In 2015, three friends, Arvind Sanka, Pavan Guntupalli, and S.R. Hrishikesh, embarked on a journey to revolutionize the transportation sector in India. They founded Rapido, a bike taxi service that has since grown into a formidable competitor against giants like Ola and Uber. But how did they achieve such remarkable success against the odds? Let’s delve into the story of Rapido and uncover the strategies that set it apart.
In 2015, three friends, Arvind Sanka, Pavan Guntupalli, and S.R. Hrishikesh, embarked on a journey to revolutionize the transportation sector in India. They founded Rapido, a bike taxi service that has since grown into a formidable competitor against giants like Ola and Uber. But how did they achieve such remarkable success against the odds? Let’s delve into the story of Rapido and uncover the strategies that set it apart.
Initially, these founders operated a logistics company named “The Carrier,” which focused on B2B deliveries. However, they realized that this model had limitations in scalability. They needed a new approach to achieve rapid growth, which led them to consider a direct-to-consumer taxi service model, targeting everyday users instead of businesses.
India boasts the highest number of two-wheelers in the world, with over 75 million registered vehicles. This presents a unique opportunity for a two-wheeler taxi service. The founders recognized that bikes are not only more affordable than cars, but they are also easier to maneuver in congested traffic. Thus, the idea of a bike taxi service was born, filling a gap in the market where no competitors existed at the time.
Despite the promising idea, attracting investors was a significant challenge. The founders approached around 75 venture capitalists, facing rejection after rejection. Many investors believed that competing against established services like Ola and Uber was futile. Some even questioned the viability of a bike taxi service in a market where safety concerns were prevalent, especially for women.
After persistent efforts, they finally secured funding from three investors: Anupam Mittal of Shaadi.com, Gaurav Munjal of Unacademy, and Kunal Bahl of Snapdeal. However, it was Pawan Munjal, CEO of Hero MotoCorp, whose advice proved crucial. He suggested that Rapido focus on tier-two and tier-three cities, where there was less competition and a greater need for affordable transportation options.
Rapido’s business strategy diverged significantly from that of its competitors. While Ola and Uber initially attracted drivers with enticing incentives, they later increased commissions, leading to dissatisfaction among drivers. In contrast, Rapido adopted a model that allowed drivers, referred to as “Captains,” to earn money on their terms. This flexibility appealed to those looking for a side income rather than a full-time commitment.
Rapido encouraged anyone with a few free hours to become a Captain, enabling them to earn between ₹200 to ₹500 per day. This approach not only attracted a large number of drivers but also allowed them to maintain control over their schedules. Additionally, Rapido’s payment structure ensured that drivers received direct payments from customers, significantly enhancing their earning potential.
Rapido’s journey was not without obstacles. In October 2018, the Coimbatore Transport Department seized several of their bikes for operating without valid permits. This incident marked the beginning of a prolonged legal battle. In February 2019, the Bangalore authorities similarly seized over 200 bikes, declaring bike taxis illegal due to a lack of required licenses.
Despite these setbacks, the company showcased resilience. During a police investigation in 2019, it was discovered that Rapido’s Captains were masquerading as food delivery personnel to continue operations. This clever workaround, however, led to further legal troubles, resulting in the seizure of 170 bikes. Yet, the Madras High Court eventually permitted Rapido to resume operations, providing a much-needed lifeline.
In October 2020, Rapido expanded its services to include auto-rickshaws, introducing a zero-commission model for drivers. They also implemented a daily subscription fee for auto drivers who wished to use the platform, which allowed them to operate in 25 cities across India.
In response to the COVID-19 pandemic, Rapido partnered with Swiggy, allowing their drivers to deliver food and groceries. This partnership not only provided an additional income source for drivers but also helped Rapido maintain revenue during a challenging time.
Today, Rapido is planning to venture into four-wheeler taxi services to compete directly with Ola and Uber. They aim to offer a comprehensive transportation platform that includes various options for commuters. Despite the challenges, Rapido has continued to grow, with a revenue increase from ₹158 crores in FY2022 to ₹214.97 crores in FY2023.
One of the ongoing challenges for Rapido is addressing safety concerns, particularly for female passengers. The company has implemented a strict verification process for drivers, including background checks and training. They also introduced a special service, “Bike Pink,” which exclusively features female Captains for women riders.
Rapido’s journey from a startup to a unicorn is a testament to the power of innovation, resilience, and strategic thinking. By identifying market gaps, adapting to challenges, and prioritizing customer and driver needs, Rapido carved out a niche in a highly competitive landscape. As they continue to grow and evolve, their story serves as an inspiration for aspiring entrepreneurs navigating the complexities of the startup ecosystem.
What do you think are the key takeaways from Rapido’s success? Share your thoughts in the comments below!