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Challenging the Ola-Uber duopoly | BluSmart
Ride-hailing businesses are fascinating- Uber, once as respected as Tesla today, pioneered this industry.
However, it’s also one of the most challenging businesses to build. Both Uber and Ola are yet to turn profitable and have exited from multiple countries.
Gurgaon-based BluSmart has emerged as an exciting player in this highly competitive market, offering a unique proposition: an all-electric fleet acquired directly by the company, rather than relying on drivers to invest in and add vehicles to the platform.
This innovative approach could very well be the winning approach to building profitable ride-hailing businesses!
Founder, Anmol Jaggi is a serial entrepreneur whose impressive track record includes starting his first business in college and leading it to a public listing.
He speaks about building BluSmart. He shares his insights on building sustainable businesses for India and his lessons from his decade-plus journey as an entrepreneur.
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Anmol: My name is Anmol Jaggi. I lead the team at BluSmart and Gensol.
So the story is that I was, I, the Gensol engineering, which is the first business that we started, uh, started in my third year of engineering itself.
Uh, by the time, I was graduating, we were already at a yearly run rate of about close to 70, 80 lakh rupees at that time in 2006 and 7.
Akshay: Wow. Amazing.
Anmol: Which will be inflation adjusted, something like 2 crores plus for today. but yeah, it started off well, I think.
Akshay: Uh, but how did you, like, you know, tell me that zero to one, how did that idea come in your mind? Instead of doing a job, I'll do something on my own. And I, I mean, for a, you must have been like a 20 year old kid. How does a 20 year kid build a business, which is doing like that kind of top line?
Anmol: Yeah. So, I was that college, I did my, I did three internships. First internship was with Indian Oil and Pipeline Divisions.
Second internship was with Bharat Petroleum in, in selling in in retail pumps, so, uh, selling of Fuel. And the third was with Reliance Industries, where we were trying to sell gas. Uh, while we were trying to sell gas, uh, I was given the areas of Madhya Pradesh and Odisa. Both of these areas are very heavily,
Akshay: And selling gas means like, who's the buyer of gas? Like, are these like power plants? So Biogas or
Anmol: oh, we're trying to sell to paper mills, cement plants, uh, large chemical industries, etc.. Uh, not power plants, not for power usage, but for application usage. Uh, so cement plant, paper mills, they were the two major customers, uh, apart from anybody who had a furnace.
Uh, so. So where, uh, heating application essentially Uh, so, uh, we were, uh, we were, uh, I was trying to do that and I was working in Madhya Pradesh and Odisa at that time. I saw a presentation which said there is something known as carbon credits. Uh, basically if you can shift from a high carbon intensive fuel to a lower carbon intensive fuel, you get carbon trades.
This is way back 2005. Uh, and uh, I learned that and I thought, boss, this is very cool here. Uh, if you can transition to lower carbon, uh, you make money.
Akshay: How do make money? Like, uh, let's say I remember like ITC was one of the pioneers of moving to low carbon. Uh, how would have ITC made money on this?
Like, let's say they replaced, uh, energy with solar power. Uh, how would that lead to money for.
Anmol: So, uh, every amount, every ton of carbon dioxide that you save, you get a certificate, uh, from United Nations that you've saved this carbon dioxide, which is a tradeable that certificate is, can be traded in Europe and US.
So, people there want emission reductions because they have emission reduction mandates there. And, you know, emission reduction happens anywhere in the world. It's the same. We have a common atmosphere. So, so that's why any emission reduction that we were doing in India, uh, they were being bought over by, the certificates were being bought over by Europeans.
So, I got a lot of, and I come back
Akshay: So these European companies, this was like a regulation in Europe that they had to reduce. So for regulatory compliance, they had to buy carbon credits.
Anmol: Yes. So, they used to do that. And, uh, so I came back to Dehradun. I spoke to one of my professor, told him, this is a great idea.
Why don't we do something on this? Uh, he said that, there are a lot of hydropower plants in there in Uttarakhand. So why don't hydro power plants produce clean energy? Why don't we get them carbon trades? So we started, uh, one project, second project, third project. He introduced me to a lot of, uh, hydro project owners.
and work just started to happen, then I was juggling between college assignments, traveling to meet my girlfriend and also work for clients.
Akshay: So this would have been, I guess, a lot of, uh, paperwork. Like say for example, you have these, uh, consultants who help you get an ISO certification.
Uh, where they make your business ready. They take your, of documentation process, etc.. So this would be very similar to that, I'm guessing where Yeah, it was, it was a have to follow a process
Anmol: Was 80% was 80% was the process paperwork and 20% was physical activity, which was good. Uh, we built some great relationships in the renewable energy industry. Uh, so while I was graduating in 2000,
Akshay: What kind of physical activity 20% you said?
Anmol: We had to do some stakeholder, we had to do some stakeholder consultation that the project is not, so it's not just that the project should be only saving carbon dioxide. If you have taken a livelihood of people or something else, then it, there its should be no negative impact of the, the project.
So, uh, we used to always study that because it isn't carbon emission reduction is one part of sustainable living, but there are other elements to it also. So whether it it has becaused any submergence of land, for example, in case of hydro projects, did it leave to loss of livelihood for anybody? Did tribal land get for it? So, uh, so these kinda sustainable measures.
Akshay: And, how would you charge them? Like, you would charge them on a pile credit that they receive or you would be doing like trading or like?
Anmol: I used to do both the things I used to trade as well as, uh, provide consulting. So consulting was like bread and butter, cheese and cake was trade. Trading was cheese and cake, so yeah.
Akshay: Okay. So like you would take a commission on the transaction value when you traded and, uh, for getting them the certification, they would be like a fixed fees of based on a number of hours that you need to put in and,
Anmol: Absolutely, absolutely. I was doing a lot of it while I was still at college, uh, and, uh, made some good money, uh, uh, in there I got placed with British Gas.
I was day zero placed in British Gas. Uh, so very happy, uh, to have got placed also. Uh, basically all Indian parents would want, their student would want their kids to have a job and, you know, be very safe. Uh, so I did, I did present it to my dad again, and, uh, my dad had posted only one condition that your business revenue should be greater than your ctc.
