OLA Inc: the good and the ugly
Recently I visited my family in India and happened to use Ola at least a dozen times. For the uninitiated, Ola is India’s leading app-based transportation company. It has raised around $1.5 billion in private funding thus far and is in a fierce battle with Uber India.
As a high-end user, I tried to explore all premium features that it offers. In addition, I made sure to speak with the drivers each time and got their views on Ola and Uber. I will provide some opinions on things I found to be good and ugly sides about Ola.
Ola’s strategy over the past few months seems to be clear: Increase retention amongst the top 10–20% of the users. This is important because top 20% of the users are likely bringing majority of the revenues. And these loyal high spending users will eventually contribute to Ola’s profitability.
It has rolled out several features and programs around this:
- Ola Wifi: auto-connects to your phone when you start ride
- Ola Play: In-cab entertainment which you can control using Ola app
- Ola Select: Cheaper fares, priority in booking queue, no-surge guarantee, and other “make you feel good” experiences if you enroll at just $10 / month
- Smooth app experience and booking flow
- Offline booths — dedicated ground staff at airports to help with pickup
Ola has definitely won my loyalty over Uber owing to it’s valuable (or catchy) features.
One of the common themes in conversations with Ola (and Uber) drivers was mention of reduced incentives. Incentives are offered in order to retain and attract drivers. Owing to reduced incentives, driver incomes have fallen by as much as 3X.
In the good old days when Ola and Uber were “throwing money” to expand driver supply, drivers had the potential to earn as much as $2,000. These inflated incomes misled many drivers to go ahead and take loans to purchase their own car(s) which they’re now having a hard time paying. This has led to several union protests across multiple state geographies in India.
It’s very difficult to imagine a taxi driver earning $2,000 per month, when top-notch engineers in the country struggle to earn half as much per month. Clearly, Ola (and Uber alike) didn’t think deeply about the driver economics when incentives would reduce and stabilise, and the side-effect that the reduced incentives would cause on drivers’ lives.
The dramatic fall in driver incomes is leading to protests country wide. A recent case, Ola and Uber drivers were on strike for 1 week in the city of Mumbai: Ola, Uber drivers on strike in Mumbai. Several state governments in India are trying to curb and strictly regulate services due to protests by taxi unions and the and due to the prevalent dissatisfaction amongst Ola and Uber drivers themselves.
Things look bleak in this area and regulations would be a tough hurdle for Ola, despite the good quality services it provides to consumers.