Anupam Agarwal didn’t own a car till his mid-20s, because using cabs worked out much cheaper than owning a car. But sustaining purely on cabs became impractical over time, since there were frequent situations in which a different kind of transportation was needed, which wasn’t available then. Whereas his ex colleague Karan Jain got to see a different side of the transportation coin when he experienced new, innovative mobility solutions during his travel abroad, and could envision their need in India.
Sensing the opportunity to tap this untapped market, Anupam and Karan quit their high paying jobs at McKinsey and set up a platform – Revv – in the car sharing market in July 2015.
“We believe India will leapfrog the stage of “a lot of people owning cars” directly, to “a lot of people using cars,” which is also where the developed geographies are headed. More importantly, this does not necessarily mean that car sales will drop, but it could mean that more and more people will get to use them when needed, since the requirement of making a huge capital commitment will go away,” begins Anupam.
For the common masses it wasn’t always possible to rent a car. But startups like Revv are breaking this trend with making different models available to the end consumer. It is due to the agile nature of its solution that, in December 2016, the company raised $ 9 Mn in Series A with equity funding led by Edelweiss Private Equity, and debt funding from financing and leasing partners such as Mahindra & Mahindra Financial Services and LeasePlan India.
“It was a mix of equity and debt. Debt is required for our supply-side partners who put cars on the platform, and was led by financing partner Mahindra Finance. LeasePlan is our car-leasing partner and contributed through operating leases. The equity component was led by Edelweiss Private Equity,” says Anupam.
Catering To The Modern Millennial: Birth of A Startup
“For both of us, taking the entrepreneurial plunge had been a foregone conclusion for a long time, the only question was when. The gaps experienced during outstation travel definitely added to our conviction. For example, the experience with unorganised car rental providers was highly unpredictable, trains weren’t an option, because all we would ever get is a number on a waitlist, and couldn’t take flights to Coorg or Simla or Kasol or to 50 other such places simply because they don’t have an airport,” adds Karan.
The duo observed the fast-growing cult of people, millennials especially, who do not want to own assets despite being able to afford them. Especially for fast-depreciating assets such as a car. At the same time, taxi-hailing apps were also spearheading this change in the mobility space. And it was amply clear that this trend would create needs and use-cases for which there were no clear products in the market.
The co-founders worked hard on deciding the name of the startup. According to them, Revv originates from the revolutions of an engine’s motor, and is a word that automobile enthusiasts use to refer to pressing the accelerator.
“We wanted something that signified motion – driving- was short and easy to pronounce, could be used as a verb, and was universal in application. The word Revv fitted these criteria well. Though we must admit, we didn’t foresee many people pronouncing it as “Rave”, which is happening, and which is something that we need to solve for,” explains Anupam.
Revv: An Ecommerce-Like Approach To Car -Sharing
Delhi-based Revv started out with car-sharing as its first offering, and has spent almost 15 months in establishing it as a mainstream mobility option, while building a reportedly profitable and scalable business model around it.
It claims to be the global pioneer of an ecommerce-like approach to car-sharing, whereby it delivers 100% of the bookings to the users’ doorstep, and do not hold any customer-facing parking lots. Claiming to serve more than 10,000 users every month, in January 2017, it launched a one-way offering for urban commuting which is slated to go live next week.
Following a unique hub-and-spoke operating model, the car rental company ensures delivery and pick up for every single booking right from the customer’s doorstep. The business model is quite simple – the majority of the cars are owned by other individuals/HNIs/companies, to whom it pays a monthly rental.
Its value-addition lies in creating a consumer brand that underwrites the customer experience, for which they develop the requisite technology and provide customer support. It is critical for the company to take technology all the way to physical functions like maintenance (e.g., through on-board diagnostics) which form the backbone of customer experience. Its margins come from the spread between the rentals that they pay and the rentals that they charge from customers.
“Multiple hardware solutions exist in the market and we keep experimenting with them, but the key part is to use the information coming from the hardware for a range of applications, like customer experience, support, safety, and pricing. The top layer of technology that allows us to do all this is in-house,” explains Karan.
When it comes to ensuring the safety and security of the users, Revv follows a particular algorithm. The majority of its fleet is equipped with standard safety features such as airbags, and gets quality-checked on the safety aspects before delivery.