And, and with and with the condition that I will also write the MBA exam, CAT exam, uh, uh, even if I decided to become an entrepreneur. So those were some conditions that I had, uh, which I fulfilled. Uh, business was greater than CTC and
Akshay: Uh, yeah. Yeah. Obviously 60, 70 lacks, like, there's no way that salary could have matched, uh, that kind of turnover.
Anmol: Uh, yeah, especially in 2007. Especially in 2007. Today, 60, 70 lacks not much, but, uh, I think 2007 was slightly different, is almost, uh, 15 years back. So money would've doubled twice. Uh, you know, it's, it's eight years money doubled, so, yeah. But, but yes. Um, It was good. So I started off, uh, right after graduation. Then formally, uh, the company had already got incorporated.
So, uh, started recruiting. Uh, after I'd left college, uh, started to build Gensol into a good company on carbon credits. My brother graduated 2010 from IIT Roorkee. Uh, so he also then joined the business. By that time, business was doing very well. In 2010, we got awarded.
Akshay: What! How, how did you learn to build an organization that, how did you learn that I should hire someone in finance, I should hire someone to do sales, I should hire someone.
How is that growth happening?
Anmol: So I would say that is all need of the day need of the, our. Uh, if you were, for example, you know, you needed more projects, then of course you need marketing team. If you're not able to file your tax returns in time, then you of course need a finance guy, etc..
So all that been, all of those have been very organically. Like nobody to my, like I, we are first generation entrepreneur. My dad's been an army officer, which is a service background. It really doesn't, uh, you know, we've not learned it sitting, sitting on the dining table. Uh, so, uh, but, but I think whatever was the need of the our, we used to just pick up that problem and solve for that problem. I think that's how, uh, zero to one, all zero to one stories are like that.
Akshay: And, and your focus was on hiring people who would execute or hiring people who would get business or like what kind of?
Anmol: I Think I was a good, I was a good sales guy myself, so really not interested in, uh, getting more sales done. It was more about execution, which was there. And like I mentioned, 2010, my brother joined. he graduated from IIT Roorkee. And that time we decided that,.
Akshay: And what was your top line by then, by the time your brother graduated?
Anmol: By 2010 we crossed 10 crores, I think.
Akshay: Amazing. That's phenomenal growth. That's like more than 10 x in just two, three years.
Anmol: Yeah. We crossed 10 crores by that time. I think otherwise he, he had got placed with Shell,
Akshay: Right, right, right. Ok, so, so yeah, you were telling me you decided, uh, when your brother joined. What did you decide?
Anmol: Yeah, we decided that, we'll now focus on solar energy also, uh, just, uh, because carbon edge, like you mentioned, was a paper pushing. That, that, that's good. It's, it's good money, but uh, we need to build up some more technology.
We need to learn more skills. And solar seemed to be very interesting at that time. Uh, because uh, we thought that, prices of solar are going fall, efficiency is going increase. And uh, we've pretty much seen the telecom revolution at that time. Telecom also the same thing happened. Your costs went, costs were coming down and there was mass adoption, which was there.
So we predicted that solar is gonna go, solar is gonna go the same way. And that's why my brother did not focus on carbon trade. He's from day one focused on solar. And that's how we started to build the solar vertical internally.
Akshay: Solar as in you would, take up projects and, uh, construct solar power plants?
Anmol: We usually started with, uh, we started with advisory services. Uh, we did not have capital to get into construction, etc.. Uh, but uh, we started with advisory services. Uh, we were been the, uh, largest design engineering company for solar power plants in the country. Designed about 50 % designed, about 50% of all solar plants in the country been designed at our office.
So that, that did some very amazing cool work, in solar. This is from almost 2010 till about 2017, 2007, we shut our advisory service because then we had much larger fishes to fry. And that by that time we had accumulated significant capital to, to get into other forms of businesses.
So we did that. Quite interesting there too, because, nobody in the country actually knew how to design projects. So, when traveled across the globe, learned it from experience, came to India, built a few plants, uh, saw how those plants have been built, what are the goods and bads of design that we have done, go back to the drawing board again.
Design. So we did it quite a process. We had a beautiful team, very nice team, uh, which was, which was helping us with all of it. Uh, so good. Uh, I think at peak, uh, in the advisory services, we had more than hundred design engineers with us. Uh, So doing fairly faired good amount of work we used to do like I mentioned we used to do about
Close to 50% of all projects in the country were designed by at our office. So, so good, good work, uh, that we were doing.
Akshay: So essentially from 2010 to 17, uh, you became a design agency, uh, or a design house for anybody who wanted to do a solar project.
Anmol: Yes, design house, project management, advisory services, strategy.
So a lot of that, uh, which was there. And in 2017, we decided that we'll get into, now we'll start getting into two more sectors, which is construction of power plants and, uh, maintenance of power plants, solar power plants. So we started both of those businesses.
Akshay: By then, you would've got capital because those are like more capital intensive businesses.
So what, what kind of top line were you doing by 17 when you reached this milestone?
Anmol: 17? We would be doing 55, 60 Crores.
Akshay: Wow. Amazing. Okay. And this, like you, you were the guy getting in the business and your brother was the one who was executing it, like between the two of you that was.
Anmol: Uh, more or less, I think both of us used to do both the things. So, uh, we were, we were, uh, so ha it used to be basically half of our clients used to be managed by him. Half of the clients were managed by me. Uh, but if he got in a client, we used to go end to end, uh, build, build out the relationship, do the complete scope of service. If I needed his help, he was always available.
If he needed my help, I was always available. So, and then 2017 he started operation maintenance and, and construction of our plants. Uh, since then we've been doing that,
Akshay: That construction of power plants. How does this operate as a business? Uh, you, bid for, like selling electricity to the government and then you construct a plant or you go to people who have land and tell them, I will bid will build. Like, how does it work?
Anmol: Like, our clients are people who have won the tenders to supply electricity.
Anmol: And so they want a solar, they want a solar power plant, and we go and build it for them.
Akshay: Okay. So, this would be like, build, operate, transfer kind of a model.
