– Farrah Gray

We often go through entrepreneurial stories, where the founder always had a burning desire to establish his own business. However, the story of redBus.in is quite distinct from a typical clichéd success story. Three engineer friends who studied together at the BITS and the unavailability of a bus ticket are the reasons behind its existence.

redBus.in is the brainchild of Phanindra Sama, who prefers to call himself an ‘accidental’ entrepreneur. Sama aspired to be an electronics engineer and was happy working with Texas Instruments in Bangalore after passing out from BITS. He was pretty much content with life until he was bitten by the entrepreneurial bug. The idea of starting a bus ticketing service was visualized by him when he failed to get a bus ticket from Bangalore to Hyderabad during the Diwali weekend in the year 2005. He decided to explore the entire bus ticketing process and to his surprise figured out many drawbacks in the system.

First of all, the agents did not have contact with all the operators. When a customer approaches an agent to book a ticket, the agent calls up the operator to find out about the availability of bus tickets.  The operator then looks at the chart and tells him about the number of vacant seats available. A bus operator can have only limited agents since he has to contact them via phone. The agents also have a limited number of operators to work with. The fare prices for the customer were not constant and kept fluctuating. One of the biggest problems was availability of return tickets. Sama felt soft wares and technology were the the ultimate tools to solve these problems.

That same weekend he wrote a letter to his friends, mentioning the problem and also his approach towards solving it. At the initial stage the idea was to create a software that would be sold to bus operators but as time passed by, it turned into a business proposition.

After the prototype was ready, they went to bus operators and tried selling it to them. However they were nothing more than salespeople for the operators and were not willing to use it even free of cost. When the situation was turning dismaying, they heard of TiE, Bangalore and proposed their business plan to them. TiE gave them three mentors who advised them on how to start a business of their own. They were given assignments every week to gather information about the number of buses, the number of routes, the average price of a bus ticket, how many people travel by bus, the type of customers, how much commission a bus operator pays to an agent and so on. Such a market survey aided them in getting a clear picture of how things worked in the industry and its Modus operandi.

redBus.in was started in August 2006 with Rs.5  lakhs which was the savings of the three friends- Sama, Charan Padmaraju and Sudhakar Pasupunuri. The word Red was chosen because they believed marketing becomes easy if you have a color associated with your brand and they wanted the name of the company to be short and precise.

Phanindra Sama, CEO and Founder of redBus.in

Life after redBus was very challenging and the hardest part was persuading the bus operators. After slaving for days, an operator agreed to give Redbus five seats and promised to give them more if they sold all five in one week. They told all their friends and colleagues about it and asked them to buy bus tickets from them. They even requested one of their friends to write about them on the discussion board at Infosys.

On the 22nd of August, they sold their first seat. A lady working at Infosys booked a ticket to go to Tirupati. They were so tense that they went to the bus station and waited till she boarded the bus. They sold all the remaining tickets in five days and went back to the operator. Soon they started adding more operators to their inventory. In order to get customers, they used to stand outside IT companies, wait for the employees to come out for lunch and hand over their redBus cards to them.

TiE selected Redbus for mentoring which became news and Venture capitalists showed a willingness to invest in their idea. At the beginning, they were of the opinion that they need Rs. 30 lakhs for developing the idea but after spending several hours with the venture capitalists they realized they needed at least Rs. 3 crore to take their business to the next level.

Today redBus sells about 228,000 seats per day and more than a million tickets per month. It has over 600 employees and the gross value of transactions on redBus last year was Rs. 600 crore. Since the company works on commission revenue on successful transactions, the net revenue is lower and in the year 2011-2012 it was about Rs.33 crore.

The company redBus was recently sold to the Ibibo group, a subsidiary of the Naspers group of South Africa in the month of June. Ibibo has added redBus to its other travel assets like Goibibo.com, the online travel aggregator and TravelBoutiqueOnline. This acquisition is considered to be the biggest overseas strategic acquisition of an Indian internet website. The last big overseas acquisition took place almost a decade ago, when Baazee.com was sold to Ebay in a $55 million deal in 2004.

Even after its acquisition, redBus will operate as an independent entity and Sama will continue to play his previous role of a CEO. The management team and the employees are also staying in place. According to Sama, there have been no changes in his life and the deal was very attractive as there is no risk to redBus and the company will not face the problems of integration.

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