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Md. Imthiaz is killing the "dead miles" in logistics | Raaho
140 Plays6 months ago
Md. Imthiaz shares insights from his startup journey, reflecting on the lessons learned from his first venture, Hoppr, which raised 5 million dollars in 2012 but struggled to scale. Now, with a new focus on solving inefficiencies in logistics through a first principles approach, he talks about the value of a sharp, narrow focus in building sustainable businesses. This episode delves into the challenges of finding product-market fit and explores strategies for overcoming them in the dynamic landscape of entrepreneurship.
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Read more about Raaho:-
1.Digitising freight network for a better tomorrow
2.How Raaho Is Using Tech To Transform India’s Fragmented Commercial Trucking
3.How is Raaho building an Online market space for intercity trucking
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Transcript
Introduction
00:00:00
Speaker
Okay. Okay. Hi, good afternoon, everybody. My name is Indias. I'm co-founder and CEO of Rahul. Super excited to talk to Akshay today.
What is Rahul?
00:00:15
Speaker
So give me an elevator pitch of Rahul.
00:00:20
Speaker
So RaHo, the word comes from Ra, which is a path, right? We are a marketplace for intercity trucking. So at one end, we have a customer who wants a truck that has a load. And the other end, we have a fleet owner or truck owner, which is largely people who own less than 10 trucks. They have a truck and they need a consignment or a load to actually move this truck and utilize the asset. So we are like a marketplace in between. Look at us as an Uber for intercity trucks in India.
00:00:50
Speaker
Okay. In the tracking parlance, you have this full track load and what is the opposite of the part? Yeah, they say part truck load or less, they say less than truck load, LTL or PTL. Okay. So which space are you in?
00:01:09
Speaker
Okay. So we are in the full truck load and not the part that load, which means that when we, what we serve is in somebody who wants a full truck, whether it's for six, 10, eight, 10, 18 ton. And you know, once the goods are loaded, then it's sealed. There's nothing called in getting added later on. So we had a full truck load, doesn't require any warehouse and so on and so forth.
00:01:30
Speaker
understood. I am assuming full truck load is the solution for larger enterprises and part truck load would be for people who have like delivery would be doing part truck load where they leave it to delivery to figure out which truck to take, etc. Whereas in your case, your client already knows I want an eight ton truck.
Understanding the Logistics Chain
00:01:53
Speaker
Actually, delivery does everything. So delivery does Patrick. Actually, Patrick look at Patrick is like a career business, right? The career which end consumers like you and me use is want to send one cover or a small packet to my mother or family, right? Whereas enterprise career would mean, you know, 500 kgs or half a ton. So that's the career. So Patrick has a lot of career set of the business.
00:02:18
Speaker
Of course, delivery is a large player. They do part-work, full-track, warehousing, and everything. We'll talk about, you know, the whole logistics is a good starting point to talk about, and we should do that. Okay, understood. So, yeah, tell me about the whole chain of logistics, and also if you can mention who are the players at each step of the chain.
00:02:41
Speaker
Okay. So I think when we talk about logistic, which is, let's say, you know, 12% of India's GDP, which is a very, very large part, right? Logistics includes transportation. It includes barrels. It includes storage and automation, right? We are largely into transportation. So that's where maybe I would be able to add a lot more value in this conversation. Transportation is around 65% of logistics.
00:03:09
Speaker
Right, which is moving goods from A to B. After that would be warehousing and after that is maybe automation and so on and so forth. When you look at transportation, which is basically how do goods move, right? How do they come to your house from a factory or from a warehouse?
00:03:26
Speaker
65% of goods transported in India happen through road. So you could transport goods from road, by railway, by water, or by air. India has 60%, 65% road, 30% by railways, and the water and air are extremely, extremely small. So as I said, India runs on chuck cars, they call it, or tires. So India is lively, a road network. And goods moving on road, they move by trucks. And that's where we come into play.
00:03:55
Speaker
Now, from the goods that move by road, goods could move for intracity or they could move intercity. 80% of goods move in terms of value is intercity trucking, which is, let's say, 200 kilometers less, or 150 kilometers less.
Rahul's Role in Intercity Trucking
00:04:12
Speaker
So for DRAHO, we are into, of course, transportation, which is road transportation, and intercity trucking.
00:04:22
Speaker
Okay. And that's really where we are. So which is why I said that we are a marketplace for intercity trucking. As you rightly further went into the detail, it's a full truckload business. So what happens is that a lot of our customers, for example, delivery is our customer delivery would do a part truck would go pick up couriers from SMEs or enterprises, bring them into a warehouse. And then they say, listen, I want a full truck.
00:04:47
Speaker
to move this load from, let's say, Gurgaon to Chennai, then we come into the play and say, here is a truck, and then we take care of this FTL, as they call it, from Gurgaon to Chennai. So that largely is the space from a logistic perspective. Of course, from a value chain perspective, how does
00:05:05
Speaker
FPL work, and maybe I can go quickly, you know, that also, right? In a value chain perspective, that could be a large brand. Let's take an example of Coca Cola, which is one of my favorite brands, right? So let's say Coca Cola would have a contract or like a 10-bit relationship with large third-party logistics companies or transporters, right? When I say transporters,
00:05:32
Speaker
Um, there are big ones like TCI, you know, that's the logistics. We try and re-express gutty, for example, is also a three period company safe express a three period company. Uh, these delivery by itself is a good example. Like heavy companies, they own trucks.
00:05:48
Speaker
Actually, most of the old economy companies definitely own trucks. So most of these are inland, express roadways, East India road lines, Varuna, all of these people, including actually delivery to some extent, they all own some asset. An asset in our business could mean trucks largely, but could also mean some form of warehouse and all. So all of these people own assets, of course. So what happens is that, you know,
00:06:14
Speaker
They have a contract with the end customer, large enterprise. The relationship between the 3PL or a transporter is a tender based relationship. It's a fixed price relationship, right? Of course, credit relationship. Something to do
Challenges in the Trucking Industry
00:06:32
Speaker
with petrol price also, there must be some petrol price linked.
00:06:35
Speaker
Escalation is beyond a 5% escalation, then that increases them. The price is really looked at, but you know, if you look at overall perspective, they would like to fix the price for the whole year or at least six months period. So it's not on demand in nature for them. It's a spot, you know, it's not a spot for it. Right. Um, what happens is that this transporters are a three pill company. They've tried and fill 20% of the requirement through their own asset, but the remaining 70, 80% they eventually go to a broker.
00:07:05
Speaker
India is full of brokers. It's a low trust economy. Whenever there's a low trust economy, you have an agent in between. And that's where brokers come into the play. Brokers, in turn, work with a fleet owner or a truck owner. The reason why this broker network exists or agent network exists is because the space is extremely fragmented, Akshay, which means, let's say, 90% of truck owners own less than 10 trucks.
00:07:36
Speaker
So it's a long tail of truck owner who of course can't work with the transporter directly. Transporter can't work with the fleet owner directly because there is an issue of trust, there is an issue of reliability. He eventually meets one middleman or the agent or a broker.
00:07:51
Speaker
So that's how the whole chain works. The relationship between a broker and a transporter is a spot for it relationship. That means it's advanced model, so there's no working capital structure because eventually you do not forget the small fleet owner to move the truck needs to fill fuel.
00:08:15
Speaker
and the driver and that needs to be paid advance because it's a very small feature. The broker gives the advance? It depends. Some large brokers would not wait for a transporter to give the advance and go and pay, but most of them would wait, would pester the transport saying advance, advance, advance. A truck would be standing there waiting for the advance and that has larger problems of
00:08:43
Speaker
you know, they call it dead mile or, you know, empty run, the weight trucker is waiting, driver is waiting. And that's why maybe, you know, of course, it's not just one of the problems is, is that there is a, that average kilometers that are in the city truck in India would do, let's say 10,000, whereas the same in America would be 14, 15,000. I'm not saying there's the only reason, but we'll talk about it maybe going forward. This is average kilometers per month, per day. What is the per month, per month, per month, per month.
00:09:10
Speaker
For a bit of the cavity, flying trucks are not here yet.
How does Rahul Improve Logistics?
00:09:15
Speaker
Rahul, actually today in this whole value chain that weakness is a broker.
00:09:22
Speaker
So, for example, that's why you see all the brand names that we talked about, whether it's Vitran, Vxpress, SLB logistic, Darcel logistic, Gethi, Safex, etc. They're all our customers. So, we are a digital broker. As we call it, we are a digital freight broker or a marketplace. So, we work with the end trucker.
00:09:44
Speaker
and we work with the transporter in the process, very clearly we don't give credit and we are asset light, we don't own trucks. Of course, we started with owning few trucks and running this 10 trucks before we really got into becoming a broker. So that's really what we are and that's our space in the value chain. Very interesting. You said 12% of GDP goes on logistics spend. How does that compare to the US?