Anmol: No, it's a EPC job. Uh, we do engineering, procurement, construction, so they pay us money and we do EPC and, and complete the project. We also do operation and maintenance of these assets that we have built and many other assets that we have not built. Uh, so we got into these two, uh, 2019 was, again, very momentous.
2019 we started BluSmart and Presento, Presento is into data analytics and, and, uh, BluSmart is into the electric ride hail, we entered electric mobility in 2019. 2019 we also did IPO of Gensol. Uh, so, which was another, uh, momentous, uh, good, good, good to get a public listed company. Uh, so, so, so, so all that, all that was 2019.
2019. Mm-hmm. Was a busy year.
Akshay: Yeah, I can imagine. Okay. So, uh, uh, let's just break down each of these. Uh, so, uh, what was the reason to go for an IPO? Because you would, uh, you would not have needed funds as such, or you needed funds for investing in, uh, expansion?
Anmol: No, it was, it was more of a dream to have a listed company to say that there is, you know, basically what happens is that in your own till the time the company's not listed, you really don't know the value.
Or you can keep saying, I'm doing this, I'm doing that, but it's only the public markets, which actually ascribe any value to. So it was good to get some value. Uh, very happy Gensol today about 16, 1700 crores, uh, business. So, uh, public markets say that it's not me who's saying that. So, uh, so very happy that, uh, that we were able to kind of get it to public market shareholders enjoyed, uh, shareholders have enjoyed our stock price went from, uh, 62 rupees, uh, to today is 1350, but, uh, about about one month back it was 1900.
Akshay: Okay, so that's amazing appreciation, Okay.
Anmol: 60 rupees to 1900 in about less than three years. Uh, was, was a, was a good achievement. People made a, people made tons of money, in the Gensol stock. We made ourselves tons of money, out there. So, so that was, that was another kind of high point on in the journey to, in the journey of entrepreneurship.
Akshay: Right. Amazing. Amazing. And, and like, uh, is it, uh, I mean, you know, what's your advice to founders who are seeking to do IPO? What are like the pitfalls to avoid, uh, you know, what are the challenges that you overcame, uh, in that journey to do an IPO and who should do an IPO? Like, do you have any advice around?
Anmol: No, I would say we did an IPO as a very small company. Our listing market cap was just a 100 crores. So, uh, we did it as a very small company, which is okay to do a small IPO also. Uh, and, and basically you have to be only ensure that, uh, you are very responsible because there is public money, which is there now.
So I don't if you can, if you think I, would say I would like to keep my conscious clear that only if I know that, uh, the business is going to do great. Well, and because I don't want people, you know, people have made tons of money. They give you a lot of blessings. People lose a lot of money, then it'll not, those, those blessings will, will, you know, turn into curses.
Anmol: So I, don't want to lose money for anybody. It's, it's everybody's hard earned money. So, uh, I think I would only do an IPO if I was very confident that the business is doing extremely well and, and, and it's gonna create shareholder returns. Ultimately, we have to also imagine this, that, IPO majority, you dilute 25%.
So we diluted 25%. 75% is still held by us. Now, anything wrong, with's happening more than the market, more than the shareholders, uh, get impacts you because you still hold 75% of the business. So I think I would say that only do an IPO if you can create returns. If you cannot create returns, if your business is not gonna do well.
Because it's a, big pressure because you know people. Then start to, an, you know, draw an analogy if the share price is doing well, business is doing well. If the share price is not doing well, the business. So, so you have to be very, very careful. You are up for scrutiny every day at 9:15 AM 9:15 AM people are scrutinizing you.
Akshay: Right. They're voting like the share prices, like a daily voting mechanism or daily feedback,.
Anmol: Absolutely. So you, there's a slight amount of pressure to it too, uh, because, uh, you know, why would you, you know, you could focus the same energy on managing then to look at a share price and look at what's happening to it.
It's a bit of pressure moment. Uh, you know, you, you feel very happy when it goes from 60 rupees to 1900, but there is also pressure when it comes from 1900 to 1400. So although, you know, people have made a lot of money, but you still don't like it when it comes down, so, yeah. Yeah. And that's the,
Akshay: This is due to factors beyond your control. Like it's just a market scenario.
Anmol: On Buddy in London decided we should raise interest rates and, and, and Indian stock market. Nothing's happened to my business. My business is doing all time best, uh, September quarter. We have closed the best ever September quarter. But you people, people will, uh, there are many external factors, perceptions, thoughts, uh, which, which govern the market.
Akshay: Okay, So from hundred bucket cap at time of IPO today, you're about 16, 1700 crores. yeah Amazing. And what about the top line? What has that, uh, trajectory been like? Like you said, September has been your best quarter.
Anmol: Yeah, so September quarter we are closing at one 170, one close to 200 crores of top line in six months.
Akshay: Wow. Amazing. So you, you'll do like maybe some 400 crore kind of, uh, annual turnover,
Anmol: Slightly higher.
Oh wow. Amazing. Amazing. And what is the breakup of this? How much comes from which, uh, part of the business, like,
uh, this is all, this is only the construction business. Uh, BluSmart is OP operates in the private domain, uh, present in the private domains.
Akshay: Even in Gensol, you have, uh, the design, uh, concepting.
Anmol: So in 17, we stopped design services.
Akshay: Okay. Instead of giving advice to others to build, we decided let's build ourselves only basically. Yeah. So now let's talk about, uh, BluSmart. Uh, so 2019, uh, this was like the one major, uh, business that you launched. So did, uh, is it a subsidiary of Gensol or it's a sister company like this? Standalones,
Anmol: Nothing. Only the founders are the same. Okay, got it. The founders are the same. No other, uh, no other relationship between the two companies, no cross shareholding, etc, etc.. but only the founders are the same.
I think again, the same thing, uh, which, which was, uh, uh, which was important for us to take decision on solar, which was around efficiencies improving and prices going down. Uh, so we loved, uh, the way solar market operated and solar started to become masses adopted in masses. We thought electric mobility is also niche today, but battery efficiency is gonna improve.
