JustRide was selected as one of the companies on Google’s Launchpad , Startup Accelerator Programme and is one of the most promising startups in the country . In an interview with FWD Business, Amit Sahu, one of the co- founders of JustRide throws light at the mechanics of the shared economy and aggregator space in the country .
JustRide was selected as one of the companies on Google’s Launchpad, Startup Accelerator Programme. Congratulations! What do you think would be the takeaways from the programme? Could you also tell us how the JustRide idea formed?
Thanks, Google Launchpad programme was more than what we could have asked for at such an early stage. We are excited to be mentored by some of the world’s finest entrepreneurs and Venture Capitalist Experts. Our takeaway would be the experience and learning about the market in other parts of the world and also different startups market perception and penetration scheme. JustRide was an idea that came to us after an unfortunate accident. A car owned by Ashwarya (Ashwarya Pratap Singh- one of the founders) met with an accident and went into total loss. This is when it struck us that buying a car could be a big risk on our balance sheet. Most young car owners avail loans of around 6 Lacs and end up paying around 7.5 lac for an asset which depreciates at a much higher rate. Secondly, when Ashwarya’s car met with the accident it had run only for 5000 km. After a settlement from the Insurance firm, he suffered a loss of 2 lacs. So, In total, we paid around Rs 40/Km (excluding Fuel) for a car which we lost. Being financially unstable in a start of his career, it was a big loss for Ashwarya. So, we did our market research and found that there were many who faced the same problem. So we started to think on the lines of building something to diversify and spread the risk. Car ownership sharing was the best possible option at that time and we decided to take a plunge into it. A team was formed within a month and thus started the JustRide journey.
Rent-a-car is an old idea. What made you believe that there could be space for innovation here?
Though Rent-a-car is an old concept, integrating it with technology available in the current market can change the business altogether. There are a lot of big names are in the market but most of them are focusing on the corporate sector. The self-drive car rental penetration in the Indian market was less than 1% of the total market size in India by the end of 2013. We took leverage of the same and focused on the B2C market which was seen as the riskiest segment. But we were ready for the challenge and with our technology in place we have been able to penetrate the market at an appreciable rate.
JustRide is not the proprietor of the cars that it rents out nor are the drivers. How does this arrangement work and does it not lead to complications?
Yes, aggregating self-drive cars in India is not easy. The law strictly litigates that a person who wishes to enter this business must have a rent-a-cab license. Obtaining this license is not easy as the law stipulates that the operator must have a fleet of at least 50 cars. We tie up with vendors who are licensed to operate in this space. Since all our vendors are licensed to operate in this space, we do not expect any complications to arise.
Though Ola and Uber are not exactly rent-a-car companies, don’t these major players like offer competition? How did you look at this challenge when you started off with the idea?
Ola and Uber have a completely different model from ours. To be honest, most Indians aspire to own a car today. We are asking to share the ownership of a car when you don’t require it. At the same time, Ola and Uber never give you the satisfaction of car ownership that we provide. This is something we knew right from the beginning and never considered such big players as our
competition when we started off.
What is the Smart Vehicle Technology (SVT) and how is it helpful to JustRide and the customer?
Smart Vehicle Technology is a datadriven technology in which we are trying to tap data from the OBD port and analyse the data to get a lot for driving information about a particular driver. The need of it comes in a self-drive car rental business because handing over a car to person whose driving behaviour is not known is a big risk in our country. We have a dynamic deposit right now based on driving behaviour which gives us a lot of traction. Customers have an opportunity to get a good deal if their driving skills are good
On the technology side, what are the updates and advancements that you are trying to bring in?
Our idea is to simplify the process of renting a car while providing the maximum benefits to customers. By providing incentives to customers to drive well through our Smart Vehicle Technology, not only are we rewarding the good drivers, we’re also encouraging customers to work on their driving prowess. SVT, if implemented well, could go a long way in improving road safety in our country.
Do you think rental cars are the way forward? If yes, why ?
We are in the initial stage of a shared economy. In our way forward, individuals would understand that buying an asset is not as economical as renting it out. Though market is yet to mature and it will take time for the mindset of customers to change. But according to our demographics- study and other market research, we see this industry is growing very fast and market penetration would exponentialy increase. The car ownership rate in India right now quite low and traffic conditions are already at its saturation level. o, shared economy is one of the biggest solution currently. That will boost the market a little more than expected.
JustRide has raised more than $3 million in funding? What are your immediate plans and which are the major cities that you are trying to expand into?
We currently operate a fleet of over 300 cars in 4 cities. As aggregators, scaling of inventory is not an issue as it does not require any significant investment on our part. At JustRide, we focus on developing scalable technologies, which would assist us in reducing operational cost while ensuring fixed returns for all our stakeholders. We are looking to expand to 12 cities with around 2,000 cars by the end of 2016 and we hope things go as per plan.
In the general scheme of themes, how do you think a product or a company should be built? Is creating a niche the only way ahead?
A product should be build focusing the needs of the society. If you have a product which can simplify life and can replace something that is costlier, you will always be successful. Niche products have their own market and whole different target audience. We are mostly willing to bet on niche products merely looking at the country’s per-capita income growth. As India is among the emerging countries, high-end product could dominate in future, in fact, the probability is very high. India, being a very cost-centric market, the growth of any company will be good when the product is accepted in all ranges of our society. A company should be available for all segments of the Society.
What is your take on the business scene in the country, in general, and more specifically the aggregator space, be it cars, hotels or housing?
Any good idea has a great potential in India, as the total population in India is around 125 Cr and tapping even 1% of them will itself be around 1.25 Cr. A company having a product used by 1.25 Cr people is any day a successful company. So the chance of success would always be high. And in the same context, the investors will always be interested in India as they see good future for any good product. Aggregator space is heating up these days, Aggregating gives you the opportunity to scale at a level higher than any other asset owning company. Be it Ola or Uber in comparison to Meru but the profit margins of both are very different. Aggregators play on volume for profit while the others play on perasset profitability. Moving to high technology and shared economy aggregators will always have an upper hand on the market but good ideas and profitable model will always be on the side of others. The market will obviously increase with time. Let’s hope for the best.
Text: Varun Kannan Photos: Various Sources