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29 Aug'18

PHAHINDRA REDDY SAMA: A man behind comfortable bus journeys.


“A person is as good as his thoughts and his thoughts are as good as his efforts put on them.”

- PHAHINDRA SAMA (CEO and CO_FOUNDER of Redbus.in



Phanindra Sama, the chief executive officer of redBus.in, is yet another engineer who chucked his lucrative job to start an enterprise of his own.

In fact, redBus.in was founded by three engineers -- Phanindra Sama, Charan Padmaraju and Sudhakar Pasupunuri -- who studied together at the BITS, Pilani, and later worked in various companies in Bengaluru.

Started modestly in August 2006 with a few seats from one bus operator, redBus today is one of the most successful online bus ticket booking agencies. Today, it has 700 bus operators, 10,000 buses listed on it, works in 15 states and sells around 5,000 tickets every day.

Last year Phanindra became the second entrepreneur from India to join Endeavor, a non-profit organisation started by the Harvard alumni.

RedBus has travelled a long way since that Diwali season of 2005, when Phani, as most call him, tried to get a bus ticket from Bangalore, where he was working for Texas Instruments, to hometown Hyderabad. He could not get it from his regular travel agent, nor from many others he approached. So that Diwali, Phani remained alone in his Koramangala flat, which he shared with six others, all of who had studied engineering together at BITS Pilani. And it set him thinking. May be there was some travel agent who did have a ticket. May be that ticket remained unsold, and everybody - him, the travel agent, and the bus operator - had lost an opportunity.

He figured there could be a web solution where all bus operators could put in their seat inventory and people could buy those online. When his flatmates returned, he put the idea to them, and they decided to use their weekends to work on the project (four of the flatmates left the project within months).

"We didn't know anything about the bus industry. We didn't even know anything about software or websites. I was designing microchips and he (Charan) was doing embedded design. We actually bought textbooks on how to write software and started learning," Phani said on a visit to the TOI office with Charan a few days after the landmark deal with Ibibo.

They went to bus operators in Madiwala and Kalasipalayam to sell the idea, but received little encouragement. "The operators listened, but they had a lot of apprehensions about the internet. If the power goes off then how will I generate my trip sheet. My staff don't know how to use a computer. If the computer gets a virus, I don't know how to fix it.

The biggest fear was about their data being online and accessible to everybody. Online transactions meant that black money would have to change to white," says Charan, the obsessive techie who was so excited by Phani's idea that he took a three-month sabbatical from his Honeywell job to build the software.

Finally, two operators, Rajesh Travels and Jabbar Travels, offered a few back seats - the least preferred by customers - to be sold online. With that, redBus went live. "We wanted a colour in the name of our site. And an easy, short word is always best for the Web. 'Red' was the shortest. It also denotes energy, youthfulness. I was then reading Richard Branson's autobiography and that was hugely inspiring, and his Virgin was red," Phani says.

redBus received its first booking in August 2006, there was more nervousness than excitement at the bus ticketing website's office. Would the conductor allow the traveller in? He would never have seen a printed bus ticket before, and he might say this is not a ticket.

"We were scared," says Phanindra Sama, who was 25 when he founded the pioneering venture together with his BITS Pilani batchmates Charan Padmaraju and Sudhakar Pasupunuri. "So we all went to the bus stand to board the customer, who was a lady from Infosysgoing to Tirupati. It was an auspicious beginning."

Given the operators' wariness to computerize, redBus initially worked on the basis of these seat quotas from operators, and returning unsold seats within a defined time before the departure of the bus. Three and a half years later, they introduced a bus ticketing software for the operators that could link to the redBus portal. To their utter surprise, it was a phenomenal success. "In the first one year we signed up over 350 bus operators; it was like one operator getting computerized every day. Operators started realizing that if they made more of their inventory visible on our website, they would get more sales," says Phani. From then on, there was no looking back.

We asked them what they intend to do now. Both will continue in redBus for some time, but Phani says he is keen to do research. We asked what they plan to do with the money they made. "It's all in fixed deposits. But someone told us even fixed deposits are not entirely safe. People lost money in GTB (Global Trust Bank). So we have to see," says Phani.

He shared his story along with the idea that he got with his friends and future cofounders Charan Padmaraju and Sudhakar Pasupunuri via email and after they came back, with a collective funding of INR 5 lakhs from their savings they started building a portal. This was the beginning of redBus! One of the rooms of the house they stayed in became their office.

Once it was ready, they went to different travel agents to get a tie-up for seats in the buses and after zillions of refusal on August 18th, 2006; they finally got their first five seats from a travel agent. “If you sell 5 seats in one week, its fine; if you don’t, don’t bother me again!” – were his words. So in desperation they went out to market themselves and landed outside IT companies and distributed their redBus cards to the employees during lunch hours. On 22nd August, 2006, they managed to sell their first seat for Tirupati, to a woman who was working with Infosys and also managed to sell the rest of the four tickets within the five-day span. From here onward their business took-off!