Prices are gonna fall. Electric mobility will also become a mass market product. And, and let's get into that. Uh, uh, so, so that's how we started Blu and off late, uh, we just acquired a company for manufacturing EV cars also.
Akshay: So, I mean, you know, ride hailing, I mean, it is like a graveyard of companies who could not succeed.
Uh, it needs so much, of cash burn. And, compared to, you know, you built Gensol with zero fundraise, zero external funding, uh, you know what, uh, I mean, tell me what, what you thought about it, uh, before you started. And, you know, these concerns must have come up, right? Like there is so much, uh, cash burn, which companies have done already to build up the business and so on.
Like, did you feel that there is a gap here through which, you know, there is an opportunity for us to enter and like, I wanna understand your thinking.
Anmol: So clearly it was a David versus Goliath kind of war, which is, a battle which in there. there are two very large, ride hailing companies which operate in the country, Ola and Uber.
And we are the smallest one, uh, which is there. So, but I think there were two, three major glaring gaps, which were there. One on the fuel side. On the fuel side, we could see that in electric versus conventional fuel, the ratio is 5:1. So fuel on conventional is five times more expensive than electric, which basically means that if we run an or an all electric fleet, we could, uh, we could, uh, our fuel cost will be very low.
Second, we beliEVe that the, in the case of, uh, driver partners own the car, uh, in, in our case we own the cars. So when driver partners own the car, uh, they, uh, get that at an interest rate of 18%, 20%. Uh, they don't have civil scores, etc.. So they get their cost of finances very high. Whereas, uh, our cost of finance is like 8%, eight and half percent.
So we save about 10 percentage point on the interest rates, which is again, which means that, at least costs are also very cheap when compared to driver partners. And the third thing, which is the most important thing, was that I think, uh, the two companies forgot about customer service at completely.
Uh, whether it was, uh, around cancellations, search pricing, dirty cars, ill Manor driver partners, I think all of us have heard enough of it and not just heard, experienced it also, uh, I think that was a right to win and right to acquire the market. Uh, customers will not come to us because we are electric.
Uh, customers will come to us if we can give a no cancellation, surge free clean car. Uh, and that's what we strive for and that's what we have been doing over the last two and a half years. So they were meant the on the cost side, interest cost and fuel cost, which is like 80% of your cost. We were able to crash it down, uh, using electric cars and,..
Akshay: Your balance sheet on customer side, right? Taking cars on your balance sheet?
Anmol: Yes. On the customer side. Uh, on the customer side, we were very happy, uh, by saying that we do no surge, no cancellation, clean cars, all electric cars. So I think customers came in because of that. And then, uh, and, and then our unit economics were much better. In fact, we had almost at the verge of, uh, breaking even should be kind.
Perhaps by December we should break even.
Akshay: Wow. Amazing. Okay. So, what was the process through which you built up these different pieces? I, I think what's unique here in this model is, uh, that you're using EV now that obviously because of your experience in the renewable energy space, that would be an obvious choice.
But the choice to own the car the choice to keep drivers on your payroll on a salary model instead of, uh, uh, like how typically it's a paper ride for, uh, Uber and Ola. Oh, you know, how did you reach these decisions? Like, like did you have some data points which helped you decide, okay, let's buy cars and keep drivers on not payroll, because that, you know, every, every VC loves asset light business models, and so you are now going the other direction.
So I wanna understand, you know, what made you take this, very contra, bet.
Anmol: Yeah, so actually, uh, see the, what people have been trying to do in ride hail is to create, uh, like an AirBNB or why did Uber actually start globally? Uber globally started with a premise that there are sufficient cars on the road.
People have, everybody will have some spare time, and in that spare time they will drive a car, make some build some good relationships, talk to people, etc., etc.. That's the founding principle of how Uber started. Ola is a copy. So, Uber is the first, ride hailing company, which, which came in.
But basically in India there is nothing known as there are enough number of cars because the car ownership is just 20 people, 20 cars per thousand people. More importantly, you cannot run a white number plate car on a ride hail. So driver partners had to specifically buy yellow number plate cards to run on ride hail platforms, which meant that it was not the AirBNB.
AirBNB was what happens in US that I have a spare car. everybody in, in US, 950 people out of thousand people have a car now.
Akshay: So essentially that model is unutilized asset. You are utilizing it. Yes. By matching, uh, it'll demand.
Anmol: Yes. So, but in India, that's not the case.
Akshay: Yeah. There's no unutilized asset in here. Right?
Anmol: Tho Unutilized city both com eh or uper se ho yellow number plate me yesati nahi eh. So driver partners are forced to buy these cars. When driver partners were forced to buy these cars, they bought it at 18 20%. Now what did Ola Uber do? Ola Uber said they were, people were making 60,000, 80,000 rupees a month. No driver partners are not supposed to make 60, 80,000 rupees a month. even engineers are not making 60.
Akshay: Yeah, right.
Anmol: So, so they were burning that much of money, which was absolutely useless. Now if you don't want to burn that much money and create a sustainable way of working in any anyway, your, are your, you might say you are not asset heavy or you might be asset light, but if you're doning out 60, 80,000 rupees per month to a driver partner, pretty much you are paying for the asset.
You are only paying for the asset without actually owning the asset. Instead, you buy that asset for 6, 7 lakh rupees, at least own the asset. So I, so that's why I think it made no sense for us to kind of give out these kind of crazy, uh, like, you know, uh, on a per car basis. Uh, for example, Ola and Uber in India have spent about 5 billion dollars put together
out of which two, 2 billion would've gone to for driver incentives. Driver incentives. Huh? No billion dollar
Akshay: Fine. Okay. That's an amazing way to look at it. Okay. Okay. So, um, you know, uh, is this bottle like, uh, a model which needs a lot of capital investment or, uh, because you are taking cars on lease, so you don't necessarily need, uh, heavy capital infusion.
Anmol: So the ride hailing as a whole only needs a lot of money.
There is a lot of technology that we have to build. We require additional amount of money because we also build out our fuel. Now the good part about running ice engine ride hailing is that at least you have patrol pumps. We don't even have that. Uh, so we have to build our own fuel. So there is a lot of capital which is required, uh, to build out an EV ride hail business.
