Becoming a bus operator to digitize intercity bus travel for 30 million Indians

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Having lived in the US for nine years, I have spent all my startup years in the US. The first time I came across the idea of startups and venture capital was during my undergrad in New York. My startup thinking has become US-centric. I started feeling uneasy with my aloofness with the Indian ecosystem beyond the most prominent startups and headlines in American tech outlets. Naturally, I tweeted about it, which predictably led to good things, one of which was an introduction to Sumit, the cofounder of Apnibus by Antler India’s Nandini.

What makes this an interesting conversation is how Sumit decided to become a bus operator to understand how the industry works as an outsider before building software to bring the industry online and improve bus travel for low-income people in third and fourth-tier cities of India.

In this conversation, Sumit and I talked about:

• His journey with the first startup

• Post-exit perspective on building startups

• Experiences with bus travel

• Becoming a bus operator to understand the industry

• Problems in intercity bus travel for low-income Indians

• Starting a marketplace to digitize bus travel

• Creating tools for bus fleet operators to digitize operations

• History of consumer internet behaviors before and after Jio

• Lack of digital penetration of utilities in small towns

Sar: Let’s start with your upbringing and the story of your first company.

Sumit: I was born and raised in a small town in Rajasthan (a state in India) and came to Delhi (India’s capital) for my engineering studies. One of the main reasons I chose to come to Delhi was I wanted to do something on my own since childhood, and I thought a metro city like Delhi would be a great place to have exposure. Since the first semester of my engineering, I have started doing something or other. When startups were not celebrated as they are today, I didn’t know about the words like startups or entrepreneurship. I was doing different things to do a small-scale business, and by 2010-11 people started talking about startups like Flipkart and Snapdeal. I started my first startup in the final college engineering semester, GrownOut. We built a SaaS recruitment solution for corporates and raised a couple of financing rounds. I ran that company for five years until People Strong acquired GrownOut.

Sar: You come from a middle-class family. You just built and sold a company at a time when you weren’t as plugged into the startup culture as you are now. How were you feeling at the time? Did it change your perspective on money or success? You went on to build another company. What were the biggest mistakes you think you made that you wanted in your next venture?

Sumit: Though GrownOut was acquired, I don’t think it was a success since we couldn’t achieve or build the business we wanted when we started. That journey made me hungry to build a meaningful business. I made many mistakes in the first startup. I believe that every business needs to focus on two things - one is the value you are bringing to your users, and the second is the unit economics. Both things are equally important; for example, if your unit economics don’t work, it doesn't matter how much great value you are adding to your customer. Eventually, your business will die, and vice versa.

Sar: Bus commute was a big part of your childhood and college days. I used to take a 7-hour bus ride multiple times every semester during my college years. Most people complain about commutes and go about their days. You decided to do something about it. Talk about your commute experiences and how they inspired what became the first version of your current startup.

Sumit: After selling my first startup, I was on a break and traveling a lot. During that time, there was one particular trip I had taken by bus, and it went so terribly that I gave up on bus travel and thought of never traveling by bus again. And it started reminding me of my childhood and college days when buses used to be my only commute mode and how I hated it. I have struggled hundreds of times with bus travel, so I decided to pick this problem and solve it.

But then, I didn’t know much about the industry; all I knew was my experiences and what the people around me told me. So I thought I should start running the buses and learn more.

Sar: Oh wow, that’s a big leap! How did you get started as an operator, and what changes did you make? You were a total outsider to the industry. Did that give you an edge in moving faster and doing things differently?

Sumit: In 2019, I started Yellowpedal with a simple idea. We just wanted to be the best bus operator by providing the best service. To get started, I met with many bus operators and convinced one bus operator who used to have six buses to give one of his buses to me. I promised him that I would generate more revenue for him; if I did that, he would have to give me some commission. Within the first few weeks only, we got a fantastic response from all our customers. Within three months, we scaled our operations from one bus to 25 buses in a completely bootstrapped and profitable manner.

The fundamental difference we had created with Yellowpedal was the service quality. We tried to replicate the kind of experience you have on flights, from ticketing to boarding to in-bus experience; we fixed everything.

Sar: So your differentiator was the hospitality. Did you build any software? You focused on the physical experience of being inside the bus during the trip. Were there any learnings that made you appreciate the job of bus operators more than when you were a rider complaining about the experience?

