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.

Outlines

00:00

🚗 The Birth of Ola and the Impact of a Disruptive Startup

This paragraph narrates the origin story of Ola, a prominent Indian cab service startup, which was founded by Bhavish Agarwal after a negative experience with a greedy cab driver. The company quickly rose to prominence by offering affordable intra-city travel options, disrupting the market and becoming the market leader. However, the paragraph also hints at challenges that emerged as the company expanded, including high cash burn and operational issues that began to concern investors.

05:02

📉 Ola's Struggles: Management Shake-ups and Revenue Concerns

The second paragraph delves into the internal turmoil at Ola, with top-level management departures and frequent cancellations of rides through the app, leading to investor anxiety. The company had been burning through a significant amount of investor capital without becoming profitable, which raised questions about its sustainability. The narrative also touches on the generous incentives given to drivers, which attracted many to join Ola, even those with high qualifications, but this came at a high cost to the company's financial health.

10:04

🛵 The Electric Scooter Debacle and Ola's Missed Opportunities

This paragraph discusses the launch of Ola Electric and the high expectations set by its founder Bhavish Agarwal. The initial response to the electric scooters was overwhelmingly positive, with a large number of pre-bookings. However, the subsequent delivery of the scooters was marred by delays, quality issues, and even instances of the scooters catching fire, which severely damaged the company's reputation and trust among customers. The missteps with Ola Electric are portrayed as a squandered opportunity that could have been a game-changer for the company.

15:05

🔄 The Future of Ola: Recovery and Redemption

The final paragraph contemplates the future of Ola, considering its potential for recovery if it can address the issues with its electric scooters and regain consumer trust. It acknowledges the strong competition from established brands but suggests that with the right moves, Ola could make a comeback. The video script concludes with a call to action for viewers to share their opinions on whether they would consider buying Ola's electric scooters in the future, emphasizing the importance of audience feedback in determining the company's success.

Keywords

💡Bharachanka

Bharachanka is the name of the narrator in the video script, who introduces the story and provides commentary on the rise and challenges of Ola, an Indian cab service company. Bharachanka serves as the guide for the audience, helping them understand the key events and decisions that shaped Ola's journey.

💡Ola

Ola is an Indian multinational ride-hailing company that serves as the central subject of the video. It was founded by Bhavish Agarwal after a personal experience of being stranded by a cab driver, which motivated him to create a more reliable and satisfying cab service. The video discusses Ola's rapid growth, challenges, and its attempt to diversify into other businesses.

💡Bhavish Agarwal

Bhavish Agarwal is the co-founder of Ola, who is mentioned in the script as the 'helpless traveler' turned entrepreneur. His personal experience of being abandoned by a cab driver led to the creation of Ola. The video highlights his role in shaping Ola's business strategy and the company's response to various challenges.

💡Market Leader

The term 'market leader' refers to a company that has the highest market share in its industry. In the context of the video, Ola quickly became the market leader in the cab service industry in India, disrupting the traditional market with its innovative business model and affordable pricing.

💡Customer Acquisition

Customer acquisition is the process of attracting new customers to a business. Ola is described in the script as spending a significant amount on customer acquisition, offering free rides and discounts to attract customers and make them accustomed to using Ola's services over traditional transportation options.

💡Incentives

Incentives in the script refer to the financial rewards offered by Ola to its cab drivers to encourage them to join and work for the platform. These incentives were a key strategy for Ola to expand its fleet rapidly, but they also contributed to the company's financial strain.

💡COVID-19 Pandemic

The COVID-19 pandemic is a global health crisis that began in late 2019. The script mentions the pandemic's impact on Ola, causing a sudden halt in demand for cab services, leading to financial hardships for drivers and a significant disruption in Ola's business operations.

💡Valuation

Valuation refers to the estimated worth of a company. The script discusses how Ola's valuation is tied to its revenue growth, and how a lack of growth or decline in revenue can negatively impact the company's ability to raise funds and its overall valuation.

💡Ola Electric

Ola Electric is a division of Ola that focuses on electric mobility solutions. The script describes the launch of Ola Electric scooters as a significant moment for the company, with high expectations and pre-orders, but also as a source of major setbacks due to质量问题 and safety concerns.

💡Quality Compromise

Quality compromise refers to the situation where a company sacrifices product quality in order to meet deadlines or reduce costs. In the video, Ola Electric's rush to market its electric scooters is suggested to have led to quality issues, including safety concerns that resulted in scooters catching fire.

💡Management Issues

Management issues refer to problems within a company's leadership or organizational structure that can affect its performance. The script implies that Ola has faced internal management challenges, including high-level executive departures and a potential loss of focus on its core business, which may have contributed to its current situation.

Highlights

Bhavesh Agarwal's terrible experience of being abandoned by a cab driver led to the birth of Ola, India's successful startup in 2010.

