“Hi, I am Phani,” he greets you, the corners of his mouth crinkling into a smile. He quickly apologises for being a few minutes late for the appointment. You may mistake him for a fresh grad, but then once he boots his laptop and runs you through a presentation on his five-year-old company, all such doubts disappear.
Phanindra Sama is the CEO of the Bangalore-based Pilani Soft Labs Pvt Ltd, a company that was set up by three friends who studied in BITS, Pilani. The company sells tickets for long-distance buses on the Net.
“This year we thought we will do about Rs 250 crore, but looks like we will do about Rs 350-400 crore,” he says matter of fact, as we meet in a small conference room in Pilani Soft Labs' modest office in Domlur, in Bangalore.
Pilani Soft Labs, or redBus as it is more popularly known, is the offshoot of a bitter experience that Phani had during Diwali of 2005. He wanted to take a bus to his native Andhra Pradesh from Bangalore, where he was working with Texas Instruments, but could not get a ticket even though he got in touch with a couple of travel agents. He was left alone in his flat when his two friends managed to go home for the festival.
Why not try and sell bus tickets on the Internet, thought Phani, as he was left to rue his fate all by himself in the Bangalore apartment that he shared with his friends – Charan Padmaraju and Sudhakar Pasupunuri. The idea took shape over the next few months and by August 2006 the three started Pilani Soft Labs. The rest, as the cliché goes, is history.
Phani quit his job at Texas Instruments, Charan his at Honeywell and Sudhakar at IBM. Pilani Soft Labs has three businesses – redBus.in, the site through which it sells bus tickets; BOSS (Bus Operator Software System), a software meant for bus operators; and, SeatSeller, a software interface for travel agents. First off the block was redBus.in. “We had Rs 8 lakh amongst ourselves, but we spent only Rs 5 lakh,” says Phani.
They were mentored by The Indus Entrepreneurs (TiE), Bangalore. After a few months, the trio raised money from early-stage venture capital firms. Three early-stage VC firms – Seedfund, Inventus and Helion – have invested in Pilani Soft Labs through two rounds of funding, re-affirming their confidence in the venture.
It is the fragmented nature of the bus system in the country that provided Phani and his friends the opportunity to sell tickets on the Net. Initially, it was hard convincing the bus operators to give them tickets to sell. But, once they got a break, there has been no looking back. For the bus operators too, it was beneficial as they were no longer dependent on the whims of the travel agents to sell seats on their buses.
Successful biz model
“There are hundreds of bus operators and finding out their names is going to be difficult. That becomes the fundamental strength in our business model,” explains Phani. Nearly 220 million bus tickets are sold annually in the country, he says, and the business is growing at 35-40 per cent every year. The bus transportation industry, in his estimate, is worth about Rs 12,000 crore a year.
redBus alone sells about 15,000-20,000 seats a day. “On any given day, we sell more number of seats on our Web site than anybody else in the country. The only other site that sells more seats is the Indian Railways',” he adds.
>redBus.in accounts for more than 70 per cent of Pilani Soft Labs' revenues, while BOSS brings in less than 10 per cent and the balance comes from SeatSeller. For both BOSS and SeatSeller, Pilani gets a transaction fee. The company gets Rs 50-60 on every ticket it sells on redBus.in. It has taken a decision to charge a fixed percentage on the bus operators, irrespective of the number of tickets sold. This strategy is in contrast with what travel agents do – they charge a higher commission the more the number of tickets they sell. Pilani's strategy was simple – they did not want to scare away the bus operators. And, it has worked.
Eyeing govt transport deals
It has signed up nearly 850 bus operators across the country, including two Government-owned transport corporations. Discussions are on with a few other Government transport corporations.
redBus' revenues have been increasing every year. From about Rs 50 lakh in revenues in the first full year of operations, it increased to Rs 5 crore the next year, to Rs 25 crore the year after and to Rs 116 crore in 2010-11.
The jump, says Phani, is due to various factors. redBus has not advertised till now and awareness about its service has been spread by satisfied customers. As the critical mass keeps building up, the word of mouth becomes extremely powerful. Simultaneously, it has also improved its service, standardising a host of features. The BOSS software it sells has added to the inventory of seats.
Today, Pilani Soft Labs is a 400-employee-strong company, most of them staffing the seven call centres across the country. It delivers tickets at the doorstep, for those customers who are not Net savvy. “We wanted to be format independent,” explains the 31-year-old Phani, on the company's strategy.
Plans more offices
Over the next couple of years, Pilani plans to open offices in more locations, including a presence in Bangladesh, to begin with, and Malaysia. It has an office in Kolkata and a few operators there have installed the BOSS. These buses ferry commuters to Dhaka, across the border, and the next logical step for Pilani is to open an office in Dhaka, he says. It also hopes to get into the bus packaged tours segment. An IPO may follow, if the revenues continue to grow at the healthy clip that it has grown so far.
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