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RedBus: Struggle for a bus ticket that gave rise to $100 million company

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Life changing ideas many times are result of real life problems, situations & experiences. Something of same sort happened with Phanindra Sama which led to founding of redBus that got acquired for $100 million.

How the idea sprouted
In the year 2005,  Sama decided to take an off for some days from work to be with his family. However, due to the festive season he could not get any ticket for his hometown and this led him to visit several travel agents so as to manage for the bus ticket. But ultimately he failed to reach his home and went back to spend the Diwali night alone in his flat. When he tried to collect the information about how the process of ticket selling and buying works, he was left with insufficient facts. The lack of interface between agents and customers perturbed him so much that he began thinking to resolve this problem. Phanindra Sama’s idea to put together technology and bus ticketing together by providing an e-platform to the customers to buy bus tickets marked the beginning of redBus.

sama
Image Credit: World Economic Forum, Flickr

Idea validation and success
Although Sama succeeded in convincing his 2 friends from Pilani to work on the idea yet the initial phase towards success was quite troublesome for all three. To come out of their comfort zone was the first hurdle they had to overcome. Pampered by their jobs, they now had to take the biggest risk of their lives, of quitting their jobs.

For a period of five months they dedicated all their focus to create the software called BOSS that could support the bus operators to manage their functioning and at the same time giving Sama, the status of seats of each bus. But happened was something that gave a setback to their enthusiasm, none of the operators they approached showed any interest in their proposal.

redBus
Image Credit: Wikipedia

Indeed the idea could not tempt the target operators but it did leave its impact in the market. To buckle up for a long journey they needed investment for their business and this is when they approached a non-profit organization, TIE (The Indus Entrepreneurs) in February 2006. TiE gave them the much needed seed funding of $1 million.

They now tried to concentrate on customers first and then the bus operators and this time their plan successfully worked out. Although the initial seven months of the startup went through financial crisis for Phanindra Sama and his friends but in 2007 they managed to raise the funding to $5 million. And then it seemed as if their business got wings. In the year 2011  redBus sold half a million tickets on a daily basis working with 700 bus operators in 15 states.

Acquisition by Ibibo and the related controversies
In 2013 Phanindra Sama got a very tempting offer from Ibibo to take over redBus in $100 million. Considering the future prospects of redBus as well as his own life, Sama decided to sell his company with the consent of his partners. After selling the company Sama went on a vacation with his parents for 10 days.  But those 10 days changed the whole game and in no time his happiness turned all dismal.

When he was abroad, some of the major designations started falling apart as the COO and three other managers quit their job. The change in working style with this sudden decision of selling the company left the employees with anxiety and anger against Sama.

Sama’s decision created a situation of chaos among the employees as except the three business partners each of the employee of redBus suffered a great loss. People holding ESOPs (Employee Stock Options) didn’t get their money while others were clueless why they did not have ESOPs. Although, Phanindra Sama tried to calm the situation what he could but the suppressed anger of employees couldn’t make them trust him again. ESOPs is very misused employee compensation alternative in India. Many startups in India offer ESOPs to employees but how may are actually benefited at last?

 

From spending nights on the stairs of Masjid to CEO of $60 million company

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Success does not always need to get along with grey hair; some people change the stereotypes. Among few such people, Ritesh Agarwal possesses a remarkable position. No doubt he has shown wonders in the world of entrepreneurship and made all the competitors to gape their mouth wide open. As it is said that everyone sees dreams but only few can turn them into reality; Ritesh Agarwal’s dedication and immense talent made his dream come true. The path chosen by him was not better than a jigsaw but his incessant efforts made it possible to overcome all odds and build a successful empire.

Imprints of talent right from childhood

Agarwal was drawn towards coding and computers since he was 8 years old. Pursuing his desire to become a self-made man, he undertook a project at the age of 13, when kids hardly are aware about career and jobs. The project gave him a life time experience and set a milestone in his career. During the project he traveled a lot and analyzed how the hotel system works. You can that see his relation with hotels had been established at that age only.

