| Phanindra Sama, 27 | Charan Padmaraju, 27 | Sudhakar P., 26 | |
| Education | B.E., BITS, Pilani | B.E., BITS, Pilani | B.E., BITS, Pilani |
| Worked with | Texas Instrument | Honeywell | IBM |
| Last annual salary | Rs 12 lakh | Rs 8 lakh | Rs 10 lakh |
| Age at starting business | 25 years | 25 years | 24 years |
| Years as entrepreneur | 2 years | 2 years | 2 years |
| Initial investment | Rs 30,000 | ||
| Source of funding | Pooled in by the three co-founders | ||
| Company | redBus.in run by Pilani Softlabs Pvt Ltd | ||
| Turnover | Rs 5 crore (2007-8) | ||
| No of employees | 85 | ||
Missing the bus
For a trip that didn’t materialise, it has proved to be an adventurous ride for Phanindra Sama. The co-founder of a Rs 5 crore online bus ticketing company, Sama’s virtual encounter with buses began in 2005 when he failed to go home at Diwali—all because he couldn’t get a bus ticket from Bengaluru to Hyderabad.
With his six other flatmates away, a lonely, livid Sama spent the holidays planning a Website that would list the routes and timings of luxury buses originating from Bengaluru. “There was no published information on buses run by private operators and I was totally dependent on my travel agent,” says the man who worked at the time as a senior designer with Texas Instruments, one of the world’s leading microchip-makers.
Creating the Website proved to be an eye-opener. “I thought there were five buses to Hyderabad each evening, but there were 50,” says Sama, who was 24 at the time. So he roped in his flatmates— all engineers and suitably employed—to collect the data on weekends. With over 300 luxury bus routes from Bengaluru, they weren’t prepared for the voluminous data that had to be collected.
Starting afresh
Two months later, Sama decided to rework his strategy to suit the scale of the task he had undertaken. Instead of setting up an information portal, he switched to creating a software solution for enabling online bus ticket booking. Funding was not a problem as all seven had well-paying jobs and had saved up enough. But as none was well-versed with Web technology, they decided to split the team: three would study and develop software, while four would collect data.
Sama took on the task of business development and selling the software solution to travel agents and bus operators. It was a roadblock Sama hadn’t anticipated. For even though the plan would have benefited travel agents and bus operators, “they didn’t understand technology and it seemed like an unnecessary investment to them”, he says. He met 20 bus operators, but got a commitment from none. “Soon, most of my flatmates became demotivated and only Charan Padmaraju, Sudhakar P. and I stayed put,” says Sama.
A binding TiE
In February 2006, The Indus Entrepreneurs (TiE), a global non-profit organisation that promotes entrepreneurship, invited business plans for a contest. The prize: free mentoring by its group of successful entrepreneurs. Sama’s plan won the contest, but it also exposed its inefficiencies. As the plan was very ambitious, aiming to connect all the cities in the country, the three mentors suggested a change of strategy: sell unoccupied bus seats on every route instead of selling the software. So their roles changed. “We were now travel agents selling bus tickets through our portal and making money on each ticket sold. This also spared bus operators the task of investing in technology,” says Sama.
The plunge
Tips to start a bus reservation site • It’s a service industry.You have to innovate constantly to stay ahead in the market • As it’s information-based, incorrect data can lead to a loss of customers • Create an efficient customer support system before launching the business • The business will thrive on volumes. Be ready to expand fast |
In August 2006, the trio quit their jobs to take up the task full-time and pooled in Rs 30,000 for their start-up. “Our parents were apprehensive, but as we weren’t married, they relented. We also assured them that we’d go back to our jobs if the project failed,” says Sama. With a saving of Rs 7 lakh among them, they moved to a flat that doubled up as their office.
For one month, they stuck to a diligent routine of collecting information in the mornings and distributing pamphlets in the afternoons and evenings. Soon, they had managed to sell 10 seats and the bus operators started taking them seriously. With the start of the festival season, bookings shot up. By October, they were making Rs 5,000 from ads and Rs 7,000 through sales a month.
The funding
As it was a TiE-supported enterprise, venture capitalists too started to show an interest in the company. The three zeroed in on Seed Fund, which took a minor stake in the company for Rs 2.5 crore. By January 2007, the Bengaluru office was earning enough to run on its own and Sama moved to Hyderabad to set up another office. In April, the Chennai office was set up, and by August, Mumbai and Delhi offices had been established. “We spent the money very carefully, avoiding frills like fancy offices and air conditioners,” he says.
Their database had grown to include 300 destinations and 100 bus operators. As their operations expanded, more people started to join the company. “They believed in the idea and even took pay-cuts to be part of the company,” says Sama.
In December 2007, redBus sold 15,000 tickets. “Since then we have been recording a 25% month-on-month increase in sales,” says Sama, who also created other points of sale through 75,000 travel agents, Sify Cybercafes, ezeego.com and lottery counters.
The team is aiming at a Rs 50 crore turnover in 2008-9. For a firm that started with four seats and two bus operators, it now lists 4,000 destinations from 300 bus operators across 15 states. “More than our belief in the idea, it was the mentoring that helped us succeed,” says Sama.
