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Category Archive : Brand

My atrocious car buying experience is a lesson in after sales treatment for all founders!

I am re-reading How to Sell Anything to Anybody by Joe Girard (book review coming soon).

Earlier today, I finished his chapter on Winning After the Close wherein Joe talks about the importance of ensuring customer satisfaction AFTER completing a sale. He gives examples of how he goes out of his way to ensure that his customers sing his praises to their friends and family. He links the importance of satisfying his customer to the Girard’s Law of 250, i.e., each person has a direct connect to 250 people; therefore, an unhappy customer can directly influence 250 people. Consequently a salesperson or a business that disappoints two customers a week will have 26,000 negative influence every year!

Why is it important to follow what Joe Girard says? For starters, the man still holds the Guinness Book of World Records for being the most successful car salesman in history. This man was selling six cars a day (on average) while the average salesman struggled to sell one. He was out making $500,000 a year selling cars in the 1970s, i.e., eight times the per capita income in the US of A – TODAY!

So yes, when that man says something – it is worth our time and attention.

I am coming back to my point for the post today.

I just bought my first car in India. It was an important moment for my team and me. We were ecstatic on getting the car delivered on Tuesday evening. However, instead of reveling that moment and remembering it for the years to come, all we cannot forget is how the salespeople delivered the car with just enough fuel to get the vehicle to the closest petrol pump!

The saleswoman blamed the empty fuel tank on some dealership policy of ensuring that customers get a bone dry fuel tank. I could not disagree more with her firm, her firm’s strategy, and finally with the saleswoman herself. If she was so embarrassed about her firm’s stingy policy, she could have ensured a happy customer by filling up the tank herself – she would make more than the Rs. 2200 it cost me to fill the tank.

Buying a car is one of the most important purchases in one’s life. I can still remember, like yesterday, the first car I bought with the money I earned by working during the first summer semester in college – a 1996 Mercury Sable with a v6 engine. I was so proud of the car even though it was six years old at the time of purchase. The moment gives me goosebumps even today.

Then 17 years later I buy my first car in India, a Honda Civic, and it is an expensive car (for my standards), but it was delivered as though the dealership was running out of money. It left a sour taste and you won’t have to think hard whether this dealership (Arya Honda) will be recommended by me to anyone. The answer is no.

I must re-emphasize that a happy customer is the best salesperson. He/she will boast about his/her positive experiences to their closest network. On the other hand, an unhappy customer will tell anyone that would like to hear him/her of their negative experiences and feeling cheated by a car dealership. Unfortunately, these car dealerships operate under old maxims therefore continue to misread their customers. Any start-up founder that is reading this post should not.

Your customer whether they are B2C, B2B, B2B2C or B2B2B or B2B2B2C (and so on) must be happy with their purchase of your goods or services. To hide behind the veil of corporate policies is the old way of doing business, and you must ensure that your salespeople are sufficiently empowered to ensure post-sales customer satisfaction, at all costs! It is just as important that those negative experiences are corrected by changing policies and processes.

The process in which the company acquires a customer, gives them lousy experience, and allows the salespeople to blame an insane corporate policy is a sure indication of a deeper rot settled in that organisation.

A rot that every entrepreneur should guard their companies against the cost of all their corporate policies.

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Would you rather hear me or read me?

Yesterday I was in Lucknow attending SIDBI’s first Investor Day in honor of their foundation’s 29th anniversary. Over 40 fund managers were present, representing thousands of crores in capital available for investment. Considering the dry powder that was going to be available in the room, the SIDBI team sourced 20 start-ups to pitch to the captive audience. The standard of the start-ups, the quality of their pitches, the professionalism and punctuality with which the event was carried out was truly unique. I have congratulated the SIDBI team privately for executing such a well-organized event but would also like to do so once again publicly through my loudspeaker (read: blog).

After the event, a few of us (fund managers) got together to catch up over drinks and hunt for Lucknowi kebabs. Since we rarely get the time or occasion to meet outside events, we took this opportunity to share several things with each other, from the books we were reading to the morning routines we were following. One of the heavily discussed topics was the podcasts that each one of us was listening to. The list includes; Joe Rogan Experience, The Skeptics’ Guide to the Universe, Dan Carlin’s Hardcore History amongst others.