Akshay: Mm. The capital is like, what are the primary heads where the capital goes? So one is to build the charging infrastructure.
Anmol: Three places, basically. Uh, uh, which is, one is the charging infrastructure, two is the purchase, two is to get cars, and three is, uh, technology, uh, building the app, the consumer facing, uh, front end of it, and. Some marketing, etc..
Akshay: And, and marketing also, I think you don't do very heavy marketing spend, right?
Anmol: Service speaks for itself, service speaks for itself. So word of mode of mouth is very strong. Our cost to acquire a customer is just about 40 rupees, uh, to acquire one customer.
Uh, you know, people typically spend 1500 to 2000 rupees in acquiring a customer. Uh, we have, we, we give zero discounts. There is no discount on BluSmart, there is no cash back. Uh, but, uh, we, we don't offer any of that.
Akshay: I, I, because, uh, I think it is cheaper, right? Like the, for a customer, uh, if, like, I've used BluSmart for airport runs and all, and I found it was cheaper than, uh, Uber and Ola.
Anmol: Uh, we don't search. So, uh, so that's the big point. So if there is search, we'll definitely be cheaper. So we should, we should, because the whole premise is that we don't want to search price. We want to say that for an office going person, you know, you are salaried. Your 250 rupees is your daily commute budget now because of a surge.
Now imagine just if sir, if you're in Delhi, uh, about 15 days back it rained and poured very heavily. That two 50 repeat trip became thousand repeat trip. Now, what is the fault of that person who is going from his office to his home? You know, that guy might be earning one la salary today for just going back to home.
The person is spending thousand rupees, which, which basically, uh, is, you know, profiteering, opportunistic, uh, profiteering on somebody's, uh, you know, back situation. Which is not, and customers don't like it. Customers don't, you? You can, you, you are trying to, you're on the other side of the table. Then with the customers, you're not on the same side of the table with the customers.
At Blu, we don't do search pricing. So if you have spent to go from your hotel or your office or your home to the airport at four example, 450 rupees, next time also you go, you'll see 450 rupees. It's not because today's the, today's, uh, heavy, today's the share day. There is heavy traffic. So you will get 600 rupees.
So the basic, uh, basic principles of business need to be right, which is that, you know, you have to first principles, customer comes first.
Akshay: I, I don't fully agree with your point on search pricing. I mean, because Ola, Ola, Uber have flexible supply. I mean, they can get more supply in by giving more price. So that's where to do search price. And for them, their way of thinking is a customer doesn't get a cab. Instead of that, let me at least make sure that he gets a cab by getting more supply and by, and the way to get more supply is to do search pricing.
Anmol: So actually let me know if, well, Sergio got some extra cards on the road.
Akshay: Okay. That yeah. There is no data to support that necessarily. It may be happening, may not be happening. We, yeah. Right.
Anmol: It is, it is now. Just become a motive to profit here.
Akshay: It is. How, how does it, matlab?
Anmol: If it starts to, starts to dizzle, the city manager just says that, let's put a surge. Surge pricing is in the hands of city managers.
The city managers does decide that if it has started to dizzle, let me put a 50% surge.
Akshay: Okay. Uh, uh, tell me about, uh, some of the other decisions you made. Uh, you know, in terms of taking drivers on fixed salary. Uh, I, I think that's like an interesting decision. What, what made you decide.
Anmol: No, I'll just, like, it's not a fixed salary model that we have with them. We sublease the cars to driver partners, but we do very bite-sized subleases, six hour leases.
Uh, the charge, the, uh, fully charged car becomes discharged or partially discharged in about six hours. Uh, so they come back to the charging how bad they swap the car. Uh, so they take a new car and drive it on the road. So the driver partner does not waste any time in charging off the car. Uh, so there is, there is no, uh, they, they operate on a lease and they have to pay us the lease.
Uh, but the lease is, uh, but their, but their earnings, uh, in case the driver partner has put in the requisite number of hours and for whatever business reason has not been able to make enough revenue, we just offer a minimum guarantee to the driver partner, which supports their livelihood. Now, what happens, for example, during Covid, or, or anytime when the demand is low, is that the driver partner has to pay the EMI of the car.
Like in case of Ola and Uber has to pay for the maintenance of the car. Uh, but if there is no earning, then where, what is the driver partner do, uh, and then they have to also run their own homes. They have to pay for their kids, they have to pay for their food, they have to pay for the tuition fees, etc., etc..
So we just ensure that in bad days time, there is a kind of a security cover with the driver partner that you will make such and such money irrespective of business. But that is only, but that is only if you follow the protocol of the platform, which is great customer service, which is no cancellation, which is, which is, which is about opening the door for your customer, offering them a sanitizer.
If you, if you can, if you only perform on the quality standards that the platform has mentioned. And, uh, and you are trained for only if you maintain those standards, will you get the, if I can use the word security cover. Otherwise you don't get it.
Akshay: Okay. So, what is the economics for a driver? How much does he pay for a lease?
And then, like, you know, what can a driver earn in that six hour period?
Anmol: So net of what our platform is doing today, the driver partner, uh, net of all the lease and etc.. And a lease comes like a full lease. You know, it's for a fully charged, maintained, insured electric car. Otherwise, driver partners have to pay separately for fuel, separately for maintenance, separately for insurance, separately for the, separately for the, uh, lease of the car.
EMI of the car, in our case it just comes up. One bundled thing. They just have to pay one thing, uh, which is there. And, uh, so, so approximately partners, uh, if they working, uh, two shifts of six hours each, uh, make about close to. 20 to 23000 rupees, uh, a month. Uh, for 26 days of, for 26 days of working.
Akshay: Amazing. This is very interesting. Like you have essentially, uh, like, you know how there is that SaaS movement in which companies no longer need to buy software and keep maintaining it and upgrading it on their own. They can just subscribe to software. So you have made, uh, electric car available as a subscription to a driver where he can get a car lease and then, uh, just for that period when he's using the car, only that period he has to pay the lease amount.