However, his love for computers enchanted him towards technical line and at the age of 16, he was selected in the Asian Science Camp at Tata Institute of Fundamental Research in Mumbai. His resolution to follow science led him to Kota for the preparation of one of the most reputed technical entrances in India. Meanwhile at Kota he authored the book ‘The Encyclopaedia of Indian Engineering Colleges’. But he could not locate his real aim there as well. Exploring the motive of his life he moved to Delhi in 2011 where sprouted his first business idea.

Image Credit- oyorooms.com

A journey full of risks and struggle

Passion to start off something on his own had always been there in him. Ritesh’s decision to drop out his formal education and step into the business world proved to be a life changing one. At the age of 17 he laid the foundation of a company named Worth Growth Partners and became India’s youngest CEO. However, the company couldn’t take him to a higher ladder of success and the very year he was hard struck by financial crisis. He had no money to pay the rent and henceforth spent several nights on the stairs of Masjid in Delhi.

But all these hurdles could not budge Ritesh from his aim and the next year he founded another company, Oravel. This business could be called as an Indian version of the site Airbnb, dealing with bed and breakfast hotels. The idea grew fast within a short span and he received a funding of Rs.30 Lakhs from VentureNursery. The efficiency of his efforts and skills made him the only Indian to get the Thiel Fellowship where he was granted an amount of $100,000.  Ritesh had a thing for learning from always and this led him to acquire more knowledge about the entrepreneurial world from all the possible sources.

Renaming the company to OYO

Ritesh’s itch of seeking better responses from a larger section of society took him to the idea of OYO stays. He could see that Oravel targeted limited number of customers who could spare a large amount from their pickets. Therefore, he himself visited and stayed at several budget hotels to have a closer understanding of the needs of customers. After this he used most of the grant from Thiel to build the OYO chain to provide the best stay in the branded budget hotels.

The journey wasn’t a smooth one there as well as he started the journey with a single hotel in Gurgaon where he handled the duties of CEO, housekeeping and sales single-handedly. However the company soon geared up and received a funding of  $650,000 from Lightspeed Venture Partners and DSG consumer Partners. OYO rooms and Ritesh Agarwal didn’t turn back then and progressed with more investors getting along with them. In just 10 months it received $6 million from Sequoia Capital and LSVP at a pre-money valuation of $60 million.

When Controversies surrounded Ritesh Agarwal

The success story of Ritesh attracted a number of haters and criticizers who could not swallow the fact that a man as young as 22 could build such a huge business. People questioned his skills of coding and called him a liar and fake. He was also accused of blurring the funding records of company. His former relations with NCrypted Technologies also came in the limelight when the latter accused Ritesh of stealing their idea. However there were no real evidences found against Ritesh.

People are always ready to grab the opportunity to pull you back but the story of Ritesh Agarwal, who fought against all odds and established himself as a successful person will always inspire youngsters.

Repeated failures couldn’t stop this entrepreneur from becoming a billionaire

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Robert Parsons popularly known as Bob Parsons’ life had been similar to that of a roller-coaster ride. He was born in a financially unstable family. The struggle of life began right there. Looking at his disinterest in studies he was sent to a traditional Catholic school in Baltimore where nuns treated students with hard hands. However, it proved not much beneficial for his academic career. Once failed in fifth standard, Parsons couldn’t develop love for books. His entire school life had been huddled with poor grades. Despite all this one thing which Bob always knew was how to make money. He always managed to have cash in pocket by doing odd jobs like delivering papers, mowing lawns or shoveling snow.

Beginning of a new journey

After completing his intermediate somehow, Parsons got himself admitted in the Marine Corps in Vietnam. It was not an easy go life there either. The war and bloodshed had a deep impact on his mind. Indeed like any other person he was nervous and thrilled but then he made a resolution to deal with whatever comes. This became a major turning point in his life. His determination developed in the days of war at Vietnam filled in him the spirit to face each and every challenge that might try to block his way.

After getting back to home, he enrolled himself at the University of Baltimore to complete his graduation in accounting, after which he secured a job as an accountant in a company in Redwood City. One day, while visiting to company’s office he threw a glance upon a book of BASIC programming language. He was so lured by the thought of programming that he went ahead and bought the book. And in no time his interest for computers became a full time hobby.