By the time I got back to my room, it was midnight. I had a full stomach and my mind had been stretched in many new directions. All in all, it had been a day well invested!

This morning on my flight back to Mumbai I replayed last night’s conversations about the podcasts that my fellow fund managers were listening to. It got me thinking whether I should move my own blog to a podcast – or have it co-exist with the writing?

There are few (if hardly any) podcasts that capture the perspective of an early stage VC in India. I was wondering if it would be more convenient for the 9,000+ followers of showmedamani.com to hear my podcast instead of reading my blog. The biggest benefit for me (and my team) would be that, it will be easier to project my dry sense of humour (accurately) through voice modulation over prose. So, my question is…

38/2019

My PR Experiment

Yesterday was an interesting day. I started off by tasting different blends of single shot coffee made by a start-up that we have been eyeing for a while now. They have been some gaining significant traction and the tasting culminated in the issuance of a term-sheet. In my next appointment, I visited several branches of a food aggregator that provides home cooked meals in an IoT enabled device. The heavy dose of caffeine from the morning helped me stay awake after an extraordinarily heavy lunch, but I really liked what the company was doing, and so we issued them a term-sheet too. In the last meeting of the day, I was with two entrepreneurs who are looking to fill the niche left open by Bira in the beer industry, and so I ended up tasting their different beers. Their product, taste, packaging and brand positioning are all unique and I’ll be honest, we are contemplating issuing them a term-sheet too. But no, this blog isn’t about tasting and issuing term-sheets, it’s about the commonality I observed in all three funding outlays, which I asked the founders to rectify i.e. instead of outsourcing it to an external agency, build an in-house marketing team to manage social media channels, PR and internal-external communication.

I used to erroneously advocate outsourcing PR and media management, but that viewpoint was permanently altered. I conducted a yearlong experiment in which I discontinued the services of our external PR agency and brought those functions in-house. Not only did I gain more control on what Artha (and I) wanted to communicate, but we also got more media mentions, got covered by the top journalists and were invited to renowned events around the globe. We also started publishing separate monthly and quarterly newsletters for our LPs and well-wishers.  All this effort has paid off through a marked increase in business for all the Artha entities, but most importantly, we achieved all these objective at 60% off our previous costs.

All of our PR (yes, all of it) was organic and genuine i.e. unpaid for. We did not sponsor events, pay for advertising in publications or authored articles. Things are moving so well that this year we are expanding the internal team by bringing in a Social Media Head that can move us from prose to video. Since we understand that the entire process isn’t a one-man job, we are allocating him/her a budget to recruit a team to facilitate this transition.

This massive cost saving got me questioning the PR/Media management agency model and whether it really works for an early-stage startup. I am afraid it does not. It takes many months and a lot of effort to get a brand new startup relevant and unpaid media attention. Unfortunately, early stage start-ups do not have the budget to compensate top-level agencies for their effort or even tier 2 or tier 3 players (unless they can secure a strong referral). Therefore, start-ups end up working with PR firms that themselves are starting up.  These PR firms overload their staff with multiple projects, to make ends meet, distributing the employee cost over the projects to make operations profitable. However, that divided cost also means divided time and focus on each project – a situation that does not bode well for start-ups trying to make a dollar for every penny invested in marketing. In fact, I have seen PR agents pitch 4-5 ideas to the same journalist in a single bid hoping to get any of them published. Is that really how you want your start-up to be pitched?

Another issue that works against the interest of the start-up is when a PR agency works hard to meet the KPIs they have promised and manages to do so in the first 15 days of the month. Having met their KPIs, they go radio silent for the rest of the month. This essentially means that their promised KPIs are the limit and not the base on which the agency works – completely opposite to how founders set KPIs for their internal team. After all, you can only create value for your company when you get more value than you pay for, isn’t it?

Therefore, I have come to a conclusion that PR agencies are useful for short sprints or Big Bang announcements, but the marathon work of building an image and brand for your startup should be done by an in-house team. In fact, even the 22 Immutable Laws of Marketing recommends the same!

