Phanindra Sama: The RedBus journey

Summary

The speaker recounts his accidental entrepreneurial journey, starting with a personal experience of not being able to secure a bus ticket, leading to the idea of a computerized system for bus inventory management. Despite initial challenges and advice against it, he and his friends developed a prototype, eventually pivoting to a consumer-facing website, RedBus, which aggregated bus operators' inventory and increased sales. The business model evolved from providing free software to charging for value-added services, leading to significant growth and computerization in the bus industry. The speaker reflects on the successful sale of the company, expressing no regrets and a positive outlook on life post-sale.

Takeaways

• 🚌 The founder's journey began with a personal experience of not being able to secure a bus ticket, which sparked the idea for a technological solution in the bus travel industry.
• 🛠️ Initially, the team aimed to create an open-source system to help bus operators manage their inventory more efficiently, but they later pivoted to a consumer-facing platform.
• 💡 The idea for a computer system to track live bus inventory came from the inefficiency of multiple travel agents being unable to provide a bus seat.
• 🔄 The team faced resistance from bus operators who were skeptical about adopting new technology, but they found a breakthrough with a younger, tech-savvy operator.
• 💻 The transition from an open-source idea to a product was driven by the realization that bus operators needed a value proposition that increased their sales, not just a computer system.
• 📈 The success of the consumer-facing website, RedBus, led to increased trust and adoption of the technology by bus operators, as it directly impacted their sales.
• 📞 A creative workaround for the lack of computerized bus operators was to manually call operators to check seat availability, simulating a live inventory system for consumers.
• 🎨 The software was made user-friendly for operators with varying levels of literacy by using color codes instead of written words.
• 📈 The company's growth was exponential, with a rapid increase in bus operators signing up for the system, far exceeding initial expectations.
• 💰 The business model was successful, with bus operators and travel agents paying for the software that facilitated ticket sales.
• 🏆 The founder expressed no regrets about selling the company, feeling content with the financial freedom and impact they had made on the industry.

Q & A

What was the initial spark that led to the creation of a technology solution for the bus travel industry?

The individual's inability to secure a bus ticket during a festival season despite multiple attempts at different travel agencies sparked the idea of a computer system that could track live bus inventory and streamline the booking process.

Why did the initial approach of creating an open-source system for bus operators not work out?

The initial approach did not work because the bus operators did not see the value in it. They were not convinced that the system would bring them any tangible benefits, such as increased sales.

How did the team initially validate the idea of a computer system for bus inventory?

The team went back to the travel agent to understand the process and validate the idea. They also visited various bus operators to learn about their workflows and needs.

What was the turning point that shifted the focus from an open-source system to a consumer-facing product?

The turning point was when the team realized that the bus operators were not interested in the software for its own sake, but rather for the sales it could generate. This led to the creation of the consumer-facing website, redbus.in.

How did the team manage to display real-time inventory on their website when the bus operators were not computerized?

The team used a manual process where every time a consumer requested a seat, they would call the bus operator to check the availability, creating the illusion of live inventory for the consumer.

What was the key insight that led to the success of the redbus.in website?

The key insight was that by making the bus inventory visible and easily bookable online, they could help bus operators sell more seats, which was their primary need.

How did the team overcome the challenge of scaling their manual process of checking seat availability?

As sales improved and bus operators gained trust in the system, the team gradually transitioned the operators to SMS-based and then computer-based systems, which increased efficiency and scalability.

What was the role of mentorship in the evolution of the business model?

Mentors helped the team realize that the bus operators were not purchasing the software due to a lack of perceived value, not because of cost or affordability issues, which led to a shift in the value proposition.

How did the team ensure that illiterate staff at bus operator companies could effectively use the computer system?

The team used color codes instead of words to indicate different statuses, allowing even illiterate staff to operate the system effectively.

What was the business model for providing the software to bus operators and travel agents?

The team initially offered the software for free and later started charging a fee once the bus operators saw the value in increased sales and were willing to pay for the service.

How did the sale of the company impact the founder's perspective on business and life?

