Phanindra Sama's vision for redBus was to introduce efficiency and method into the unorganised bus travel sector. Seven years on, the show is well on the road
Award: Outstanding Startup
Phanindra Sama
Co-founder and CEO, redBus
Age: 32
Interests outside of work: Photography, though he claims he gets lesser and lesser time to practice it.
Why he won this award:
For bringing efficiency and predictability to the unorganised and unreliable bus travel sector. RedBus has now made it easier for new bus operators to start even without an office for support.
It is 7.45 pm on a Friday evening in Bangalore. Advertising professional Aditi is wrapping up for the day at the office when she gets a phone call. A friend has just been promoted and there is a party she has to attend. The location: Chennai.
Aditi isn’t ruffled. By 9.45 pm, she has her duffel bag packed and is consulting a bus booking app on her smartphone. Based on her travel history, the app asks if she is interested in a weekend trip to Chennai. She replies in the affirmative and is shown a live ticker of luxury buses departing within a 5 km radius from where she is, all in the next hour. She identifies a favourite operator and is directed to its current position on a map. Fortuitously, it has seven unoccupied seats and will be crossing a traffic signal just a few hundred metres from her house.
Fifteen minutes later, Aditi is in a seat automatically assigned to her by the app, based on her previous preferences. The ticket has been charged to her account. Early next morning, she is in Chennai. As she leaves the bus, the app on her phone gently buzzes and asks if she would like to return to Bangalore the next evening, with the same operator and seat.
This scenario may sound somewhat futuristic to some but, for Phanindra Sama, 32, co-founder and CEO of redBus, the future is already here. Sure, less than 5 percent of the Rs 15,000-crore market for domestic bus travel has taken to the internet, but those that have, says Sama, are pushing the boundaries. And as an acknowledgment of the potential of the industry, the Ibibo Group, a joint venture between South Africa’s Naspers and China’s Tencent, acquired redBus at a reported valuation of $140 million (Sama refused to comment on the size of the transaction) in June this year.
“We decided to sell because many factors came together,” says Sama. “I and Charan [Padmaraju, BITS classmate and redBus co-founder] had devoted most of our working lives to redBus, and there came a point when we realised that our parents weren’t getting any younger and our families were missing us. When we got a really good offer from Ibibo—and remember, an exit was always a question of ‘when’ not ‘if’ due to our prior venture capital investments—we decided to take it.” He adds that Naspers, one of Ibibo’s parent investors, is a great long-term backer. “Most importantly, they are running redBus as an independent company instead of merging it with another,” says Sama.
Nonetheless, a $100-million-plus exit is significant for the Indian startup space. It is also a validation of redBus’s competitive advantage that it is getting it in a sector long considered low-value.
This is a sign of things to come, points out Sama. “Bus operators are migrating to the next level of technology. For long, many had used technology only to improve distribution; they are now installing GPS trackers on their buses in order to monitor arrivals and departures down to the minute. They know consumers value accuracy and punctuality,” he says. “On the redBus mobile app, users can see the live locations of these buses.”
Instead of depending on hunches or expensive trial-and-error, several operators use aggregated customer search data from redBus to identify newer routes. “Operators who were earlier busy managing broken-down buses, garages, drivers and grease, are now relying on technology,” says Sama. Over the next few years, technology will become even more central to the bus travel sector, he adds. “Customers will be able to hop on to a bus on frequent routes, without having to book in advance. Operators can use precise GPS data to modify driving patterns, thereby increasing both safety as well as fuel efficiency. This, in turn, will incentivise good drivers,” he points out.
Shaping An Industry
Ashish Kashyap, CEO, Ibibo Group, also talks about Sama’s policy of empowerment. “Most entrepreneurs I have met are wary of giving up control but Phani is exactly the opposite. He has gone and empowered people across levels, which means the company is now about more than the entrepreneurs who founded it. It is an institution and platform for the entire industry,” says Kashyap.
(This story appears in the 01 November, 2013 issue of Forbes India. To visit our Archives, click here.)