37/2019

Video Of The Week: Vishal Krishna Interviews Confirmtkt Founders

A few days ago, I saw a Facebook live interview of Confirmtkt’s founders, Dinesh & Sripad. Early on, I had led a round of investment into Confirmtkt and also sat on their board for a few years along with Pravin Agarwalla.

Back then, we both went through a very tough phase with the founders (and the venture), which the founders recount as something that gave them “sleepless nights” in this interview. While I quit the board last year, my eyes were full while watching the two of them. I’d credit the interviewer, Vishal Krishna for bringing out this story so well.

Vishal’s interviewing style is awesome. He is extremely well read and well-prepared with questions for the people whose venture he is interviewing. This thorough preparation helps him delve into the deeper delicate, intricate details with the interviewee that would otherwise have been missed out. I can vouch for this because he has interviewed me before and dug out some details that even I had long forgotten.

The video focuses on Dinesh and Sripad’s journey of becoming responsible and established leaders who grew Confirmtkt into a category leader and a sustainable enterprise. This is what makes it my video of the week as well as the inspiration for my blog post tomorrow.

24/2019

Aakash, Artha and Designer-as-a-Service

YourStory did a profile on one of Artha’s in-house companies Artha Creative Studio, led by Aakash Jethwani. He is a thought leader in the design thinking space and his thoughts were covered today in this ADC article.

I have known Aakash for almost 5 years since he first sent me a funding proposal for his EdTech start-up that taught ethical hacking to coders. I asked him to provide a hacker’s analysis  for one of the start-ups I was leading a round of investment in. His report was so thorough (and shocking) that I recruited him as the CTO for the company he had analysed!

As the CTO, he taught himself web design and built a fantastic website at only a fraction of the market cost. During the process, he experienced the limitations of an in-house designer first hand and saw a niche in creating innovative web and app designs for start-ups. He reached out to me saying that his work with our investee company was done and that he was ready for a bigger challenge.

Around the same time, I noticed that although many of our investee companies had in-house staff to help them with designs, most of them were mediocre. This did not make any sense and I learnt that:

  1. Start-ups cannot afford experienced designers as they are very expensive
  2. In-house designers that start-ups can afford are juniors with little experience, who need access to several tools to produce unique & innovative designs. Those tools could cost as much as ₹25-40,000 per month – as much or higher than an experienced designer’s salary!
  3. The in-house designer’s design suggestions are overridden by the tech heads because they lead to extra development work. Therefore, designers are instructed to build designs that cater to the needs of the tech team rather than the company’s target customer.  When this design fails, as it should, who gets blamed for it? You guessed right – the designer!
  4. Designers suffer from tunnel vision as they are only working on a single project within limited boundaries drawn by the tech team. Over a period, their enthusiasm dies down or they leave for greener pastures. The new designer that comes, brings in new energy but that dies again soon.

When Aakash proposed creating a design studio where he would…

  • create innovative web/app designs for start-ups
  • work with the tech development team to implement the design
  • monitor the audience’s interaction and make incremental changes

 it was music to my ears.

I asked him to test this thesis by working on in-house projects first. He provided the designs for:

Next, I introduced him to my close network who raved about the design as well as the results they received from his work.

I could see that he was onto something big so after all the tests we decided to induct him as the CEO of an Artha brand. Aakash has been baked over hot coals to get this job but I am happy to have him on board.

If you are looking for an innovative design for your company, I would strongly recommend that you reach out to aakash@artha.studio.  

11/2019

Modern retail will choke the life out of (young) consumer brands

A speaker at a recent closed-door conference that I attended, made a presentation on the different kinds of business models and what makes them successful. One very important observation that he pointed out, and that stuck with me was:  

If the key to the success of a restaurant start-up is location, location, location,
Then the key to the success of a consumer goods start-up is distribution, distribution, distribution.”  

Expressing my investment focus on consumer brands in a blog post earlier this year and in the interview with Sudhir Chowdhary of Financial Express, propelled some excellent deals into our pipeline, many of which are in the advanced stages of evaluation. Most of the start-ups that came to us however, were utilising modern retail as a part of their distribution strategy, an expensive approach, that I have some serious doubts about.  

