Transcript Of the interview
Mihir and Mohit, we've looked into your back histories and both of you have a ton of experience in the travel space in India. Can you tell us a bit more about your background and how you've translated that experience into what you do today?
Mihir: I started my career at one of the leading IT companies in India. I was working there as a product manager and I worked with two startups. We were the three founders of MyTaxiIndia. Travel is my family business, my father was in this business. So this business is in my blood. I met Rahul and Rahul was the CEO of Wisers India; Wisers India was one of the leading B2B companies in India. And we figured out to make something like Yatra.com and one day we had a big conference in Hydeyrabad, where 2,000 people were coming. We could have easily organized a hotel and flight but booking a taxi was a tough task for us. After the event, we found that this was a serious gap. Which is why we thought that if we could solve this problem, we could build a billion dollar company.
In 2013, me and Rahul started MyTaxiIndia and then we met Mohit, who joined the company in 2014. Then, as everything started to click, we quickly got to where we are now and we received funding.
Mohit: Being with a start-up like Yatra.com, where I was part of the founding team, then I was part of the founding team of GoIbibo.com, and then I headed the Middle East business for Musafa.com. It's now been more than 10 years that I've been working for someone and building from scratch and taking the growth business.
This helped me to learn to understand the challenges that come with the start-up journey. So I thought of becoming an entrepreneur myself. Since I know Mihir and Rahul, both of them for more than 8 years, as well as the fact that the taxi business looks exciting, we thought of coming together and taking this to the next level.
Pritish: I'm very interested in understanding from Mohit, I have worked in hospitality earlier, I have worked with GDS and with OTA (online travel agents) and I see that you have a very strong background there. Obviously, I see you are hitting something which is very valuable in terms of a Taxi GDS system; why do you see that a Yatra or GoIbibo or Musafa can't build this on their own, given that they have the infrastructure?
Mohit: I've been with start-ups and built GDS, for hotels; it's an extranet, right. People already have a GDS for flights and hotels, but nobody has a GDS for taxi. First of all, this intercity business, it's 90 percent unorganized. Somebody has to take a lead.
It's not a question of nobody being able to build it. Yes, they can build it too. It's about the first mover advantage. When hotels were getting built four years back, everyone was trying to build. But nobody could think of intercity taxi, they were just fighting between themselves and trying to gather market leadership. What we thought was, nobody is thinking about the potential of another taxi player in the interstate, which has 46 million people transfers per day and is 90 percent unorganized.
So first of all, to all these people, we thought of getting them into one platform. Then we thought of launching a GDS, a Global Distribution System, so that all the taxi-operators could get into one system and reach out to these consumers. Again, to answer to your question, these companies can also build their system, but we've done our homework. Today, we are available in 119 cities [now: 125]; even if somebody tries to do it. They will be a year behind.
Pritish: I get that and I commend you for actually taking that step. First mover advantages are always a plus, if you execute on them right. The other question to that is, I understand that the Yatras, the Ibibos have the tech infrastructure, but would have to build the taxi infrastructure [to match and compete]. What about companies like Uber or the other taxi services which do intercity travel? They could easily do taxis from Delhi to Jaipur.
Mohit: To answer this question, whenever you build a company or build a technology, you have to think of the entry barriers. The first entry barrier for Uber is that their taxis have a license to travel within the city. Whereas MyTaxiIndia's taxis have a license to travel one city to another city. That's one entry barrier.
If you look at it in India. Companies like Uber and Ola are fighting and they have a technology which can only handle intra-city. In intercity, what happens is that if you travel to a hilly area, your internet is not going to work. That's where our technology comes into the picture.
When you don't only have to rely on the internet, you can book your taxi on the go, without any issues. What happens in a day, an Uber driver does 14 trips. If he does one intercity, he would lose 13 trips a day. Where would that booking go? Again, it would be distributed among competitors. Our technology and the license-thing is an entry-barrier for our competitors. Intercity business, we call it a long-distance in the taxi business and point-to-point taxi-business is very different. In point-to-point like Uber and Ola do in India, demand works like, "we need a taxi and we need it in a few minutes". But for inter-city taxis, a driver sometimes needs to drive two to three days, so a driver needs to be well prepared. Uber software doesn't allow the driver to get well-prepared.
Our software architecture works very different. We inform the driver well in advance of a trip. If I now tell a driver that I'll be going on a holiday for two days, the Uber trip suddenly gets this request, but he will say he's not prepared, that he doesn't have his luggage and hence cannot take the request. These markets are very different and we've geared our software specifically to this market.
Wai Hoi: Can you tell us a bit more about how you set yourself apart from the field during pitching rounds and during investment rounds.
Mohit: Technology. Nobody has really solved this problem in India. Many companies, that I won't name, have tried, but many companies have tried to provide that long-distance, inter-city taxi. But their way of working and technology wasn't at the level of that ambition. At the front-end, they are taking bookings from the customer, but at the back-end they are calling to the taxi-operator from a taxi. We have built a GDS, that handles everything, from booking, to confirmation to dispatch. Everything happens automatically. There is no human intervention in place here.
Mihir: Our technology has helped to reduce the fare by 40 percent. What used to happen, if you wanted to go to Agra and didn't want to come back, companies used to charge return fares. But with our technology, you can offer one way. You don't have to pay for a return, reducing prices 40 - 50 percent.
Pritish: Being an Indian, I understand the pain of not coming back, but paying the full fare of the return trip.
You see, the draw is in the [wow factor] for the customer. A small taxi operator only has 10 cars. What happens if the 10 cars are already booked? The 11th customer comes around - and the taxi operator generally is forced to say they don't have a taxi. They generally lose their customer. With our platform, we have built a social network among the transporters, allowing them to use our inventory. If the 11th or 12th customer comes to them, they can use our inventory and serve their customer. Revenue is also increasing. Price is reduced by 40 percent. And the wow factor and their earnings have increased due to the technology.