“We also set speed limits, crossing of which triggers alerts to both us and customers. We are working on partnerships for assisted-driving technology, which will help make the experience even safer,” shares Anupam.
Starting Up: Not Sure If We Should Call It The Biggest Challenge Or The Most Exciting!
Working in a corporate where you are provided with all the help and support – to starting something of your own is altogether a different task. Right from buying the office printer, to designing app flow and website, to training the delivery staff one has to do all this alone.
During the early days, there were incidents – when the co-founders had personally delivered the cars to customers (since they were short on delivery boys), or had handed over their personal car to a customer, since the car assigned to the customer had met with an accident and no other car was available.
“We have gone to the extent of basing the performance evaluation, progression, and incentives of our team directly with the performance on customer experience. This is true even for people whose actions might not have a direct bearing on customer experience, since eventually this is about building a culture,” says Karan.
Just-born startups can go into a mode of throwing people at these problems, which is something that Revv has resolved to never allow to become a part of its DNA.
“Not sure if we should call it the biggest challenge or the most exciting part, but the huge shift was that we suddenly had to do myriad things, all by ourselves, without any help from the supporting infrastructure which is a given at any large and well-established corporate. Hence, the simple solution was to roll up the sleeves and be in a DIY mode, and be extremely thoughtful about hiring very selectively,” says Karan.
Revv faces competition from funded startups. In December 2016, Zoomcar has raised an undisclosed amount of funding from China-based Cyber Carrier CL. Mumbai-based JustRide has also raised about $3 Mn (INR 20 Cr) in a bridge round of funding from YCombinator partners Justin Kan & Qasar Younis (COO of YCombinator), and Paul Buccheit (creator of Gmail). So, to stay ahead of the likes of ZoomCar, JustRide, MiCar, Voler to name a few, Revv is focussing more on building the market and creating awareness rather than competitive thinking.
Currently, its USP is pricing and its delivery models. But as per the founders, USPs are often replicable, especially at the early stage.
“We are building our “spike” on customer experience. It is amply clear that it is going to make-or-break the game, and there’s a lot to be done there,” says Karan.
The Road Ahead
When the duo started off, they conservatively assumed that this is a low-frequency product, hence repeat-users will be slow to come by. But within a year, they were sitting on 50% of their revenue, which was coming from repeat users.
“There is one user who has already used us 47 times in the last 15 months, and we are eagerly waiting to cheer for his half-century. This realisation of strong repeat behaviour was magic to our confidence and growth targets, and is also the foundation behind a lot of our work on customer experience and products,” says Karan.
Their current focus is on deploying the money raised for scaling up quickly and launching new products – on both the supply and demand side. “We will think about the next round once these initiatives have been stabilised,” informs Anupam.
Targeting a revenue of about $22 Mn (INR 150 Cr) in FY18, the duo want to build a future where 30%-50% of Indians will get affordable and convenient access to mobility on-demand.
“We are clear that we want to address the ‘shared mobility’ needs as a whole, instead of limiting ourselves to hourly rentals as the only product. We exist to serve the needs of people who are giving up traditional car ownership, and their needs are highly varied, and we need to create specific products to serve each of those needs. You will see movement on this front, as well as geographical expansion pretty soon,” concludes Anupam.
Editor’s Note
When we look at the shared car mobility market; it is still at a nascent stage, with a lot of flux and innovation happening on both the supply and demand side. The industry has witnessed tremendous growth over the years and is not expected to decline any time soon as lot of startups have come up in this space to tap this untapped market of car rental.
According to this Ken Research report, the industry is witnessing an increase in revenue due to the availability of cheap car rentals with lots of options. The report further states that the online car rental market in India constitutes around 5% of total automobile market. But with a surge of new players coming up, the market is expected to grow further, with no signs of slowing down.
And this is what can serve as a boon for startups like Revv. Talking about Revv, the startup already counts the likes of Gautam Kumra (recently elected India MD of McKinsey & Company), Rajat Dhawan (Mentor to McKinsey’s automotive practice) and Ananth Narayanan (CEO of Myntra), as its angel investors which indicates that it has a long way to go. This investor confidence coupled with its agile and customer-centric business model will likely hold it in good stead as other startups in the space also leapfrog toward serving the average Indian millennial. How far it will be able to stay ahead of the curve is a question for the ages.
