Rixi: The Altruistic Transporter or the new Capitalistic Platform?

On: September 19, 2016
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The digital landscape in Pakistan, is currently progressing and has had quite an impact on the transport industry. With public transport previously being unreliable at best, and Uber and its competitors entering the arena, the stage is all set for a much-needed revival.

One such local ‘rival’ is Rixi, a recent start-up that digitizes the process of hailing a rikshaw, the locally used three-wheeler. Rixi works by connecting commuters to rikshaw drivers by “polling drivers’ locations using cellphone towers and matching passengers’ messaged locations to points on Google Maps” (Reuters).

Though the service relies on older technologies, such as SMS based services available on feature phones rather than smartphones, the founder Adnan Khawaja defended the choice, stating “If you look at … Uber’s operational model, they will be depending on the smartphones…In countries like Pakistan, India, Bangladesh, that population is […] growing, but it’s still smaller compared to the vast market” (Reuters).

Indeed with mobile phone subscriptions being above 130 million in Pakistan, but data (3G/4G) subscribers being around 32 million (Pakistan Telecommunication Authority) there does seem to be potential for a simpler ‘SMS based application’ especially with a general lack of literacy among rikshaw drivers. Currently however Rixi works with around 1000 rikshaw drivers, which is only a small fraction of the 80,000 registered rikshaws on the roads of Lahore.

While Rixi has been hailed in many circles for its ‘social innovation’ having won for example the Fulbright Social Innovation Challenge, and though it arguably makes the process of obtaining a ride/or getting a customer less cumbersome, it remains to be considered whether this serves as another poster for the ‘sharing economy’, or would face critiques similar to those that Uber and similar apps face, for example that of the rise of platform capitalism.

Platform Capitalism or Sharing Economy?

A German technology blogger, Sacha Lobo argued “What is called sharing economy, is merely one aspect of a more general development, i.e., a new quality of the digital economy: platform capitalism” (qtd. in Olma 2014).

While that connection is looked at as inherently positive, in fostering new networks and expanding markets, the issue is that “In platform capitalism: many of the old middlemen and retailers disappear but only to be replaced by much more powerful gatekeepers” (Olma). In the case of Rixi it may be argued that the elimination of middlemen in the transport industry is not necessarily negative, as in many cases they hold a localized cartel position and the rikshaw drivers are thus usually at a disadvantage.

Another major critique of the “gig economy” as well as the bidding model in these apps and services is that it exerts a downward pressure on wages; Guy Standing a labor economist calls workers in such a model the “precariat”, “a new class of laborer, dependent on precarious work and wages” (New York Times). Nevertheless, in response to such a critique, one could look at the current state of the transport industry in Pakistan, especially surrounding rikshaw drivers who generally cannot rely on a steady source of clients or income. Social security nets are negligible, if they exist at all. In an interview with a local newspaper, one of the rikshaw drivers working with Rixi said, “This could be a useful service for us. The number of rickshaws in Lahore is increasing and each day we waste more than 60% of our time on roads waiting for commuters. This is appealing. At least we are guaranteed three commuters per day and without much negotiations” (Haq).

Moreover Uber and Lyft have been critiqued for having profit maximization as their ultimate goal, posing that they would “invariably favor efficiency over social impact, output over outcome” (Dreher). While this critique has value in its own right, and while Rixi emphasizes efficiency, it charges 8% per transaction a month, and relies heavily on outdoor advertising on its rikshaws to aid in revenue. In the long-run however, what steps would be taken to make the business model sustainable remains to be seen.

However, if not an example of platform capitalism, does Rixi then embody the essence of the ‘Sharing Economy’? While it does not feature online transactions or ‘peer-to-peer exchanges’, it does use information technology to “provide individuals with information that enables the optimization of resources” (Hamari, Sjöklint and Ukkonen).

In a publication on the ‘Rise of the Sharing Economy’ in the Indian landscape, the benefits of the sharing economy are emphasized, much of which resonates with the case of Rixi:

“The benefits of the sharing economy are manifold – including on-demand access to goods and services, efficient utilization of unused inventory of assets across industries, leading to a multiplier effect such as increased employment, consumerism, digital literacy and the rise of micro-entrepreneurship” (Ernst & Young LLP).

In an interview with the BBC, Arun Sundararajan, Professor of Information at NYU Stern School of Business, who has written extensively on the sharing economy, said that in a global context the sharing economy, especially similar platforms are quite effective, especially if there is an increase in transparency and quality (Sundararajan).

The program also included the founder of Rixi, Adnan Khawaja who spoke about Rixi and what it does. Arun Sundararajan’s response is paramount:

“With the rikshaw drivers in Pakistan… we’re more efficiently getting people who need work to people who want that supply. So overall what it is doing is growing the pie. In the short run it might disadvantage people who were getting advantage of the inefficiencies of the system, but in general it is quite a positive trend and certainly an equalizing trend where the benefits are not going to be realized by the richest 1% but by the people that lie below median income” (Sundararajan).

Works Cited

Dreher, Julia. “Sustaining Hierarchy – Uber isn’t sharing.” ResearchGate (2015): 4. Article pdf.

Ernst & Young LLP. The rise of the sharing economy: The Indian Landscape. Corporate Publication. Kolkata: Nasscom Productive Conclave, EY, 2015. Document.

Hamari, Juho, Mimmi Sjöklint and Antti Ukkonen. “The Sharing Economy: Why People Participate in Collaborative Consumption.” ResearchGate (2016): 2047-2059. Document pdf.

Haq, Shahram. The Express Tribune. 19 November 2015. News Website. 16 September 2016. <http://tribune.com.pk/story/994228/tapping-growing-market-hunting-for-passengers-made-easy/>.

New York Times. In the Sharing Economy, Workers Find Both Freedom and Uncertainty. 16 August 2014. News Website. 16 September 2014. <http://www.nytimes.com/2014/08/17/technology/in-the-sharing-economy-workers-find-both-freedom-and-uncertainty.html?_r=2>.

Olma, Sebastian. Never Mind the Sharing Economy: Here’s Platform Capitalism. 16 October 2014. Blog. 16 September 2016. <http://networkcultures.org/mycreativity/2014/10/16/never-mind-the-sharing-economy-heres-platform-capitalism/>.

Pakistan Telecommunication Authority. Telecom Indicators. 2016. <http://www.pta.gov.pk/index.php?Itemid=599>.

Reuters. Uber’s upstart rival in Pakistan uses rickshaws, low-tech phones. 19 June 2016. <http://www.reuters.com/article/us-pakistan-transport-apps-idUSKCN0Z50XW>.

Sundararajan, Arun. In the Balance Manuela Saragosa. 12 October 2014. podcast.

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