The sale provided financial freedom and allowed the founder to focus on new perspectives and opportunities, emphasizing a 'glass half full' mentality and contentment with the outcome.

Outlines

00:00

🚌 Incidental Entrepreneurship in Bus Technology

The speaker recounts the accidental beginning of their journey in the bus travel industry. Working at Texas Instruments and frequently traveling by bus, they faced the frustration of not being able to secure a bus seat during a festival. This led to the realization that the bus industry was technologically backward, with travel agents unable to provide real-time seat availability. The speaker's engineering background prompted the idea of a computer system that could track live inventory for bus operators, which they initially intended to develop as an open-source solution for the benefit of consumers. Despite discouragement from a travel agent, they pursued the idea, learning programming languages and software development to create a prototype system.

05:00

🔄 Pivoting from Open Source to Value-Driven Software

After developing a basic prototype, the speaker and their team approached bus operators to understand their workflow and integrate it into their software. They faced skepticism from operators, who doubted the feasibility of their technology. However, they found a receptive audience in a young, tech-savvy bus operator who was taking over the family business. Despite building the software, they initially struggled to convince operators to adopt it. A pivotal moment came when mentors questioned why operators, who could afford expensive buses, wouldn't invest in a computer system. The realization that operators didn't see value in the software led to a shift in strategy, focusing on increasing sales rather than technology adoption. This insight led to the launch of a consumer-facing website, which simulated live inventory by calling bus operators for seat availability, a method that eventually gained the trust of bus operators and led to a scalable solution.

10:02

📈 Scaling Success and the Journey of Red Bus

The speaker reflects on the growth of their business, which started with a basic idea to solve a personal problem and evolved into a platform that revolutionized the bus travel industry in India. They recount the challenges of convincing bus operators to computerize their operations and the innovative approach of using color codes to make the system accessible to those who were illiterate. The business model, which involved providing software to operators and a consumer-facing website, eventually led to a significant increase in ticket sales and adoption of technology across the industry. The speaker also discusses the decision to sell the company, expressing satisfaction with the outcome and the financial freedom it provided, without regret for not holding onto the company for potentially higher valuations.

Keywords

💡Entrepreneurs

Entrepreneurs are individuals who create businesses, bearing the risks to innovate and build something new. In the video, the speaker describes himself as an 'incidental entrepreneur,' highlighting how his journey started by identifying a need in the bus travel industry and taking the initiative to address it.

💡Bus Travel Industry

The bus travel industry refers to the sector that provides transportation services via buses. The script emphasizes that it was the 'least technology industry,' indicating the lack of technological integration which the speaker aimed to change.

💡Incidental Entrepreneurs

Incidental entrepreneurs are those who start a business out of necessity or by chance, rather than by a premeditated plan. The speaker's inability to get a bus ticket led him to the idea of creating a technological solution for the bus travel industry.

💡Open-Source

Open-source refers to a type of software where the source code is made available to the public, allowing anyone to view, use, modify, and distribute it. The speaker and his friends initially wanted to create an open-source system for bus operators to improve ticketing processes.

💡Prototype

A prototype is an early sample or model of a product built to test a concept or process. The speaker mentions creating a prototype software that performed basic functions, which was a crucial step in validating their idea.

💡Value Proposition

A value proposition is a statement that communicates the unique value a product or service offers to customers. The speaker realized that bus operators were not interested in the software for its technological features but for the increased sales it could bring.

💡Computerization

Computerization is the process of converting information or processes into a digital format that can be manipulated by a computer. The script describes the transition of bus operators from manual to computerized systems, which was a significant part of the speaker's business model.

💡Real-Time Inventory

Real-time inventory refers to the availability of up-to-date information on stock levels. The speaker's business model involved displaying real-time bus seat availability on their website, which was a key feature for consumers.

💡Scalability

Scalability is the ability of a system, network, or process to handle a growing amount of work. Some venture capitalists questioned the scalability of the speaker's manual process of checking seat availability, which was later automated.