Most modern retailers take 30-35% of the sales price of product as their “cut”. For 90% of start-ups, this massive pay-out is equivalent to the cost price of the product. Over and above this cut, start-ups must shell out money for ATL/BTL marketing, PR, etc which makes the total marketing cost well over 50% of the sales price.  

Although such a large pay-out of the sales price is required at early stages, marketing costs are meant to reduce over time and become a smaller percentage of revenues with scale. Retailers however, continue to ask for a standard 30-35%, causing a massive drag on financials.  

Furthermore, most modern retail stores have terrible payment terms (barring a few) and withhold payments for 45-60 days causing expensive start-up capital to be stuck in working capital. Most retailers also have clauses that force their vendors to take back items that have not been sold and are approaching their expiry date, which could be a function of the store not performing well due to certain issues that the vendor has no control over.  

For the expensive money paid out to modern retailers, they provide very little data on the consumers that are buying a start-ups’ wares, making it difficult for start-ups to get accurate customer insights and improve their offerings or develop new lines of products.  

I have been heavily influenced by a case study that I did in college on how Walmart destroyed Vlasic pickles in the early 2000s by becoming its biggest customer and the reason for the drop in its margins. Vlasic eventually filed for bankruptcy protection.   

In my opinion, selling directly via an online e-commerce platform or through their own website is the way to go. Although this may lead to copious amounts of money spent on marketing and logistics, it pales in comparison to the amount start-ups shell out to modern retail chains. Additionally, direct selling gives the start-up access to direct customer feedback (which is invaluable) which will significantly improve the product & research team’s understanding of the target audience and allow customer service to quickly respond to consumer grievances, suggestions and behavioural changes. Another upside is that the products can be shipped nationwide beyond the geographical boundaries of modern retail stores. This is something that has the necessary “escape velocity” to quickly scale revenues – I cannot impress enough upon the importance of this feature for the investment attractiveness of a venture.  

The point that drives the proverbial final nail in my argument to avoid a massive reliance on modern retail is the emergence of several private label brands. Many retailers (Amazon included) use the sales data of top performing categories and brands and start looking for options to private label them. This means that not only is a new brand paying these modern retail stores 30-35% of their revenues, but they are also acting as the guinea pig to augment the retailer’s private label portfolio and increase its profitability.  

Therefore, I strongly advocate that founders should avoid the modern retail route until they have reached a commanding size or just avoid them (if they can) altogether.  

99/2018

All that Glitter is NOT for a Startup Founder

I find it extremely hard to empathise with founders who want to “maintain” a certain lifestyle with a large team and a swanky office to “feel” like an entrepreneur. Founding a start-up is a messy and dirty affair and there is no amount of sugar coating that can change that fact.

Founders who find motivation in the fluff of being an entrepreneur; a fancy office, a ton of employees and a flashy lifestyle have got it all wrong. Very few businesses start out that way and in fact very few ever reach that size. For every OYO out there, there are millions of no-name companies that are providing a respectable living to the business owner but aren’t making the 30 under 30 Forbes Asia list. In fact, the concept of OYO came to Ritesh because his business (Oravel) could only afford to put him up in shoddy two-star hotels. Today, he heads the world’s largest chain of single brand hotels. Similarly, the founding team of Wow Momos started out by selling momos at a roadside stall. Even I started my career living at $20/night hotels and knocking on people’s doors. And trust me, it wasn’t glamorous at all.

Therefore, individuals that are willing to put their salary as the last pay-out i.e. paying themselves after the salaries of their entire staff; those willing to reduce their lifestyle choices to adopt the ones their businesses can afford; and those who will make a Re 1 business expenditure work like a Rs 5 one, are the ones who should take the plunge into entrepreneurship.  The rest can wait!

95/2018

The Journey from 500k to 5 Billion Demolishes 5 long-held Startup Myths

It has been over a week now since the news of OYO’s $1 billion round and ascent to unicorn status became official. This is a huge accomplishment for Ritesh and the entire Indian start-up ecosystem as the new round’s purpose is primarily to expand OYO’s reach outside India, something very few Indian start-ups can boast of. I expressed the enormity of this moment in a quote to Ananya Bhattacharya of QZ.com.

