Travel portals are a hot segment in India and have received a good chunk of change from investors. Quite a few of the well-known travel portals are in the airlines and hotel reservation space, but there is another low-hanging fruit in the Indian travel segment that is gaining momentum: bus travel. Every day millions of people travel to various destination in India, and yet there are very few online options for travelers to book their tickets. redBus, a Bangalore-based startup is focused on creating a comprehensive end-to-end e-commerce solution that includes online and offline options for bus travelers

Phanindra Sama, co-founder of redBus talks about how they started their company, entrepreneurship and of course a new and improved way of booking your bus tickets.

KB: What does redBus do?

PS: redBus is an aggregator of bus tickets. It is a giant travel agent that gets its strength in distribution from the following channels: website (about 1 million page views a month); call centers and offices in Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Mumbai, Pune, Vijayawada and Vizag and Partner distributors (Subhiksha, BangaloreOne, Oxigen, Sify iWays and the list keeps growing).

Online is just another channel of distribution. Unlike other e-commerce sites a user can order a ticket online and then have it delivered to their home, where we can collect the money for the ticket.

KB: What is the problem you are trying to solve? Are you doing anything different when it comes to booking bus tickets?

PS: Before redBus came into being there were a bunch of problems customers faced: unable to buy a return ticket or get a comprehensive list of bus routes. Let me explain. Let us assume that you go to a travel agent in Mumbai looking to buy a ticket for Pune. The agent may tell you that there is a bus that leaves at 8.00 pm. But, that might not be the case since there are other buses available at different time slots. This travel agent might not be able to offer you that option since he/she might not have a tie-up or does not favor (due to commissions etc) the other bus operators.

Other problems that customers face include incorrect information on the cost of bus tickets since there is no published list of bus fares. Furthermore, customers do not have the ability to do comparison shopping or choose their seats. Plus, there is no way to use the Internet or mobile phones to book your tickets.

This is where redBus comes in. We play the role of an infomediary, where we are trying to bridge the information gap. At a secondary level we provide easy to access channels for consumers to buy their tickets with different payment options.

KB: How big is the market and who is your competition at the regional and national level?

PS: There exists no formal study on the market as yet. However a back of the envelope calculation shows that the market could be about Rs.15,000 crores. Competition is largely regional. In Chennai there is ticketgoose. In Bangalore there is customerneedz. In Mumbai there is Ticketvala and in Hyderabad there is abhibus. However, none of them match redBus in terms of the number of bus operators, routes and customer base.

KB: What prompted you to do a startup in this space considering that bus tickets booking is a low-margin business? Does it help your business that this is a fragmented space?

PS: Yes, selling bus tickets is a low margin business. But the volume of the business is absolutely attractive. With the increase in usage of technology (internet/phone) for reservations, we are confident we can make money. Fragmentation does help! It is a huge entry barrier for others.

KB: Did you look at other areas before settling down on your current business model?

PS: Yes. We did look at selling / licensing software solution to bus operators. In fact our first business plan was dependent on that. We pitched our solution to some operators in Bangalore and saw that they were hesitant about sharing their operational data (number of bookings, total turn over, commissions paid to their other agents etc.) with a company that could be their agent as well. Between the choice of being a software vendor and being an agent, we chose the latter.

KB:What is the best part of doing a startup?

PS: The best part of doing a startup is the personality change one undergoes. Now, you have to weigh every word and decision you make. In the process you suddenly find yourself as a mature person.

KB: What are some of the challenges of doing a startup in India? Paperwork and bureaucracy? Hiring? Office space? Lack of ecosystem? How did you solve these problems?

PS: I don’t know how it is abroad, but I feel, there should be a ‘Startup zone’ on the lines of ‘Special economic zones’ to encourage entrepreneurship. Government. should overlook some regulations like painting of office periodically, office timings etc. along with tax rebates (if possible J). Today, we spend significant amount of time in making sure that we are compliant with all such regulations. Believe me, there are innumerable compliance’s to be followed and I respect most of them. However we are a young company with limited bandwidth and I have to spend my time on growing the business failing which I may not see the light of the day. Under these circumstances, Government could provide me some breathing room.

KB: How difficult was it to raise fund for startups in India? How much money did you raise? What do you plan to use the money for?

PS: In our case, the fund raising was relatively easy. We were being mentored by TiE, Bangalore chapter and it added to our credibility. We raised a million dollars and have been using it on technology and operations.

KB: When you look back what are some things you would not do when you have to raise your second round of funding?

PS: I would not spend any time in discussing with people if the valuation was fair and what valuation I should expect etc., There is no mathematical answer to it.

KB: Who do you turn to in times of crisis?

PS: Sanjay Anandram, our mentor and Bharati Jacob, our investor - absolutely fantastic people to talk to in times of crisis.

KB: Who is your role model as an entrepreneur?

PS: I never thought of anyone, but I like reading little anecdotes about Dhirubhai Ambani and how he built his company.

KB: What are your future plans in the next 12-15 months? How difficult or easy is to stick to your roadmap and schedule?

PS: In the past 18 months, we discovered that there are many other things that could be done in the bus transportation space. It is difficult to stick to a roadmap. At the same time, we draw a lot of motivation every time we beat our schedules.

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