And if there is not enough business, he can choose not to, or he can choose to take 10 days off if he wants to, and it'll, because it'll not affect his costs if he's not working for 10 days, he doesn't have to.
Anmol: So that, that, that brings in a very high quality of talent pool for our driver partners because you can as a driver partner, you do not have any fixed cost.
You do not have to pay the EMI. You do not have to pay the lease. You do not have to pay the maintenance. Now you can. This is where we have actually now brought in what originally was the Uber concept that if you have spare time, come and drive.
Akshay: Right yeah. Because in India, the unutilized asset is manpower. So this is actually
Anmol: Exactly, so, you get that. So we have multiple hundreds of students who drive for us. And so if you sit in a BluSmart car, you can, you can pretty much find a very educated MBA going graduate who's driving the car because, uh, because the guy had some spare time, uh, four hours in a day, he could spare. And, and in that, in that four hours, he could make 12, 13,000 rupees.
Akshay: Amazing. Amazing. Okay. And, so how do you acquire driver partners at scale like
Anmol: Bhol nai ke sarooth nahi eh sir that just people, you know, we have, uh, unutilized, uh, India's, uh, strength and weakness both is the huge manpower that we have. So I think people are looking forward to earning opportunities where they're only, where they have to only bring their skill and no capital.
In the case of our competition, people have to bring skill, which is the skill to drive and capital. In our case, you only have to bring skill. So if you have, so if you have the, if you have the, if you have the ability to drive safely, earn start earning money.
Akshay: What is your driver onboarding process like? How do they get trained on what is the requirement of the platform and, you know, so that your service quality is maintain? How do you maintain service quality Basically,
Anmol: Yeah, So i think, the driver onboarding side, it's a two day training process.
Now, if you can ask our competition how they onboard driver partners, all you need to do is to scan your Aadhaar, scan, your, uh, driving license, upload it in our portal. Your driver ID becomes okay, and you can start driving. Nobody's EVer physically met the driver partner. In our case, the driver partner has to clear a fitness Test.
Has to clear the background verification has to clear a driving test because all electric cars are also automatic, so they have to clear a test, driving test for an automatic car. Uh, electric cars don't have gears. Uh, so after they have done that, they go through a two day training program on every weekly they have to complete two hours of training, which can happen through videos or in person.
Uh, so they have to do that, and then only they can be fit to be retained on the platform. Plus, uh, we, we take, uh, complaints extremely seriously. Uh, because what happens is that in case of our competition, if you rehire a driver partner, one car also gets rehired. If you say that you will not drive, that means one car also becomes less.
In our case, if you rehire a driver partner for quality, the driver partner is gone. There is a new driver partner, which will drive their car tomorrow. The car is there. So, so people, people know that if they do not perform, there are 20 people standing in the queue to take their job. So that is like a pressure, that is like a pressure on them, if you know that.
People on Ola. Driver Partners on ola.
Akshay: Amazing. Okay. Amazing. How, how you figured out each of these, uh, like solutions to, uh, you know, fix, uh, do you also, uh, like collect data to ensure service quality? Like is there a IOT. Uh, or the vehicle, which like, you know, tell me about all of those other initiatives to maintain service
Anmol: Huge amount of data, which is collected. I think customer feedback is the, is the best format. Uh, if you go onto the app store array, operating is 4.9 out of five. We've been maintaining it for a very, very long time, uh, which is the best, uh, for, uh, for any ride hailing app in the world is the, is the best, uh, rating, star rating, which is there.
Uh, after every trip, customers review it. We have mystery mystery writers who take, we have a, we have a dedicated call center where you can call in and, uh, and, you know, mention your feedback. Social media is such a big, uh, uh, provider of feedback. Uh, so, so all of that is, all of that is, uh, pretty active modes of getting, uh, uh, getting feedback.
And, and I think, uh, uh, you know, just like our stock market tells you at every 9:15 AM how you have been performing, uh, after every trip, the customer tells you how you have been performing. Uh, but we do thousands of trips every day now, and, and about 70% of the trip people, uh, give us star rating after the trip.
Uh, so, so that is enough data to be collected. And then they also mention whether the issue was with the cleanliness of the car or with the driver behavior or something else, etc., etc.. So I think huge amount of data flows in from customer side, uh, onto, uh, onto, onto onto our app. And, and I think all of it is very deeply analyzed because customer service is the only key to success.
Akshay: What about, uh, IOT based data? Like, does that help? Because I, I'm sure EVs have a lot more, uh, data that they can generate as compared to an ice car.
Anmol: No, we get a lot of data. So, so we get a lot of data on how the brakes have been applied. We get a lot of data on the speed of the car, acceleration of the car.
We get a lot of data on if the door of the car has been opened, door has been closed. So we get all of that, uh, data which is there, which basically, uh, you know, helps us only to, uh, ensure that things are going right. So, for example, if, if there is a certain acceleration or deceleration of a car, we get to know that.
And if it is, let's say, cross the 4g, kinda a mark, there is an alarm which gets raised at our operations center. So that means that something wrongs happening with the car. So we use maybe an accident, maybe somebody is hit it or the driver is driving dash, etc., etc.. Uh, so we get all of that, uh, data, uh, from, from the, uh, from the IOT device, which is there.
Then most importantly, the IOT data is about location. Now how, uh, people in how our competition gets your location is through the phone of the driver partner. There is no, but in our case, that's not the case. In our case, the location is coming from the, uh, from the car, from the car. The location is being coming from the customer's phone.
The location is also coming from the driver's phone, and all of them are triangulated to understand that this is, it's not that the car is showing X location, the driver partner is showing Y location and the customer is showing Z location. That means there is a safety incident, which is going to happen.
So all of that needs to be, uh, needs to move at a certain speed. They all need to be in a certain, radius, one meter radius of, of each other. So, those are some of the tech. Tech helps us to identify safety issues because tomorrow, today, If there was a driver partner who threw your phone off you know, bad guy, he, and he threw your phone outta the car, there is no way you can track anything.
Akshay: Right Yeah. But you would come to know, because the car and the customer location is different, so means something is wrong. Right?