💡Aggregation

Aggregation in this context refers to the process of bringing together bus operators onto a single platform. The speaker's company aggregated bus operators, which allowed for a unified system for ticket sales and inventory management.

💡Sales

Sales in a business context refer to the exchange of goods or services for money. The speaker discovered that the primary need of bus operators was to increase sales, which became the central focus of their value proposition.

💡Color Codes

Color codes are visual indicators used to represent different statuses or information. The speaker's team used color codes to make their system user-friendly for bus operators, including those who were illiterate.

💡Literacy

Literacy generally refers to the ability to read and write. In the script, the speaker mentions that despite some bus operators being illiterate, they were able to operate the computer system effectively using color codes.

💡Trust

Trust is the reliance on the integrity, strength, ability, or surety of a person or thing. The speaker talks about building trust with bus operators, which was essential for them to adopt the new computerized system.

💡Mentorship

Mentorship involves guidance from an experienced or more knowledgeable person. The speaker mentions mentors who helped them understand the bus operators' reluctance to buy the software, leading to a shift in their business approach.

💡Business Sale

A business sale refers to the act of selling ownership of a business. The speaker reflects on the decision to sell their company, expressing satisfaction with the outcome and the freedom it provided.

Highlights

Incidental entrepreneurship in the least technologically advanced bus travel industry.

The founder's personal experience of not being able to get a bus ticket sparked the idea for a computerized system.

Initial plan was to create an open-source system for bus operators to improve ticket availability.

Learning about bus operators' workflows through direct interactions to build a useful software.

Realization that bus operators were not buying the software because they didn't see value in it.

Shift in strategy to focus on increasing bus operators' sales rather than just providing software.

Launching a consumer-facing website to sell bus tickets and demonstrate the value of real-time inventory.

Innovative workaround of calling bus operators for live inventory when they were not computerized.

Gaining the trust of bus operators by demonstrating increased sales through the system.

Transitioning bus operators from manual to computerized systems over time.

Adapting the system with color codes to make it usable by illiterate staff.

Achieving rapid adoption with 400 bus operators computerizing within a year of launching the software.

Creating a business model where every bus ticket sold in the area generated revenue for the company.

Selling the company and the founder's perspective on valuing the financial freedom and life experiences gained over pure valuation.

The journey of entrepreneurship leading to personal growth and a focus on the positives.

The company's impact on aggregating bus operators and streamlining the bus ticketing process in India.

The founder's satisfaction with the outcome and no regrets about selling the company.