00:10:14
Speaker
Oh, US would be around 7%, 6, 7%. China also would be 7, 8%. And if you look at it, this is what the government has identified as one of the key pillars or objective of national logistics policy and LP, which is they're talking about bringing it to 8%, 7%. I think this 12% is in the coming down phase. But there are lots of other things for it to come down, right? That is, can we use, end of the day,
00:10:42
Speaker
the cost is higher because of the trucker cost is very high.
00:10:46
Speaker
the trucker
Efforts to Reduce Logistics Costs
00:10:47
Speaker
who's the asset owner is not able to sweat his asset. So if his cost per kilometer is high, the same thing mentally goes to the end customer. So there are lots of things that need to come into play, which is better roads, faster filling of the truck, lesser dead miles, lesser stoppages on way. If the fleet can do 14,000, 15,000 kilometers, which means the cost per kilometer will come down for a trucker, which will then get parked on to
00:11:15
Speaker
transporter and then get passed on to the end customer. Of course, there has to be a liquidity in a large marketplace that needs to come in thereby removing the inefficiencies of a manual broker or a non-digital broker that we call it.
00:11:36
Speaker
India's almost double of what a developed country is in terms of percentage spend on logistics. Is it only the problem of bad roads, dead miles, etc? Or is it also that maybe they use more rail transport and other means than India is largely relying on road transport?
00:11:54
Speaker
It's a very, very, very good point, right? I think India is, of course, very high on 65% on road. So it's definitely railways is important. And you see a lot of improvement in that area. The government focus on rails is really improving. You see now roll on, roll off happening. I was just reading today in Diwadi somewhere where there is a roll on, roll off. That means trucks are just going there.
00:12:21
Speaker
the rail route is being taken to move the goods. So the government really understands the need for last mile first mile connectivity when you want to improve railways, right? Because the boots have to come from warehouse to the railway track and then let's say go to Chennai and then from there railway track to back to warehouse, right? The first mile and last mile is a large problem.
00:12:41
Speaker
for railways to connect and which is what I think the government is really working on. So there's one area, but then there are lots of other things. I felt that the check post was one of the areas earlier, but GST, that problem is gone. Every time you're crossing a state, there was a check post which would take three hours and four hours. Roads definitely was one of the problems.
00:13:05
Speaker
I personally believe the last 10 years have been phenomenal when it comes to roads. When we started this business, the normal route for Delhi Chennai would take let's say, you know, five days, six days and express road will be expressed would be three days. But today, normal is considered to be three days, two, three and a half days. So that is huge change. So you have to understand that there is, there is a check post going away, which means unnecessarily standing under the documentation, of course, some cost.
00:13:31
Speaker
happens when there is a check post in the government, but our local people there, but that's gone. So, you know, it's, it's becoming efficient. Plus fast tag is coming up, right? Every toll, there is a fast that's also is saving time. Um, mostly highways. We're not really cutting through villages. Okay. So the roads are good when you're, when you're reaching fast, your asset can, you know, kilometers can go up. That's one way to reduce costs.
00:13:57
Speaker
to when the roads are better, your fuel efficiency is better. You have to understand that 40% of the cost is going to be the fuel cost. So whatever that goes into improving the fuel would take care. And of course, 40% is the EMI. So if you do more kilometers, then you're after some point of time, your variable cost per kilometer comes on. So it's a mix of many things, right? Which is railway, which is improving road transportation.
00:14:20
Speaker
But India is so large that if you want to make an impact, you need to do everything. You need to grow. Railways also, you need to keep your roads getting better and better because it's very difficult to start connecting very small towns with railways. You know, trucks really do a great job. And hey, you know, we are running into trucking, man. We have to focus on trucking here, right? A company like Rivigo is also a trucking company. So they would be a customer for you or are they a competitor to you?
Lessons from Rivigo and Blackbuck
00:14:51
Speaker
I don't think Rivigo exists now. And why didn't Rivigo succeed? Like it was essentially a distress sale, which happened to Mindra. The business model fundamentally was wrong, like being asset heavy. Like they thought that the more they scale, the number of trucks they own, the more profitable they will get eventually beyond a certain number.
00:15:19
Speaker
And you're saying that. I am not the best guy to, you know, comment. I know the, I think the funny thing is phenomenal. I think sometimes it's timing sometimes, you know, doing a little too much somewhere. I believe that asset heavy companies efficiency is very difficult to run the business with different mindset from the business are doing both asset heavy and asset light. I think it gets difficult. Sometimes businesses don't have to be easy for the businesses.
00:15:50
Speaker
Not all businesses are obviously funded businesses. True, true, true. And what about Blackbuck? Is that your competitor? What does Blackbuck do? Are they also in this full truckload or are they like delivery doing everything?
00:16:04
Speaker
Actually, you seem to have done a lot of homework on the other players. Out of the syllabus question, but let me answer. Blackbuck has been there for a long time. I think they've been pioneers. They've been in this business for 10 plus years. Blackbuck has gone through a lot in their journey. Initially, they were going to end customer and working with brokers from a supply side of the business.
00:16:31
Speaker
I think and I call it trucking 1.0 somewhere because at that point of time the market was not really digital. The trucker was not using the smartphone. The smartphone penetration was not as out today. Digital payments were not there. So what they were doing is that they were trying to replace the transport at one side and working with the brokers.
00:16:53
Speaker
It's difficult actually, you know, because you're in effect, there's hardly any leverage, right, in margins. Of course, a lot of businesses that we see, that we have seen, I call it ZURP and POSURP, right? Zero Interested Policy Bill is a very different type. Okay. And I think today, today, you know, Blackbuck,
00:17:16
Speaker
is actually providing like a discovery tool for a brokers where brokers can find customers or a trucker can find loads on the platform. It's more discovery platform, right? Whereas we are a transaction led business.
00:17:31
Speaker
Um, I don't think we don't work with, uh, you know, blackboard, not our customer blackboard used to be our customer, like a few years back. Right. But not anymore. Uh, today we are a discovery platform for a broker and a trucker. Uh, and they also work with end customer a little bit. Okay. Understood. Understood. So, uh, what percentage of your business comes from transporters and what percentage would come directly from the enterprise like say a Coke?
00:17:59
Speaker
Oh, I am almost zero. Actually, you know, we don't work with any customers at all. Right. We work on new transporters and 3PL companies.
Building Trust with Truckers
00:18:07
Speaker
We have some small and medium outside in the SME small enterprises who would maybe not work with a transporter or work with a broker directly, but that's
00:18:17
Speaker
I would say really, man, some 1% of our business come within customers. We work only with third party. Is that a conscious choice or it just happened that way? No, that's a business that we mean. It's a conscious choice because I personally believe that if you want to build a marketplace, right, you know, we have been a very supply first company. We believe that the look at it like this, a customer. Let's, let's look at the problem. What does both the parties want, right? A trucker.
00:18:45
Speaker
who owns less than 10 trucks, most of them, right? He wants a return load and he wants to be paid on time. That's his need, right? Whereas an end customer wants a reliable truck at the best price. And now with the blanket generation, he's adding this called instant. A customer wants a reliable truck.
00:19:12
Speaker
Right. And a trucker wants a return load. So we have a very supply first company, right? So what we said is that, listen, in a market where a small broker has no leverage, you know, everything is manual, can't be scaled, not very transparent. Right. And, you know, when he does payment to the trucker, he delays the payment. And also he does random deduction. So we said, Hey, what, let's stand for transparency.
00:19:38
Speaker
In the whole industry, from the players that you talked about, some of them that we talked about in the last place, nobody has managed to win the trust of a trucker. That's the brand name. Sometimes we always say Rao Digital.
00:19:58
Speaker
I'm an online company. If you look at the online company, you can see that it's a lot of money. But it's a lot of money. It's a lot of money. So, we used to never say we're an online company. That's why when we used to rent 10 trucks or 1,1,1, and 1, they didn't know, like, you know, you can't get a truck, you can't get a truck, you can't get a truck, you can't get a life problem, right? Which is why our purpose is to make life better for a trucker and driver. It doesn't sugar a customer, right? Because we're a supplier first. So, what we said is that, listen, we will pay you on time like crazy.
00:20:27
Speaker
You know, if it means the truck left at one o'clock in the night, there was a time when I would open a bank and, you know, app and I would pay at that one o'clock when we were doing, let's say one transaction, two transactions, right? And that's what we stand for today, you know, honest, you know, pay you on time transparent. And now with network of, you know, let's say we are present in 17 cities today, we are able to bring you back on a lot of occasions is a return load.