Anmol: Yeah, absolutely. So, so we would also, we would also know the driver partners, location. A lot of things. I think, we also know if the car is running or not.
If the, if battery percentage is coming down, the car is running battery percentage is not coming down, the car is not running, the car is stationary, was the AC on or not, we can even, we even know whether the windows were rolled up or rolled down.
Akshay: Okay. Amazing. And you also took a decision to, uh, not be on demand, like, uh, I think you need to book at least 45 minutes in Advance?.
Anmol: It majpuri eh sir oh majpuri eh It's not a, it's, we would want to be Insta hail, uh, but, uh, we are slightly constrain. We have about 2,500 cars now in Delhi and NCR, to go Insta hail for full delhi and NCR, we need about 40,000 cars. So, uh, there's a, we have to do the full geography and then we have to start reducing time.
Akshay: What is the constraint to growth? Uh, like why can't you do 40,000 in a few more months? Uh, what, what are, is it a supply of vehicle? Is it supply of charging infra? Is it supply of money? What, like, you know..
Anmol: Please do a podcast with CEO of Tata Motors, Hyundai.
Anmol: Ask them this question and let me know the answer also, why they're not manufacturing enough EV cars.
Akshay: So the constraint is only supply of EV there. There's no money or charging infra. Both of those are sorted.
Anmol: BluSmart has more than enough money than it what it needs.
Akshay: Because you anyway are taking on lease, so you don't need to really put in money to acquire more cars.
Anmol: We need some money, but, that's not, that's not hell of a money that we need.
We are very adequately capitalized. I think, we still just in our bank, we have enough money to last us for the next three years. So, uh, we're not actually, uh, issues and free break even by October then, then, by December then anyways, uh, we don't need for the money. So from a money perspective, I think we are more than the only constraint is on how many cars can we get.
Akshay: Okay. So is this why, you acquired a EV Manufacturer? Okay. Tell me about that. Which, uh, which company did you acquire? Why did you select it? Out of all the options in front of you, what, uh, and what are the, uh, like what's on the roadmap for that company?
Anmol: So, uh, we acquired this business. This was a US based startup. Uh, they were not able to raise funds.
They had a very nice product. Uh, the founder was a very technical guy, not a commercial guy. So, uh, we raised two rounds of funding, but couldn't raise the, the next one. Uh, and, uh, we wanted to,
Akshay: What's that company?
Anmol: We've not named it, like, we've not, disclosed what business we acquired. but,
Akshay: They sent to passengers, EV Space.
Anmol: Yeah. Yeah. Passenger EV space. It's a car. Uh, so, uh, so we wanted cars for BluSmart and, uh, nice technology. Nice, nice people, nice team. Uh,
Akshay: They had a working prototype in place and, uh, they had figured out, uh, manufacturing also. They had started, or no?
Anmol: No, they were, they only had prototypes. Uh, they only had prototypes and uh, basically they were trying to raise funds for manufacturing.
Akshay: They would essentially be competing against Tesla in the US market. Like that was going to be the ambition Sponsor.
Anmol: Tesla is a, Tesla is a $50,000 card. This is a slightly, uh, this was supposed to be a $10,000, uh, ah,
Akshay: Mass market, uh, EV. . So, so now that team is working to set up manufacturing in India?
Anmol: Yes, yes. In fact, I'm today at their office only the plant is being set up at Pune in cha, at Chakan, in Pune, uh, with God's grace. Uh, we should start the trial production in the month of January and commercial production should start from March.
Akshay: Wow. That's amazingly fast. A and because you acquired so you can do this fast, because they had already figured out the technology and, and the, uh, that product market fed the, vehicle design prototyping, R and D, all of that they had already done. So hence,
Anmol: So we've, uh, so, uh, when we got in, the design was at, uh, stage minus one in the sense that, uh, one stage lower than good to go, good for production, kind of a design, which was there. I think the teams worked hard. Uh, we just acquired the business very recently in April. So it's just been like, uh, six odd months since we acquired it.
And in the next three, four months we'll have the plant ready and production started. Hmm.
Akshay: And, and this is purely for internal consumption, or is this gonna be a standalone, uh, EV business, which you'll also sell to consumers?
Anmol: We are gonna sell to, we are gonna sell to consumers.
Akshay: Oh, wow. So, uh, did you, uh, to tweak the design for Indian conditions or, uh, like was there a need to tweak it for Indian conditions? The car design?
Anmol: Yeah, of course there were certain things which were needed. Uh, but the, but the founder is, the founder of this company is also an Indian. Okay. Of course, in the US based company. But, the founder is also Indian, So there was. He knew pretty well about Indian condition, so it wasn't a big challenge.
Akshay: Okay. Amazing. Amazing. Okay. And what's the plan for, uh, this, uh, EV business? Like what is the run you will do, like, how many cars a month? And, you know what, like, so roadmap for this?
Anmol: Yeah. So we have, uh, right now we are constructing our first plant. Uh, the first plant is going to have a manufacturing capacity of 1200 cars in two shifts.
If we, decide to add a third shift, we can take it up to three, 2000 cars per month also. Okay. So, we're going to produce, uh, uh, I would say if we start two shift, uh, at 200 cars a month, it'll be, it'll be a good, it'll be a very good start.
Akshay: Right. But, but even this is not fully meeting your need. Like if you wanna hit 40,000, uh, in Delhi, this is like, so what else are you doing to meet that supply gap?
Anmol: No. So I, I'm sure Tata Motors is ramping up their production. Our prime, uh, our prime purchase is still going to be Tata motors. We're also in very advanced negotiation with the European supplier of cars.
So we should be able to sign an agreement in the next one, one and a half month with them too. For, for supplying a few thousand CARSs, uh, Tata Motors. Uh, we've already placed an order for 13 500 cars with them order, which we have received 2000, 11500 is still pending with them. Uh, so between Tata motors, European large auto manufacturer and, and, uh, our own, uh, Gensol EV production, uh, should be, I think in about 12, 15 months, we should be able to hit the mark.
Akshay: Okay. So, uh, what's the roadmap in terms of, uh, geographical expansion? So right now you are Delhi, NCR focused., what, how you launch?