Sumit: We used 3rd party software only and didn’t build any in-house since the idea was never to be a bus operator for long; we started being bus operators only because we wanted to learn more about the industry. I was a bus conductor for 30-40 days and understood how day-to-day life is too chaotic for bus staff. Those days made me really appreciate the job of bus conductors and drivers who are making it possible for people to move from one city to another every day.

Sar: When, why, and how did the shift to becoming a software company come about?

Sumit: We ran full-stack bus operations for almost 20 months. In the first few months of our operations, we understood that if we wanted to solve this problem, it had to be a product-led approach. The operation-led approach has limitations; it can not be scaled quickly. The best case scenario of that approach would be becoming the largest bus operator in the country, with a fleet size of 1000-2000 buses, but that is also nothing compared to the size of the market and problem.

We were profitable with Yellowpedal; it gave us the luxury to do a lot of experiments during those 20 months of operation. We experimented a lot, and when we did the pilot of ApniBus, we became sure of what we needed to do. We shut down our full-stack operations without delay and pivoted to ApniBus.

Sar: Before we get into the details of what you do now, tell me how your wife and parents reacted. Did they think you were crazy for becoming a bus operator after selling your first software startup?

Sumit: Yeah, everyone except my dad felt that I went crazy. My older brother told me, boss, you ran a tech company, and now you are talking about running buses, are you alright? After one month of the operation, when my brother went to see those operations, he felt I was on to something.

Sar: Ha, that’s funny. It’s just amazing to hear a software founder become a bus conductor! Talk about the software opportunity you saw in the intercity bus travel market.

Sumit: Buses are the backbone of Indian travel and the only option for the majority to travel from one city to another. Every day, ~30 million Indians travel intercity via buses.

In smaller cities of India, unlike tier 1 cities, intercity buses are the only option for people to travel from one city to another. They don’t own a personal car, and train connectivity is also not great. So technically, buses are the only option they have. Intercity travel is essential for them.

And unfortunately, despite all the technological innovation in India, bus travel today remains the same as it used to be 50 years back. It is still entirely offline, full of chaos, and very inefficient. Commuters and bus owners end up struggling with this status quo.

If you’re booking AC sleeper bus tickets from Bangalore to Chennai via an OTA, your experience today is 10x better than it used to be. But this is not the case if you’re traveling from Jhunjhunu to Alwar!

With ApniBus, with the help of technology, we are simply digitising this entire stack to make life easier for every stakeholder. Now commuters don’t have to deal with chaos at the bus stop or wait at the bus stop; they can easily find the bus which has available seats - book their ticket right from their home - can track the location of the bus, and then reach to the bus stop when the bus is about to reach. That means no more travel with stress and anxiety.

Sar: You spent a lot of time in small towns and villages to understand the consumer internet behaviour of the people. What did you observe, and how did it shape the product? You have an interesting perspective on Indians that came online in 2016-2018 versus those that came online in 2008-2011.

Sumit: In 2009-10, what we were mostly doing on the internet was consuming content on platforms like Facebook and Youtube. By 2012-13 we started shopping online on platforms like Flipkart. That was the behavior of people in tier 1 cities.

Since Jio launched in 2015-16, people in tier 2 and 3 cities and small towns have adopted the internet exponentially. And what they are doing right now on the internet is consuming content (maybe much more than what people did in metro cities) and doing a lot of digital transactions on UPI. But not many utility apps exist for this segment that addresses their needs. Since this market is huge, we will see a lot of action in the segment in the coming year. Before we started building the product, we spent a lot of time understanding our Bharat audience and how they use the internet and mobile apps. So when we started building our app, we focused on two things - one, it has to support local languages. Second, the UX needs to be very simple and easy to use.

Sar: What you are building is a marketplace. The frequency of thebehavior is a big factor in scaling and retention for low ticket-item transactions. Most on-demand ride-share companies have short-distance trips and cities as their largest categories. Given your focus on intercity travel, help me understand where the frequency is coming from.

Sumit: The behaviour of intercity bus travel users is different than the intracity commute over shorter distances within the cities. It's a need base market; people travel to another city for their needs, and frequencies vary accordingly. For example, a person living in a small town and working in a nearby town 50-60 km away travels daily on buses. Whereas a person traveling 200-300 km away for some work or leisure travels less frequently. Travel frequencies in this segment vary from daily to 20/25 times a year.