00:20:51
Speaker
The moment you do that, let's say, let's say a truck, for example, does four trips today, you know, he does 50% of those truck trips on us, 50 to 60%. It's dependent on you. And he's saying, he trusts you. He's saying, yeah, I am dependent on these guys. So I will give good service. I will not do, I will not hold the truck randomly. Right. And say,
00:21:15
Speaker
And that is a rating system. There is a way to make sure that you have good stuff. The moment you realize that, oh, and this is not happening in one year, this has been six, seven years, right? So we've been at it, you know, and what we, what we realize that the trucker is loyal, it becomes reliable and which is exactly what the customer
Rahul's Business Model
00:21:31
Speaker
wants. He wants the reliable truck.
00:21:33
Speaker
Right? In this business, there's nothing called a night truck. You know, just a bell zone. Right? So the moment you start getting knocked by truckers and the truckers prefer you, you suddenly realize that the customer likes you because he knows that if I have a sensitive note and if I have good, which have to reach, I as well use a very reliable broker called Raho.
00:22:02
Speaker
instead of a roadside broker and then when you suddenly realize that I think the price is also the same.
00:22:08
Speaker
So the model is very simple. We are able to get good price from the trucker because we rotate him more. We give him more kilometers and we fail him well on time. We don't do random production. He gives you a price lower than he gives it to a broker sometimes. And that benefit I make by giving to the customer. I am not the lowest price provider to a transporter because I have to make margin in between.
00:22:36
Speaker
Right. And we are very, very particular that we don't give, you know, we have never given a truck at a negative margin. Never.
00:22:51
Speaker
Of course, we are increasing that. I'm not saying we're not increasing, we're focusing and we've increased. We have almost, yeah, we've really increased that margin in the last one, one and a half years because we all know the market scenario. So that's how the needs work.
00:23:07
Speaker
Let me put this into a kind of framework. So as a business, you need to choose your battles. You could have either fought for demand, where you would be fighting with transporters to acquire a coke, or you could have fought for supply. And so from what I understand, your take is that this is a supply constraint market, and it is better to focus on fighting for supply. And the demand can come through another intermediary instead of you going directly to the enterprise, because there is a lot more demand. I mean, demand is there if you fix supply.
00:23:38
Speaker
You know, it's, it's about what kind of company we want to build, right? We want to become, we want to build a product like this. Right. We, so by being, by being the role that we are playing in this value chain, we are, we are able to be on demand in nature. We are able to build a product like company, right? We are able to build an asset like company. We are able to build a capital-efficient company for that matter.
00:24:02
Speaker
I don't have credit. I think if you go to end customer A, we'll fight with the transporter who has an asset because he's been there for 50 years. We've been there for 50 years and he will go crazy prices because his cost of running the business is very, very small.
00:24:21
Speaker
And of course credit, he has enough cash to not take the loan. The moment you start putting a business 1% a month, 1.5% a month cost, this business becomes very, very tough. So this is a very thin margin business. The structure of this business makes it a very thin margin business. So you pick your margin and say, listen, I think we're a product company.
00:24:40
Speaker
Right? What do we want to solve here?
Route Optimization and Efficiency
00:24:42
Speaker
We want to, if I were to just extend my purpose, right, to make life better for a trucker and driver, using technology and data science for efficient freight matching. Fundamentally, it's a Uber problem. Look at a pre Uber era. Example, you're, I live in Gurgaon. So let's say from Gurgaon to go to my airport, a cab would come, you would charge me for up and down.
00:25:05
Speaker
pre-uber era, right? I'll have to have an agent, I'll have to go to some parking lot to get a cab, right? But I was paying for up and down. There was a dead mile, right? The empty run that a cab was doing and eventually I was paying for it. Okay. So it was super inefficient for a carbon footprint.
00:25:25
Speaker
be there's a cost involved, fuel, gel rad, physical value. Same problem exists today. Let me give you an example that happens every day in our business, something that I quote a lot. Let's say there is a truck in Noida and there is a truck in Manasa, both of the same type. Both of them want to go south, let's say Chennai. In the old economy or the old system, what will happen? A trucker
00:25:50
Speaker
works with a broker, he'll work with one or two brokers only, and that broker has only five, seven customers. He'll work with five truckers, five customers, right? Now what he'll do is then let's say the man has said truck owner, the broker says there is a load from Noida to Chennai. So this truck in Manasar now has to go empty to Noida.
00:26:11
Speaker
Up and down is 140 kilometers. Empty run. There is an overnight, no entry to enter Noida. So one day gone, which is three and a half thousand rupees. So it goes empty upside down and eventually has to cross Manas and go down to Chennai. The same thing happens to Noida truck which is coming empty to Manas and then going to Chennai. This happens every day, which is why they say 20% of the time the truck is either idle or it is during an empty run.
00:26:38
Speaker
which is the data that we see and it happened all the time. So my view is that that is the problem was falling. Imagine if I can solve it, there is enough money to be made. I can give the trucker a little more. I can give a truck at a lower price. Of course, I can still make close to double digit gross margin in my business.
00:26:58
Speaker
Save the environment, carbon footprint. After industry, the next big area of pollution, especially we are in NCR and I think we are getting a little better in the last two, three days, is trucks.
00:27:13
Speaker
So, you know, this is one way. So if Raho wins, for example, or if you're able to make this rate matching efficient, we will be able to reduce carbon footprint from the significant side, plus being able to make a trucker's life a lot better, a driver's life a lot better, a customer happy and overall, and this would eventually then lead to reduction in the overall logistics cause, which is an overall national way to look at it. It's a battle that we choose for the kind of company that we want to become and the kind of people that we are.
00:27:43
Speaker
So I get excited by building the product and technology. Of course, we have co-founders. Maudli is my co-founder and CTO. And he always says, at the end of the day, we are a matchmaking company. And we believe that the broker today is an inefficient matchmaker. And we believe that technology can make this a lot better. It has happened with the Zomato, it has happened with Uber, it has happened with Urban Company.
00:28:08
Speaker
It has to happen. It can't be this way. Okay, interesting. I'm guessing the competitor for you one is of course these offline old school brokers and the other would be I guess Vahak would be in a similar space to you, right?
00:28:27
Speaker
Actually, Vahak again plays in a very discovery layer, right? I would say the way earlier, you know, they are not part of the transaction. I personally, I mean, again, there are different approaches to this business. You could be the Vahak also, right? Where you are saying, Hey, Vahak competes BlackRock. Very, very straight, right? Saying that, Hey, there is a load here. There's a truck here, but then the whole promise of payment, they are letting you know,
00:28:55
Speaker
I come from this fact that India is a low-trastic one. Right. You will need an agent. Who's going to want responsibility? Let go the other way round.
00:29:16
Speaker
Who's going on responsibly where the hell the trucker is? Who will take care of the KYC and so on. A lot of issues, which is why we have always been a transaction that maybe I am missing some pieces that Rahak is seeing or Blackbuck is seeing possible. And I don't want to say that I know it all. But I'm saying that we, we have always been transaction led because we came from the problem that a trucker wanted a return load and he wants to get paid on time. It's how you define the problem.
00:29:40
Speaker
Right. And that's where we are. I'm not saying we won't enter the Waha crowd or they won't enter our, it's a large market. Right. Yeah. So your mode is supply.
Journey of Building Supply
00:29:52
Speaker
How did you build supply? How many truckers work with you today? And tell me that journey of building supply. Interesting. Actually, you have to go to the starting point.
00:30:04
Speaker
So after Hopper, I mean, we were doing something in the area of delivery. What is Hopper? Let's go even further back. So this is your second venture, right? Maybe you can just take us through the journey of the first venture first, and then we can talk about how you will travel. Okay. We'll keep Hopper short, right?
00:30:27
Speaker
Okay. No, I think I quit. I became an entrepreneur in 2010. Hopper was my first startup, right? Hopper was an online doc and commerce company. Quick overview. So what had you done in 2010, till 2010? You're an IMT Ghaziabad alumna, so you did your MBA there. Then from campus to Hopper, just
00:30:47
Speaker
quick one minute. Okay, so I'm from Chennai and you know, I started working in 96. I worked for I sold phones in 96 when I sold I was a blue dart and then I sold Pdas I did MBA 98 2000 as you write you said Chennai boy in Ghaziabad that was my first trip to north just for information first time my train to Delhi and then this journey to Ghaziabad and
00:31:12
Speaker
And Hindi has really gone spoiled after that. The 2000 joined McDowell's. I worked for UB sales in Mumbai, and then Chennai, and then Bangalore, tried a guy. Then joined Airtel 2008, 2004, January. Sorry. Seems 20 years back. Very early days of Airtel growing it.
00:31:38
Speaker
eight, 10% a year month, et al. Super, super entrepreneurial, et al. Absolutely stunning founder. All right. Learned a lot. I was in the et al. Karnataka, which is like a circle, did product role, became a sales ad, became a marketing ad. Motu Gurgaon 2007 as the vice president heading data business for et al., which is an
00:32:03
Speaker
non-wise business or value-added services as they call it. They did that in 2010, then I decided here. There's a B2C business only, right? Like the HelloTunes and all of that. Yeah, I did a GPR as HelloTunes SMS.