Ola revolutionized the Indian cab service market by making intra-city travel affordable and easily bookable.

Despite initial success, Ola faced challenges as top-level management resigned and the company burned through investor funds.

In 2016, Ola cab drivers reportedly earned more than average software engineers due to lucrative incentives.

Ola's aggressive discounting and customer acquisition strategies led to heavy losses for the company.

The COVID-19 pandemic severely impacted Ola, causing driver incomes to plummet and many to leave the platform.

Post-lockdown, Ola struggled with driver shortages and increased fare surges, leading to customer dissatisfaction.

Ola's management has been criticized for losing focus on its core business and venturing into unfamiliar territories.

Ola's valuation is tied to revenue growth, not profitability, which has driven its pursuit of new business ventures.

Ola Electric's launch was initially promising but marred by quality issues and fires, damaging the company's reputation.

Internal management issues and unrealistic deadlines at Ola have been linked to a toxic work culture and executive departures.

Bhavesh Agarwal's leadership is questioned, with critics urging him to stabilize existing businesses before new ventures.

Despite setbacks, there is potential for Ola to make a comeback if it can resolve issues with its electric scooters.

The future of Ola hinges on its ability to regain customer trust and deliver on the promise of its electric vehicles.

The video concludes with a call to action for viewers to consider whether they would support Ola's electric scooters in the future.

The video encourages viewers to subscribe and engage with the content to support the channel's growth.