Transcripts

tell us how your journey started you

brought technology to bus travel which

is the least technology industry so why

did you how did you even think about it

yeah actually we were incidental

entrepreneurs that way I was working in

Texas Instruments in Bangalore and my

parents were from Hyderabad and I used

to take buses frequently to go back to

Hyderabad and for the one odd here that

I worked in Bangalore every time I went

to this travel agent he could get me a

seat

except for the value of 2005 when I went

to him in his usual way he made a few

phone calls to the bus operators and he

couldn't get me a seat so just when I

was leaving his office he told me that

maybe another agent could get me a seat

and that really intrigued me as to if

this person is an agent for buses he

should be able to tell me whether or not

there's any bus that evening from

Bangalore to Hyderabad why is he not

able to get and why is he asking me to

go to another travel agent and so I got

curious and I went to this other travel

agent he also made two three phone calls

couldn't get me a seat so that way I

went to the third travel agent he also

did the same thing so I went to

four-five travel agents but ended up not

getting the seat so I ended up in

Bangalore for that long weekend and the

next day when I woke up I was feeling

guilty because maybe there was a tenth

travel agent to home which I had gone to

maybe he would have called the 30th bus

operator and maybe the 30th operator a

deceit which went waken from bangla to

Hyderabad right and and if indeed that

operator had a seat which meant waken

from Bangalore Hyderabad that evening it

was a big loss to him because he would

burn the same fuel same driver

everything but he would have gone with

one seat wakened and it was a loss to

all the three four travel agents that I

went to because they just happened to

call the wrong travel bus operators

right and it was a big loss to me as a

customer because I wanted to be home for

the festival and I just couldn't be

there and then being an engineer the

solution was very obvious to me right

why can't it be a computer system where

all the bus operators just mentioned how

many buses they run and what's the live

inventory

at that moment in time and I go to the

first ravage and he just logs on to that

system and says which of the operators

have a seat and then calls only that

operator so that was the solution and I

thought the wife and such a system

exists so I don't have main to all my

flatmates we were all bachelors staying

in a flat so I wrote to all of them

saying I can get a seat and can we

create this system and during those days

open-source was big so we actually

wanted to create an open-source system

which we give to the bus operators for

free and then we would benefit as

consumers and etc so that's that's how

the journey started and then one thing

led to another

so not simple one thing like so so you

you you wrote to all your friends and

they also happen to not get tickets to

go anywhere and they were around

no no they all they all had gone home

and yeah I think that was also lucky

that way because I was alone if there

was somebody else I think would have

just gone to a movie or something and

spent the weekend but the thing that

only I was there or the seven friends

and I had all this time to just think

over and feel bad about not getting a

seat I think made me think of a solution

so did you actually start working on the

solution over that weekend no I I mean

not technically but yes I went back to

the travel agent to find out how it

happens and just to validate if this

would work in etc but the agent told me

that many people had tried and it

doesn't work and he advised me not to

leave the job and do anything like this

and except try and all that so did you

leave the job to do this or did you keep

the job and do this in the evening for a

while

yeah actually because it was supposed to

be an open source thing we continue to

do it in parallel to our jobs and the

thing was we did no computer I mean

programming the Java's and the.net sin

except I was working for Texas

Instruments of VLSI designer so actually

we went and bought books on how to how

to write software

I knew C C++ but I didn't know the other

software so we literally started with a

HelloWorld program it's rendered on the

website so it took it took it took about

six seven months for us to come up with

a prototype software which was which is

doing the basic necessary

so when did you know that okay there's

not going to be an open source but this

is going to be a product so you wrote

the code now the system is available so

now you start going to travel agents to

see if they are willing to take it so

what did they say basically because we

had to create a software for bus

operators we had to know their processes

as to how they work what they do what

should what should the workflow be and

etc so we went to many bus operators

asking him how they do and etc so almost

all of them showed us a way said in fact

on the bus operator when we were like

sitting in his office there's a customer

who came in to buy a ticket and he was

telling you're showing that operator

that customer and telling me you think

that guy will buy your ticket look at

them whatever I mean he was he was not a

sophisticated person and he said I mean

guys like this traveling bus what are

you thinking you will create a solution

in etcetera but we got lucky with one

bus operator so what was happening with

this bus operator was the next

generation was taking over the business

and that young person happened to be an

engineer and then got into the business

so we stuck off very well and then he

had appreciation for technology so he

gave us a chance and he walked us

through the whole workflow and that's

how we started building the software and

but the strange thing is after we built

the software for six seven months when

we went back to the same operator to

make him use the software he wasn't

using it he wasn't buying your computer

right

he was Jessel the young persisted the

young person right and then all kinds of

things come to your mind I mean why is

he not buying is he not buying because

it is expensive for him

is it not buying because he can't pay

for it so the our mind was running on

those lines and then we said okay we'll