00:32:17
Speaker
in all kinds of non-wise business. So, a lot of innovation. That's where you meet a lot of entrepreneurs. One of them was my good friend, now, Deshekhar Sharma. You get inspired by people like that. Every time you meet, the man is thinking 20 years ahead.
00:32:37
Speaker
I think it is these people that you deal with as innovation, I had the entrepreneur that you get excited and think, you know, there is a chance to an opportunity to change the world, make some difference. And that's when I became an entrepreneur, Hopper, actually Hopper was because I was very excited. At that time I used to work on a lot of location-based services, right?
00:32:59
Speaker
And those were not smartphone days, just for information. Smartphone was just 2% of total mobile base. I was very excited about location where we were building a lot of stuff on location. And I felt that mobile knows where you are. Like at Intel, what kind of location?
00:33:17
Speaker
Location services, you know, you know, friends chat, you know, buddy finder, you know, find your friends that they are, you know, we were trying to, you know, build a layer on top of your location. So basically, location was always a horizontal, right? You can build services or applications. It was always trying to build the horizontal allow innovators to build applications on top of it, isn't it? So, you know, we had built the location middleware at that point of time. And, you know, we were like thinking that now we need services to come on top of it.
00:33:46
Speaker
And that was really exciting for me. And I said, listen, I think mobile knows where you are. And I actually, to be honest, didn't know what I wanted
Insights from Previous Ventures
00:33:54
Speaker
to build. I just didn't have to leave to get six, eight months notice. And then I said, okay, I took a break. I always knew that I love the fact that mobile knows where you are. So our first pitch for Hopper was we will replace these, the boys who are giving away leaflets outside a mall or a market. Think here, there is a new store, which has a 10% off.
00:34:16
Speaker
I'm like, mobile knows where you are. I don't need this leaflet to come. And that's what Hopper was. Hopper was, initially it was about checking into places. You check into places that allows us to build the data of places and then you could get rewards for it. And hey, listen, checking into places was not too unhappy. Our biggest story was that you could check into a place through a feature form.
00:34:39
Speaker
Imagine if 1500 rupees Nokia, you would just dial star, X, X, X, Y, and it will show you places and you can say, I'm at a means one, right? Or I'm at a topic of a name in small right now. Right? So it's the USSD, I think that's what it's called. USSD, yeah, USSD, USSD that unstructured or whatever, right? USSD thing and boom. And we realized, oh my God, we had almost a million checks in the day.
00:35:11
Speaker
So, of course, like any startup, right? Initially we didn't have anything. It was like a, like a market place, right? At one end there was a consumer and the other end there was a restaurant.
00:35:24
Speaker
right, or let's say a spa, you know, a spa restaurant wanted to talk to the users nearby and bring them into your stores, which is drive traffic and the customer was wanting options. So initially, you know, how it was like a game, you check in, you get points and you get some rewards, the offline rewards. Then we quickly, you know, moved into selling coupons.
00:35:46
Speaker
And at that point of time, I think a deal with Cafe Coffee Day completely turned for Hopper because he just said, check into a Cafe Coffee Day and get a coffee free. Boom. Yeah. We had 10,000 merchants like Cafe Coffee Day on the Hopper platform where it would just check into a place and get it. A lot of learning from there. I think got bought over, you know, or a Cafe Coffee Day. This was a
00:36:09
Speaker
like a way to build customer loyalty. Like they would know who all are coming there, then they would be able to send them promotional messages.
00:36:18
Speaker
Festival, loyalty, traffic, you know, traffic. Of course they do not free coffee. It was by to get one free. So that was traffic, you know, another store. How can it drive you? You are here. Contextual marketing, extremely contextual marketing. Isn't it? You entered an ambient small and you say, I am in the ambient small. The moment you check in on small, imagine all the brands realizing, Oh my God, you are here. Now let me talk to you. Then eventually it ended up becoming like a loyalty platform. Check in one second time, you get something fifth time, you get something 10 times.
00:36:46
Speaker
We allowed the merchant to build on top. The USSD technology told you the location or the customer would have to type out the location or something.
00:36:55
Speaker
No, of course not. That's the beauty of it. When you dial the USSD, it'll show you the tendencies around you. Because I was getting the location from telecom companies, right? I was getting the lat-long, right? And we were way ahead, I think, I think, of time. It's like really, really ahead at that point of time. Today you are going to build a very good technology, it seems like. But I guess the smartphone essentially made that technology not so relevant.
00:37:24
Speaker
I would say there's one thing that made Smartphone a free was I think we missed the bus. You know you always build for the future and you know sometimes you have to put significant efforts in the future. It talks about focus and at the same time let's say Zomato was only on smartphone and said and I'm sure Zomato would be looking at us saying oh my god their numbers are much bigger.
00:37:48
Speaker
from a check-in perspective but I think it's where you see ahead and maybe I think we tried to get to App Store and of course we were one of the top 10 in one point of time but then you realize that somebody has run a little ahead of it. So that's one of the things that there are other things that you learn from Hopper. I exited, got bought over and then I started. When did you realize that you
00:38:14
Speaker
Like you're not going to be able to scale it up because it started strong. You had that cafe coffee day, a million seconds a day. So when did things start going south and you realize that we need to pivot, we need to try other things. And obviously in the thick of it, you don't probably know. This is only with hindsight that you can say.
00:38:37
Speaker
It's not that I was always excited and I think we had a huge space to go. But there were other things that were happening. There was a pressure on growth for us at that point of time. We had raised capital.
00:38:54
Speaker
In 2011, we had a first round of like $5 million, $4 to $5 million we had raised from Barthi South Bank. That time, 2011, not many VCs in India, startups are very, very few, right? And so when you raise so much capital, you need to grow. And I think a lot of things that happen around it, planet market.
00:39:20
Speaker
I think we were, we were, we raised so much money without a product market. And then you are opening a lot of cities and then you realize that, that you're growing by not fixing the product. And you come back and try to fix the product. And then by the same time, there are other things that are happening in the business. And then, you know, somebody finds you really exciting. Somebody likes your merchant bears. A lot happens after that. So I said, okay. And first startup. So who acquired you? Oh, hike.
00:39:50
Speaker
like messenger at that point of time. And you were still USSD at that time when they acquired you? No, no, no. We had already moved to the app. We had the USSD, but we were already moved to the Android. And I think we had a very good product running called Opera Cache at that point of time. So no, no, I think we were on the app at that point. And this was like, again, a check-in product, something like say Magic Pin.
00:40:17
Speaker
Yes, it was checked into a place and then you get rewarded and coupons and stuff like that. So at that point of time, I would, I would feel that it was a lot like a four-square group on those days, right? You check into a place, you get points and at those points we are converted into upper cash, upper cash, give you discounts. And then, you know, we allowed our merchants to build a large program on top of it, first check-in, second check-in.
00:40:41
Speaker
It was a complete online development of commerce product that we had become. But our strength at that point was the huge merchant ecosystem that we had who was using Hopper at that point. Okay. And why did Hayek want that merchant ecosystem?
00:40:59
Speaker
Your hike was a alternative, right? Yeah, but I think that was an era, in my opinion, that WeChat was very, very famous in China, right? Which is you become a platform. Yeah, for not many people, but also merchants and everything. It made a lot more sense. I mean, I don't know much more about that, but I think to me, the merchant ecosystem made a lot of sense at that point of time. And you want to build a platform for us. And how much did they acquire you for?
00:41:30
Speaker
I would say not much. Let's put it that way, right? Not something that I would be like, Oh my God. Yeah. It was a good shot up. Good learning. You know, another day, what you retain is the learning. And I think all those learnings to me. So when somebody says, okay, how long are you building now? I think 14 years.
00:41:47
Speaker
Right? Because, you know, you learn a lot from your journey. And Mira, how has it been at it? You know, we've been perseverant. One of the biggest things that you see. Tell me about how, you know, Hopper got acquired. And so how did you even think of that let's buy trucks? Okay, so you're done with Hopper now.
00:42:16
Speaker
I took a break. Very honestly, we were trying to build a product in the delivery space, you know, very, very excited about fruits and vegetable delivery. I still feel it's a problem that you have to be solved, right? At one end, if you're getting a very, very fruits and vegetables at no price, then the quality is not that great. And if it is quality is great, then the price was something that a consumer is not willing to pay. So we were trying to solve.
00:42:43
Speaker
a local delivery problem, right? And all, which is, how do you solve delivering anything? Largely fruits and vegetables. You are trying to solve the fruit directly. So in that whole process, you know, you know, my co-founders and me, I think we were trying to evaluate the space. How did you meet your co-founders?
Mission and Ecosystem Understanding
00:43:03
Speaker
They were with you.
