The Diwali that lighted up an Internet Revolution! by Arun A T

How many times have you thought of visiting your family for a festival or a family function and you dropped the plan just because you did not get a ticket for your bus journey? Possibly, now you have the redbus app, in your mobile and could book the ticket in minutes. But back in 2005, when Phaninder Sama, the BITS Pilani alum from Hyderabad, was working for Texas Instruments in Bangalore, Sama used to visit a ticket booking agent in his area, who will call the bus operator to block a ticket for him from Bangalore to Hyderabad or for the return journey. This remained his usual way of booking tickets until the Diwali of 2005, when his agent tried hard to get a ticket for him at the last minute but could not find an empty seat for Sama. This agent tried calling another agent who again gave a red for Sama’s Diwali dreams.

Charan, his close friend and all his roomies went home and Sama was totally dejected, as he will have to spend his entire two three days of Diwali holidays at his room, with no one to accompany him. He sat still and was more worried about the system because of which he did not get a ticket. If the second contact of the agent is associated with a few different bus operators, then there must be some more agents who will be looking at certain other operators alone. Sama, soon realized that he must come up with a system that allows operators manage their agents properly, so that they do not carry vacant seats and that was the Eureka moment.

Sama, immediately called his friend Charan and shared his distress, convincing Charan to join him in making open source software that would help operators maintain their inventory, so that the operators can easily approach operators, based on the seat availability. As soon, as they came back, the roomies assembled and started developing software for bus operators and agents. Unfortunately, there was no one to accept their software and implement it, as they are used to book tickets with slips and manage their inventory on sheets, writing names of the passenger to the corresponding seat. And to the surprise of Sama, they met an operator who was ready to accept their software, as the guy was about to take over his father’s business and he has an engineering background with a passion for technology too.

When Sama returned to this customer again to check the functioning of the software, the software was on a lull. Sama and Charan thought that they aren’t good to afford a computer to operate this software and started setting up a computer, bought with their own money and installed the software in it, hoping that the operator will start using it. Even then, the operator did not move out of his conventional booking system. Deeply saddened, these guys approached some mentors around and asked for suggestions for improving sales, and all these were happening on the part time, they got after their usual work at the corporate.  One question from a mentor really made the team think of an alternative approach than the current software. What was that question? “Do you think a person investing 2 Crores on 2 buses on a particular route cannot afford to buy a computer on his own?” asked a mentor. And then the magical happened.

“What is the exact problem you face?”, Sama asked his only client then and the operator replied, “I need to drive sales and there will be no use having an inventory management system for this business”. At last, Sama and Co. found out the exact pain point of an operator. The bus ticket market is highly unorganized and Charan, let us make it consumer centric, said Sama in a determined tone. By then they started, a website that allowed people to book tickets online. And the so called internet age came, only after three years of inception of redbus. So how did they manage their inventory? Whenever a customer selects a ticket on the front end, an executive at the back end will call the operator and show the status of the ticket on the front end, and book the ticket on the user’s behalf. This might sound silly, and many Venture Capitalists turned down Sama’s offer, stating that this business is not scalable.

Initially, the bus operators gave only the last seats for redbus, as people buying tickets offline do not prefer them. But this team sold even that and from then the operators started believing the redbus team and started giving bigger numbers for online sales. In fact their first customer who booked through their website actually was an above mid aged lady, for whom her son booked a ticket. The team personally went to the bus stop and made sure that she got seated in that particular seat before the bus leaves, showing how passionate they were towards customer satisfaction.

After the blasts from the VCs, without giving up, Sama and co, started developing the back end that allowed operators to show their seats availability, but this will function only with internet connectivity. They got around a few potential operators and the ticket sales were going good, at 2007. Sama planned to have at least 100 operators to use redbus application for their ticket sales by 2010, but to his surprise found around 400 operators using redbus for ticketing due to the high internet penetration, though they are from the rural areas and even now there are around 40 operators registering with redbus every week. And 2013 saw more than 2000 operators on board, using its ticketing software for booking offline and make their tickets available for redbus to sell them out.

The product was not just consumer centric but also, operator centric making sure that even an uneducated person can operate the application. Say, for booking tickets, they implemented color codes like red, green, pink and grey so that the person working at the operators end need not read anything but just know the numbers and the color codes.

Though he has sold out his business to the ibibo in 2013, Phaninder Sama, still remains the pioneer in the internet industry, who tried and implemented an internet business in India, when there was no Flipkarts and Snapdeals around. And that too, in a highly unorganized bus ticketing market where you find a lot of operators whom you cannot even see and confirm his/ her availability in that particular route, was a real disruption. It is not that difficult to sell your own products online or rent your own taxi, as you have a direct access to the customer and the products. But Sama’s one bad Diwali experience has not just lighted many new internet ventures but also disrupted the buying and selling behavior of the entire country. I could see a lot of people with some innovative ideas, just identify the pain points in that stream, link them with your ideas and innovations, make it and disrupt the market. Hope to see an article on you, being published here, sometime soon.

by – A T Arun – Great Lakes Institute of Mangement, Chennai

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