Image Credit: Wikimedia

Take chances in life

Now this was the time when he turned his hobby into a business idea. In the year 1984, Bob Parsons invested an amount of $15,000 he had saved from his previous jobs at Vietnam and Redwood City to lay the foundation of Parsons Technology. It basically dealt with software based on accounting. No success story is worth if the journey is not posed with challenges and hurdles, Parsons tasted a heavy failure in 1985 with a loss of about $25,000. This did give his company a punching blow but couldn’t stop him from making his way through it. He tried to track the place where his efforts lacked in. It was his marketing strategy that wasn’t paying him well and then his next move set a benchmark in his life.

Parsons’ motive was not just to make money; rather, he wanted his idea and services to be in knowledge of as many people as possible. And this led him to spend an amount of $5000 to fetch a front-page advertisement on a regional computer publication cover. This risk turned out to be one that of profit as the sales got a new boost. Now he knew where exactly to strike and he approached bigger publications to advertise his company. Finally the retail price of Parsons Technology grew by 90% making $100 million annual revenue. In 1994, Bob Parsons sold the company to Intuit for $64 million.

Becoming big daddy of  web world

After selling his company, Parsons was left with huge amount of money but had dearth of ideas. However, in 1997 he founded another company Jomax Technologies which provided services to build websites for other people. Parsons wanted to make the company name a bit catchy before registering it officially and therefore in 2000 he renamed it to GoDaddy. For a period of 4 years, incessant failures made Parsons go dejected as he lost all his money with just $6 million dollars left in hand. He had decided to take his steps back and was almost about to quit when he witnessed a hotel’s valet happy and satisfied unlike him. This motivated him to take an about-turn and make a firm resolution to stand and face all obstacles and keep trying until he tastes the success. His dedication and relentless efforts turned out to be successful and the firm started making profits.

In the year 2011, Parsons stepped down from the post of CEO to executive chairman and sold a major portion of the domain name registrar and Web-hosting firm GoDaddy to private firms KKR, Silver Lake Partners and TCV acquiring $2.3 billion. Holding about $930 million in cash, Parsons later diversified his business portfolio by making investments. He todays owns shopping malls, vehicle dealerships, a lending firm and Scottsdale National Golf Club.

Takeaway from Bob Parson’s story is to be passionate about something, be ready to fail, be ready to adapt, try, try and keep doing the good work.

Kevin Systrom: The man behind $1 billion idea

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Social media has expanded its domain at a very rapid pace in last 5 years. The craze of social networking sites and apps for instant messaging, photos and videos sharing has brought about a revolution in the social life of people. In the list of all such sites and apps, the inception of Instagram has set a milestone. Instagram has made a record breaking impression in the lives of millions of users in a very short span. Its unique features like filters, adding special effects before uploads and hashtags have made it one of the most popular apps on net.

Talking about the success of this app, the heavy toil and dedication of the person behind bringing out such a great idea cannot be overlooked. The journey of Kevin Systrom in building up this app worth $1 billion had been short but endowed with several twists and turns. The interest for computer programming in Systrom had developed right from the days when he attended Middlesex School in Concord and it intensified as he grew up. He graduated from Stanford University in 2006 acquiring a bachelor’s degree in management science and engineering, after which he joined Google as an associate product marketing manager. Dedicating his service to Google for two years, Systrom turned to join a travel recommendation startup named Nextstop.

Kevin Systrom
Image Source: Wikipedia

Dedication to learn
Kevin Systrom was not completely satisfied with his job at Nextstop, as he had a bigger plan in his mind. But he knew it was difficult to proceed further without a training and in-depth knowledge of computer science, thus he gave up his comfort to learn coding. He accomplished the assigned tasks of Nextstop in the office hours while learned to code at nights and on weekends. Indeed it was not easy to manage it altogether yet his inexorable efforts showed ardent result and he came out with an HTML5 prototype which he named as Burbn. The app dealt with the on-going trend of photo sharing and checking-in. Now the only thing dwelling in his mind was to take his idea further and it didn’t take much time as well. It was in March 2010 when Systrom met Baseline Ventures and Andreesen Horowitz at a party and approached them with his prototype. The party came out to be a remarkable event in his life as the two venture capitalists liked his idea and agreed to invest in it. He then quit his job to dedicate all his time and skills to Burbn and within just two weeks he raised $500,000 as seed funding from the two venture capital firms.