00:43:05
Speaker
my God, I cannot even say that how blessed I am to have. So Fahad, being with me from Hopper Days, I know him for now 13 years, Murli Dharan, very, very dear friend. Actually, I had done a small investment in his earlier startup 10, 11 years back. So he leads technology, Fahad needs operations, and a very dear friend called Joshua, who I know for now 20 years.
00:43:31
Speaker
working with me, he takes care of customer experience and HR, clearly we should talk about them. I feel that, you know, building a business with co-founders is like a must do, especially if you're building a product tech company, then I think technology co-founder is a must. And if you are not a technology, which is not, and without Murali, just here a few minutes back, without Murali, I cannot imagine Raul, and without Joshua and Father. So I think what we,
00:44:00
Speaker
So we realized when we were in this Azadpur, Mandi used to try and figure out a way to get the fresh vegetables. And that's where we used to find these truckers and drivers. When we start talking to them, when we start asking the question, how do you go back? And everybody would say, I would give my name to a broker and broker, and stuff like that. And I realized, I mean, you know, I look at it like that.
00:44:29
Speaker
that the trucker or a driver was just checking into one broker register. And broker was doing a matchmaking. Just remove all the truck, truck, truck. End of the day, there is a matchmaking of somebody who wants something and somebody who hasn't. It could just be married matchmaking also. But end of the day, it's not. And broker was a guy who was deciding to cook your load there. And when you meet a broker, you realize that this guy is
00:44:57
Speaker
you know, from a small town, or he has a relationship with few truckers and few customers, and then he'll open a shop. He's got multiple phones with him, charging the phones all the time. He's always on the phone call, zero tech, right? That brought us to think, oh my God, this is a much larger problem. So if I were to look at, you know, Hopper and Rahul, I think not my connection here in terms of socializing, right? It's a much larger problem.
00:45:27
Speaker
You know, think about it that there are 80 lakh trucks. There are one and a half crore truck drivers. Each truck driver would have a family to support four or five people. OK, you're talking about almost 78% of India dependent on trucks, not including the puncture guy, the petrol guy, the toll guy, the highway network, the people who build the highway network.
00:45:57
Speaker
This is a huge space. 1000 brokers also exist in the market. All the boxes that you sometimes feel that you need to start out right, which is
00:46:10
Speaker
There is a problem. I think technology, for us, technology was important, right? With technology, you can solve the problem because that's where we come from, really. So we said, okay, live impact, social impact, okay, a business that you would leave for the next 50 years, kind of a business, and hey, you're liking it. But it's not that we, after that, we suddenly decided to look at it.
00:46:35
Speaker
You had invested that fruit and vegetable business. You had done serious investment in that, right? You bought 10 trucks just for that. No, not that. We bought 10 trucks after that.
00:46:46
Speaker
Oh, fruits and vegetables are a delivery business, right? We were doing something called a Ting Tong as a product. We were not bought anything. We were running for one year. We had customers on the waiting list. We were doing only in Gurgaon. We were delivering anything. Actually, at that point of time trying to pivot to food. We're not bought anything, but we realized that I find that delivery business would never make money. Yeah. Right. You know, a big boss. We thought that delivery business would never make money. At least at that point of time, I didn't.
00:47:13
Speaker
four C's epitome, right? Or a blink, not that this didn't make money, but I don't know. I'm saying that at that point of time, I said, yeah, how do you make this cost of delivery and customers won't pay more than 50, 60 rupees.
00:47:27
Speaker
So that's why we never scaling their business. We didn't raise capital. I said, you raised capital before finding your product market fit. So this time you didn't want to do that. I think so. I think so. And too much capital, right? And much larger VCs also, right? So I said, you know, we didn't, in fact, far then we drove for a couple of months, you know, trying to understand. And then it came the one point where I said, yeah, end up with all this research.
00:47:56
Speaker
You know, one thing was very, very clear that we felt that the trucker was a guy who was completely messed up. His life was really hard. He's not able to pay the EMI. Broker, sorry, the driver's life is really, really bad, right? And Dibibu was talking a lot about driver life at the point of time. And I said the driver's life was really bad.
00:48:14
Speaker
He's waiting at the loading point. He's waiting at the unloading point. He's not getting paid on time. He's hardly coming home. And you don't know who's right or wrong because you do a lot with this trucker. He is misbehaving holding that. You don't know what started, right? Did we make the trucker and driver bad or the driver was born bad, right? Because everybody would say... So we said, I think we need to
00:48:40
Speaker
have massive empathy with the trucker. And then when you start saying that if you want to build a business for the next 20-30 years, I say, let's do something. I remember Murali and trying to figure out, let's do it. I said, Murali, there's nothing that we can build. We don't know anything like that. Then you say, okay, what's your investment? We bought 10 trucks. First five and then another five and say, okay, this is our investment now. The moment you put 10 trucks and you put two crore rupees, your family starts saying,
00:49:06
Speaker
Holy shit, what are you doing actually? Right? What is this? Now we have truck drivers. So yeah, we're in the last four, going 50 minutes, drive one hour, you know, for me and me sometimes. And you guys were doing the driving part also. Are you hired? No, we were not driving. We can't drive anymore. Not that young too, right?
00:49:32
Speaker
No, it's really romantic me. It's really romantic because they give you only chases. I drove my own first truck. I have a picture of it. I drove it from the Tata yard to outside on the road. But the romance ends there only. We had truck drivers. We had somebody early.
00:49:54
Speaker
stage people who joined us, like four-man welders, wet truck drivers. Of course, we sat in our trucks though, you know, we used to travel 100 kilometres, 150 kilometres with them, but not truck driving really. And that's all. One, one and a half years, we were not broker, we were not a market payer, we were only 10 trucks.
00:50:12
Speaker
But that allowed us to build our business, which was NCR Chennai. That's a lane that we worked. So if you look at it, from a supply side, it's not that homogeneous in our business also. The number of trucks that go from Chennai to Bangalore are not the same number of trucks that come or the load exists from Bangalore to NCR.
00:50:30
Speaker
or let's say NCR to Bangalore, Bangalore to NCR. So trucks go another way. So we started NCR Chennai, Chennai because they come from there. And a lot of South truckers come from the Coimbatore, Namakkal, Silicon Bay area. NCR truckers come from the Granapatadi. The question you ask, how do you start adding truckers? You build a relationship. You be part of them. You empathize with them. And slowly, slowly you say, you suddenly realize that, hey, my transfer does want four trucks.
00:50:59
Speaker
I can fulfill one or two for my own, right? Maybe I can take two from the truckers who I know very well, who come from my zone. I really know them well for some one year. And that's how you started saying you moved away from, so we have to work, we have to give our truck to brokers only.
00:51:17
Speaker
not two transporters, right? Because we were trying to understand the way typical trucker works. Where am I going to search a transporter? The moment you started doing that, you realize the problem of a truck broker and how much is deductions and random stuff, right? And then, okay, then we realize, okay, as a trucker, this was a normal problem. We empathize with it and slowly, slowly remove the transporter to get a load. It became asset less. And then we became a pure play broker.
00:51:45
Speaker
digitization, we started right from day one, then we will digitize WhatsApp, blah, blah, blah. I think COVID, we grew 7x post COVID because all the people who are not willing to use our app, I think India has completely changed in the last.
00:52:06
Speaker
in a couple of years. We have leapfrogged. We didn't look at desktop internet. We moved straight to mobile internet. Similarly, we've again gone to mobile payment so heavily in the last 10 years. Imagine we're talking about Tucker and Driver having a smartphone.
00:52:27
Speaker
paying 10 bucks or 12 bucks using PTM for a cup of tea. Well, I'm standing there trying to take out my cash. It has happened with me in the markets. Dhaba is accepting PTM or making payment. So I think a lot happened in our favor, which is why I think the trucking 1.0 companies 10 years back didn't have, which I think Rahul had. No cost of acquisition.
00:52:52
Speaker
internet was there today. And that's how slowly, slowly, suppliers grew. And you ask the question, how many suppliers work with them? We have 7,000 or truckers who work with us.
00:53:03
Speaker
Right. And how many trucks? Is that 7,000 trucks or each of these truckers have? No, no, no, no, no. Each of the trucks would have around, let's say, 10 trucks. So our last number was that we had around 60, 70,000 trucks on our platform over a period of time. I think that's how we built an absolutely zero cost of acquisition. We don't even have a
00:53:26
Speaker
you know, Google account for that matter. We've never spent a rupee on marketing. Never spend a rupee on marketing. And that's the reason why we have not mentioned much.
00:53:41
Speaker
In fact, a referral link also be just put now, I think, a few weeks back. It's pure word of mouth because a very close-knit community, actually, it's not that all businesses can do this or whatever I say is relevant for all businesses. No, not really. This is a very close-knit community, a trucker-trust-broker after a long time. And once he realizes that they are low, they are low. I think somewhere we underestimate that you have to be known like a good people.
