InDrive, a Siberia-born ride-hailing service, is doing something special. It has cut its margins, offers its passengers the cheapest prices possible and is generous to its largely freelance staff. It enters a new market, and favours some of the poorest and most underdeveloped in the world and spends next to nothing on marketing. It has exited Russia and over the last two decades expanded into 48 countries where it is slowly overtaking the incumbents to become the market leader based on little more than word of mouth recommendations.

At the root of this success are the founders are not concerned with maximising profits; they want to maximise “fairness”. The business model is not to undercut the competition by offering a better service for less, but that is one of the side effects of focusing on the well-being and value for money of both the customer and the drivers and damn the bottom line, as long it generates enough to run the company and allow it to grow.

With the world gripped by the accelerating Climate Crisis, as bne IntelliNews has reported, the likes of the United Nations’ Intergovernmental Panel on Climate Change (IPCC) and academics everywhere have called for the old “infinite growth” models that came in with Adam Smith over 100 years ago to be abandoned and replaced with a sustainable economic model. InDrive’s approach to business is a rare example of a business that could show this sustainable economic model exists.

“Our goal is to positively impact over 1bn people’s lives by 2030,” CEO Mark Loughran told bne IntelliNews in Cairo in mid-April on the sidelines of the Aurora Tech Awards, a competition to promote start-ups founded and run by women from emerging markets around the world.

InDrive CEO Mark Loughran told bne IntelliNews that the company is pioneering a new way of doing business that it hopes will have a positive impact on over a billion lives by 2030, during its event in Cairo. 

New Year’s Eve in Yakutia

It all started on a freezing cold New Year’s Eve in Yakutsk in the Sakha Republic in 2012, in the heart of Russia. Yakutia is not just Russia-cold. It is the coldest place on earth.

New Year’s Eve is the big party night in Russia; because they use the Georgian calendar, Christmas falls on January 7 and even then, it’s the lesser of the Orthodox Christian religious festivals to Easter. New Year’s Eve if the one with the parties, enormous family meals, decorated pine trees (yolka) and the present giving.

Except in Yakutia on New Year’s Eve the local taxi companies triple their fares and gouge the party-goes on their way home. As it regularly gets to -50C walking home is not an option. Outraged by the opportunistic high prices, InDrive’s founder, ethnic Yakut Arsen Tomsky, saw an opportunity in a messaging group that sprang up in response to price gouging. It connected punters to drivers willing to take you home for a reasonable price. The key feature was that punters can negotiate with the driver on the price and agree something reasonable. The group was a smash hit and from it, the ride-hailing service InDrive was born.

The company has come a long way since then. If you live in London or New York, you probably don’t have InDrive as a go-to app on your phone. You might not even recognise its green logo, even though InDrive has remained the world’s second-most downloaded ride-hailing app for three consecutive years – it was downloaded over 6.1mn times last December alone. That’s because InDrive, launched over a decade ago, quickly expanded to 888 cities in 48 countries, operating primarily across emerging markets – and the more emerging the better it does.

InDrive does best in places where customers are price conscious and getting an acceptable deal is important. InDrive originally quickly spread through Russia but, like Magnit, Russia’s phenomenally successful discount supermarket, largely avoided the megalopolises such as Moscow and St Petersburg, focusing on regional cities to begin with. When it later launched in Kazakhstan it was an overnight success.

The company has stuck to its “fair price, freedom of choice” philosophy from its early days which remains at the core of its business model. The strategy of its main rivals like Uber and Yandex-taxi has been to subsidise fares and win market share, then slowly hike the tariffs, which their apps control. The InDrive app also suggests a fair price when you give a destination, but then you have the option of reducing the price and waiting for the drivers to accept or give a counter offer. Usually, that means a lower price, but if you are in rush and don’t want to wait long, you can also offer a slightly higher price and jump the queue.

Drivers also have a choice. They can choose to accept a lower fee if they have nothing else to do, or if the route is on their way home. They can also choose to refuse completely if they don’t like that part of town or simply want to stay close to home. As InDrive specialises in underdeveloped emerging markets like Mexico, Peru and Colombia, the ability to give drivers freedom of choice on which part of town to go to can play a significant role.

“I was in Colombia and one of our drivers told me she would never pick up a fare from two hotels in particular, or the train station,” Loughran says, who was hired in 2024 and formerly was a senior executive at Microsoft, Nokia, Honeywell and other major multinationals working across Europe, Latin America and Asia. “She said it simply was not safe.”

This flexibility also suits drivers who don’t have to work full time or to any fixed hours at all. Loughran related another story of a pair of drivers, a couple, that shared the duty of looking after an aged parent and split the work but never drove far from home in case they were needed. Other drivers that tend to drive a particular route to work and back can use the service to earn a little extra by taking passengers going in the same direction.

Move to Mexico

InDrive exited Russia after the 2022 invasion of Ukraine and established a major operational headquarters in Kazakhstan, while many senior managers have relocated to Cyprus, which serves as the second hub of operations. There are also large regional offices in Mexico, Colombia, Brazil, Malaysia, Egypt, India, Pakistan and Indonesia, which are important growth markets.

The obvious thing to do after Russia was expand in the so-called near abroad of the other Former Soviet Union (FSU) countries, but Tomsky took the much more radical choice of setting up in Mexico.

“Tomsky decided to go straight to Mexico,” says Loughran. “That is the sign of a true entrepreneur. Mexico is a huge market with some of the largest cities on earth. And with relatively low incomes as an undeveloped market, is it perfect for our fair-deal business model. I don’t think the guys that were sent there to set the business up were even sure where it was exactly, but today we are the market leader in most of the big cities.”