Anmol: We launched, uh, Bangalore about two weeks back. Okay. So that's been a good launch. Uh, we are liking how Bangalore is shaping up. Uh, Bangalore can also absorb over 40, 50,000 cars.
So Bangalore is a la very large market also. So, uh, I think we are happy to be in these two geographies for now. Not really looking at these, at any third geography for the timing.
Akshay: Right. I mean, there's so much scope here that you don't even need to, like, it'll take you a year or two to fully meet the demand in these geographies only, I'm guessing.
Anmol: Absolutely. Absolutely.
Akshay: So, uh, what is, uh, like the kind of revenues that you're doing, uh, I wanna understand the revenue model also, like you earned from the, uh, amount that you deside it out to, to the driver plus something per ride. Or like, how do you earn, like
Anmol: Should we earn three things? Uh, one, we take a take rate of the customer revenue, so what, 25% of customer revenue comes to us.
Two, we make revenue from lease to the driver partners. And three, we also make revenue from third party zoo users, charging stations. So, so we also make revenue from there. Uh, so Blu is today, uh, annual revenues in the under rate of about more than 200 crores.
Akshay: Amazing. And how many charging points do you have? Uh,
Anmol: About close to 600 fast charging points. 1400 slow charging points.
Akshay: Okay. What is the, uh, the difference between fast charging and slow charging? Like the, I mean, why would you invest in slow charging? Why not just invest in fast charging? Is there a benefit to get slow charging points?
Anmol: Uh, yeah. So, uh, what happens is that, uh, in the nighttime we have enough time to car charge our cars flow fast charges of course, cost are the, uh, cost, uh, about at least 20 times more expensive than a slow charger. So a slow charger you can get for about 6,500 rupees fast charger if it's ccs, is about 4 lakh rupees.
Akshay: And, uh, you told me about, uh, and, uh, analytics. So I guess in BluSmart, we have pretty much covered everything I wanted to ask. I think we covered, yeah. Okay. One last thing on BluSmart. Uh, so, uh, what has been your fundraise journey so far? Like, uh, who are the investors who backed you and, you know, uh, just, just tell me a bit about that. Also,
Anmol: We, we've raised a four rounds of capital till date. We did a 3 million seat round, then we did a 7 million pre, then we did a 25 million a and 25 million A one. Uh, so we've raised about close to 60.5 million dollar till date, which is about close to let's say 400 rupees that we have raised. Uh, and uh, and yes, uh, British Petroleum's been our largest investor.
Uh, so BP, BPS a significant investor with us, British Petroleum. Then we have Mayfield who is a very solid investor with us. Then we have some of the largest family offices in the country who've backed us. For example, Sumanth ka AL'S office, which is also part of Hero family. Uh, so, uh, they pick ups, family office, etc., etc..
A few very famous family offices who've backed us. Uh, uh, so, so good, good set of investors that we have.
Akshay: I guess it would not have been a big challenge for you to raise funds because you had that credibility of Gensol, like building up Gensol.
Anmol: But we. But we had Covid, uh, and in Covid we was zero.
Akshay: Oh, right. Okay.
Anmol: We had to raise money for a company whose revenue was zero.
And, and, and, and, and a company whose, uh, prime business was the worst thing that anybody wanted, which is travel and mobility.
Akshay: Yeah. Right, right. How was the covid period for you? Like, was it like a high stress, high pressure situation for you? Or did you have enough money in the bank to last it comfortably or like,
Anmol: So money's never been a constraint for us in any of the business money. We've always had sufficient money, uh, with us. Uh, I think, uh, it was a fun time, uh, apart from the human tragedy, uh, which was happening. Uh, it was generally a fun time because we were in the very early days of starting Blu.
We started Blu on 6th of December, uh, 2019 and 20th of March. Uh, the lockdown happened, so we had about hundred days. Only which we had operated. Uh, and all through the three months of lockdown, we just sat and improved the technology. Uh, so, uh, we had hundred days of, uh, experience. We knew, we knew where this was failing, we knew what, what we had to build.
Uh, so I think, uh, we were on Zoom call just building out the tech and then, uh, when it all started again in July, uh, and then again, we've got a lockdown in, in, in, in, uh, in December and then in May again when wave two wave three happened. So, so, yes, uh, it's been, it's been, uh, start, stop, start, stop. Uh, but every time, uh, we used to get a lot of experience of, of what is working, what is not working, uh, and, and in those, in those off peak, uh, kinda days, which were the lockdown days, we used to go and build out.
Uh, and, and otherwise it's very difficult to change an operating system when operations are running because, uh, there's so much pressure of operations. Uh, but if you're sitting at home, no car is running on the road, you can pretty much, uh, uh, you know, uh, just focus all your energies and fixing the tech.
Akshay: Mm right. It helped you mature your product in a much faster way than would've been possible. Yes. Right. Amazing. Okay. Plus, I guess, uh, COVID would've also made, uh, people value, uh, customer service more like your core, uh, promise of customer service would've become more valuable post covid.
Anmol: Yeah, no, I think, yes. Uh, people, uh, did talk about sanitization. People did want, uh, uh, proof that the driver partners were vaccinated, so, so a lot of this was there, which is, which is great, I think. I think Yes. Uh, Covid generally upped the ante on, on, on, on sanitization, cleanliness, etc., etc.. So, so yes. Good. Has been, we have been big beneficiaries on the business because of Covid.
Uh, our, our competition suffered massively, uh, they had 500,000 cars, but lot of driver partners were, gave their cars back, etc., etc.. So competition size, actually halfed.
Akshay: In, in your case, uh, the drivers are still protected, but in their case, if there's no money, then the driver goes bankrupt. So that would've also,
Anmol: Huge amount of reposition of cars, which happened during Covid.
Akshay: Amazing. Okay. Okay. Uh, I read that you're raising about 250 million in your next round.
Anmol: That's correct.
Akshay: Amazing. That would be like a unicorn round, I'm guessing.
Anmol: No comments on that. It's a, it's a good raise.
Akshay: Yeah, it is. It is amazing. Absolutely amazing. More power to you.
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