00:54:08
Speaker
Right. And if you look at our app rating or if you look at word of mouth, all the additions today, I think we are more than what we need. I think we are not able to give that demand. I feel to a lot of our truckers and that's a challenge to solve. But a hundred percent acquisition on the trucker side, on the customer side, word of mouth, of course, for acquisition of the demand, that is sales team. But now we don't have any sales team field team to acquire trucker.
00:54:35
Speaker
Very, very glad to say that the supply side is 100% digitized, which means right from the time you download the app, he does KYC, he uploads the other card.
Leveraging Digital Infrastructure
00:54:45
Speaker
Of course, India Stack has held, you know, there's a checkbook that he uploads, he gets it, one of the times actually we checked the detail, then there is a video KYC, then in the last one year, what you've done is that he sees his relevant loads for his truck, he bids for his load,
00:55:02
Speaker
In negotiation, the AI system actually prompts him saying that this is too high in terms of getting a load. I reduce the price. We have a call. That is a call that happens. And then we select him saying, you are selected. This is your load. Then we give him a location to go. Then he goes to the loading point. He uploads the LR. He gets his advance. He uploads the POD. We have the tracking system. You get the balance payment all through the app. Trucker.
00:55:32
Speaker
we are benefited by what's going on in India. And a trucker is benefited, a driver is benefited because the digitization, the power of digitization, which I think started with smartphone, GST, UPI payment, now Fast Add now. I mean, so many things that we are going to launch ahead is India Stack, I think. Okay, so which is why I said that trucking 1.0 and trucking 2.0, trucking 1.0 had headwinds.
00:55:57
Speaker
of no digitization, no banking, cash transaction. Whereas, Rahul has talking 2.0 as the tailwinds of, you know, digitization, smartphone banking, digital banking, you know.
00:56:12
Speaker
TikToks of the world driver, you know, started, I mean, why do you think started buying a smartphone because of YouTube and what's up calling? And then you realize, like, you know, you, you, you buy a smartphone initially for enhancing your life lifestyle. Then you'd become livelihood. Right. A punch, a punch in one leg, a smartphone, a mobile phone is a, is a livelihood. He writes his number and then goes around.
00:56:42
Speaker
It's also the key maker for that. He's roaming around with this one double saying, call me. Okay. And yeah, I think that's, that's Raho and the supply. Yeah. That one rupee, which you send to the bank account would also help build trust, right? Just the fact that this company, it's a very interesting one, you know, when we didn't have this digital and everything,
00:57:07
Speaker
And just one of those anecdotes, right? So when I used to make the payment directly from my bank in the middle of the night, let's say one o'clock, right? When I've got the LR and it's a new supplier, for example, I used to, you know, Laurie receipt. That's a proof that the vehicle has been loaded. Now with GST, there is an EVA bill also that has come, which is good.
00:57:30
Speaker
I would just transfer money to somebody, which is, there's no loaded, right? So I would look at the, and I would have the truck number saying this meeting has been loaded on this truck. And then I have to transfer the money to that truck owner. And if it's a first time truck owner, and I had to check whether this, this truck owner's account number is random people. So I would transfer 11 rupees and I call it Chagud.
00:57:53
Speaker
and the message. So it became so famous that, hazzar appan, shagoon aage hai. Right. And, uh, and now with, of course, digitization, that is, they call it a penny drop, right? And the penny drop one rupee, uh, thanks to, of course, all the digitization, I'm able to get the actual number. So what we do is that we work one of the direct three toner on whose name RC is the registration certificate, right? So that we don't want to work with a middleman. We want to work with a guy who owns it.
00:58:22
Speaker
In this business, the moment you bring a middleman and the middleman and the truck owner has a problem, you are gone. You know, you are in a deep problem. So you try and avoid that. So yeah, the chagoon has now become a penny drop and things have become better. Is the RC digitized? Or does someone need to take a photo? How do you know whether it's a genuine RC or not?
00:58:44
Speaker
You know, there is enough APIs today that I can check if I put the vehicle number, my API is able to save the vehicle name from one. That's an API.
00:58:55
Speaker
Okay. So I, you know, there are a lot that has happened in this country, which is, because I said that, you know, you know, Raho would not have been without these tailwinds that are coming. Yeah. Yeah. Simple thing. A broker. Let me take a very simple thing. One example, why would a broker against the truck driver goes there? When the vehicle gets loaded, the broker would give some cash to the driver so that he can put the fuel and fuel station was the ATM in India. You know, right. A trucker would have a tie up with the fuel station.
00:59:25
Speaker
You know, uh, and, and the fuel station would give the cash to the truck driver. Okay. Right. So that you can, you can feel fuel or you can have the, you know, the truck owner would never give the full money to the truck driver, scared that he would run away with the money. So every 400, 500 kilometers, you would give money to fill the fuel and forest, you know, but they call it daily expense of food and everything. Okay. It was cash.
00:59:55
Speaker
You see, now what has happened? No, the truck driver is also using digital. Where is the cash? No. Fuel is getting cash. Total payment, don't need cash. Truck, let's say, even for food, the guy is using a detailed payment now. Where is the cash? Earlier, a truck driver would hide so much cash, be scared. Don't tell me, don't tell me,
01:00:24
Speaker
Hey, it's gone. So, so very, very lucky as they call it most of the times, right? Timing is so important. You know, in Hopper and this, right? You see, there's a timing benefit that we've got. And I think there is a timing. Of course we had to.
01:00:50
Speaker
you know, a little bit of a wait for the right time, you build for the future, right? The learning from Hopper and Rao is that in Rao you have to, you know, we said, listen, I think let's take it for granted that it will become smartphone, the trucker will have a smartphone. People have to say, do you think a driver will use a smartphone? Reasoning, I see a world where the driver will use a smartphone. I see a world where things will get digital. I see a better world and I'll build for the better world.
01:01:18
Speaker
I mean, you cannot, of course, predict COVID, but I built for the better. And I felt that Zomai had to build that. He built for the better. He actually said, yeah, I will discount it, right? I think, and I think that's, you know, maybe we are in the right time. I always say that it cannot be, even today, let me tell you the digital market freight booking is less than one percent. Imagine.
01:01:45
Speaker
So 99% is still with the traditional broker. The traditional old way of working. Why are you struggling with demand? You said you have more supply than demand today. Why are you struggling with demand? Do you need to spend money to acquire more demand?
01:02:06
Speaker
I think the key question is that our supply is growing faster than the demand because the transporters are building a demand for us. Our supply is growing faster than our demand because the demand is not fully digital yet. Whereas the supply is fully digital. You can't stop a trucker to download an app and say I want to load.
01:02:28
Speaker
So that's our curve is like this, whereas you still have to be very careful when you onboard a transporter because you're going to be very careful that he's a transporter that will pay you on time. You know, he's somebody who can reliable, his orders are reliable, so on and so forth, right? So I think it's not that there is a problem. It's an opportunity that I feel that, you know, that the tipping point for us where you're not doing anything, you're getting supplies happening for our
01:02:58
Speaker
Whereas we need to crack the demand point, but I think they're growing, surely we'll solve that faster. But I would assume that demand lies with businesses. So businesses are like a lot more digital savvy willing to go to a website in order to provide better service to their clients.
01:03:26
Speaker
Like, I didn't understand why demand is not growing as fast as supply. A lot of our transporters, they're still old economy companies. That is still that one person was there. Most transporters are like an SME, like a medium enterprise. Most of them, they still have that, they call it a traffic guy who's not necessarily very digital savvy.
01:03:55
Speaker
In this business, what happened that, you know, when there is a load, they forward it to, let's say, you know, a few brokers, we are one of them. Okay. And they would like send it through a WhatsApp message or something like that. Yeah, you know, that's why I said we have 100% digital supply, but you know, it's not been very easy for us. Enterprises take their time because they need to, they rewire the way the organization is. Some of the big companies that I talked to you about are 60 year old companies.
01:04:25
Speaker
you know, there is a certain way that they work. And they are coming to the news is that the new gen you need an account executive who will receive the requirement and tell the company that yes, sir, this will be done. Yes.
Future of Logistics
01:04:40
Speaker
We call it. We have a shipper app. We have a shipper app, but you know, we, you know, we are slow to it. They use the shipper app. Um,
01:04:54
Speaker
as soon as the vehicle gets confirmed, because the documentation, everything is on the app, the tracking is on the app, but the process of getting a truck, they feel when I can make a call and we can make a WhatsApp, I get it in few minutes, why will I do it? And I think it's a slow change. Also, it's a matter of time focus also, right? So we, as I said, we focus on digitizing supply. I'm sure in the next one, two years, we'll make that compulsory so that I think the new gen that's coming in these old economy companies,
01:05:21
Speaker
are also thinking transparency. We are also seeing, hey, listen, I don't have a view of what's going on. Why a particular vendor is selected vis-a-vis Rahul. And I think the moment a new generation is asking that question, the only answer would be, and most of them are wanting, is digitize. When they digitize, they will say, we'll work on digital companies, we'll work with companies, and we have full clarity or elaboration. So I think it's, I would say that
01:05:50
Speaker
The future is definitely detailed and thankfully we are at the helm of it or trying to steer towards it. What does your product look like? I've got a few hints. For example, you said that document uploading happens on the product and all documents reside there and also you said tracking happens on the product. The driver downloads your app and therefore
01:06:15
Speaker
You are able to give real-time location updates. Just talk me through the product part of it. Let's start with, let's say a customer says, I want a truck. He says it on a WhatsApp or a call. Somebody from my internal system quickly puts it.