OYO’s journey smashed many myths that founders, investors and journalists hold strongly about start-ups. I took the last week to decide the 5 most common myths that can be done away with, for good.

1. The first-round valuation is important to set the floor for later rounds

OYO’s starting valuation of less than 3 crores was not an obstacle in its journey to become the 2nd most valuable Indian startup. The important thing is that Ritesh was able to EXECUTE the plans and ideas that he pitched in his fundraising presentations.

P.S. OYO did well even though we invested in their seed round in tranches… it did not affect any of their growth rounds of equity, obviously!

2. Founders should save equity for later rounds

It is important to note that: 75% of zero, is zero. Unless there are multiple term-sheets being shoved into a founder’s inbox giving him/her stronger negotiation leverage, founders should just focus on raising enough capital to execute the objectives set for the round and investors should provide value-adds besides the capital. Founders that under-raise or hold long drawn-out negotiations for better valuations are doing themselves and their startups a disservice.

3. IITs/IIMs degrees is a pre-requisite for startup success

It is well known that Ritesh did not go to college and got a $100k Thiel Fellowship for choosing entrepreneurship over a college degree.  His journey is a testament that even the best education is useless if it cannot be applied in the real world that we live in. I enjoy working with humble founders like Ritesh who; work hard, study hard and are teachable over conceited founders that expect royal treatment for the degree(s) that they hold.

4. Only deep-tech and hi-tech startups get the big bucks or those with a truly unique idea

The real beauty of OYO’s success is the simplicity of its business. Since none of the incumbents were paying attention to the gap in the budget accommodation space, it allowed OYO to swoop in and leave them in the dust. OYO’s initial premise was to provide a clean room, free breakfast and free wifi at an affordable price – that’s all. The execution required hard-core sales and marketing prowess and strong leadership aided by technology, not the other way around.

5. Founders should not pivot or that will destroy their startup

It is important for founders to have a flexible business plan so that they can address the changing needs of their target market. Ritesh pivoted Oravel to OYO rooms, Harsh Shopsense to Fynd and there are many such success stories that started out very differently from where they ended up and they all teach the same lesson – be prepared to change the action if the outcome is not what was expected.

91/2018

Why did we Invest in Haazri?

There is a serendipity in deal-making once one summarises the events that lead to its closure. Today, as I announce our investment into Haazri, that is how I feel. My first interaction with Haazri was unbeknownst to me, during the long hours that I spent at Yash’s office ordering numerous cups of the chai that almost immediately gave me a kick. I profusely praised Yash’s peon assuming that it was his magical hands that had prepared the perfect cup of chai every time, when in fact the magic was happening downstairs, at Haazri’s kiosk in the Naman Midtown lobby.

It was at an IIM-Indore event that I realised my praise had been misdirected. Haazri was pitching at this event and had brought in batches of their freshly prepared chai for the investors to enjoy as a part of their presentation. I immediately recognized the flavour and feel of the chai. It was intriguing how the young founding team – Dhruv Agarwal, Karan Shinghal and Arjun Midha had cracked the code of making the exact same awesome cup of tea without having any previous experience in the food industry. To test the product further, I invited them to our office for a follow-on presentation nudging them to bring a batch of their tea. They arrived with a thermos full of the chai that I had grown to love. It tasted the same and gave the same kick which was hard to replicate; I was hooked.

What I found interesting about Haazri’s business model was their approach to standardize and limit each menu item right from the outset. For example, ingredients for the chai are individually weighed at a central warehouse and distributed across their stores, which are then used to make a single batch of fresh chai. Perishable items like milk are procured directly from brand distributors and delivered straight to the store, thereby ensuring that there is no adulteration. A similar practice is also followed for the food items on their menu.

In fact, the founders have gone a step further to train the staff on when to add specific ingredients using a stopwatch. This ensures that there is no alteration in taste and that the final product is identical to the last, every single time.

