How did you manage to raise funds initially, given that you planned to start up in India, with an unproven business model locally?
The first big break in funding came from a connection of David (David Back, who co-founded Zoomcar with Moran). The wife of the dean of his business school, Lady Barbara Judge, was a former SEC commissioner. She was a celebrity in her own right. Having her name helped and she was able to connect us with her friends and made those initial introductions. That helped us make some inroads into investors. Larry Summers invested a small amount in May 2013. After his investment, we were covered by the media, including The Wall Street Journal. The next day we had five investor calls from angel investors. They all ended up investing. That helped us get to 50 cars in Bangalore.
How difficult was it to attract investors during your growth period, given that Ola and TaxiForSure captured the imagination of investors willing to bet on taxi start-ups?
Investors were certainly more keen on Ola and TaxiForSure, and they raised big money. It was triggered by what was happening to Uber in the US or Didi Chuxing in China at that point in time. But we were always very confident about the demand side. The challenge was to ensure an amazing customer experience at scale. Everything else falls in place. Some investors noticed that. But then people like words such as aggregation, on-demand, etc. There was a herd mentality and flavour of the day factor. However, there were matured guys who could think laterally. For us, growth was huge. We had the processes in place. We had the financing, got the cars, got them rolling. For us, it was never about losing market share to Ola and Uber because the use cases are different. We do not view them as competitors at all.
What was the biggest crisis in the life of Zoomcar?
That would have to be when I was struggling to get a permit. I was nervous because we had already raised some angel money by then. At that point we realized that we might have to give this money back. It was the only time in the life of the business that I was really nervous because we did not have any path to launching.
Scaling was hard because we had to work with a partner (Ramesh Tours and Travels). Every time we wanted to add more cars, Ramesh would be like, “Oh, why do you need more cars?” Our own permit was in January 2014. It was a lot of paperwork and meetings. But we wanted to work by the book but we were clear that governance standards had to be the highest.
Was increasing supply the only reason for launching the associate programme or you wanted to reduce expenses towards buying your own cars as well?
Getting supply is really tough. Now that we have marketplace, though we have not scaled it up too much, it will facilitate faster boarding of cars. Going to vendors every time you want to add new cars is not a scalable model because they also have their limitations on how fast they can move. The reason why everybody has not scaled up is not because there wasn’t enough demand. It was because supply was difficult to figure out, even today.
The Zoomcar Associate Program is a little bit of both. First, the demand was increasing, but not the supply on an equal clip. Hence this was a way to get quicker supply. Number two, there was an opportunity to streamline some costs. We can be more efficient on ground and the parking cost element is offset. We use existing parking from associates. So we can pass the cost saving to customers.
What will you call out as your biggest mistake?
One of the biggest mistake was we took too long to hire a chief technology officer (CTO). It definitely set us back in many ways. As a non-engineer, it was hard for me. We had a sense of urgency but we should have done it (appointing a CTO) because it created a lot of unnecessary friction. We hired Amit Sharma, our first CTO, in July 2013. We were already established by that time. Until then, technology was outsourced. For sure, this business is not all about technology. We obviously did not die. It is always a trade-off. It might not cost you much, but if you had it earlier, it would have helped you. When we were trying to raise our series A money, we did not have any technology team.
What are the key business decisions that have made Zoomcar what it is now today?
A few things actually. Certainly, launching Delhi was a big decision. This gave everybody some confidence in the business and model. Everybody said Delhi was a crazy place. The reality is, we did not have any issues in Delhi. The launch gave us a pan-India flavour, both internally and to investors. It also gave confidence to banks as they now saw this as a model that they could stand by. Everything changed in terms of their support, the deal terms, partnership models. For instance, if some lenders would give you 100 bucks, would now give you 300 bucks. Manufacturers who were giving you 50 cars in one shot would now give you 200 cars.
Then, the decision to raise funds from Sequoia. That helped us get a lot of tech and product talent. It helped in hiring.
Another thing that was really helpful was the home-delivery service. We launched that in December last year. We had done it informally in the past. We always were sure of its scalability and knew that we have to build a tech solution to relaunch it sometime later.