Steps towards success with Mike Krieger
The reassessing of Burbn began after Mike Krieger, an acquaintance from Stanford University joined in with Systrom. Now it was the time to give the app, a unique feature so as to make the experience of users different from the other popular apps. The main focus of Systrom right from the beginning was on mobile photos. The duo wanted to make the app very handy, free from the complications of too many features at a time and therefore they took few steps back and stuck to photo sharing. And then they decided to rename the app from Burbn to Instagram. Their incessant efforts and hard work were all directed to make it better by improving the photo-sharing experience of users, fixing the bugs and by passing it through several other tests.

And finally the big day came, eight weeks later Instagram was launched on 6th October, 2010. No wonder, the minds of two gems made this app with such intent care that there were hardly any complaints or issues after the launch. And by the end of the first week it had been downloaded over 100,000 times and reached to one million users by the mid of December.

Acquisition by Facebook
In not more than 4 months after its launch, Instagram with its remarkable features began attracting investors and as a result of which the company value reached around $25 million in February 2011. Seeing its increasing popularity, Jack Dorsey the executive chairman of Twitter approached Kevin Systrom offering an amount of $500 million to acquire the company. But till then Systrom had no intention of giving his dream in other hands and thus he declined the offer.

Insagram made constant progress adding up more polished features and in April 2012 it was released with a new version compatible to the android phones. With this step the app established new records as it was downloaded by more than a million of android users in less than 24 hours. Acknowledging the company’s progress even Mark Zuckerberg, Facebook founder could not resist himself and showed his desire to purchase Instagram. He was aware that Systrom would never agree to leave his hands completely off from the app so, he offered a tempting amount of $1 billion in cash and stock emphasizing on the provision that the company would be free to be independently managed and to this Systrom could not deny.

Hit by criticism
No successful story could be completed without the involvement of scandals and criticism. In December 2012, there were some changes made in its terms and services policy which included the clause of owner’s rights to sell users’ photos to third party without any notification and compensation. As a result of this Instagram was hard hit by criticism and there was a notable drop recorded in the number of users. But the mistake was soon rectified with an apology by Kevin Systrom himself.

Story of Vivek Wadhwa- a Silicon valley tech entrepreneur turned academician

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‘Hard work bears sweet fruits’; this old adage has successfully proved its veracity in every age. And sweetness to these fruits is enhanced when talent and skills are blended to it. While reaching to the pedestal of success, failures are generally encountered but one must not sway away from the aim. It is the firm determination and incessant efforts that can aid you in achieving what you wish for.

The story of Vivek Wadhwa, a Delhi born technology entrepreneur from America voices out the same dedication and hard work which helped him to grab his goal. Wadhwa completed his graduation from University of Canberra in 1974 with a B.A. degree in Computer Studies. After graduating, he upheld his career in programming computers, adding a mere number in the prodigious swarm of programmers to make his ends meet. But as time passed, it became cumbersome to carry on with the same pace. Expanding family demanded more income and at the same time he too realized the need to progress. Thus, his needs and talent invoked in him the passion to come out of his shell and break new ground.

Image Credit: Wikemedia

Matter of choice

The decision to move into a new life wasn’t a trivial one. He knew his one step forward would change his entire world for good and the uncertainty of the outcome was hanging like a sword over his neck. But a ordinary life was not what Wadhwa desired. It is said that stagnation leads to rotting and this is what kept him moving. At the time when he was newly married and his wife was expecting, he decided to enroll for a MBA degree from New York University. It was biggest bet of his life as he didn’t have enough savings which meant tough times ahead.

His thirst for knowledge knew no boundaries and he was aware that doing an MBA would enrich his brain with the understanding of business world which he did not know of in much depth. With the hope for a bright future he invested all his savings and time to earn the degree. Vivek had to make many compromises to pursue MBA as he had to scale down his living standards and also had to shift to a compact one-bedroom flat with his wife.

Education never deceives you

Though he considers doing MBA as best investments as it helped him grow professionally and become an entrepreneur, yet he is no more an advocate of hiring MBA’s in startups. Vivek sees a clear gap between the skills that a business school teaches and what a startup requires.