The company quickly expanded again to Colombia and Peru, where it is also now the market leader, according to Loughran. "This is entrepreneurship. Mexico is a huge market, and the InDrive service was ideally adapted to it. This was about seeing where the opportunity lay and acting on that."

Pakistan is a similar story and another a fast-growing market in Asia, where InDrive is already the number one ride-hailing service in the main cities. But while InDrive has launched in what appears to the be the intuitively local choice of India, growth is going slower there as the competition is more developed and the company says it is still getting to know the market.

"The Pakistan market is an important one, and we are the market leader there. Pakistan has a population of 200mn people, but only a relatively narrow section of society – the emerging middle class – can afford taxis. This is true for a lot of the markets we are in. However, there should be a new term for 'emerging markets' as they are growing very fast and catching up with the rest of the world. Our business is a direct beneficiary of that process," says Loughran.

It seems the company does best in emerging markets at an early stage of their catch-up growth where the customers are extremely price sensitive.

Loughran explains that the low fares that result from price-bidding make the service affordable to even the poorest, and that although an InDrive taxi is more expensive than a bus in Pakistan, if you share the ride with some friends then the amount each passenger pays can compete with the cost of public transport.

Already famous in several Latin American countries, InDrive launched in the US, in Miami, where there is a large Latin American community that was already familiar with the service. It quickly grabbed a large market share. However, the company pulled out of Miami in March because of a dramatic surge in insurance prices, which have more than doubled since InDrive first launched in the United States in 2023. Insurance costs have become the dominant expense in InDrive’s operational fees, making it impossible to sustain local operations without significantly raising driver and passenger charges, according to Loughran.

Fair business model

Arsen wrote a book titled “Inner Drive: The Underdog Global Impact Company,” where he laid out his "fair business" model philosophy.

The fairness concept extends beyond running the ride-hailing business to impacting society in general. InDrive has also invested in the arts and sports, backed impactful movies and documentaries, and funded the recent Aurora Tech Awards, which support and promote tech start-ups founded and run by women in emerging markets.

One of the other unusual aspects of the business is sharing the money with the drivers. Incumbent taxi services typically take 25%-40% of the fare as their commission and also payments are made to the company and then eventually returned to the driver from the corporate bank accounts.

In contrast, InDrive only charges 10% commission and the driver gets to take home more of what he or she earns at the end of each day via direct payments to a digital wallet.

"Yes, giving the driver a larger slice reduces our profit margin and means we have to run a leaner company, but it’s important to not only offer customers fair prices, but to be fair to drivers too," says Loughran.

What the company loses on margins it makes up for with volume, but at the end of the day the owners don’t only care about maximising profits; they are mainly interested in making the platform work, generating enough capital so they can keep growing the business. And that breeds loyalty – both amongst the customers and the drivers.

"Drivers are given choices. They can choose their own hours and routes. For some, it's important to be able to refuse certain destinations,” says Loughran. "We rely on word of mouth. Drivers enjoy working for us part-time or picking up passengers along their daily routes. They love being paid directly by the customer – it removes banking fees and avoids the 30% commission our competitors charge," says Mark.

inDrive.Money

Loughran relates that at one point the company noticed that some of its best and most loyal drivers sometimes just disappeared and stopped work. Curious, the executives wondered why and began to call them up to ask what had gone wrong.

It turned out that some drivers had suffered from some disaster, like an accident or something as simple as a worn-out exhaust pipe. The problem was the $300 needed to replace the pipe was beyond the means of these low-income worker, so they had to stop driving. As they were effectively working freelance, without a contracted salary or were gigging as courier drivers, they could not get a credit from a bank and fell into limbo. The only alternative was to go to the “unregulated” lenders who charge usurious rates.

In response the company set up inDrive.Money – a product that has been especially popular among drivers. Drivers don’t have salaries, but inDrive has a ton of data on their work routine, average incomes and reliability. The team hooked up with licensed financial institutions, who could use this data for credit scoring and offer loans to the drivers.

“We were able to extend drivers loans, helping them to create credit histories and ensuring that the size of the loan they get corresponds to their actual earnings,” says Loughran. “And on top of that, drivers are given the option to either pay the loan off after some agreed time, say four months, or repay the loan bit by bit via payments deducted automatically from their fares via the app.”

The offering has been a huge success. Loughran retells a conversation with a driver in Colombia, who called it “practical” and a lifeline. One of the most common uses for the loan is to pay for emergency car repairs. However, loans have also been used by drivers in various locations to pay for better private schools for their children’s education, where the father pays off the extra school fees by driving an extra hour or two each day. "It’s been a game changer for parents, giving lower-income families access to higher quality education that helps them move up the social ladder,” Loughran said.

Investment plans

The company has largely grown by reinvesting retained earnings. Loughran says it has raised a few hundred million dollars from US funds Bond General Capital and Insight Partners – but compared to other ride-hailing giants, this is a modest amount.

And the business became EBITDA positive last year. “Our budget for the next three years, including cashflow, is fully funded for the next three years,” says Loughran.

While InDrive says it is always reviewing different funding options to see what’s best for the company at any given time, its reliance on word-of-mouth marketing and the slow-build approach to opening new markets means the management is not under much pressure.

Chief impact officer Egor Fedorov, one of the company’s original employees who is also from Yakutia, told bne IntelliNews in Cairo: “Yes of course an eventual IPO is a possibility. It’s one of many options on the table that we will take if it makes sense at the time. But in the meantime, we will continue to grow and roll out in new markets with what we have. It’s already been more than 20 years and we are still growing!”