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YatraGenie: Taxi-Aggregator Model in Danger of Collapse

Sunil Shah | June 29, 2016
Here’s a surprise: A CEO bold enough to talk about a deep flaw in the Indian taxi-aggregator business—and why it needs to be fixed quickly.

And if you work 12 hours a day for 30 days, well you are going to fall sick!

What are you doing about this, because you are party to the problem?

My model is different. I'm not interested in building a billion dollar business overnight. We want to take our time and build a business that's both profitable and sustainable for the drivers.

I'm seriously looking at bringing about change. I'm trying to ensure that we start with the transporter. Like, I said, if the transporter is healthy, the ecosystem will work.

Since I cannot go over the pricing cap that the government has set, we have created a package for drivers. Part of the idea behind the package is to ensure that drivers don't stick to city driving only. If drivers agree to increase the radius in which he is working, they can make more money.

This way we aren't throwing incentives to drivers. The last thing we want is to create a culture in which we reward people for merely doing their jobs. Incentives should be limited to people who are super stars.

But I'm afraid that, in the last few years, in the rat race to become market leaders, taxi aggregators are spoiling our own people. We're telling them that we'll reward them just for doing their jobs. We're creating problems for ourselves and we're shooting ourselves in the foot.

Some day or another, if we continue down this path, things will break.

But players like Meru have been in this line of business for some years now. How do you explain that?

I have a lot of respect for Meru. Meru doesn't make these promises to their drivers. I have to give them credit. And until the other aggregators came along they didn't have discounting models.

But, that said, at Rs 19.5 per kilometer (the cap that the government has put in Karnataka), the operator is still making a loss.

You said "some day, if we continue down this path, things will break." Can you make a guess of when?

That really depends on how deep the pockets are of the investors behind the aggregators.

So the question boils down to: When will investors stop investing and this bubble bursts?

My guess is that it won't go on for too long. Another two years at the most. I say two years because we've reached a stage where the two unicorns (Ola and Uber) are literally fighting. A fight, by the way, that isn't good for all the other players, big and small, who can't match the throwaways they are offering.

I hope that the investors and the folks running the aggregators realize that when the ecosystem breaks, there will be a lot of people on the road. End consumers will use public transport or autos, but the drivers will be in trouble. Remember, a lot of them have left mom-and-pop stores or other means of employment to drive taxis. When things go bad, it's going to be hard for them to re-start.

I think the bigger aggregators should have some moral responsibility. A business that runs only on discounts has to stop. 

Source: Computerworld India  


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