Bangalore: One night in September, a cab driver called Santhosh V in Bangalore was using his iPhone to capture a photograph of some vomit in his car.
Santhosh, who had never used an IPhone till a few days before the vomit-photographing incident, doesn’t have a strange fetish.
He was photographing the vomit, the reminder of two drunk and rowdy young men who had travelled in his cab, so that he could send it to the taxi company, which would, in turn, charge an amount to one of the young men’s credit card. And he would likely give them a negative rating, which would show up the next time the young man tried to use the taxi company’s app tried to use it to order a cab (which will probably mean that drivers will think twice before responding).
Santhosh drives a BMW; he works for a local taxi company called Shrusti Travels that runs a fleet of luxury cars (Mercs, BMWs, Audis) and that had, in turn, leased them out to a hot US start-up that hopes to disrupt India’s market for luxury cabs, Über.
I travelled in Santhosh’s BMW the day after the vomiting incident, and back from a meeting with Phanindra Sama, the young founder of bus ticketing service RedBus. I had downloaded the Uber app from the App Store and decided to test it out; it looked like it would rain and I didn’t want to be at the mercy of the city’s notorious public transport service. To be sure, I was also willing to pay a premium (and hope my editor would sign off on the “legitimate” expense). As my meeting with Sama was winding down, I opened the app, and tapped on an icon that said “set pickup location”. I didn’t have to manually enter anything. The GPS automatically picked up my location and I got a message (also on the app) that said a driver would pick me up in 17 minutes. I didn’t have to talk to anyone, nor did I have to give directions.
Sama, who knows a thing or two about disruption, and who recently sold his company to the Ibibo Group for an estimated $135 million, was impressed. “That looks disruptive,” he said. “I must try it out.”
The Indian luxury cabs market is ready for disintermediation. It is fragmented. Worse, the only way traveling executives can use a luxury cab when they travel is to hire it for the entire day, paying, at current rates in Bangalore, around Rs.6500 for eight hours. They may actually spend 40 minutes in the cab driving to two meetings, but they still have to pay. Über, in contrast, charges per ride. My 12 km back to my office from the RedBus office cost Rs.540.
As critics of the Uber model have pointed out, it will only work if a car does several luxury trips in a day. It will only work if the city in question isn’t prone to gridlocks like Bangalore is. And it will only work if Uber makes enough money to compensate fleet operators sufficiently, leaving a healthy margin for itself.
Still, this is the model, Uber, all of a few days old in India plans to use, after already experiencing some success in the US.
Google Ventures and TPG Capital recently invested $258 million in Uber which has also raised funds from Menlo Ventures, Amazon.com Inc. founder Jeff Bezos and Goldman Sachs.
Bangalore is the first stop, but Uber eventually wants to expand to Mumbai (bad idea) and Delhi (great idea, given the wonderful roads and the premium that city’s residents may pay to show up for a meeting in a Beemer).
For these who can afford it, a Uber is a great way to travel around. The credit card details are entered in the app, so all billing is direct (allowing the company to add for such things as cleaning if required, as it was, in Santhosh’s case) and receipts are mailed to the customer. Customers rate their ride (driver) and drivers, in turn, rate their fare.
Uber, Santhosh’s claimed, had already hired 500 luxury cars and would soon hire 1,000 more. An Uber spokesperson declined to comment.
A few days later I used the service again to ferry my boss and a colleague from a hotel to the office. This time, the driver was Ramesh (he gave only one name) and the car, a Mercedes E class. Ramesh rattled off the training the cabbies had received from Uber: shave every alternate day (at least); be polite; drive slowly; open the door for the fare; if you are dropping a lone woman late at night wait till she is safely home, walking her to the door if necessary (if she demurs, walk 10 steps behind her)...
This time, I paid Rs.270 for a 4 km ride.
A simple back of the envelope calculation shows that for long rides, Uber will be at least twice as expensive as other cab services, and none if them seems particularly perturbed by the company’s entry or its interesting business model.
“We have more than 1500 vehicles and we do more than 6000 trips. Delivery success rate is 99.8%. There’ve been days of strike, heavy rains, etc but we’ve maintained that rate. That’s our commitment to service,” Meru Cab Co. Pvt Ltd chief executive Siddhartha Pahwa said. “One and half years ago our delivery rate was 93%. Then we made changes in our algorithms and incorporated traffic conditions in our IT systems and processes. Based on that, we’ve been able to improve our service levels,” Pahwa added.
Travel agencies that give luxury cars on rent directly to customers are excited about Uber’s launch in India.
“There’s no other large cab aggregator in the market which offers premium and very high quality service. I think Uber can work in India but it’s too early to say for sure,” said Ramesh, owner of Bangalore-based Ramesh Tours & Travels.
David Back, co-founder at Zoom Cars, a car sharing service that operates in Bangalore, said in a recent interview that Uber’s entry would help radio taxi startups attract more investment.
“We can say to our investors ‘Hey, Uber thought this was a good market, so it must be a great market. Give us some backing too,” Back added.
Mihir Dalal in Bangalore contributed to this story.