Transcripts

hello everyone welcome to today's video

and I'm your friend bharachanka in the

year 2010 a person was traveling from

Bangalore to bandipur but on the way the

driver demanded for more money than what

was agreed before starting the journey

but the traveler refused to pay more

money and the greedy driver was Furious

and the driver threw the passenger out

of the car and left him abandoned in the

middle of the room and this traveler was

standing all alone in the middle of the

road completely helpless and such kind

of terrible experiences shock many

people and it can make many people cry

out of helplessness but very few people

drive motivation out of pain

helplessness and humiliation and this

helpless traveler standing in the middle

of the road was one of those people and

this helpless traveler was bhavesh

Agarwal and this terrible experience

gave him a motivation to start a more

reliable and satisfying cab service

experience and this is how India is one

of the most successful startup company

Ola was born founded in the year 2010

ola became the market leader in the cab

service in no time and during this time

period renting a car was expensive and

most of the people couldn't even afford

it and during that time people only

rented car if they have to go to a

different city or a different town but

Ola changed everything by making

intra-city travel very affordable to

every office going person and anyone

could book a cab even in the middle of

the night in just 5 minutes and this was

something near to Impossible at least in

India before Ula came into existence and

this is how Ola disrupted the entire

Indian cab service Market with a fresh

new experience which the Indian

consumers had never seen before and in

no time Ola became the market reader and

the revenues of the company only kept

growing in the coming years and during

this time it appeared that Ola was

Unstoppable and this company was

destined for greatness but then

something started happening in the

company which changed everything for Ola

company was firing people top level

management people were resigning and

leaving the company on the Ola mobile

app the rights booked were suddenly

getting canceled very frequently and

most importantly the investors of Ola

were really worried because so far Ola

has burnt around the

17453 crore rupees of investors money

and in spite of burning such huge amount

of money the revenues of Ola had started

to shrink or started to fall and that

was really worrying the investors and as

an additional burden investors were also

worried because because the company was

nowhere close to getting profitable so

now the question comes what went wrong

with India's top unicorn which was

believed to be destined for greatness

let's try to understand so what if I

tell you in the year 2016 a Ola cab

driver was earning more money than an

average software engineer and some of

you might think this is a joke or I'm

kidding but I'm not this is actually

true so now many of you might get this

question in your mind that how it is

possible that a cab driver working for

Ola is earning in lags while Ola as a

company was still making heavy losses so

to answer that question Ola is a startup

just like zomato or swiggy which is

backed by big Angel Investors and

Venture capitalists so Ola was spending

huge amount of money for customer

acquisition because for Ola money was

never the problem and they had a truck

load of investors money to burn so Ola

gave big discounts to customers like

your first ride would be free discount

up to 50 and many more and this

attracted a lot of customers to use Ola

cabs which was a plan to make customers

used to and addicted to the comfort of a

cab ride compared to the hassle they had

to go through a local bus ride or Auto

ride and that's why Ola was giving big

discounts and free rights to increase

the frequency of a person using Ola cabs

and now to cater this huge demand Ola

also needed a lot of cab drivers to join

them and cater the customers whom Ola

has learned in with big discounts and

free rides so to make more number of cab

drivers join Ola they started giving

unbelievably lucrative incentives to the

cab drivers where every Ola cab driver

was getting an incentive of rupees 250

for every ride that was booked

irrespective of distance and in addition

they were also getting 3000 rupees

incentive if they complete six ride

eight thousand rupees for 16 right and a

Hopping 12 000 rupees for completing 19

rides in a day and these incentives were

so attractive that many people who are

working in companies like Siemens who

had a MBA degree from a UK University

and even many software Engineers left

their job to become a Ola cab driver and

because of this earning potential as a

Ola cab driver many people even bought

multiple cars on a loan and hired the

drivers to drive those cabs for Ola so

it was like a huge party that Ola has

thrown where the customers were getting

free rides and big discounts and the cab

drivers were enjoying huge and lucrative

incentives but then something happened

which Ola or none of us have imagined in

our wildest dreams which was the covet

panda coming and the whole country went

into a lockdown and because of this the

income of all the Ola cab drivers went

to zero and now many cab drivers were

struggling to manage their expenses and

worse and now they were in debt and were

unable to pay their car Emi and thus Ola

failed them to provide any stable income

and the cab drivers were forced to sell

their cars and leave the Metro cities or

bigger cities to work in their home

towns or Villages but today we are far

away from the lockdowns but most of the

cab drivers who left Ola during lockdown

never came back to Ola and this has led

to shortages of caps and because of

which the fair sign charges have

skyrocketed and because of which now

people have again started looking at

rikshawalas and public bus and trainer

transportation and along with the covet

Panda maker there is another big reason

which is stopping cab drivers from

coming back to Ola any guess what is the

reason exactly right Ola stopped giving

the huge incentives which it gave before

to the cab drivers and of course this

has a reduced the losses of Ola as a

company but it also took away the very

reason cap drivers were joining and

working for Ola and as a result most of

the drivers who left Ola during pandemic

never came back and also the existing

drivers are leaving Ola to work for

private cab companies and travel

agencies and this is the reason why your

cabs are getting canceled very often or

you have to wait for longer time for

your ride to get confirmed and

responding to this whole situation the

founder of Ola bhavesh Agarwal tweeted

on December 2021 claiming to solve the

problem as soon as possible but it

appears the problem still continues even

today and also some of you might be

using Ola cabs and if you are facing

that issue even today then you can put

that in the comment section and now to

this whole situation some believe the

problem still persist because ola's

management have lost Focus from its Gap

business and they are trying to venture

into new and unknown businesses where

they don't have any prior experience and

there is nothing wrong in exploring new

businesses which have potential but if

your existing business is making huge

amount of losses and instead of thinking

how to make the existing business

profitable if you are thinking about new

and unknown businesses then many might

question the company's management is a

losing focus and surprisingly this is

not the first time Ola has lost Focus

because Ola has a track record of trying

new businesses and failing at them

miserably burning a huge amount of

investors money and some of the examples

can be Ola Foods Ola money Ola cars Ola

Dash Ola corporate and the list goes on

but there was an exception because when

Ola came up with a new idea of Ola

electric many thought this time it's

different and Ola might just succeed

this time in establishing a new

successful business apart from its cab

service business but very soon this Hope

was also shattered because after Ola

launched its electric scooter for many

it appeared that this might become the

