Ahead of its IPO early next year, in August Temasek Holdings and Warburg Pincus invested $500 million in ANI Technologies Pvt. Ltd., the company that runs Ola. The homegrown ride-hailing firm’s 35-year-old founder Bhavish Aggarwal also participated in the round, and currently owns a 7.9% stake in the 11-year-old company, according to research firm Tracxn. Its latest valuation is $6.7 billion, though with the IPO round kicking off, bankers expect it to clock around $15 billion. Aggarwal’s other company, Ola Electric, incorporated in 2017, became a unicorn two years later (currently valued at $1.1 billion), and is backed by Tiger Global, Matrix Partners, and SoftBank. Ola’s direct competition Uber is one of the country’s well-funded start-ups, having raised more than $24 billion in equity till date. Ola currently has a 65% share of the domestic ride-hailing ecosystem. It is working on new mobility solutions such as drones — and even a flying car.
I started Ola in December 2010, just two years out of college. I went to IIT-Bombay, after which I worked at Microsoft for two years and then started off with a slightly different business —Olatrip.com — which sold online tours and activities. I launched it during the Commonwealth Games in Delhi. But nobody bought any tour from me. Instead, everybody wanted a vehicle to go to Shimla or Agra. I realised I need to pivot. The real value I can offer, which consumers are willing to buy, is an online portal where they can book vehicles for inter-city travel. That’s how it started. Then we added an app-based ride-sharing business. We realised the bigger opportunity is how we travel within our city. Radio cab services were too costly and had limited availability. So, we worked on an application-based business model to increase the scale quickly, and that became the Ola of today.
When I started, I was a first-time entrepreneur and just 24-years old. It was a very different time back then. Start-ups were not a large ecosystem, funds were hard to come by, the funding ecosystem was not as mature as it is today with angel, seed, Series-A, B, etc. For us, raising the first round of ₹30 lakh was the hardest. I am still surprised why those people gave me the money. Today, the start-up ecosystem is so vibrant... The next decade is going to be India’s decade, and I want Ola to be a big part of that. Till two months ago, I didn’t have a car. I used Ola everywhere. It helps because you know what product you are building, what’s working well and what’s not. I used to chat up with drivers very frequently. This helps you gather a lot of pulse on the ground. I often use my competition’s products as well. It’s important to keep a tab on what they are doing—both the good and the bad.
Make Or Break Moment
In the 10-year journey, there have been many such moments every two-three years. There has always been a point where if we wouldn’t have done what we did, we wouldn’t have become what we became. In the early days, we were in Delhi, Bombay and Bengaluru only. We had decided we will launch in 100 cities within a year. It was a hard choice. We had never done it or never even gone to many of these cities. But we did it, and that actually led to much faster penetration of ride-sharing in the country, which also has been instrumental in our becoming a larger business much faster. This was in 2013-14. And even viz-a-viz competition —initially with TaxiForSure or even Uber after that —we were always able to execute faster, better and more efficiently than others. And the consistency in doing that has made all the difference. We have failed a few times also and have learnt from them. It’s important for growth companies to take risks. Sometimes you will fail, but most of the time you will succeed.The Business Model
The Business Model
It took some iterations. The business model evolved as the industry grew and matured. Business models are not static anymore. A lot of high-speed decision making is required, and the market context and consumer preferences change frequently. It’s very important to be nimble and keep evolving the business to the needs of the market. Our vision is to be the future of mobility, and the future mobility platform for India and the rest of the world. Ride-sharing is the beginning of that vision. The second pillar is our Ola Electric business, where we want to make in India for the world. The third pillar is to build a new format for auto retail. People need to consume and buy auto products in a more digital and sustainable way.
We started with a website where my phone number was the call centre. People used to call me and book their vehicles. We have built our technology step-by-step. We built our consumer app in 2012, then a driver app and then a much-deeper technology platform for inter-city logistics and intra-city vehicle movement. We have built much more technology over the years around safety. For example, we have a feature called The Guardian, where we automatically detect if a passenger is in an unsafe part of the city and put a trace on them. Even when I go into Ola Electric’s journey, we have built the whole technology in-house — right from the motor to the powertrain to the battery pack to the software. I believe companies that build their own technology have a very strong competitive advantage. India’s digital connectivity landscape has evolved a lot in the last decade. When we started off, nobody had smartphones. Data connections, mostly 2G, were slow. The business was much more of a web business. Today, India has one of the leading digital infrastructures in the world. The challenge is now different. It is scaling up within a sustainable business model across the country, taking businesses to 400-million people.
We have had some very competent people from across the world. For example, in our electric business, we have some of the world’s leading manufacturing and engineering experts working for the company. You need the passion of youth in start-ups to build for the future. And youth doesn’t mean young age only. You need a “can do it”, “will do it” attitude much more than functional competency or years of experience. If you have a capable, passionate and young team, just leave them alone. The team will deliver.
The early pitches to investors were very different back then from what it is today. We were 24-year-old kids trying to build what investors saw as a taxi business. It was very hard to tell people what the business is, why I believe it will be big. One of the reasons I feel we always found receptivity at the investor side is that the intent and the passion shown through. They have always believed we are a genuine group of people trying to build something of value. In the Ola Electric business, for example, the need for India to electrify is clear to everybody today. Three years ago, when I started the company, it was not so clear. Today, we have very forward-looking discussions with potential investors.
Marketing & Sales Lessons
In the first two-three years, it was a challenge to convince customers to use our services. In 2014, prices fell and the scale became large, and an inflection happened. The growth rate became something that we had to manage v/s something that we had to work hard towards. I realised if you are in a disruptive industry, businesses don’t scale in a linear way. There comes a moment when you have the right product at the right price point with the right value proposition for enough customers. At that point it will just explode. Between 2014 and 2018, maybe we grew like a 1,000X. Now that’s going to happen in electrification also. That’s why we have made this rallying call to the country about “Mission Electric” — after 2025, we should not be selling any petrol two-wheelers.
When Did You Think You Had Arrived?
I don’t think we have arrived. When I look at companies that I look up to, we still have a long way to go. We have to take our firms public eventually, and build profits for shareholders.
Riding Through Toughest Times
We have had a lot more successes and many failures. Every failure comes with its own set of challenges because you have to first accept that you failed and dive deep and understand why you failed. Then bring in the learnings and succeed the next time. There were many failures because either we were late, or we were following the wrong business model, we didn’t execute well or a combination of all the factors. Sometimes, we have succeeded in areas we thought we might not succeed. But there will always be risks. Companies’ capability to take calculated risks and convert them into successes is what defines long-term value creation. We are still in the process of building Ola Electric, we are still learning. One of the toughest phases was when we started building the food business in 2018 and failed. We took our learnings from that and shut down that business. Some of our businesses after that have been very successful because of the learnings we took from that period.
Our vision is to create the mobility platform of the future. Ride sharing is one of the pillars. Electrification and digitisation of the full auto retail experience are the others. Hyper-local logistics are part of the broader mobility ecosystem, which we are looking to disrupt. The roadmap for us will be to go deeper into these businesses. For example, right now we are focused on getting our scooter out, but we are working on our car as well. It will be out in 2023. We are looking at newer concepts more relevant to India like potentially flying cars, drones, etc. We will do things which we believe are sustainable and relevant.