Vivekananda Hallekere, co-founder and chief executive of scooter-sharing platform Bounce, swears that dockless mobility solution is here to stay and take off big time in India.
He has his reasons to stand by his conviction. Bounce, which initially started off as a luxury bike rental platform, Wicked Ride, has scaled up significantly in a short period of time. But Hallekere says they have barely scratched the surface and there is still a long way to go.
Surely, investors also seem to be taking note of the venture’s potential to solve a very relevant India problem, the first and the last mile in urban mobility. The company has raised around $23 million (approximately) so far from the likes of Sequoia Capital, Accel, InnoVen, Qualcomm and Flipkart co-founder Sachin Bansal.
Additionally, the company is also in the midst of a $70-80 million round that could see some marquee names like Israeli-Russian billionaire investor Yuri Milner and Facebook co-founder Eduardo Saverin’s venture fund B Capital Group putting in money.
The venture was founded in 2014 by Hallekere, along with Varun Agni and Anil G. The company initially offered motorbikes and scooters on a rental basis primarily to urban commuters. It tweaked its business model to a dockless scooter-sharing service but has continued to run its rental business. With the acquisition of bicycle-sharing unicorn Ofo’s India assets, Bounce now also offers dockless bicycle sharing.
In an interaction with TechCircle, Hallekere talks about the journey behind Bounce and the company’s road map ahead. Edited excerpts:
You started off as a luxury bike rental. When did you spot the opportunity to go bigger?
This was in early 2016, when the Bengaluru metro railway line had just come up. We were discussing metro as a mobility option for commuters. That was also the time Indonesian ride-hailing firm Go-Jek had raised its first big round ($550 million).
Over prolonged discussions, we realised that the first mile and the last mile were always going to be a problem in cities where metro railway was just taking shape. We also happened to bump into a report about the Delhi metro railway, where even with 180 kilometres of metro railway lines, the average first- and last-mile was about six kilometres. Suddenly, we realised that we were staring at a potential billion-dollar opportunity.
Why dockless scooter rental over a taxi model?
After a debate on the merits and economics of a bike taxi, we gathered that the biggest problem statement in the taxi model was the driver cost. This driver is a fungible resource and we will have to fight for this resource with other industries like food delivery and e-commerce industry. Also, it is by now an established pattern that drivers do not remain on these jobs for long.
In scooter taxis, the driver is not a convenience but a friction point from all perspectives -- for us as a business as well as for the customer in terms of sharing a small real estate with a stranger. Besides, the risk levels were very high. However, once we remove the driver from the equation, we realised that economics is not the only thing that improves.
Can you take us further into it?
We started on roundtrips with keys dispensed from a dispenser. But then realised it was not scaleable and docks will never make sense. It had to be end-to-end.
Having said that, each of these models have a role to play and can survive in an urban mobility market in a country like India, where the demand is so huge. Only 18% of the population have access to personal mobility including cars and two-wheelers. Also, we are just talking about major cities. What about the Tier-II and Tier-III cities?
In terms of efficiency, while urban cities pose a problem of congestion, the Tier-II cities and beyond just do not have a well-evolved public commute system at all. So each pain point has a specific solution.
How has the reception been so far?
Taxis work the best in certain markets wherever the traffic is unidirectional while they don’t in certain other markets. In taxis, the demand-supply match can happen because there is a driver. But the cost at which he/she comes onboard does not justify the economics for us. It's as simple as that.
We are currently doing more than seven rides per bike every day. So I would say we are already doing what a bike/scooter taxi can do, but without a driver.
What is Bounce’s biggest value proposition to the consumer?
The customer service is solely dependent on the consumer here. You find a ride, use it and drop it anywhere without having to wait for anyone. One can even share the cost by sharing the ride.
What we are essentially trying to do is give you the feeling of a private vehicle ownership, but just at a much cheaper cost. For example, the average cost of travelling a kilometre by Bounce comes to Rs 6.50. It becomes just Rs 3.25 when you share it. As simple as that. We also don’t lose money at this pricing.
Gradually, at some point later, we may enable an option where a user can also pool the ride with another commuter traversing along the same route.
Can Bounce work well in cities like Delhi or Chennai, which are well-connected by various modes of public transport?
MRTS (mass rapid transit system) commute economics justifies only if a commuter clocks more than six kilometres. Even then, the last mile or the first mile is always a problem. In our case, our solution works well in conjunction with the metro railway. Likewise, our solution also works well for commuters who commute less than 10 km every day.
That said, 40-50% of our rides begin from or end at a metro railway station. On top of this, the public transport system is also not completely evolved at all cities. Hence, we are trying to act as an alternative mode of transport. While we are optimistic that our solution will work in any sort of big city and see no reason why consumers won’t adopt this, we will have to wait and see.
Do you need a certain piece of public infrastructure to enable mobility solutions like Bounce?
