Ola: Driving the Change
The most Promethean and ingenious ideas emanate from the exigency to resolve a personal predicament, and in the case of Ola, it was an unscrupulous cab driver that stimulated Bhavish Aggarwal to contemplate the plight of several other travelers booking a cab, who are left completely on the mercy of their chauffeurs. Once while journeying from Bangalore to Bandipur, Bhavish tackled a nasty situation. The driver of his cab halted the vehicle on the way and demanded to renegotiate the cost that was previously decided and mutually agreed upon. Refusing to comply, the driver abandoned Bhavish in the middle of his ride, baffled and ponderous on the possibility of a service that could provide satisfactory customer services at affordable pricing.
Inquisitive and audacious from the start, Bhavish probed the dormant potential a car booking business harbored, and collaborated with his Hostel-5 wingmate Ankit Bhati, to launch the Ola cab services, a company with the aim to deliver a hassle-free, reliable and convenient personal transportation experience. And the rise of Ola has been nothing short of meteoric. Commencing within the confines of Powai with the institute serving as the major customer base, Ola now functions in over 250 cities and has scaled up to include 150 million users, clocking around 2 million rides on its platform each day.
The seeds to establish a startup germinated for the cofounders Ankit and Bhavish in the college itself, as both of them, procured freelance projects to gain experience and a little side money to spend. Admitted to the coveted Computer Science stream in 2004, Bhavish, prior to establishing Ola in December of 2010, worked for Microsoft as a research assistant, wherein he even published two patents and three papers in international journals. The decision to quit such a high paying job and a lucrative career path were indeed a difficult one to explain to his parents, but his conviction infused with the itch to launch an entrepreneurial venture prompted him to bid adieu to his job and invest his undivided attention fulltime to Ola and its operations.
Mr. Ankit Bhati on the other hand, serving as the Chief Technological Officer of the startup, completed his dual degree in mechanical engineering from IIT-Bombay in 2011. Renting a 1-BHK apartment in Powai that acted both as their office and lodging, the duo demarcated their roles in the startup, with Bhavish negotiating with the vendors and Ankit providing the technological support and expertise. Both identified customer loyalty and driver-partners as their biggest assets and gradually scaled up the operations.
Ola expanded aggressively and proliferated even the remotest and most challenging of all markets like Bihar and eastern UP cities, fuelled by the surplus investments it attracted during its expansion. With SoftBank playing as the most notable investor, Ola has raised over $3.5 billion from the likes of Tiger Global, Matrix Partners, and Temasek Holdings, with ongoing talks with Microsoft for $150-200 million. Lately, it raised over $250 million from SoftBank during Series B round funding and $92 million from Flipkart, pushing its valuation over $6 billion. Furthermore, the startup cashes in operational revenue more than $300 million annually, and achieved profitability in the last financial year, earning positive gains on each ride that it provides. The losses are getting mitigated each year, the market dominance is increasing and fresh investments indicate a significant display of confidence by the industry on the homegrown venture that is taking on its competitor Uber both in its home market and abroad.
The fierce competition galvanizing the two rivals for market dominance, Ola has emerged victorious, claiming almost twice the market share and higher penetration, even though it had to survive Uber outspending it by 5 times. With over a million more drivers, and considerably more user engagement on apps and services, Ola is not only edging over Uber in the indigenous market but has also conquered a lot of space in foreign markets like Australia, New Zealand and UK, claiming its presence through extremely low commission rates. Further to consolidate its place, and move beyond cab aggregation, it has closed a number of acquisition deals like buying out the Bengaluru Taxi based service TaxiForSure ($200 million), the trip planning applications company Geotagg for an undisclosed amount, FoodPanda, Ridlr, and the scooter rent startup Vogo.
The influx of positive cash flow in funding and achieving profitability after almost a decade of operation, Ola intends to invest now in building new-age and cutting edge technology, for which as a small start, the company launched itself on a modest scale in the Bay Area and hired 100-150 people to consolidate its geographical footprint. The company also has shifted its focus to reduce the customer acquisition cost (by almost 50%) and the cash burn by limiting its incentives and offers, for both the customer and the driver and instead supplementing it with more diverse services and better employee terms like subsidizing education, medical insurance, and driver incentive programs.
In recent times, the company has branched out by foraying into the cloud kitchen segment and building an electric vehicle entity, Ola Electric, which is also a unicorn. It also entered the self-drive segment with Ola Drive, and inked deal with power distribution companies BSES Yamuna Power Limited (BYPL) and BSES Rajdhani Power Limited (BRPL) to bring charging stations to New Delhi. This is a step forward in Ola Electric’s efforts to drive growth across India’s EV ecosystem. The company has already set up charging networks around the country and is running several pilots to deploy electric vehicles and charging solutions, including battery-swapping stations, among other initiatives. To fund its operations, it received a $56 million in capital in February 2019 by Tiger Global and Matrix India, and an undisclosed sum by investor Ratan Tata in the Series A round of funding. The company intends to achieve its target of putting 10 lakh (1 million) EVs with the help of the enthusiastic government, on the roads by 2021, and to develop a complete ecosystem of services and vehicles of Ola Electric by that time, as huge key players in the sector like Mahindra look the space as a lucrative one to operate in.
Ola also aims to double scale its business(drivers, revenue, customers and driver partners) and expand in the Australian subcontinent by 2021, to 11 cities and 33 locations. The key challenges according to Bhavish in driving the startup has been managing the scale, with the company eyeing for an IPO soon in less than 24 months, and for that end is laying off people, optimizing teams, and
adding top executives to put out an attractive offer.
In a short span of just 4 years since the inception of Ola, Bhavish and Ankit were featured in the list of richest Indians in 2015, being the youngest ones to do so. Being a serial investor, Bhavish has also invested more than $25 million in companies like Chaayos, Torl Mttorcycles, Avail Finance, MadRat Games and HashLearns, and was featured as one of Hindustan Times’ 30 Achievers under 30 as well as in the Forbes India list of 30 under 30. Having built one of the world’s leading ridesharing companies out of India, Ola, under Ankit’s leadership, has pioneered some of the world’s most innovative technologies, be it the world’s first connected car platform or the robust technology backend that serves various unique mobility use cases to over 150 million users. For his efforts, Ankit has been awarded Entrepreneur of the Year, 2017’ by the Economic Times, ‘Disruptor of the Year, 2017’ by CNBC-TV18, Forbes 30 under 30.
With the future full of possibilities for this iconic startup, and spaces like food delivery, e-vehicles, and the credit card industry, yet waiting to be disrupted, the cofounders credit their success to their persistence, risk-taking ability, and focus on solving real-life problems. Despite certain potholes in the way like transparency, technology, and driver credibility concerns, Ola’s road to glory has been just as iconic as its vision, with its unparalleled impact on the entrepreneurial culture of the country and on the emancipation of its consumers and drivers.