issue, and they didn’t go about it ethically. I think a lot of people are paying too much attention to the valuation and not enough to how the company is actually doing and their business model because this is easy to do.

Skift: What’s one lesson ride-share startups, or all travel startups for that matter, can learn from Uber’s path so far?

Novoa: The way Uber’s grown and the pace in which they’ve done it is incredible. But that aggressiveness starts to catch up with you eventually. They very quickly tried to replicate in Europe what they did in the U.S. and that didn’t work out so well and now they’re trying to adapt their model to better fit Europe. They didn’t consider this carefully enough initially and now this is of course their big focus. So you may need to change your strategy and model depending on what country or region you want to operate in.