Sar: Ah, so work travel is a big part of the opportunity here. Talk about the progress you have made so far.

Sumit: When we went live, we were operational only in one city and one route for the first few months. We perfected our offering there. Once everything was in place, we scaled to 15 more cities on over 350+ routes. In the last eight months, more than 1 million tickets have been booked on our platform, and we see 150% growth monthly.

Sar: That’s a quick ramp-up! Talk about how you chose your first few cities and your go-to-market for launching new cities. How do you find and acquire supply at scale? Do you have a team on the ground that goes from city to city?

Sumit: Whenever we go to any city, we try to onboard the maximum number of buses from that city to our platform so that we have maximum options for our users from that city. Given our business model’s network effects, we need to operationally onboard a few major cities from that region to cover an entire region.

This market is completely unorganised and fragmented. Bus owners are distributed across small towns. Every bus goes through the bus stops, where we identify buses and their operators. Onboarding supply is the easiest part of this puzzle since our offerings solve the basic needs of every bus owner. We bring demand and visibility to their day-to-day business, which they don’t have today. We have a very strong and dynamic ground team which makes onboarding a city easy.

Sar: Talk about your business model.

Sumit: We don’t charge the end customer anything to ensure affordable prices. We charge a basic fee to the bus operators and a commission for the incremental demand we bring them.

Sar: What role do the local governments play in intercity bus infrastructure? Do you have any desire to work with them?

Sumit: Intercity buses are operated by either State Road Transport Corporation (SRTC) or private operators. And as I said earlier, we want to onboard as many buses as possible from every city, whether private or SRTC, so that ApniBus users have maximum options.

Sar: What questions about your business do you get asked often?

Sumit: “Another bus ticketing platform? How are you different?”

What makes us different is our users. 400Mn Bharat users still don't have access to the right information about travel. It was not just about the massive opportunity but the frequency and intensity of the pain felt by them. This Bharat customer has embraced digital experiences: from UPI to Amazon. But when it comes to essential bus travel, their experience is still poor: no reserved seats, no location tracking, unreliable schedules, fraud, etc.

Sar: Switching gears. What has pitching your company to investors taught you about the market you are in and the funding landscape of India today?

Sumit: Due to exponential internet penetration in Bharat (India in Tier 2/3/4 cities) and the gigantic market size, everyone is excited about this. Except for the content and payment apps, this market is largely untouched, and this is where the great opportunities lie. I believe we will see great companies coming from the Bharat market over the years.

Sar: What have you learned about hiring people?

Sumit - Since we are in mission mode, so when it comes to hiring, there are two things we focus on - one is to build a large funnel of candidates, and the second is to bring like-minded people to the team. If these two things are done properly, half of the job is done. Also, we believe if someone enjoys working, they bring their best, so we try to build a culture where everyone enjoys working on whatever task.

Sar: What’s next for ApniBus?

Sumit: The journey has just begun for us, and we are just operating in small geography right now. We are on a mission to digitise this market across India in the next few years. When you start building a business, it becomes very important to understand what really matters. Not only do you have to identify what to work on, but you also have to see what not to work on. Because with limited resources and time, you can not afford to work on things that don’t even matter. Internally this is where we regularly spend time to ensure that whatever we work on creates some impact and don’t end up working on random things.

Sar: Let’s end with your perspective on the growth of the Indian ecosystem.

Sumit: If we just compare the last 20 years with the last 20 years, I believe with continuous technology innovation, we have collectively grown very fast. This has been possible because of all the founders and the investors who believed in them. I hope to see more and more founders coming from small towns in the future and investors backing them.

Past conversations with Indian founders include deep dives into insurance with Verak’s Rahul, conversational commerce with Haptik’s Aakrit, streaming services with STAGE’s Vinay, and BaaS with Falcon’s Priyanka.

If you have recommendations for who I should talk to next in the Indian ecosystem, please reply to this email!

AngelList Stack is for startups that want faster fundraising, cleaner cap tables, and high-interest banking all in one place. Scaling companies such as Abound, Harness Wealth and Syndicate migrated from other vendors in less than a week with zero legal fees to gain an unfair advantage in managing their back-office. Learn more by signing up here.