Wai Hoi: What I find fascinating is that you're not jack-of all trades, you're not playing head-on competition with the Ubers of this world. Instead you've really identified your market, your customer segment and what it is that your solution provides in the market. Can you talk a bit more about the process behind the thinking? How did you identify this market specifically and how did you know you had the best way to get into the market?
What we identified, if you look at the train data. Close to 5 million tickets are getting sold everyday. And out of, still, 13 - 35 percent tickets are not getting booked, because trains don't have the availability needed. On the other side, if you look at busses.Busses, again, they don't go into every city. Then we thought of this huge population (60-65 percent of people) are not being served. We don't look at the data from tier 2 and 3 cities, where people really want to come and use road transport.
Another thing is, let's say, I'm going with a family. If I take a Volvo, that will cost me 4,000 bucks, even if I take the Agra route. How it would happen, first, I'll go from my home to bus stand, from bus stand to the destination bus stand and then from that bus stand, to the final destination. It's not convenient. That's how we thought of launching intercity taxis. Intercity taxis will come to your doorstep and will take you to the destination where you want to go at a cheaper cost. So we thought we that if we launched this, we are serving the market, which is so unorganized at the moment. There is an existing demand, and if we get this convenience in place, people would love to take the taxi.
Wai Hoi: So what was your unfair advantage there? How did you guys know that this was going to be a success? Because the reason it is not organized is because a lot of different players have looked at the market and they never considered it to actually to have the potential to be successful or even profitable. Why did you guys say, we're going to make this happen and can make this happen?
Pritish: To add to that question. How did you really identify those tier 2 and tier 3 individuals or families would be interested in taxis in place of conventional busses or trains?
Mihir: If you ask anybody in India, booking a inter-city taxi is a very tough task. You need to call multiple people. There is no one brand in place. You first find a name on Twitter on Google, then you have to call multiple taxi operators. In India, you have to negotiate the price. Every taxi operator has a different price. So we know this pain area of the booking process for intercity taxis in India. We know that this is a very tough process. So we started.
At the moment, regarding taxis over buses and trains, we just need to educate them. Taxis seem very expensive. But since we have reduced the taxi price by 40 percent, now the taxi price is very competitive as compared to bus and train tickets.
Mohit: Adding one more point, you wanted to know, how did we gather the data. Yes, we could gather the data through online studies which we have. Plus, we come from an online travel background so we could take the data from airlines. An airline, has a connectivity problem. There is an airport in Delhi to go to Bangalore. [But how would a traveler go from their home town to Delhi and then the connecting destination from Bangalore?]. The traveler would need a road transport. In India, in a lot of geographies, where the airport is not there, you have to take a flight and still need road transport to reach the final destination. That was a very useful data point. Even for the train. People have to come to the metro cities. Jaipur, Delhi, people in tier 2 and 3 cities need to go to major metropoles just to be able to take the train.
Wai Hoi: Right now, your strategy, is so focused on getting traction in second tier and third tier cities and you're making waves there. How does that strategy there differ from when you guys were just starting out and trying to get a foothold in the first tier cities? Did you have a different strategy back then or is the approach pretty similar?
Starting out, the strategy was to get all the taxi operators under one platform. Only if you have a supply, you can sell it to people. For the first year, that was the strategy, to get all taxi operators under one platform - make them understand how the system works and how the system is going to help their business.
Wai Hoi: Right, and what was the sell back then? How did you make that happen? To get the taxi operators on board.
One of the co-founders Satyakam Rahul, he's been in the travel trade for twenty years. He has worked with the transporters, he has managed taxis, so he's the guys who made it happen and got all the taxi operators under one platform. For us, the best thing was that we built a system which helped taxi-operators to manage their fleet AND manage their operations. They were really excited. Another thing was, we are a marketplace, right? So if you ask someone to manage your system and then you give them the booking as well, so they are fully dependant on you. You are solving their problem and you are generating business for them as well.
As of now, our strategy is, to get all of these operators on a platform and now we have to make sure that more and more people use intercity taxis. Where we follow only a non-digital strategy.
Mihir: There is no difference between the tier one, tier two and tier three cities. We had one plan, which was to educate the transporters, telling them the advantages of the GDS on their business, their life and their everything. There was only one plan.
Pritish: What is an amazing piece of data that people don't know about the Indian travel market?
Mihir: One is the 46 million people that travel intercity for the distance of 200 - 300 kilometers. This is a huge set of people. They are our target customer. The best part is, out of that, only 5 percent of people have their own car. Huge demand in India. And Pritish, since you have been in India, you know booking a train ticket is a very tough task. There is huge demand on the customer side. We just need to log the supply.
Wai Hoi: How did you guys actually filter out that data? I imagine you don't start counting. How did you find that out? What kind of research did you do?
Mohit: We looked at train data, we looked at plane data and plus, there was a study, which we commissioned. We were looking at data about how many people travel intercity by road, between 200 - 300 kilometres and 300 - 500 kilometres. That's how we got the data. Plus this data is partially available online and easily accessible.
So we thought of, yes, this is the right one.You can't get all this data in one place. You have to get multiple sources to get to the complete numbers. Like he [not sure who] said, [that's how we calculated that this is a]15 billion market, which is growing by 15 - 20 percent year-on-year.
Mihir: Best part is that since a year, we have the technology expertise - we also have the travel expertise. From me it comes from the family business. For Rahul, it comes from being the CEO of WISERS India for the last 20 years. Mohit has a great travel background from being in Yatra and GoIbibo. We know the customer, we know the pain areas of the customer and what the customer needs in this market.