01:06:31
Speaker
on the internal app that pushes a notification to all the relevant truckers. Truckers have already given us their inventory as they call it. They have checked in to say that my truck is getting Chennai. I have a multi-excel truck. So if there's a multi-excel truck waiting in Chennai or in Delhi and we have a load that matching, which is a matchmaking, it informs in saying that, hey, there is a load exactly
01:06:53
Speaker
at this point. We also know where the truck is waiting. So we try and see if we can give him a load which is closer to where he's standing, where his current unloading point is closer to the new loading point. And how do you know where the truck is?
01:07:10
Speaker
Because the driver checks in to say that my truck is here. I'm waiting for a load. The driver checks in. The trucker also says his inventory and selects a Google pin saying this. So he has all his vehicles are already in my system. He taps the vehicle number and says this vehicle is here in the Google pin. So the system automatically tries to push so that we can, we are able to get a better rate because the trucker sees less cost.
01:07:37
Speaker
Right. Um, so he gets it, he bids for it. Once he bids for it, then we have our rate. Is it with the customer? Are there other factors also? No, I can, we get a bid. Sometimes what happened to trucker would bid. Sometimes, you know, we have a bound. We're not doing a reverse bidding. We don't make him go down, right? We get a bound saying, okay, uh, code between this price, right? We use this bid to be able to get his interest.
01:08:04
Speaker
And we also know that there is a truck. Then we go ahead and quote the price to a customer. There is a negotiation with the customer and the trucker, which is still on the phone. We tried to do it with the AI and quote the price. We actually push a new rate. Some truckers accept the rate or some truckers would want to call immediately because they would like to understand loading point. That is still a little bit of, see if you're dealing with really Bharat. Okay. It's not like, you know, as I call it that completely offline matching to automated matching, we have 75%.
01:08:34
Speaker
It's still not fully uberized that you don't have to do a call. So a customer then agrees the price. We are able to make that margin that we want. And within a few minutes, we normally are able to give truck in a lot of instances in 10-15 minutes.
01:08:51
Speaker
We, in the system, because the trucker vehicle details already there, he accepts a load. The documentation goes to a customer on the app. We share the driver number. Driver knows where the loading point is. Then somebody is tracking to make sure that the vehicle reaches the loading point. From there on, everything is fully digital. Customer is able to track his truck. Trucker is able to take his payments. Mostly life is very, very good. Three, 4% of the time, vehicle goes.
01:09:18
Speaker
running late or goes into some wrong distance, wrong area, goes into the route. Then we have to say, dude, why are you going by this route? Then you realize that he has his favorite petrol pump in that area, or diesel pump, or sometimes he says, everything happens. So I think a lot of
01:09:43
Speaker
Do you take the risk on your books? Like if there is, and what is the risk here? If there is delayed delivery, is there any risk to
Risk Management and Profitability Goals
01:09:52
Speaker
that? What are the risks of this business? Help me understand. So what happened is that, okay, one thing we don't really take super express delivery businesses, right? Which is 36,000 Mumbai. But yeah, we have a tad.
01:10:06
Speaker
Yeah, those pay more, but those charge also more because we don't own asset, right? The driver to drive 24 hours or have two drivers or something like that. Double drivers, 24 hours. I didn't realize that, you know, that makes sense. Express business in India is I think 67% only. Okay.
01:10:28
Speaker
It's one of these mentors and really the e-commerce companies that really need super files to come. So we really don't cater to the market share because as a marketplace, it's very difficult for us to control this. Our service level just go down dramatically and put more stress in the business. But we do have some suppliers who do only Express and then we try and match them with Express loads.
01:10:50
Speaker
So that's easier. So you tag it, saying this start node will go only to that particular supply, but that doesn't very small for us. Our on-time data goes to 90%. That means starts to reach on time. When they don't reach on time, sometimes there is a penalty, but we have a penalty for it supply side also.
01:11:08
Speaker
we would take care of that. In terms of you asked the question of risk, there is a little bit of a liability up to a certain amount, amount of thousands only that we take responsibility. If something really big happens, yeah, for damage there is let's say up to 10,000 rupees. We also have a supplier balance payment that we also have to pay because we pay 90%, 10% still exists, right? But when there is little large problem in Cardi Giam, which is rare, rare, rare, rare.
01:11:36
Speaker
Then I think we are responsible to give an FIR to the customer. And then the insurance process kicks off. Because for the kind of margin that exists in the business, we definitely cannot take responsibility of the DoCoR command. By the way, all loads are insurance. 100%. Every customer, the end customer takes insurance.
01:12:01
Speaker
In this case, let's say, Coca Cola takes insurance, not transporter also. Okay. And this is standard practice in this industry. You don't need to- Standard practice, don't have to worry. Take care. Understood. Not right now. You do have to bundle when we start growing massively on the SME side. SME who needs, let's say, five FPL trucks, then you would say our major transportation gives up, insurance. At that point of time, we will try and solve the problem. That is not a very complicated square there already.
01:12:30
Speaker
A lot of other businesses have also been built. What kind of revenue do you do today? So let's say we are a run rate of around 160 crores a year.
01:12:44
Speaker
170 crores a year that we do. Last year we recorded a revenue of 130 crores. Last year we recorded around 126, 130 crores gross billing for us. We make a margin on top of it.
01:13:05
Speaker
around that number. That's the range. You're right. Understood. Understood. So you are less than that. We are reaching on that ring now. I'm guessing if you want to be like a, you know, business making a hundred CRs revenue and by revenue, I mean the margin part of it, then you would have to raise a lot of funds too. And you would have to go directly to a co-op and I mean, that's the only way to do it, right?
01:13:34
Speaker
Not really. Let me tell you about raising capital. We have not raised so much capital. How much have you raised? Very very careful. We have still not raised a series A. Total capital raised by Rahul till now is around 38 crores. Total capital deployed is around 22 crores total.
01:13:57
Speaker
Okay. In seven years, the amount of money that we have locked totally on 22 girls. Are you currently like, I still go ask money or are you profitable? The magical question everybody wants to ask. No, we're almost there. Let me call it. We're almost there. I'm super excited that maybe
01:14:23
Speaker
maybe in the next few months you will turn completely profitable. I'm talking about at the, not a beta level, but community level fully profitable. We're almost there. That's a big focus for Raho that, you know, that is, you'll be, yeah, I think to add, I, I,
01:14:41
Speaker
Yeah, around that number, we will be profitable completely till the bottom line and I think that's the focus of Rahul to build a profitable business. After that, you know, when the product is built, I mean, you should be able to continue growing this business, not necessarily with a lot of capital. I don't see that. Now the question is, would we go and customer?
01:15:03
Speaker
I mean, why would I go if I continue to grow, right? My transporters and 3PL companies are happy to work with me and grow. I don't see any reason why we need to go to end customer, large enterprise for sure. Would we do a small and medium? Maybe yes, because that guy is anyway going to a broker that anybody who goes to a broker is my target audience as a customer, right? Anybody who goes to a transporter is not my audience because transporter is my customer right now. So I don't see that, but I think we have a lot of adjacent businesses to think of.
01:15:33
Speaker
you know, to scale at some point of time, which is, you know, to sell tires, to sell insurance to my truckers. There are a lot of ancillary products that he's buying.
New Business Opportunities
01:15:42
Speaker
Okay. And, but we have been always focused on saying, listen, let's focus on the load. That's the largest problem. Right. So for a, for a trucker, the product you give is either going to go to increase his revenue or reduces cost. We have focused on increasing.
01:16:01
Speaker
things that can grow his revenue, things that can make him do more kilometers, right? Things that can get more top line, sweat his asset more so that he can pay the MI well. At some point of time, we say, listen, I think maybe we can give you a great discount on insurance because he is a small fleet owner with two, three trucks, no insurance company wants to give him a great discount, but he's spending 67,000 rupees a year on insurance. Maybe we could help him there. And I think we will start seeing some pilots in that area in the next few to six months.
01:16:30
Speaker
where, you know, we'll slowly, slowly start becoming that store for him and, you know, expand the portfolio. See, listen, you're coming for load, you buy trucks, so you buy maybe old trucks also, you buy insurance, you buy tires, you know, give you some puncture tires if you do. And I think all of that should come in. But... Will that be as big as your FTL business in a couple of years? I mean, where do you see that potential of that business?