I have studied and invested in many food plays in the past; my family also owns a couple of restaurants & cafes, but rarely have I ever found the level of preparedness that the Haazri team displayed. In their quest to provide the exact flavour & texture of tea to the nth customer, they have developed robust SOPs which have had an exponential effect, something that they themselves could not have imagined. For example, since each food preparation comes with the raw ingredients weighed and individually packed at the central warehouse, the founding team keeps a tight lid on pilferage. They make sure that the number of packets consumed from the inventory either lead to a sale or have a solid alibi. When there is a discrepancy, the founding team investigates and penalises the store staff responsible, thereby letting them know that they are always watching. This level of granular control is what made me jump out of my chair and pursue them further.

The Haazri team maintains a limited menu of food & beverage items which reduce wastage, inventory, staff requirement & sophistication. Additionally, it reduces the capex investment per store to the sub 5 lakh range (including rental deposits). The low capex, opex and wastage significantly improve their bottom line, allowing them to provide items at a fraction of the cost of Chaipoint or Chaayos but at a slight premium to the roadside food & tea vendors – a premium that people are willing to pay for standardised items with better hygiene. The more we dug into Haazri, the more we realized that this fits perfectly into our fund’s investment strategy. Therefore, we decided to start working with them to gain a better understanding of the team.

First, we asked them to explore a B2B option for small offices that in our opinion run an inefficient pantry and delivered substandard products. With Haazri’s low-cost base and fresh standardized products, they could easily replace the live tea & coffee services, or machines. They made an earnest effort towards this approach and have more than 50 B2B partnerships onboard today. This avenue helps them pay for the stores fixed costs and provides a fixed base revenue each month.

Then I asked all three founders to join me in Kolkata where I had convinced the founders of Wow Momos and Chaibreak (an AIV investee), to share their experiences on finding a niche, building a bootstrapped brand and continuing to innovate & dominate their respective niches. While there is no better teacher than experience, learning from the experiences of others comes in at a close second. I am thoroughly indebted to Sagar Dariynani, Muftir Rahman, Aditya Ladsaria and Anirudh Poddar for taking out the time to guide these young entrepreneurs because these interactions led to a positive change in Haazri’s founders’ attitude towards their business.

Once the boys were back from Kolkata, we were ready to issue Haazri a term sheet. The team decided that the company should raise enough capital to be able to open 20 new stores in the next 12-15 months and produce an MRR of Rs. 2 lakhs from each store, so that they could break even at both a store and central level. The founders immediately subscribed to this advice and were excited about the scale that Haazri could generate. However, the DNA of the company to provide products at a slight premium to the roadside vendor but at a fraction of the cost of competitors was always a priority for us as well as the founders. Our research indicated that people in our target market were increasingly concerned with what they had been consuming and didn’t mind paying a slight premium for the guarantee of a standardised, hygienic product.

The investment committee was happy with the work we had put in so far and suggested that we add a coffee option to go along with the tea so that it catered to the larger palate of the target market. I pursued a vendor from Bangalore to provide the raw material that would allow Haazri to sell filter coffee without having to build the complex infrastructure that is required to deliver the perfect taste of filter coffee. The investment committee was happy with the terms of investment and gave their approval. We were all ready to roll.

After a couple of days, our team noticed that the margins had started to plummet. Since Haazri was on our weekly tracker, we investigated the matter further immediately. This revealed that the founders had expanded their menu options based on customers’ feedback. The number of menu items skyrocketed from under 10 to over 30! Deeper questioning revealed that the founders were trying to increase revenues per store by providing more items. My counter view for them was that: while it is easy to maintain the new menu for 4 stores, it would be a nightmare when they achieve scale, running 25-30 stores. They would either have to raise prices or suffer major losses. So, the founders and I concurred on eliminating the menu items that weren’t selling and introduce new ones.

Their fear that the revenues would drop after this change was quickly dispelled as Haazri’s revenues & margins per store improved within just a couple of weeks. This short experiment convinced the founders even further on the value of staying close to their DNA.

