Dark Side of OLA CABS | OLA Valuation SCAM Exposed? | OLA S1 Pro Fire and Blast| Business Case Study

Summary

The video narrates the rise and challenges of Ola, an Indian cab service startup, founded by Bhavesh Agarwal after a personal incident. It quickly became a market leader, revolutionizing intra-city travel with affordable pricing. However, internal issues, including top-level departures and financial mismanagement, led to a decline. The script explores Ola's struggle with profitability, its venture into new businesses, and the setbacks faced with the launch of its electric scooters, which caught fire, damaging its reputation. It concludes by questioning the company's future and whether it can regain trust and continue its growth.

Takeaways

• 🚗 The story of Ola's inception began with a personal experience of its founder, Bhavish Agarwal, who was abandoned by a cab driver, leading to the creation of a reliable cab service.
• 📈 Ola quickly became the market leader in India's cab service industry by making intra-city travel affordable and convenient, disrupting the market with a new customer experience.
• 💰 Despite rapid growth, Ola faced financial struggles, burning through 17453 crore rupees of investor money without achieving profitability, causing concern among investors.
• 🛑 The company's missteps included frequent cancellations of rides booked through the app and a failure to retain top-level management, which led to a loss of focus on its core business.
• 🚖 In 2016, Ola's business model was such that cab drivers were reportedly earning more than average software engineers, highlighting the unsustainable incentives offered to attract drivers.
• 🔥 The COVID-19 pandemic had a devastating impact on Ola, with lockdowns causing a complete loss of income for drivers and leading to many leaving the platform, never to return.
• 💔 The reduction in driver incentives post-pandemic resulted in a shortage of cabs, increased cancellations, and longer wait times for customers, damaging the brand's reputation.
• 🛠️ Ola's diversification into new businesses, such as Ola Foods, Ola Money, and Ola Electric, has been marked by failures and has not been successful in offsetting losses from the core cab business.
• 🛑 The valuation of startups like Ola is primarily driven by revenue growth rather than profits, and a stagnation or decline in revenue can significantly impact their ability to raise funds.
• 🔥 The launch of Ola Electric scooters was initially met with great enthusiasm, but quality issues and fires led to a loss of trust and a major setback for the company.
• 🔄 Bhavish Agarwal's determination to overcome challenges is highlighted by his journey from a helpless traveler to building a billion-dollar business, suggesting resilience and potential for a comeback.

Q & A

What was the initial motivation behind the creation of Ola Cabs?

The motivation to start Ola Cabs came from Bhavesh Agarwal's personal experience of being abandoned by a greedy cab driver on the road, which led him to establish a more reliable and satisfying cab service.

How did Ola disrupt the Indian cab service market?

Ola disrupted the market by making intra-city travel affordable and convenient for everyone, allowing people to book a cab at any time, even in the middle of the night, which was nearly impossible before Ola's existence.

What were the incentives Ola provided to attract cab drivers to join their platform?

Ola offered lucrative incentives such as a fixed amount for every ride booked, and additional bonuses for completing a certain number of rides in a day, which were so attractive that even professionals with high qualifications left their jobs to become Ola drivers.

How did the COVID-19 pandemic impact Ola's cab drivers and the company?

The pandemic led to a lockdown, causing the income of Ola cab drivers to drop to zero. Many drivers struggled financially, some were in debt, and unable to pay their car EMIs, leading to a mass exodus from Ola and a shortage of cabs, which increased fare surges.

Why did Ola stop providing the large incentives to cab drivers?

Ola stopped the large incentives to reduce losses within the company. However, this also removed the primary reason many drivers joined Ola, leading to a decrease in the number of drivers and an increase in cancellations of booked rides.

What were some of the new businesses Ola ventured into, and why did they do so?

Ola ventured into businesses like Ola Foods, Ola Money, Ola Cars, Ola Dash, and Ola Corporate. They did so to grow their revenue and increase their valuation to continue raising funds from investors, as their core cab business was struggling with profitability.

What was the initial response to Ola's electric scooter launch?

The initial response was highly positive, with many people pre-booking the scooters, and within 24 hours, Ola received more than 80,000 confirmed orders worth 600 crore rupees.

What issues did Ola face with their electric scooters, and how did it affect their reputation?

Ola faced quality issues with their electric scooters, including delays in delivery and numerous faults in the advertised features. Most damaging was when the scooters caught fire, which led to a loss of trust and belief in the brand.

What is the importance of revenue growth for a startup like Ola?

For a startup like Ola, revenue growth is crucial as it drives the company's valuation. If sales or revenues stop growing or start falling, it reduces the company's ability to raise more funds, affecting its survival and growth.

What is the potential future for Ola if they can fix the issues with their electric scooters?

If Ola can address the issues with their electric scooters and make them reliable, they have the potential to make a strong comeback. However, this will depend on customer willingness to trust the brand again and competition from established brands.

What is the role of the founder, Bhavesh Agarwal, in Ola's journey and challenges?

Bhavesh Agarwal is the driving force behind Ola, turning a personal negative experience into a billion-dollar business. However, he has also been accused of setting unrealistic deadlines and contributing to a toxic work culture, which has led to internal management issues and executive departures.