This post is authored by Siddharth Sharma, Founder and CEO of Raftaar Technologies, makers of Limo.
So it seems that last week, Raftaar Technologies — the parent company of Limo — turned one year old, and since it has been the best year of my life (definitely my “professional” life), I thought it might be interesting to do a retrospective.
A Brief History
The first money Limo (it was called rBus back then) earned was a Rs. 100 commission from a private charter bus service. We were just poking around the market trying to get an idea of the lay of the land and one day we got a customer but we didn’t have any buses yet so we forwarded him to one of the quasi-legal services that operate in Mumbai for a small fee. Hey, revenue is revenue!
One day a group of office goers found us through our website and we launched our first bus. Within a week we had four more buses on the road.
And so it was that even before we had a team, before we had any tech and certainly before we had any clue we had traction. Great, right?
Traction
Traction is great, but to be honest, it’s not so great when every new bus shortens your runway and takes you closer to death. We were very fortunate to have raised a seed round from India Quotient, Anupam Mittal and others but soon after that the funding environment clouded over and we needed to find sustainable growth — and fast.
The graph above tells an eloquent tale — of being lost in the wilderness of unviable business models, of not having figured out customer acquisition, of disagreements with regulators and of having ultimately prevailed over all of these.
Today our app based contract carriage service is the largest in Mumbai in terms of ridership. We have around 200 services on 45 different routes. Our initial raise was not very big and so we’re almost certainly the most capital efficient operation across the country. Our total burn barely tops USD 500,000 and we’ve grown 3x in the last few weeks with a very healthy pipeline in hand.
But it’s taken time and it’s been so embarrassing — every investor report we sent until recently had the same headline numbers for ridership and revenue. But we knew one thing — ridership is the easy problem, profitability is the hard problem. And scaling profitably is practically an oxymoron. Yet we knew that at one time network effects would kick in — that if we built the machine right growth would actually ease operational burdens, ease customer acquisition and ease financial pressure as well. All we had to do was not die before we figured it out and we had to avoid bad growth — the unsustainable growth which makes life nasty, brutish and short.
Today a quarter of our fleet is operationally break even or better and based on our pipeline close to half the fleet will soon be pulling its weight in terms of RoI. Even better — we’ve done this while being compliant from a regulatory standpoint.
That long flat line was our trough of sorrow and despair but it looks like we’ve broken through on the other side. Have we crossed the chasm? Time will tell but we’re starting to see network effects — adding new routes gets easier all the time and the more our network grows the easier it is for new buses to reach break even. Thanks go here to our investors who patiently heard the same numbers for months and still continued to back us to build something valuable.
So now bring on that traction! We’re ready for it.
Building for Scale
Transit, the way we’re trying to do it, is an onion of unsolved problems with every layer revealing another layer below it and if your eyes weren’t watering already the next one is definitely going to make you cry. Regulation, unit economics, consumer behaviour, driver issues, infrastructure issues — the list of problems to solve is endless. With no money to hire, we fell back to our strengths — superior technology execution, data driven product management and aggressive automation. So I’m happy to say that we’ve built a world class platform for transit ops.
Our tech team has one job — make all humans more awesome. Turn car drivers into bus users. Turn tired parents into relaxed commuters. Turn our ops people into superhuman bus masters. And so, with a tiny team of four, we not only built all the consumer facing tech but also a platform that allows one person to run our entire fleet.
Ok, I’m exaggerating a bit. Our ops bot — Botbali — is almost sentient now and Botbali does most of the heavy lifting.
Given all of this, we aren’t going to be needing to add ops headcount till we’re 5x our current size.
And we’ve got amazing data infrastructure too! which is a huge contributor in getting us to break even. Tight feedback loops tell us when what we’re doing is working and a healthy attitude towards failure keeps us chugging along. For example, with amazing data infrastructure one can do stuff like this
The above was on a particular route that was not earning enough. Given a clear problem statement, adequate resources and well engineered feedback loops we are getting better and better at turning the above into this. With deep insights into individual consumer preferences, pricing elasticity and route and time sensitivity of our users it becomes possible to fine tune the service to serve maximum people.
I do believe this is the first time transit is being treated as a consumer product and data-driven product management techniques being applied to it. It’s super exciting but that’s a whole other blog post by itself.
Building a startup is like brain surgery — it’s about patient execution, not patient execution.
A genuine focus on avoiding fake work, hiring for diversity and emphasising team cohesion means that Raftaar Tech is actually a pretty decent place to work at and as a result Team Raftaar is composed of seasoned veterans who know how to run transit. We never had any money for a fancy office or offsites or catered lunches but luckily it seems that keeping a team together is about the good old basics of autonomy, reasonableness, trust and mutual respect.
This team has turned deploying bus networks and guiding them to profitability into a trivially repeatable process. I think that is pretty darned cool!
So now?
So now onward and upward to the future! We’ve just raised fresh capital from Rainmaker Ventures and we’ve launched a very disruptive Employee Transportation product.
Regulation remains a challenge but there are very exciting changes on the horizon. Ministers and Secretaries are meeting to discuss a way forward for entrepreneurs to participate legally in the transit market. In the meantime we continue to grow as fast as we can using whatever means we can find to comply with the law of the land. It’s not easy but it has saved our bacon on more than one occasion.
As they say, the days are short but the years are long. We’ve certainly come a long way since that first bus ride a year ago. I can’t wait to see what we build in the coming years. Transit is set to revolutionize our Indian cities and I feel very privileged to be a part of this amazing story that is unfolding.
If you’d like to participate in this journey as a colleague, as a customer, as a bus partner or as an investor or if you just want to talk about buses then do get in touch with me at svs@limoapp.in
