[Social Media] Find out why Mahesh Murthy thinks redBus is innovative
Mahesh Murthy, founder of PinStorm and founding partner at Seedfund took to popular QandA
social network, Quora, when a user on the site put out the question - RedBus.in: How is Redbus.in innovative?The question has about 11 answers all ranging from how effective redBus has been in business execution, to how the questioner had got the definition of innovation wrong. Mahesh's answer, was quite detailed. It was from an insider's point of view (Seedfund invested in redBus) and quite a detailed account of what redBus is trying to solve. Here are some interesting points from the answer -
RedBus is as much a normal bus ticket booking site as Google is a normal search engine. I will talk about RedBus' innovation at 3 levels: macro: the businesses it chose to be, to mid-level: its strategic thinking to the micro: its day-to-day processes.At the macro level, imagine this. You want to go home to Hyderabad from Bangalore - and you hate the fact that you have no idea which bus will have seats to take you there, and when that is scheduled to leave. That's when you figure out that, hey, perhaps you can solve the problem. And perhaps you can build a business while doing so.
Then you dive in over a period of months and find India has more than 5,000 inter-city bus operators with 5 to 500 buses each. And the enormity of the task grabs you. There is no GDS - Global Distribution System, like Amadeus or Galileo to plug in to, like MMT and Expedia do for flights. So there is no inventory to sell, actually.
So you create the inventory from the ground up. You decide you need to start at the bottom, build out the GDS for this industry. You actually build the bus booking eco system at 3 levels simultaneously - the GDS across operators; the booking system / ERP for each individual bus operator - so they become e-enabled and can control which seat goes to whom; and then the booking site at the retail level that we all see, where the public books tickets.You fight 3 large wars at one time, under a code of silence, with very little money - relatively speaking - and with a huge sense of urgency to get it done before too many folks wake up.
Tell me that's not innovative.
The company has to figure out a way to win all of India before the rest get in. It can do an expensive slash-and-burn by running wide across India simultaneously. Or instead do a Genghis-Khan-like "win one territory, establish your rule, the win the next" mode. It chooses the latter.
Starting with Bangalore - Hyderabad. Fills up buses for operators on this route. And then figures out there's even more value for the operator if they can fill up the return route. Then, over time, adds a route. Grows to dominate it, make the operators happy. Then adds another. And another. By now operators - both private and government - are asking RedBus to grow to sell their other routes. They do, slowly and steadily.
Always keep the bus owners happy. Never hike commission, just match the amount owners pay to offline agents and touts - so owners don't get nervous. Talk to the bus owners frequently - how many engineering grads believe their calling is to spend 7 years talking to the chettiars, sethjis and other pot-bellied folks who own inter-state bus companies - and become their trusted confidants? These guys took the trouble.
Not just win good buzz from operators - but win buzz from consumers too. And do so without spending on media - like all the other funded folks were doing.
Till a month ago, did you ever see a RedBus TV commercial? Or a Print Ad? Nope.
The company grew from selling 2 seats a day to selling a million seats a month for a middle-class product meant for middle-class Indians - remember these are inter-city bus tickets - with no offline media spend. Eat your heart out, FMCG marketers.
This is what they did: use a little digital, intelligently. Track word of mouth maniacally. And win customer hearts, booking after booking. Apologise for mistakes. Work to rectify them. And focus again, maniacally, to create a delighted customer.
And all this while, resist the temptation to diversify. Could they have sold air tickets too? Or lodging at each bus stop? Or holidays to sight-seeing destinations? Or train-bus combinations? Sure. Did they? No.
Do give credit not just to what they chose to do, but also to what they deliberately chose not to do.
Tell me that's not innovative.
How many companies change their websites up to 50 times a year? These folks run A-B and multivariate tests on optimising their sites for conversion. Every week. And implement the improvements, every week. After week. After week.
What does it end up with? A look-to-book conversion rate that is 4 to 5 TIMES that of MMT, Yatra, Cleartrip or any other online travel agent. And to my knowledge, twice that of Online Shopping for Electronics, Apparel, Computers, Books, DVDs & more. in the US.
A rate that's still going up. And a business that today we estimate does as many bookings per day as MMT and Cleartrip combined. Again, remember on a nil offline ad budget.
This brings the cost of conversions down to ridiculous levels - remember one bus ticket sells for around Rs. 550 - compared to Rs. 4,500 on an airline. And the commissions here aren't huge. So you have to convert a customer by spending, overall, less than that small percentage of Rs. 550.
In a day and age when large portals spend Rs. 1000 per sale, tell me this is not innovative.
Innovation in execution
Often, innovation is interpreted as the uniqueness of idea. However, redBus's run as a business these past years shows how innovation lies in solving a seemingly mundane problem in a very effective manner. Mahesh's answer encapsulates that in the ways in which redBus overcame challenges they faced as they grew and the impact that it has had on various levels.
There is a lot being spoken about redBus today, but I think it is important to acknowledge the impact that this startup has had on our lives.
Stay tuned for more from redBus.
Read Mahesh's complete answer here.