E-ticket to ride

A bad experience led to Phanindra Sama’s good idea: why not sell intercity bus tickets online? Aabhas Sharma talks to the founder of redBus.in.

The old adage “necessity is the mother of invention” holds true of Phanindra Sama. Sama, CEO of redBus.in, once wanted to travel to Hyderabad from Bangalore on Diwali. As a last-minute option, bus was the most straightforward mode. But it turned out to be the opposite.

“I went to travel agents, bus operators, but there just wasn’t enough information available,” Sama says. So he, together with friends, decided to develop a seat-management system for inter-city bus operators. Five years on, their firm redBus has crossed Rs 100 crore in turnover and has about 40,000 agents and 700 bus operators in its network.

Sama used to work for Texas Instruments in Bangalore and was content with his job. “I never thought I would be an entrepreneur, but the idea was good and we were enthusiastic about making it work,” says the 36-year-old electronics engineer from BITS Pilani. As engineers, Sama and his friends had no clue about software. They bought books to learn software and develop code. At first, Sama says, all he wanted was to create a software for bus operators. “Selling tickets wasn’t something we had planned.”

In a country which still follows the bricks-and-mortar model, how does redBus sustain volumes? The business model is complex, and Sama admits he had a tough time explaining it to bus operators and agents. RedBus gets Rs 50-60 on every ticket it sells online. “We ask operators to give their tickets to us and we sell them online as well as deliver them by hand,” he explains. For travellers, it is cumbersome to look up hundreds of operators, so redBus.in works for them. “We make sure that, if a person books a ticket with us, we give multiple options,” says Sama. Just like the hotel industry, their website books 10 per cent of seats on various routes. RedBus dominates in south India, and is looking at western India as well.

Initially, Sama was told that no one would buy bus tickets on the Web, that the online model worked only for airlines and the railways. “But the same thing was said about the other two modes of transport as well, and it wasn’t easy to change the mindset of operators,” Sama recalls.

The operators, too, were wary. Marketing the concept was a challenge. Fortunately for redBus, The Indus Entrepreneurs (TiE) liked its idea. TiE assigned mentors who made the redBus team work hard to research the business. “It wasn’t easy leaving behind a well-paid, cushy job to start from scratch. But we had to get out of our comfort zone,” Sama says.

He remembers how, in those early days, he and his partners stood outside IT offices to hand out cards to employees. “It was a humbling experience. A few months earlier we were on the other side and used to ignore such people.”

The first operator that agreed to sell tickets on its site told redBus that if they managed to sell five tickets in one week he would give more seats. The number seemed small, but for the first four days no one booked any tickets. Then, on the fifth day, a woman booked one ticket, and soon they sold the other four. The key “big push” came in the form of a VC who invested Rs 3 crore in the company and advised them to do bus ticketing — and that’s what Sama did.

RedBus now employs 370 people, operates seven location-specific call centres, and home-delivers tickets. It sells about 5,000 tickets a day. Sama believes that they are just starting to capitalise on the potential of online bus ticketing. Sama may not have reached Hyderabad on that fateful Diwali day, but the journey he did embark on is taking him places.