How DriveU’s Super App Is Simplifying Car Ownership With On-Demand Drivers

After completing his graduation in marketing and finance from the US, Ashok Shastry returned home and started working as an operations analyst with homegrown cab aggregator TaxiForSure in 2013.

Following TaxiForSure’s acquisition by Ola in 2015, Shastry almost moved back to the US in search of opportunities, but destiny wanted Shastry to take a plunge into the world of startups.

Given his experience with an Indian cab aggregator and car rental startup, he knew the pains of finding a sweet parking spot for vehicles in Indian metros and Tier I cities. It was then he decided to set up India as his base to solve the problem of parking issues in the country, which even today has more vehicles than infra to provide support.

He thought of leveraging technology to help car owners book parking spots before they leave home. Eager to create disruption, Shastry spoke with his father Ramprasad ‘Rahm’ Shastry, and Amulmeet Singh Chadha to book parking spots online in cities like Bengaluru, Delhi NCR, Mumbai and Hyderabad.

In the next few months, the trio realised that the opportunities in online parking spaces were fraught with challenges. As a result, they went back to the drawing board to revisit their plan.

“The idea of a startup to offer pre-booked parking spots to vehicle owners appeared minuscule, as the total addressable market was highly unlucrative and small, and an aggregator like us had little chance of building a sustainable revenue stream despite burning cash,” said cofounder and chief executive officer (CEO) of DriveU Ashok Shastry said.

Over the next few months, the startup junked the original idea and pivoted to the new idea of offering drivers to car owners. Therefore, the father-son duo, along with Singh, started working on an app from where car owners can book drivers on an hourly basis.

Founded in 2015 and operated by Humble Mobile Solutions, DriveU is a one-stop platform that enables users to hire drivers online on an hourly basis in a hassle-free manner. The startup also offers other services to simplify car ownership for Indian customers.

Initially, DriveU had three cofounders, the Shastrys and Singh, however, Singh moved on after serving the startup as a cofounder for nearly two years.

However, Much Was Still On The Cards

Looking at their peers, the cofounders realised that there was a much larger market to bet on, and DriveU, as an app, was capable of doing much more than merely offering drivers for hire.

The startup also offers services such as insurance renewals, car washing, vacuuming and dry cleaning, along with vehicle servicing and FASTag recharges.

“Even though we have created a super app for car owners of the country, all our offerings revolve around the sticky case of drivers for hire,” the cofounders said.

The startup’s super app is currently operational in Bengaluru, Hyderabad, Chennai, Mumbai, Delhi-NCR and a few other cities.

It claims to host more than 65,000 drivers on its platform, who have completed 50 Lakh-plus rides so far.

But, What’s The Revenue Model?

The startup generates revenue by charging a commission of 20% from drivers on the total booking amount. The app charges INR 129 from customers for the first hour to book a driver, after which they are charged by the clock.

DriveU also has a membership structure in place, starting from INR 299 a month, under which it enables users to avail discounts on rides, prioritise members for services, give dedicated customer support and provide complimentary insurance on rides.

Additionally, DriveU earns money by offering allied services such as doorstep car wash, which starts at INR 399. It also earns commissions from the sale of FASTag recharges and insurance renewals, which further spruces up the bottom line of the company.

Moreover, the startup claims to operate a B2B vertical, which caters to enterprises looking to hire drivers in bulk. Under this arrangement, it has so far worked with used car marketplaces such as Cars24, Spinny, and CarDekho, among others.

DriveU also caters to used car marketplaces, enabling them to move vehicles from warehouses to the end-user or to workshops.

The startup’s B2B arm accounts for 30% of its total number of bookings, which, however, contributes a mere 15% to its total revenue stream.

“But, this does not make us a B2B business. We rather like to call ourselves a B2C-focussed company. This is purely because of higher ticket sizes and a wider use case in the customer-facing space,” the CEO said.

DriveU has so far raised $5.9 Mn through equity infusion and another $2.2 Mn in debt across multiple funding rounds. The startup is backed by names such as Unitus Ventures, Stevens Creek Ventures and Singhal Foundation.

