Last week, Lithuanian Parliament has legally formalized ridesharing. It took Lithuanian government less than a year from companies such as Uber and Taxify started offering its innovative services.

Startup Lithuania has asked Jevgeni Beloussov, Taxify’s Expansion Manager, does this step represent a global trend of governments becoming more flexible with innovative business models being taken into account faster.

Jevgeni: We believe this is an important step forward and governments in Baltic sea region have been most open and innovative to consider ridesharing legislation. Additionally, Estonia, Latvia, Finland and Denmark have submitted taxi regulation changes to Parliament discussions. But it’s not yet a wider trend in older European countries. We expect more governments willing to learn all the pros and cons of this change from the experience of the first-movers, but it is hard to say whether everyone would want to adopt these changes and disrupt existing status-quo.

Clearly, laws are lagging behind innovation and we believe that governments need to be forward-looking and notice opportunities in a timely manner, while startups have to be proactive to help governments spot these opportunities. Interestingly, we were expecting Estonia to be ahead of other countries in Europe in regulating ride-sharing, but now apparently Lithuania is taking the lead.

How challenging it is for startups to operate in inflexible legal environments?

Jevgeni: Given the competitive pressure, sometimes it is better to ask for forgiveness than wait for permission, meaning acting in a gray area and let the service grow while getting relevant arrangements done on the regulative level in parallel. We all know that lawmaking is a complicated and time-consuming process. For us, time is everything – if we don’t act fast, someone will take our spot. Challenging inflexible legal environments requires courage and can often be followed with sanctions (legal or monetary), which should be treated as operational costs.

How should startups overcome these challenges? How could startups help governments to make legislation better suited for innovation whilst still defending public interest?

Jevgeni: No one knows the business better than the leading providers of each market. It is important for operating startups to be proactive and present showcases to the regulators and help them identify the problem and propose ways to address it. Estonian startup ecosystem is famous for being effective in organizing panel discussions both with market participants and government officials – helping all parties to find and agree on common grounds.

Specifically, Taxify has been very active in talks with municipalities and ministries across different countries to push through the idea that ride-sharing brings great benefits to the society:

• Lower barrier to entry means more competition and better service for customers.

• Historically government needed to guarantee good service, but licensing doesn’t work well – still scammers and poor quality in transportation industry. Technology companies with transparent ratings can offer much better services.

• Reduces traffic jams, as people can use technology to share rides and use less individual cars.

Taxify has been now working with private drivers for over a year and is clearly a market leader and first mover in the Baltics. In Europe, Taxify is number one competitor to Uber and we are actively promoting ride-sharing as new innovative business model. We now work with hundreds of private drivers in Vilnius, who are willing to meet new people and earn some extra money. Our customers like private drivers because we have very strict quality standards for drivers and cars, plus affordable tariffs. Average feedback rating of ridesharing (private) drivers is also higher compared to licensed taxis.

Thanks for your time, Jevgeni, and good look in your future endeavours! By the way, Taxify’s co-founders gave an interview to Verslo žinios, the main Lithuanian business daily earlier this week where they discuss their expansion plans in and beyond Lithuania and discusses some lessons that could be learnt from the Estonian startup ecosystem.