biggest failure for Ola for you and me

it might appear very obvious and simple

Ola should focus on its care business

focus on becoming profitable and then

think about entering new businesses but

sadly it is not as simple and obvious

for Ola and why Ola is not focusing on

cab business and why Ola is so desperate

to enter new businesses and the simple

answer to all these questions and not so

simple situation of Ola is valuation so

if you see any company which is selling

any product or giving any service would

make a certain amount of sales or

revenues and from the sales and revenue

if you minus the expenses and the taxes

to be paid then the company will be left

with the profits so now if you consider

an established company or a corporation

then the valuation of this company is

determined based on the profits they are

earning if the profits of the company

are increasing and growing every year

then the valuation of the company will

also increase with the increasing

profits and now if you consider a

startup or so-called a loss making

unicorn company then here the valuation

of the company or the value of the

company is determined based on the

revenues or the sales these companies

are making which means irrespective of

the profits if these companies are

earning more revenues or sales and their

sales are increasing and growing every

year then companies like Ola can keep

raising more money at higher valuation

from investors and Venture capitalists

which means in simple words Revenue

growth or sales growth drives the

valuation in startup companies or

so-called laws making unicorn companies

and if the sales of these companies or

revenue of these companies stops growing

and in the worst case starts falling

then it will also reduce the valuation

of the company which means it will take

away the ability to raise more funds to

keep funding their loss making

businesses and this is what is exactly

happening with Ola where Ola is finding

it very hard to grow their revenues from

the cab service business because this

Market is already saturated and there is

not much growth left in it and that's

why Ola is running desperately behind

new businesses and desperately trying to

make them work and for a brief moment it

appeared that Ola has made a strong

comeback and Ola can keep growing its

revenue and keep raising more money at

higher valuation because on August 15

2021 when Ola released an advertisement

introducing Ola electric where bhavesh

Agarwal stood on the roof of Ola

Electric's scooter Factory and

introduced to their brand new products

Ola S1 and Ola S1 Pro and personally

when I saw that ad and saw those fancy

electric scooters with so many fancy

features which costed only about 1 lakh

rupees I thought it was a game changer

and I believed in Ola and like me there

were lots and crows of people who

believed in Ola and many people even

before the launch pre-booked Ola

electrics photos and the belief of

people was so high when Ola electrics

launched the pre-booking they were

selling four scooters every second and

within 24 hours they had more than 80

000 confirmed orders which were worth

600 crore rupees and at this point of a

Time the investors who touted ola as a

destiny to become great again started

believing in Olaf and this was the

chance for Ola to become one of the

greatest companies the Indian startup

environment have ever produced and when

everything was looking so good for Ola

Ola just blew this massive opportunity

and what did Ola do Ola delivered their

electric scooters to their customers and

what happened next in India four

electric scooters have caught fire in

seven days this is the S1 Pro electric

scooter that burst into flames in the

city of Pune why are these electric

scooters burning and just like that Ola

blew away their once in a lifetime

biggest opportunity which could have

made Ola one of the greatest company

India has ever seen and just like that

Ola lost all the trust and belief people

have bestowed upon it and now many

people who bought these scooters are

regretting and might have even bowed

never to go back to Ola for electric

vehicles just like the cab drivers who

left hola and never came back so what

went wrong how Ola blew away its biggest

opportunity of a lifetime so here is

what happened Ola compromised on quality

in a hurry to capture the market at an

early stage first of all the delivery

which was promised within a month was

delayed to several months and the

customer were already pissed with the

delay and after a long waiting time when

the electric scooters were finally

delivered it became a perfect fit for a

classic meme of what I expected and what

I got because the features Ola had

showcased in the advertisements were

plagued with numerous issues and there

were tons of complaints across Twitter

which said the scooters were faulty and

worst even the scooters were catching

fire and bursting into flames and thanks

to the poor planning and execution Ola

might have lost their biggest

opportunity of a lifetime which could

have been a solution for their revenue

growth problem and to continue raising

funds at a higher valuation while some

hold ola's founder bhavesh Agarwal

responsible for this poor planning and

execution because by many bhavesh

Agarwal is accused of giving unrealistic

deadlines in Ola electric which resulted

in toxic work culture and if you see in

last two years many top level Executives

have left Ola from different verticals

including Ola cabs Ola cars Ola electric

and Ola financial services and even

Ankit Bhatia who is the co-founder of

Ula left Ola in 2020 to start a new

company with former colleagues so it is

very clear that Ola is dealing with some

serious internal management issues which

have to be solved and many believe that

bhavesh Agarwal needs to fix its

existing business before jumping into

any new business without any experience

because in present time it has become

very clear that jumping into new

businesses to justify their valuation so

that they could raise more money from

the investors by selling the new

business idea as a dream might not work

for long and maybe that is the reason

why founders of companies like Oyo and

baijos are focusing more on

profitability so now comes the million

dollar question what can be the future

of Ola so if you see Ola is still a very

strong brand and if Ola can fix the

problems in the future version of

electric scooters and make it worthy

then Ola can also make a strong comeback

and here some might think that I am

being too optimistic but hey come on

even the great Mr ratan Tata failed

initially and was about to sell Tata

Motors car division to Ford Motors but

then ratan Tata got a chance and he

turned around Tata Motors car Division

and 20 years later the company is

stronger than ever but here as well some

might say that again I am being too

optimistic because I can't compare

bhavesh Agarwal to ratan Tata because he

is

great and there is only one ratan Tata

and ratan Tata can do anything and if

you say so I would agree but you should

also remember that bhavesh Agarwal was

that poor traveler who was left

abandoned in the middle of the road by a

cab driver and from that middle of the

road bhavesh Agarwal have come a long

way and have built a billion dollar

business and if a person

who turned a bad travel experience into

a billion dollar business then he might

not miss the next chance to make a

comeback and of course the road is not

easy there is tough competition and

there are established Brands like Bajaj

TVs hero and many more but still Ola has

a chance to make a comeback so I will

leave you with this positive note and a

question for you and the question is in

future if Olaf fixes their electric

vehicle problems would you be willing to

buy those electric scooters or you would

prefer buying electric scooters from

companies like Bajaj TVs or hero which

are long established brands in the

two-wheeler market so answer this

question seriously and sincerely in the

comments section and your choice will

decide whether Ola will succeed or not

so that's it for today guys and I hope

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next video Until then take care and Jai

Hind