Besides the objective of opening 20 new stores, this round aims to build Haazri’s management team to prepare them for rapid scaling. We are looking for a Marketing Head to build a digital presence for the brand through a quirky marketing campaign and an Operations Head who has the experience of selecting, opening and successfully operating multiple stores. The job descriptions for these positions are almost ready and we will share them soon but if you know someone who could be apt for these roles, please do refer them to us.

In addition, Haazri is on the lookout for store locations within Mumbai’s Metropolitan Region. The ideal location would be in a corporate tower; food court, lobby or next to a cigarette vendor’s store. You can reach out to my team by emailing us on portfolio@artha.vc with leads.

In conclusion, I am excited to add Haazri to the Artha portfolio and see a bright and exciting future for them. Now let’s get back to work!

83/2018

3 Reasons Why I Believe OLA Has Lost Its Mojo

Just last year, I was writing praises of Ola’s product mix that allowed it to have the upper hand over Uber. In fact, I was so happy with Ola’s product strategy that not only did I endorse Ola Select’s benefits to all my friends & colleagues and open a corporate account with them but also swore to use OLA exclusively in India. However, in the past few months I have consistently found myself choosing Uber over Ola and (after much deliberation) I can hone it down to 3 main reasons.

1. Ola Select No Longer Offers a Compelling Value Proposition

For those who don’t know, Ola Select offers 4 main benefits:

  1. Ride without Peak Pricing
  2. Skip Booking queue
  3. Prime at Mini-Fares
  4. Free Wi-Fi during the ride

Initially, Ola used to charge Rs. 499 per month to avail Ola Select. Gradually they started increasing this price until it added up to a whopping Rs. 1999 a couple of months ago.

Since my monthly commute costs less than Rs. 5,000, the steep increase in the subscription cost was economically unfeasible. I felt as though Ola’s management was price gouging me and it broke my trust. I heard similar gripes from many who were regular Ola Select customers.

However, when I opened my app today, I found a discounted monthly subscription price had dropped to Rs. 1299, at the cost of capping the surge protection at Rs 75 per ride. It looks like someone at Ola noticed the drop in the subscriptions and attempted to salvage it with this move.

If I assume that Rs 75 equates to a 25% benefit per ride, then it works out to an average bill of Rs. 375 or a 25-kilometre trip which is rare for someone travelling within Mumbai (or most cities except Delhi & Bangalore). Even if I assume that I took those many trips in a month, it would still take 20 rides before the subscription paid for itself and 40 if I wanted to get any additional value out of it. Therefore, Ola Select would make sense to someone who was regularly spending Rs. 15,000 (40 x Rs. 375) on Ola per month – a rarity in Mumbai.

The biggest guffaw of this pricing strategy is that the normal Ola rides are now directly competing with Ubers prices and often, I end up opening both apps to see availability and pricing before I book my ride. This is something I do not recall doing when I was a Select member.

2. Untrained/Greedy Cab Drivers

The quality of Ola drivers has been steadily dropping over the past 12 months, but it has dived off a cliff over the last 3 months. On multiple occasions, drivers have hesitated to arrive unless they know the drop off location or cancelled the trip if it is short or payment isn’t going to be made in cash. Off-late, I observed the most alarming trend in Hyderabad & Bangalore wherein drivers want me to cancel my trip after they arrive and settle with them in cash for a discounted rate below the original trips pricing quote. Clearly, something is going on at Ola that is causing such drivers to be recruited and retained.

3. Filthy Car Quality

Ola’s fleet is ageing rapidly. Their quality assurance teams seem to have gone on vacation since the tablets have stopped working, in-car Wi-Fi is non-existent, the cars are well dented, have their paint scrapped off in many places and have not had their interiors cleaned in months. If Ola assumes that their riders will take 25-kilometre trips in these vehicles, the least they can do is to ensure that their vehicles are providing a comfortable commute.

The overall Ola experience has left a lot to be desired.

The loyal Ola users are now looking for better options and it isn’t a coincidence that Uber has newly launched its Premier vehicles campaign. It assures the rider that they shall enjoy new vehicles and highly recommended drivers for their trip – at no monthly cost at all!

Time to buck up or it’s going to be hasta la vista, Ola!

72/2018