by ramdas published July 25, 2015, 10 a.m.
Early August 2011 a young man named Raghu approached me to help build a Django website. He had earlier contracted open source evangelist and Pythonista late Kenneth Gonsalves, and Kenneth had a difference of opinions with Raghu and his partner. I think it took me about four weeks to build the first version of Taxiforsure.com, and the day after I completed the project, I booked a Taxi to the airport through the site. Ironically the taxi never came on time, and it was pouring in Bengaluru, and I missed the flight. Raghu was gracious to book me on the next available flight, and I reached Hyderabad well in time. (Raghu if you are reading this the NDA we signed has lapsed :) ).
Post the launch of the site, Raghu and his partner Aprameya hired a full time programmer and then many programmers and architects, and we moved on. Rest is history. Ola Cabs purchased Taxiforsure.com for an alleged $ 200 million earlier this year.
Cut to December 4, 2011. Legendary Bollywood star evergreen Dev Anand died at his hotel on December 3rd night in London. Among the many stories which did the rounds around Dev Anand, a touching story was about his driver by Prem Dubey who said Dev Saab paid him just Rs 5000 a month. I remember checking with some friends who were affluent enough to employ chauffeurs, and I heard that the monthly salaries were between Rs 10,000 and Rs 15,000 in Bengaluru.
In 2011, taxi rides were more costlier than auto rickshaws in Bengaluru. Since then we have seen cases where renting a taxi is a lot cheaper than hiring an autorickshaw.
Average Taxi driver made Rs 20,000 or so in 2011. Today Uber drivers make between Rs 75,000 and Rs 90,000.
It’s apparent that the war between Ola, Taxi4Sure, Uber and others have benefited consumers as Taxi rides have become cheaper, and in some days I have seen the rides to cost next to nothing. Petrol or Diesel rates have not dropped that much, and Taxi Drivers are making four to five times they earned compared to 2011.
It’s clear that there is a huge discounting going on, and there is desperate attempt to woo the drivers. Most of them are losing Rs 100 to Rs 200 a ride. Yet even in hugely discounted rides taxi drivers get paid promptly.
So they are keeping both consumers(the taxi riders) and providers(taxi drivers) happy and very happy at the expense of the huge amounts of VC funds they have been receiving. This is fine because this is how most new age brands have grown.
My question is how long will the happiness last? Someday Uber and Ola will kill rest of the competition. Someday they will run out of all monies, and their investors will demand returns. They will call for a successful IPO. And post IPO at least they cannot afford to lose money on every ride. Well they can, and even if so for how long more?
So whenever that happens, I am unable to figure out how consumers will still get free rides or discounted rides, and taxi drivers continue to make the same amount of money. No Arthematic or Logic is helping here.How can taxis which pulls in at the best 18 kilometres to a litre of diesel still continue to be cheaper than a rickshaw which pulls in 30-35 kilometres to a cheaper kilo of LPG?
Last week in Paris we saw massive protests against Uber. We have seen governmental interference in Delhi following the unfortunate rape incident earlier this year. But despite all these obstacles Uber is already a behemoth that is likely to pull in billions of dollars of fresh investments and capture every major city in the world.
I know a driver called Raju, who currently earns Rs 90,000 a month and has put his eldest in an Engineering College. He switched from Meru to Ola to Uber and has even seen a month where he earned more than a lakh. Yours truly will not earn that kind of money this year at least.Raju speaks impeccable English and is quite aware of the future. He collects the business card of everyone who travels in his car, and sends an occasional SMS. He called me recently, because I have not called him for six months. He politely inquired about my health and asked me whether I am now using another cab driver.
I informed him that I have not travelled to any destination that requires me to board a plane in the recent past, and since he is keen only on airport rides which fetches maximum in Bengaluru, I have not called him. He said that he is very well aware that one day there would be enough taxi drivers in the city signed up with different aggregators, and the bonuses will stop.
He added that between the consumer and the driver,someday taxi aggregator will choose the consumer. His only hope is that that day should be far off. He has a daughter doing her 12th and is keen to follow her elder sister and join an engineering college. He is a role model for Narendra Modi to be featured in the next Mann ki Baat radio broadcast.Raju’s plan B is that he has built a database of nearly 800 business travellers over the past five years or so. He feels that he can deal directly with his customers, and he will find many loyalists like me who would prefer him for his personalized service and silver tongue, rather than using a mobile app.
But how many such Rajus are out there who are well-aware and smart. What will happen to those drivers when they suddenly see a dip in their income, the day the bonuses drop? Or will the consumers be forced to cough up extra? I wish someone can provide me with some answers.