Citymapper – London’s Uber?


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Last week Citymapper (one of the poster children of the UK’s OpenData movement) announced the launch of their CityMapper PASS card.

Citymapper started out with a travel app based on the early releases of transport open data by UK public providers, they then launched a hopper bus service for a short while and this morphed into their shared taxi service “Ride“. Along the way they raised an enormous amount of funding for a relatively small startup – according to Crunchbase they had a $10m Series A in 2014 and a $40m Series B in 2016 with some pretty serious investors coming on board. Now they have launched their PASS which potentially can save users upwards of £4 per week on the cost of an Oyster Card (London Transport’s contactless card). The Guardian explained the basic finances here

“While the pass will bring in revenue, it will also result in the company losing money, at least in the short term. Technically, it operates as a simple pre-paid debit card, with Citymapper paying TfL for each journey its users take until they hit the standard weekly price cap.
That means that every user who reaches the daily Tube price cap (£7.00 for zones one and two) at least five days in seven will result in Citymapper losing money on them that week. The company’s explicit plan to counter that loss is to expand the pass by bundling in ever more private offerings, where it has more power to negotiate prices, until it offers a bundle that covers everything from dockless bikes, through rental cars, to ridesharing services.”

https://www.theguardian.com/uk-news/2019/feb/27/citymapper-pass-launch-london-travel-card-with-cheaper-rate-than-tfl

If PASS is going to reach a critical mass (is that 10,000, 100,000 or more users?) they could be losing £15-20 per user per month at which point they will burn through their cash resources pretty quickly. The last accounts that Citymapper filed are for 2017 they show cash balances of £12.5m after an in year loss of £6.3m. It looks as if Citymapper will need another investment round to support an aggressive launch of PASS and the costs of acquiring users until they find ways to make the service profitable.

Does this matter? Just after the launch was announced JA Early said

Or as the Guardian concluded

“But the launch of the service has prompted concerns from some that the company’s end goal is to try and burn its funding to establish a large base of users that it can then wield in political battles with city authorities to gain better terms for itself. That model has brought success for companies like Uber and Airbnb, which have reshaped regulations around their needs in cities including San Francisco, New York and Paris.”

https://www.theguardian.com/uk-news/2019/feb/27/citymapper-pass-launch-london-travel-card-with-cheaper-rate-than-tfl

Time will tell whether this pivot will work for Citymapper and their backers, I’m doubtful whether there is enough demand for this all inclusive multimodal public transport payment system. Of course Uber have shown how you can disrupt a market by throwing enough investors’ money at undercutting existing players, whether that is good in the long term for users of these services remains to be seen.

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