Speaking with Inc42, the cofounder said that the platform is focused on cross-selling its offerings and has seen heavy traction emerge on the servicing side of its business.

How To Stay Efficient And In The Green?

At a time when the Indian startup ecosystem has come under fire for lack of focus on profitability and unit economics, DriveU’s Shastrys said that their startup has laid stress on sustainable business practices since Day 1.

“We are always trying to make things more efficient. Our current customer acquisition cost is less than INR 200. This is because we run a significant amount of performance marketing campaigns as against full-fledged branding campaigns. Besides, if we feel that something is going wrong, we re-evaluate and pivot quickly,” the cofounders asserted.

We were told that the company has 135 employees on its rolls, guided largely by the philosophy of being frugal without compromising on quality. The company claims to give precedence to products and features that have a positive return on investments (RoI) and sets effective key performance indicators (KPIs) for its small but efficient team.

According to the founders, the startup reported a full quarter of EBITDA profitability in the first quarter (Q1) of the financial year 2023-24 (FY24). It also saw a 40% quarter-on-quarter (QoQ) jump in revenues during the same period. The startup claims to have closed FY23 at INR 61 Cr revenue, which it projects to nearly double in the range of INR 100-120 Cr by the end of March 2024.

The company reported 50,000 monthly transacting users (MTUs) across all its operational cities in June 2023, with nearly 75% of its B2C business coming from just two cities — Bengaluru and Hyderabad.

A majority of these users, nearly 78%, are repeat customers, while the remaining 22% are new, according to the CEO. The startup claims to have more than 3 Lakh monthly active users (MAUs) and more than 10 Lakh downloads on Google’s Play Store.

Speed Bumps Ahead!

According to the cofounders, the startup’s ‘driver-for-hire’ service is popular among the younger demographic, who largely use the service for running errands and commute.

Overall, the startup caters to the niche segment of users who have higher purchasing power and can afford to hire a driver. And this could pose some challenges, as, according to government data, car ownership in India was less than 8% in 2019-20, which further narrows down the total addressable market for the company.

Further, in terms of competition, the driver-for-hire space is still in its nascent stages and is populated by an entire brigade of unorganised drivers and small players that cater to a small geographical area.

In this segment, DriveU competes with the likes of Ezi Drive, Hire4drive, Top4 Call Drivers, Drivers India, and Driver On Hire, among others.

However, the biggest challenge comes from the ‘super app for car owners’ segment where it locks horns with deep-pocketed and heavily funded players like Park+. While Park+’s sticky case is offering parking solutions online, it also offers a gamut of auxiliary services such as car wash and car service, just like DriveU.

On Inc42’s question of any potential challenge from new players and incumbents, the DriveU CEO told us that the startup has built a robust tech stack, which would continue to provide it with an edge over its peers.

He also believes that the company’s sticky use cases, product-market fit, streamlined unit economics and right pricing place it ahead of the curve in every sense.

On a side note, DriveU is part of the growing list of Indian customer-facing startups and works directly with gig workers. In the recent past, many Indian new-age tech startups have faced protests for unfair working conditions and lower wages.

On this, the CEO said that drivers are at the core of the DriveU ecosystem, and all facilities are provided to their partners from the very first day.

The consumer internet space is also plagued by issues such as a lack of standardisation across all its services. In this instance, drivers could lack adequate training, good communication skills and basic mechanical skills.

Besides, recent times have seen the Rajasthan government introduce a Bill to regulate the gig economy, and many such plans are already afoot at the central level.

The regulatory overreach could mandate specific requirements for platforms dependent on the gig economy.  Growth and early stage startups could be forced to ensure higher compliance — both on the financial and the regulation front — which could likely hit the bottom line of these emerging companies.

So far, DriveU has treaded cautiously, shying away from blitzscaling, and focussing on sprucing up the venture sustainably. As the disposable income of Indians rises, the company’s super app is expected to see a spurt in the number of users, unless its competitors emerge with a similar and more potent playbook to disrupt the market that DriveU today claims to have under its belt.