We are not bringing in a new form factor to create a parking infrastructure, dedicated right of way, or a dock. Two-wheelers are the major mode of commute for India. India has 100 million two-wheelers already and consumes about 25 million year after year. Has there been any dedicated infrastructure created for two-wheelers so far? We are just adding to it.
Likewise, in terms of parking spaces, we have exclusive access to parking spaces in Bengaluru metro railway stations and wherever there is paid parking, we have made an arrangement with them as well. In tech parks, companies like SAP Labs, Sasken Technologies and Mercedes-Benz have created dedicated parking spaces for us, recognising our value.
But these problems are likely to face your cycle-sharing operations.
Cycle sharing is altogether a different story. There are multiple problems like parking infrastructure and pilferage. But the biggest of them all is the commute itself. The busy roads by themselves pose a big challenge for these vehicles. Not to mention the weather conditions and the fitness levels of most people to do a six-kilometre commute. This is a classic example of a need to create a dedicated infrastructure.
Is Bounce’s business model designed more to appeal to the younger demographic?
Our solution has multiple use cases across all age groups, students, home makers as well as the elderly group. I can give you a specific example. In smaller towns, you have people who need to travel to the city at regular intervals. For them, commuting is a huge challenge.
I am talking more with reference to the floating population. The floating population of any city, be it small or big, is so huge that commute becomes such a struggle for this diaspora. Imagine what a solution like Bounce can do to them in terms of access to livelihood.
How long do you think before dockless scooter rentals become mainstream in Indian urban and micro mobility?
This is not like e-commerce where it takes time to build a consumer habit and trust. Mobility is always going to be a problem. Here, people know how to ride and where to go. All we are telling you is one doesn’t need to own a scooter and you just pay for the time and the distance.
While there are macro issues like how to continuously attract capital and talent, it would be very foolish of us to not make this business work. As long as we or someone else can do it, this is a business that has all the hallmarks of a big time take-off. What Bounce has currently done is demonstrated the need and the workability of the dockless-sharing solution.
How capital- and operations-intensive is your venture?
It is definitely operations-intensive. Since there is no driver in our business model, we have to do a lot of things from our end. The DNA and the approach required is very different as this is not a marketplace model.
It comes with its own challenges. We have built the tech and the product. Now it is purely an execution game. This requires attracting talent continuously. This has also not been done before. One good thing is we don’t have the problem of attracting our customers with deep discounts. We just need to market the product and bring in consumer awareness.
What is your scale of operations in Bengaluru? Also, are there any plans for geographical expansion?
I will not be able to give you numbers. However, I can just say our daily rides amount to 10% of what one of the two major cab-hailing players does in Bengaluru every day. This is a business that works big time on proximity and density. The vehicle has to be close to you.
We have about 5,000-6,000 scooters in Bengaluru. We intend to scale up significantly over the next 12 months.
Do you see solutions like Bounce grabbing a section of cab-hailing commuters?
Like I said earlier, India is a huge market and every solution has its use case. I am not sure whether someone using cabs would give them up for Bounce. However, for a lot of commuters, it would make logical sense as it can help you save money and time. However, having said that, there is no need for us to snatch any cab-hailing consumers. There might be some overlaps, but it might not be significant.
What about your bicycle operations? Will they get a bit less focus than your scooter-rental operations?
As I said, every solution has a use case and we saw an opportunity and hence decided that acquiring Ofo's business would make for a great move. The way we look at is to enable as many commuter miles in as many ways as possible. The dockless scooter-sharing solution addresses a larger and more pressing problem.
Likewise, the same with Wicked Ride. Does it make economic sense to continue operating it?
Wicked Ride has always been a decent business, that is traditional and cash-rich. We are perhaps among the very few players that also offer luxury bikes like Harley-Davidson on rentals. I will not be able to say anything about it right now. It's more about bandwidth and focus. Our current focus and bandwidth are aligned more towards mobility solutions. We will have to discuss it internally and decide on the future of Wicked Ride.
What are your near-term and long-term expansion plans?
I cannot share much about that as we have a lot of internal targets. What I can tell you is we are looking to replicate this in other cities, hopefully, within the next 12 months. We are looking to scale up operations by at least 40-50x within the same time period. Even at that scale, we feel it would still be conservative compared with our goals.
As for roundtrips, we are already operational in 10-11 cities. For dockless, we are evaluating around six cities (can’t disclose names). Likewise, we will launch operations based on the market opportunity and potential rather than geography. For example, it is not necessary that our next launch will also be another southern market just because we started in Bengaluru.
Is there any scope for inorganic growth?
We are never hesitant to explore both organic and inorganic means of growth. However, if we were to explore for acquisitions, it would be likely to augment our tech capabilities.
Talking about the competition landscape, how many big players can this space accommodate?
These are very early days. But it is a beautiful business to be in and we are likely to see a lot more players emerging in this space. But as on today, we are the only ones in the dockless mobility space. There is still a lot of learning that needs to go into this space. Eventually, there will be a last few men standing, but it’s too early to talk about that now.