Now at that time their whole concept was to create a software, sell it to bus operators and give the money to some NGO. But they were amazed to see that none of the bus operators were ready to take it for free also.

But in the year 2006, they got a major leap when they got selected for the TiE Entrepreneurship Acceleration Program. They gave them three mentors to advise them on what to do and how to start a business of their own.

These mentors helped them make their business what it was. They gave them assignments for every week wherein they had to do a market survey of the number of buses, the number of routes, the average price of a ticket, how people buy tickets, the profile of customers, how much commission a bus operator pays to an agent, etc. As a whole, they helped them get a generalized idea of the industry.

That was the time they suddenly became very famous and VC’s started contacting them. But as good students they asked their mentors for advice! Take the money and begin developing the idea – were their words! So they did!!!

Funnily, their initial asking was for INR 3 million and when one of the VC’s spent hours with them revising the plan, that figure multiplied to INR 30 million which was finally agreed on. And in February 2007, they got their first ever funding from SeedFund, which would be invested in a span of three years.

They very intelligently used the money to form the company, hire more efficient staffing and most importantly for setting up the official premises. They slowly managed to grab the whole market, they now had 500 partnerships with bus and tour operators for 5000 routes. It covered 15 states primarily in South, West and North India and had also expanded to Central, North-East and East India. They also launched more packages to make it lucrative.

It now had 75,000 partner outlets and offers ticket booking services from the mobile via SMS and phone. It also delivered the tickets home and earned a gross revenue of INR 30 crore annually. At the same time unfortunately the 30 million they had raised, which was supposed to last for three years got over in one-and-a-half years. This is when they felt the pinch and decided to raise some more funds.

But now the scenario was different. The Lehman Brothers had collapsed and there was a global financial crisis. All the VCs who were interested once were not even talking to them. But luckily in July 2009, with a collective funding from SeedFund, Inventus Capital Partners & other unnamed investors, they managed to raise USD 2.5 Million.

They used these funds for the betterment of redBus and to strengthen its base. They also built a Software as a Service product short for SaaS for bus operators which handled licensing, upgrades and maintenance of the software and from here onwards redBus was no more just a “travel company.”

They now had 250 people working for them in 10 offices — Bengaluru, Hyderabad, Chennai, Coimbatore, Pune, Delhi, Vizag, Ahmedabad, Mumbai and Vijayawada. Along with that they also had seven physical call centers, three satellite call centers and tickets were home delivered in 10 places.

Their range was now increasing, so were their revenues. The company had grown 6x from the time of the initial round of investment but at the same time due to global crisis the valuation of the company went down. But that didn’t affect them as the numbers spoke for themselves. Their revenue graph just went on increasing, they started off with a mere INR 5 Million revenue in FY07 with no profits, and directly jumped to INR 50 Million in FY08, followed by INR 300 Million in FY09 and finally a massive INR 600 Million in the FY10.

In May 2011, they raised another round of funding worth USD 6.5 Million with the help of Helion Venture Partners, Inventus Capital and SeedFund. But what was more shocking was that that year they also managed to make 3.5 Million Ticket Bookings. Now that their accounts had sufficient balance to manage the business, they tied-up with state government services like Goa State Road Transport & Rajasthan State Road Transport Corporation and sold more than 10 million seats at a growth rate of 250% with intentions of International operations in Singapore and Malaysia. With such immense growth and popularity redBus had managed to clock USD 120 Million in gross merchandise value in February 2013. This gave a big boost to their business value. But it didn’t stop them from betterment, as a matter of fact, redBus in partnership with YourBus and Asset Tracker launched real-tracking on their portal.

But with such speedy growth their thirst for more financial backing increased. And as per reports from Business standard in March 2013, they were on their final stages to raise USD 20 Million worth funds at an aggressive valuation of as much as 11 times their net revenue of close to INR 55 crore, thus valuing the company at USD 110 Million. They also acquired a tie-up with Karnataka State Road Transport Corporation (KSRTC) to sell both state owned and private bus operators in Karnataka. Their reach had crossed all boundaries and was making its way to unmatchable success but the news they announced next shook everyone to the core.

In June 2013, redBus announced that they had sold the company to South African media giant Naspers through its Indian subsidiary, ibiboGroup, for around USD 120 million (approx INR 790 crore) at a gross merchandise value (GMV) of around Rs 600 crore. This was the biggest overseas strategic acquisition of an Indian internet asset. A company that was named amongst the world’s 50 most innovative companies, alongside Apple, Facebook and Google by business magazine, started with a boom ended with a boom. In April 2014 it was reported that redBus launched hotel booking powered by ibiboGroup’s back end infrastructure on its website followed by redbus teaming up with Uber (an on-demand cab transportation application) to offer free rides to bus stops in August 2014.

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