Ola founder aims to stop Uber’s passage to India

Bhavish Aggarwal, co-founder of ride-hailing service Ola, is in a pitched battle with Uber Technologies Inc. for domination of India’s streets. But late last year, the streets of Chennai disappeared as monsoon rains flooded miles of the southeastern port city.

Aggarwal quickly commandeered scores of boats from wherever he could find them. He helped with government rescue efforts, picking up passengers in fishing trawlers, canoes and inflatable rafts. The stranded cheered his ingenuity and contribution to the recovery.

Aggarwal is counting on his local touch to repel the intrusion of Uber. The San Francisco-based company, led by billionaire Travis Kalanick, said last year it will spend about US$1 billion in India and it has gained ground against the incumbent. Ola is part of an alliance of ride-hailing companies in China, Singapore and the U.S. that have teamed up to challenge Uber with their knowledge of domestic markets, customers and governments.

“We understand the Indian context so much better,” said the 30-year-old, dressed in jeans and a shirt with rolled-up sleeves during an interview at his startup’s headquarters in Bangalore. “Uber conquered a market where people had cars in their garages. In India, we didn’t have garages, we didn’t have cars, we didn’t even have roads.”

Uber, the pioneer of the ride-hailing business, showed off its clout earlier this month by attracting the largest single venture investment ever, US$3.5 billion that came from Saudi Arabia’s sovereign wealth fund and valued the startup at US$62.5 billion. Ola is undersized by comparison. Its valuation is US$5 billion and it has raised less money in its entire existence than Uber did in the last funding round. “Scrappiness only gets you so far,” said Anand Sanwal, CEO of research firm CB Insights. “Uber with the war chest it has can subsidize drivers and even riders. That makes a big difference.”

Aggarwal contends Ola has a better grasp of how to operate in a country with infrastructure challenges like nowhere else. India’s public transportation systems are often overwhelmed by the country’s 1.3 billion people and traffic jams can last hours. “Money is not the thing that wins the market. It is experience,” he said. “When I see people hanging out of packed buses, perched atop jam-packed local trains, a family of four astride a motorcycle, I realize how much still lies ahead.”

Aggarwal can’t conceal his animosity for Uber and Kalanick. He’s partly agitated a foreign rival is trying to lay claim to such a promising business. He also thinks Uber’s tactics go beyond acceptable, including a lawsuit the U.S. company filed against Ola for allegedly booking fake Uber rides to disrupt its business. Ola has denied Uber’s charges in court.

Aggarwal was raised by two doctors in the northern town of Ludhiana, not far from the Pakistan border. When he was growing up, the local public transport system was non-existent. He went through grueling test-preparation classes in the town of Kota to win a spot at the elite Indian Institute of Technology in Mumbai, where he studied engineering.

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After a brief stint at Microsoft Corp., he left to start his own venture. He and classmate Ankit Bhati tried selling holiday trips online, but customers were scarce. In 2011, they shifted to offering car rentals in Mumbai.

What they lacked in flash, the duo made up for in sweat. Bhati coded all day to create the website. Aggarwal worked around the clock answering phone calls and riding the jammed Mumbai trains on trips to pitch customers. In 2012, they began offering rides on demand, at first only to customers who called in their requests. When drivers didn’t show up, Aggarwal borrowed a car from his girlfriend, now his wife, to pick up the client.

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Later that year, they introduced a smartphone app so customers could summon a ride without phoning. The business began to take off and they landed a US$5 million investment from Tiger Global Management, giving them cash to grow. “We have arrived,” Aggarwal thought at the time.

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Then Uber entered India in 2013. Ola had expanded to Bangalore, but Aggarwal knew he had to scramble or lose his head start. The company had less than US$500,000 in the bank and he spent all the cash on expansion. Aggarwal maxed out his credit cards to keep things on track. His credit score is still terrible. “We were tiny when Uber came to India, the challenge only drove us to get more ambitious,” he said.

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Still, it quickly became clear Uber had a lot to learn about the local market. It required people to pay with credit cards, like in the U.S., even though most Indians only use cash. Its app was only available in English, while Ola offered its service in eight other languages.

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Aggarwal’s hard work began to pay off as he added customers and drivers, essential for a service that depends on giving people a lift at a moment’s notice. Rangaswamy H.K, a Bangalore-based driver, uses Ola’s Kannada language version and prefers the domestic startup. “Ola understands drivers well,” said Rangaswamy, who gets paid each day unlike Uber drivers who are paid weekly. “It is nice to see the accounts done and have my day’s earnings in my own bank account.”

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In 2014, Aggarwal found a solution to his cash crunch. Ola got backing from Silicon Valley’s Sequoia Capital and Japan’s SoftBank Group Corp. In 2015, he splurged on an acquisition of local ride-summoning rival Taxi For Sure at a price reported in the local press to be US$200 million.

When we invested, he was one of many players in the market. He has since built a worthy set of services for the Indian market

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Aggarwal also stepped up his emphasis on localization, drawing on his own experiences from not owning a car and navigating the gridlocked streets near his office. Ola was the first to start a call centre for drivers. The company also introduced more vehicle choices: motorcycles, three-wheel autorickshaws and cab options at multiple price points, including BMW, Mercedes and Jaguar sedans. In its premium category, Ola offers Wi-Fi so riders can use their time productively. It also lets customers book trips ahead of time, a “ride later” feature Uber unveiled in the U.S. this month.

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“When we invested he was one of many players in the market,” Nikesh Arora, SoftBank’s president, said by e-mail. “He has since built a worthy set of services for the Indian market.”

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Ola has expanded quickly and is now in 102 cities, compared with Uber’s 27. Uber claims to handle 50 per cent of the trips in its 27 cities “as per internal estimates,” a spokeswoman said. Ola said its market share in those cities is in excess of 75 per cent, according to “third party” measures it collected.

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Uber is pushing hard to gain ground. In Delhi, the company just dropped prices to 6 rupees (9 cents) a kilometre to match Ola’s cheapest offering. Uber is also aiming to add 20,000 more drivers through an alliance with Tata Group that makes it easier for them to get financing to buy Tata cars.

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A spokeswoman for Uber said the company has adapted quickly to the India market, instituting cash payment options, setting up a call centre for drivers and offering a variety of vehicles. The app is also now available for drivers in English and six other Indian languages, she said.

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In his sun-filled offices overlooking Bangalore’s chaotic streets, Aggarwal sees dramatic change ahead for the industry. He predicts self-driving cars will be a reality in five to 10 years and sees electric vehicles gaining widespread adoption as battery prices fall. He jokes that only five years ago he planned his days around autorickshaws and getting back home after a night at the local pub. Now his goal is to make a billion Indians mobile.

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When Ola started in Aggarwal’s hometown of Ludhiana, it set off a family drama: The driver for Aggarwal’s parents quit, bought his own car and registered for Ola. His mother was at first upset. Then she downloaded her son’s app and learned to summon a car whenever she wanted one. “She feels liberated,” he said.

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