01:16:59
Speaker
I think from a top-end perspective, not very, but from a margin perspective, bigger. The margin pool might be bigger of those products. Okay. Right. The margin percentage that you can make might be bigger, but you have to understand the core reason why it comes there to you is, in my opinion, is the largest problem called loads. Right. You can't suddenly launch saying, yeah, I have to launch Pro or I've got tire system.
01:17:23
Speaker
Very difficult because he buys tire like what he changes once a year, the truck tires. But he's doing continuous business and we also know so much of data about him that we know his insurance rate better.
01:17:39
Speaker
We have the documents of when the vehicle has to get insurance. We will try something soon. Everything is there. We have all
Growth and Expansion Plans
01:17:47
Speaker
the documents. It's very natural for us. But as I said, you know, one of my learning is to stay focused. We've stayed focused on that right now. And when I say we turn profitable, we turn profitable without any of these answers. We turn profitable only on our loads. Tell me something. Why aren't you
01:18:06
Speaker
Yeah. Why don't you have that ambition case called 1000 karat top line in the next two years or next three years? Well, you are happy with growing without raising money, with only working with transporters. If you had the 1000 karat ambition, you would probably want to
01:18:31
Speaker
figure out, can I directly go to the cokes of the world? So that's why I'm asking this. Or am I wrong in my understanding that there's no point going to the cokes of the world? The transporters are a better customer segment. Let's just go deeper with them. You never say never, right? At the moment, we believe that we are adding a lot of value and we have a long way to go. Sometimes talk about timing of the business. Do I see 1000 crores a month?
01:19:01
Speaker
Do I see 100,000 a month? I think in the next three years, maybe I see 200, two years, three years. That's up to 100, 100,000 a month. Without needing any more capital organically. We are going to raise some capital. We are going to raise some capital. We have to raise some capital for sure to be able to pilot or do some new things. To grow network. We are present only in 17 cities. We should be present in 50 cities.
01:19:27
Speaker
grow network, geography network. And you know, you know, from day one, those cities don't give you profit, right? Uh, grow ancillary products. Maybe, you know, try your hand in, you know, not give you profit. Well, you have your asset. Like it gives, but it takes some time. Sometimes the new city has a new segment of supply base, right? For example, today we do only container trucks. We don't do open touch at all. Okay.
01:19:57
Speaker
Let's say you are suddenly opening a city in Guwahati. Now, the truckers who roam around Guwahati are not there in my network, maybe, because I have spent a lot of time in building Delhi, Chennai, South, North. I may not have enough truckers who run in Guwahati. So it takes some time for me to build a supply base, of course, profitability. The cost is people cost. And then, of course, I think technology is a continuous cost that you have to start thinking, I'll be talking to Amazon companies in India.
01:20:27
Speaker
free coupon children, startup benefits. But I think you need some capital and also you have to try some projects, you have to try some new things, the insurance etc. It's not that from day one you need money to alternate. Also don't forget in today's time your first priority will be to stay alive.
01:20:50
Speaker
have enough money in
Business Philosophy and Team Dynamics
01:20:51
Speaker
the bank. I think we are an IPO company. We will do an IPO in the next couple of years. We'll raise one round for sure. One, two rounds maybe. We'll raise capital, getting some great people to help us in the journey. You know, raising capital is not just about money, right? It's about getting in people who can make the company better, you know, get you ready for a bigger thing. Ambition, yes, but
01:21:14
Speaker
One of the things they've realized is that if you want to profitably keep growing, which is the only path we have taken, it takes its time. This business is not a business which can double every month. It's slow and steady building brand. I think most businesses to me take 10 to 15 years. Unlike what has happened in the last few years where some businesses are just
01:21:42
Speaker
you know, some went down in the same speed, right? Maybe this is not their business, maybe we are not their team. We did also realize that what we love, as a company, I love now building a good business. You know, I talk profit, I talk transaction level profit, I talk overall profit, I say listen, this cost is not required, we talk productivity.
01:22:03
Speaker
Right? Because this is the business. This is what I'm going to be doing for the next 20 years. What's the hurry? As long as you're growing properly. What's your headcount today? 135. And how many of these are people who do the calls to customers, to truckers? Many, not many. The matching people organization is 30 people.
01:22:32
Speaker
Okay. A lot of others are collection, POD, billing, technology, proof of delivery. We have to collect the proof of delivery from the market. So those guys and engineering HR.
01:22:47
Speaker
And connection, customer support, partner help desk is a very big support. You know, our suppliers still, everything they do on the app, they do a voice message on the app and they have a problem. That's another beautiful feature that we see. We're hoping to open source it that on the complaint side, what we realized that a supplier can't type. So he has a voice message saying, uh,
01:23:14
Speaker
Very nice. And we love it. 80% of the people just send a voice message. Yeah. That shows empathy towards customer, right? When you build product. Yeah. And we were so excited with this product. We want to open source it also. We have a full layer around it that's built on ticketing system on this one.
01:23:33
Speaker
What do you mean in his own language? You have some technology which converts the voice to text. Yeah, we have built something which is not only this, so we could open it. We can give it to ticketing system companies, right? A lot of people would love this product. My co-founder technology was telling me that, you know, a lot of people will actually benefit from something. We said, okay, we should try and see how can it benefit. So we have a lot of people in part 10 help desk and so on. So I think, yeah.
01:24:01
Speaker
We're keeping a count. We have order in this 135, a good 15, 18 hour interns are working with us for let's say three months or six months, but they are part of that count. On-roll is 110.
01:24:15
Speaker
Okay, amazing. So let me wrap up by asking you, what advice would you like to share with young founders? You know, you're like the second time founder now and a lot more conscious about making the right choices and so on. So, you know, what advice would you like to give to first time founders? Okay, advice and all. I think, okay, let me start. It's a long journey.
01:24:42
Speaker
I think all founders should realize that start with a purpose, it helps to have a purpose. You know, entrepreneurship is a lot of sacrifice. I mean, you hardly give time to your family, I feel. It's a journey that you would sacrifice a lot of time for your family. Every day you're giving up something, a lot financially,
01:25:08
Speaker
Actually, I remember this Jensen Wong of media said this, that I was successful until I became an entrepreneur. Okay. And, but the other way to look at is that, you know, I started in my case, I feel that I totally agree that I was successful until I, you know, till I started up. But I think I managed to have a true purpose on the after that.
01:25:32
Speaker
Okay. And so if you want to make a great impact, startups are great, but financially it doesn't mix on a spreadsheet. It'll never make sense. It's a long journey. You should give at least 15 years for it. There could be one odd case, you know, of two years, three years, five years exists, right? But it's a long journey. A lot of sacrifice, undervalued virtue, in my opinion, is perseverance and resilience.
01:26:01
Speaker
many days you have value, you're vulnerable and you say this thing, my God, am I doing that? The doubt keeps coming back. And then every day in the morning you get up and you get obsessed and that obsession drives you.
Advice for Founders
01:26:15
Speaker
Okay. I think, you know, one of my friend said this that
01:26:24
Speaker
The highs are really high, but the lows are really deep and the highs don't make up for it. And that's true for anybody who's starting out. But India, the next few years of India, so if you really want to build, this is a great time, great country, go for it. But remember the purpose, don't just do this for money. Other advice I would give, have co-founders with you. It just is going to help you a lot. It's good to have some experience before you start up. I think that
01:26:54
Speaker
From raising capital, I've sent this in the whole call that don't raise too early, be careful, wait for the product market fair, don't get carried away by these announcements of amount of money capital raised. Eventually it's a business, you have to make money. Capital that you raise has to be given back. Nothing comes free. Right. I also want to say, because some people come to me, not all businesses are VC funded businesses.
01:27:20
Speaker
Some businesses are a great businesses don't have to be a VC funded businesses. So do that. Another one I can give you is that be careful when you raise capital. Raising capital is just the, it's not just about valuation or it's just not about
01:27:38
Speaker
the amount you are raising. There's a lot that is there in the shareholder element. Read it well. For first-time entrepreneurs, it's extremely important to take care of it. Take care of your health. It's a long, long journey. If you're not healthy, it's not going to happen.
01:27:56
Speaker
The positives are many, you do this after some one time you realize that, Hey, the biggest joy you would get is that those hundred lives, uh, the hundred people that work with you, uh, the lives of all around what you started. So, you know, that's a big, big happiness comes into this responsibility. Like a father, right? That is a responsibility for the child. Uh, but this is a great time. There is no better time. There is no better country than India. There is no better time than now.
01:28:26
Speaker
You know, I mean, like, like there was a trucking one point on this trucking 2.0, maybe there is a trucking 3.0, uh, with all the tailwinds that exist. So go ahead, have a great life. Go start up, man. You need entrepreneurs all around us.