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How this startup is bootstrapping its way to take a million cars off the road

Sindhu Kashyap
27th Jan 2016
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It’s Monday morning. Being a peak traffic day, the first thought anyone who commutes a long distance has is leaving the house early. And if you’re from a city like Bengaluru, the possibility of getting caught in several traffic jams is quite high. According to city traffic reports, vehicular population in the city has exploded to 56 lakhs. The traffic police have stated that the situation is getting worse each day, especially in Whitefield, BTM Layout, Silkboard, Bellandur, and Maratahalli.

Today, bus aggregators like ZipGo, shared services like Zify, Lifto, Bla Bla Cars and cab aggregators like Ola Share and Uber Pool have become a necessity. And yet, the number of cars with only one commuter is high. In 2014, when YourStory spoke to Raghu Ramanujam, Founder, PoolCircle, he said that their goal was to enable four people to ride in a car instead of one.

Carpooling, as a concept, comes under the large umbrella of shared economy, which a recent Price Waterhouse Coopers report on the global market estimated at $15 billion. This figure is projected to hit $335 billion by 2025.

The 2015 ride

“During the course of 2015, our base grew eight times with more than 80 per cent of consumers being direct B2C users and the remaining 20 per cent being corporate users. We have more than 20,000 daily work commute routes available with an average distance of about 17 km,” says Raghu.

Yourstory-PoolCircle
Team  PoolCircle

They have also partnered with the Bengaluru Traffic Police, and Embassy Group to power carpooling for their tech parks. The team has also been working with Ernst & Young for third-party certification of Carbon Footprint. This is to ensure that the team gets a complete research report on the environmental benefits of carpooling and how the actual reduction in the number of cars on road can reduce pollution and the carbon footprint.

In October 2015, after a carpooling promotion driven by the Bengaluru Traffic Police, PoolCircle began working with the ELCIA – Electronics City Industries' Association the governing body of Electronic City. It has more than 70 member companies and other institutions and a joint workforce of more than 140,000.

PoolCircle has developed an exclusive private carpool network for ELCIA with whitelisted email extensions provided by the latter. To join this carpool, the user has to validate his or her corporate email address from the whitelist; carpools are setup only among ELCIA members.

Speaking about the partnership, Rama N.S., CEO ELCIA says that they have launched a single large carpooling community to drive higher levels of safety and participation. She adds that this partnership is their ongoing endeavour to establish Electronic City as a smarter and greener workplace.

Typically, 75 per cent of PoolCircle users find rides that match their search criteria. Also, in heavy density areas like Koramangala, Whitefield, Electronic City, Indiranagar, and Bellandur, it is fairly common to find 20 to 25 options if one searches during peak hours.

The team claims to have made close to 4,500 distinct carpool connections. Raghu says that their user retention after seven days is 53 per cent and after four weeks is 37 per cent

Raghu adds that at the core, ride sharing unlocks massive economic value by putting spare capacity to use and driving at overall efficiency. This long-term viability is in sharp contrast to the cab aggregation model, which the team believes to be unsustainable.

The team has also developed PoolCircle IntelliRide technology, which moves away from the model of a source to destination match. This technology scans through individual routes and provides matches based on the route overlap. Raghu adds that ride matching isn’t just about where you start and where you are headed. It is more about how far you can ride together. This delivered an 80 per cent improvement in the rides found on the network.

Road bumps on the way

The ride, however, hasn’t been easy for the PoolCircle team. Towards the end of 2014, during the course of raising their first round of funding, after multiple rounds of discussions of the deal term sheet, the deal fell through.

“It wasn't a happy new year for us, but the team’s self-belief and the customer affection that we were already starting to win convinced us to keep going. This also led us to evolve a revenue stream from enterprises, where we enabled what we call a ‘Closed Loop’ carpool, among their employees,” adds Raghu.

The team soon found out that the two-sided marketplaces approach was the hardest to implement, especially while bootstrapping. They knew that carpooling meant bringing in a significant behavioural change in the consumer. So the easiest way to focus on adding a customer base was to use the reference system of their existing user base.

However, the team realised that they had underestimated the importance of financial incentive as a motivator for carpooling. Raghu says that while the social and environmental aspects of carpooling are compelling and much talked about, the cost saving aspects, which actually happens to be the biggest driver isn’t spoken about much.

“We could have certainly grown faster if we had focussed on that earlier. We are in the process of addressing that and should launch an integration with a mobile wallet soon to power cashless payments soon,” adds Raghu.

Understanding the consumer

For B2C consumers, the product is free for now. Over the next few quarters, PoolCircle will be charging a commission on the money moved between the Ride Taker and Ride Giver. The app is available on Android and iOS.

For enterprise or B2B customers, they charge a fee based on initial setup cost and an ongoing monthly subscription. This cost varies based on predefined user slabs. The payments are made basis a commission and the subscription model the organisation chooses.

“Our manic focus on customer satisfaction has helped us get a strong sense of what our customers need and has helped shape our product direction. I still make it a point to have a conversation with about 20 per cent of our users”, says Raghu.

In PoolCircle, there are no strangers. You may not know the person, but you would know which corporate email extension he or she has, their Facebook friend count and multiple other data points to help you make an informed carpool decision.

There also is a trust-point-based user rating system that helps validate the identity of the user and even helps build trust without disclosing any personal or private information. PoolCircle allows the user to choose which network of contacts or “Circles” they want to carpool with. This includes any combination of colleagues, neighbours and other social and professional connections, in addition to gender preferences.

Vinay Kumar of Bengaluru, who is a regular user of PoolCircle says that his experience with PoolCircle has been great so far and that every commute he chooses via the platform matches his requirements perfectly.

Even Ola Share acknowledges the value of social ride sharing and the importance of trust. “The concept of social ride sharing gives you the opportunity to share a ride with people you’re comfortable with,” says Anand Subramanian, Director of Marketing, Ola.

PoolCircle is also working on bringing apartment complexes onto the platform. Raghu says that multiple apartment complexes already have carpool groups on WhatsApp. Helping commuters arrange carpools more efficiently and across other trusted apartments in the vicinity will add huge value.

The team is also in discussions with some of the large travel platforms to integrate their ticketing systems with their intra-city ride matching capability to lower overall cost of travel for the user.

YourStory take

The last few years have seen the likes of MeBuddie, RidingO, and CarPool Adda coming up in this space, but the entry of global players like Brazilian Tripda and French BlaBla Car was the real game-changer. It has brought validation to the need for carpooling in the Indian market.

While the concept of ride-sharing and taxi and vehicle aggregation is growing, government policies and laws seem to be shutting the party down early. ZipGo and other shuttle bus services had hit a rough patch so would platforms like these survive?

PoolCircle has tie ups with the Bengaluru Traffic Police, and Vikesh Agarwal Founder, LiftO says that there is no mention of carpooling or ride sharing or lift giving in the Motor Vehicles Act, 1988 (a Central government act), and that the Act does not specifically disallow these services.

Today, with the number of platforms in the space and the funding pumped into the market, PoolCircle has to compete with several players with deep pockets. However, many believe that you don't need to be well-funded to capture the market. Zerodha, a stock brokerage platform is one such example.

PoolCircle seems to have got the mix right in terms of tie-ups, but many platforms are yet to break in and actually create the desired behavioural change. Only time will tell whether the market behaviour actually changes or not.

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