After MBA Vivek secured a decent job in the IT department of CS First Boston, where he rose from the position of a programmer to become a project leader and then to the post of vice president of the company. His skills and hard work were finally illuminating his way to success.

Although he was doing a praiseworthy job at CS First Boston he couldn’t achieve complete satisfaction from his work and then he decided to lay his first step in the entrepreneurial world by spinning of the startup, Seer Technologies. He used his skills to persuade IBM to invest $20 million in his company and this gave the initial bolt to his company. Under his leadership Seer Technology grew to $118 million publicly traded company.He later founded Relativity Technologies in North Carolina in 1997 which was considered as one of the best companies to work in the world.

Later, he left the company and shifted his focus to academic research. Vivek Wadhwa is now a fellow with the Labor and Worklife Program at Harvard Law School, a professor at the Pratt School of Engineering at Duke University, and Vice President of Innovation and Research at Singularity University. He writes for different blogs like Techcrunch and Businessweek.com. Vivek Wadhwa has set an example for everyone that success could be achieved if you are ready to dedicate your time and energy to your aim without dwindling for a moment.

An Indian CEO wants BMW for all his employees

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A simple comment on Hacker News motivated an employee of Zoho Corp. to leave his cushy job and build a b2b company that recently got $31 million in funding at $250 valuation from Tiger Global.  Company in case is Freshdesk and the person behind this hugely successful venture is Girish Mathrubootham.

Girish Mathrubootham, CEO of Fresdesk founded this cloud-based customer support platform in 2010. Girsih was VP of Product Management at the ManageEngine division of Zoho Corp when he read on Hacker News that Zendesk (now a competitor of Freshdesk) is increasing prices by 60% to 300%. In this comment of an unhappy customer of Zendesk, Girsih saw a potential business opportunity.


There was another personal experience where Girish never got a response to his 20+ emails from insurance company for his damaged TV. But when he posted his plight on a public forum he got immediate attention of the company.  He realized that he had  all that it takes to create a platform like Zendesk. He decided to hit the $37 billion customer relationship market with a SaaS based customer support platform along with his colleague Shan Krishnasamy.

They worked day & night with dedication for eight months to get the product out in market. In 2011, Freshdesk signed up its first client, Australia’s Atwell College. Freshdesk also emerged as winner at Microsoft BizSpark Startup Challenge winning $40,000. Girish and his co-founder maintained from the beginning that if within a year Freshdesk doesn’t get enough traction, they will shutdown and go back to job. However, that situation never arrived and soon they signed up 100 customer and became Zendesk’s biggest rival.

Smart Moves
Since inception Girish and his team planned everything from marketing to operations within budget. When they couldn’t integrate a US payment gateway to handle recurring payments which is essential part of any SaaS business and since their target customers were in US, Girish went ahead and registered a US company while sitting in India for just $1278. This paved the way to get a US bank account and integration of recurring payment gateway.

Girish always loved the work culture at Zoho Corp and felt the  strong sense of ownership and pride of being part of the Zoho group. He brought the same culture to his company. Unlike other big startups, Freshdesk don’t prefer to hire people from IIT or IIMs. On the lines of Zoho, Freshdesk also prefer to hire top talent of tier II, tier III  educational institutes. Girish is a kind of  CEO whose happiness lies within the happiness of his employees. In an interview to ET, on being asked about wealth creation, he answered

“Wealth creation to me means creating wealth not only for founders and shareholders, but also for all the employees who are passionately building the company along with us.I think it is a great opportunity that I have as the founder to be able to create and share wealth. When I started the company I told my wife that I am not starting a company for me to buy a BMW, I am starting a company so that all my employees can buy BMWs.”

Once on a trip to San Francisco, Girish was proud to know from a taxi driver that he uses Freshdesk on his day job as support engineer. In 2012 Freshdesk launched a mobile SDK, Mobihelp, which lets its clients to engage their customers within their mobile app. In 2015, Freshdesk acquired a social recommendation platform Frilp and a live video chat company 1CLICK to strengthen its customer support platform. Today, Freshdesk is used worldwide and has a huge customer base with a plush office in Chennai along with branches in cities like London, Sydney and San Francisco.

Image Credit: Freshdesk