give it for free and then we'll buy

hardware for him

we'll get him internet connections and

acceptin and all that but that's when we

got some mentors from Thai those mentors

asked a question which almost changed

our life right the the red bus life so

they said this bus operator is buying

buying a bus which is worth a crore

right and on any route he has to buy two

buses because one bus leaves from this

side on a bus on that side so he's

pairing two clothes to

open up a root and and you are thinking

that he can't spend 20,000 to buy a

computer for that root there's something

else to it so that's how we got into we

shifted from that journey to another

journey to explore why they not buying

and that we discovered that he is not

buying because it is not seeing value in

it so so that's how we we then dropped

giving software to him and then we just

changed the value proposition to him

which was we then revisited the whole

problem statement sat with him and said

what is that one thing that you need the

help so he said I don't need computer as

I don't need Lee RS leakages I don't

need any of these things and ya say what

what is that that you need then he said

I just need sales I mean if I can sell a

hundred more seats I can buy for more

buses right and that became like a big

insight for us then we drop this whole

software to bus operators and then we

launched the the consumer side which is

red bus dot in website but the challenge

was how do you how do you have this

real-time inventory on the website when

the bus operator is not computerised

right then but we had to solve this

problem the right so then we kind of

thought laterally and then came up with

the solution saying that okay for the

consumer it appears like live but in the

back end every time a consumer comes in

and says I want the seat we call the bus

operator and take the head of entry Ivan

the way we did things like that some of

the venture capitalists didn't want to

invest in us because they said that this

is not scalable how long will you do

this things like that but somehow we

continue to do it and then Jersey people

did you have in the back end doing this

so we had the we had about six seven

people we didn't have so many sales then

slowly I think as the sales improved the

bus operators belief and trust in the

system improved so then slowly converted

him to SMS base then from there

converted into a computer based and then

by our third year we were selling enough

seeds that's when we revisited launching

the software for bus operators so we

went back picked up that code and wrote

the software for bus operators and then

we estimated that we'd get hundred bus

operators in PI

us from them because just five years

back I'm and I think sometimes I am like

astonished as how the world changed in

five years right five years back there

was no internet trust were the Internet

connectivity in India and that too in

rural areas where the bus operators are

there so so we we estimated that 100

will happen in five years but in the

third year of red bus when we launched

just in 365 days we signed up four

hundred bus operators who got

computerised overnight that was like

huge huge and the thing that was driving

that whole thing was that if they could

make their inventory life they would get

more sales and that was the only thing

that was driving and they didn't mind

using the sophisticated computer system

and many of their staff were illiterate

they couldn't even read but they were

operating computers used they knew in

the air to press this and we had all

these color codes right I mean we moved

away from the from the words like booked

reserved ladies that extra we converted

to color code so the illiterate could

know that okay if it's red it means this

if it is green this means this and he

could he was like you became expert

overnight on operating that system and

today it feels so good when you walk on

the street and the bus operator has a

computer or a travel agent has a

computer so how many bus operators not

there so there are actually we thought

we are done with aggregating the bus

operators but even today we get 30 40

bus operators onto the system every

month so actually even we don't have the

contest - how many bus operators exist

in India how many are there on your suit

right now we should have probably 1,500

to 2,000 bus operators so it's been a

this is a year old information and I

can't put the right numbers now because

we'd sold the business you sold it only

last year yeah yeah so in that seven

years how many tickets did you sell so

we were selling the every million seats

a month when we actually that was

through red bus otherwise otherwise

through this computer system that we

give to the bus operator almost every

seat that he sold went through the

computer system so we became like a

media's of bus

getting in a country okay yeah and did

they pay your fee for that masticating

system yes in continental no no yeah I

think the numbers are confidential but

the model is fine yeah so the

interesting thing there is because we

had a software for bus operators and we

had a software for travel agents and we

had a website for customers so it's so

turned out that if you are in the bus

stand and if anybody is carrying a

printed bus ticket right there is some

money that is made by us even if that

doesn't matter whether he's bought with

the bus operator or with our travel

agent or with us because all these

software's were provided by us so great

I have one last question for you is

going to put you on the spot a little

bit which is you Seoul the company

do you regret selling it she should have

hold on held on for another few billions

of valuations no no no not at all

actually I think during this whole

journey of entrepreneurship right I mean

I think has teamed as well there's so

many things that you go through that you

change so one of the things that the my

the way I changed is look at only the

glass half full right and all through my

life right and in this in this sale the

glass half full is my bank balance is

big enough that I will not end up

spending all that money in my lifetime

so I don't need extra money that way and

today I have the freedom that I have

after looking at the world there are

very very different perspectives is

absolutely non-credible for any kind of

money

you