Flywheel, the app that makes taxis act like Uber, is coming to New York City

Flywheel, a Bay Area-based e-hail app company, announced Thursday that its “TaxiOS” technology was approved by New York City regulators for use in the city’s iconic yellow taxis.

Flywheel offers two main products: an e-hail app for riders, and a smartphone-based operating system for taxi drivers that replaces the jumble of meters, dispatch, advertising, navigation systems, and credit card readers currently clogging the interior of the vehicle.

It’s an aggressive move by Flywheel into a space dominated for over a decade by just two companies, Verifone and Creative Mobile Technologies (CMT). And it’s a move the company hopes will eventually help the beleaguered taxi industry better compete with Uber by copying some of the ride-hail giant’s innovations. Flywheel says it hopes to have its smartphone meter in 1,000 cabs by the end of 2016, and to dominate all 13,000-plus yellow taxis by the end of 2017.

“We’re finally giving these guys... a weapon to fight back against Uber,” Oneal Bhambani, chief financial officer of Flywheel, told The Verge. “Now the drivers can operate with just a smartphone.”

But as a new entrant into New York City’s rough-and-tumble taxi world, Flywheel is picking questionable friends to ally itself with. In an industry notice, the startup listed a Long Island City address as its New York City headquarters that is also the location of Taxi Club Management Inc., a medallion group operated by controversial taxi mogul Evgeny “Gene” Freidman.

Freidman, a flamboyant figure in New York, is said to control upwards of 1,000 taxi medallions — those little tin shields affixed to the hood of taxi cabs that authorizes them to pick up street-hails. But thanks to Uber, Freidman’s empire has been crumbling. He’s filed bankruptcy on dozens of his companies, been threatened with foreclosure by the bank, and sued by the state attorney general for failing to pay his drivers properly.

Asked to describe their relationship to the taxi mogul, a spokesperson for Flywheel said the company is “working with Evgeny Freidman, in addition to other fleets to improve taxis in NYC.”

Asked whether Freidman’s legal or financial issues could effect Flywheel’s rollout, the spokesperson said, “If any taxi fleets have any issues as described in your latter question, the taxi medallions still continue to operate at the taxi fleet, or possibly at another fleet. Flywheel's roll-out is not leverage to any one fleet.” In other words, Freidman is a means to an end for Flywheel’s ambitions.

Which is not to say what Flywheel has accomplished isn’t significant. Most taxicabs in the US can buy meters and credit card systems from a number of different firms, but in New York, only two companies control the lucrative business: CMT, based in Long Island City, Queens; and Verifone, based in San Jose.

Each company takes a cut of every credit card payment that's made and earns revenue off advertising shown on taxi television screens — although that may be a thing of the past after the city’s Taxi and Limousine Commission recently approved a pilot to junk the screens. Both companies have introduced e-hail apps in the last year, and Verifone is currently testing out touchscreen tablets to replace the much-maligned Taxi TV, which it plans to roll out to customers in the coming weeks.

That proposal cleared the way for Flywheel to make its move. The company, which is primarily an e-hail service, currently operates in San Francisco, Los Angeles, Seattle, San Diego, Sacramento, and Portland. New York City, which is the country's largest taxi market, was the logical next step.

Bhambani, the Flywheel CFO, said he’s confident his company will be able to compete not only with Verifone and CMT, but eventually Uber as well.

“The secret sauce in this industry, make no mistake about it, is the app you give to the driver,” he said. “The consumer facing app needs to talk to the driver app. That’s where the magic happens. That’s how you get fast ETAs.”