Pilani Soft Labs Pvt. Ltd, which runs bus-ticketing website redBus.in, has built one of India’s most successful start-ups, and concurrently its co-founder and chief executive Phanindra Sama is widely considered to be one of the country’s most successful entrepreneurs. Sama and his two co-founders—Sudhakar Pasupunuri and Charan Padmaraju—revolutionized bus travel in India by introducing transparency and convenience in ticket pricing, seat allocation and selection of bus routes. Sama sold redBus, which was founded in 2006 and backed by investors including Helion Ventures, in June for a reported $135 million to ibibo Group, a subsidiary of South African mass media firm Naspers Ltd. In an interview, Sama spoke on why he sold redBus, what it took to build the company and the lessons learnt. Edited excerpts:
What have you learnt from building redBus?
When we were trying to do this, people said: ‘you don’t know software and you’re trying to attempt this when there are so many software companies already.’ But we stuck to it, and bought books and learnt it. Within five months, we created the product. That was because we were so driven. So what I learnt was that as long as things are logical, any one of us can learn. I also have learnt that entrepreneurship is a process of self-purification. There are so many things I’d have never realized, if not for entrepreneurship, and never introspected. I changed a lot during the past seven years. I used to bribe people, I used to be this angry young man. Today, I’m more tolerant and much higher on values.
How did you build your founding team?
Nowadays I see a lot of start-ups which have complete strangers as co-founders simply because their VCs (venture capitalists) say that you need to have complementary skills. They themselves take a lot of time to figure out the equation and chemistry between them.
For us, initially, it was the three of us when we formed the company. It was an informal set-up and trust formed the basis of the initial team. For example, even when we exited, the CFO (chief financial officer) and I decided to not tell anyone else about this. These kind of strategic things…they don’t happen until they happen. We didn’t even tell the co-founder (Charan) until just a few days before the deal (with ibibo Group)—and he was fine with it. That’s the level of trust.
(Coming back) since all three of us had jobs and also didn’t know how to start a company, we needed help. I asked my friend and relatives to help us. So a distant cousin of mine and a friend’s friend joined us and another cousin of Charan’s too. So there were three of them and three of us when we started the company. Those three were a strong source of strength because they did everything and they worked as hard or more than us. They even learnt how to write software.
People say that start-up ideas take a long time to bake and initially you need to go after volumes and forget profit. What’s your take on this?
We were always profit-oriented because the business needs to be sustainable. We’re an anti-start-up type because we’re always focused on making profits at the end of the month. Probably because of the conservative background we come from too, we didn’t have long investment periods—we never thought that we should just invest for three years and expand, and then look at anything else. Our mentor at TiE (The Indus Entrepreneurs) Sanjay Anandraman also shaped our belief system, and not just in this aspect. And Sanjay is influenced by Wipro Ltd (he worked at the IT company for a decade).
Was it difficult to get married as an entrepreneur?
Yes, it was difficult. Even though when I got married in 2009, we were more established than any other entrepreneur I know of—we were doing turnover of Rs.100 crore. As an entrepreneur, you don’t really have a social life. But my father-in-law’s story is that he had nothing, and he worked really hard and he’s done well for himself (as an entrepreneur). So he could relate to what we were trying with redBus. That way I was lucky.
Ours was an arranged marriage, so parents are obviously involved and it was difficult to explain what we did because who used to sell bus tickets, and what was a business doing selling private bus tickets because private bus operators have this reputation of being shady and all that. And on top of that you’re an agent! These days, fathers-in-law want an entrepreneur, but those times were different.
Why did you think it was the right time to sell now?
It was not like we just decided to sell. There were many, many reasons... Do I feel bad about selling? No. How happy you are with the money is relative. There was one thing that Charan and I discussed (after Sama had agreed to sell) that made a lot of sense to me. If you make 10-20 times the money much later in your life versus whatever you make now, as long as it is significant, I would take the money now because my parents are getting old. Everyone talks about how successful we are, but I’ve never shown them what it really is. He (Charan) said there’s no point in making more money later if you can’t share the success and joy with them.
When an entrepreneur struggles with the question on whether to sell or not, what would you tell them?
It’s a very individualistic decision and 99% of the times the entrepreneur knows the answer. When we were going through this dilemma, one of my board members told me that you know the answer, just go sit and think about (it) and whatever comes to your mind is the right answer.
Is it tempting for entrepreneurs to take short cuts to become successful, especially in India where corruption is pervasive?
It is difficult. But as I said, our belief system was shaped by Sanjay. He used to tell us stories about Premji (Wipro’s billionaire founder Azim Premji) and how much emphasis he put on ethics. I heard a story from Premji himself at a conference. Premji said they opened a factory years ago in one of the small states and they needed to get an electricity line for the factory. One of the ministers wanted a bribe for that and Premji said ‘no’. So he didn’t get the line and for 18 months the factory was run on generators. They only got the line when the government changed after the elections. These are inspirational stories. Once you know that Premji has become so big and successful doing things this way, it gives you a lot of confidence.
Many start-ups in India fail because the entrepreneurs’ families don’t support them. What has it been like for you?
In our case, our larger families were not really involved, so they didn’t affect the business one way or the other. But yes, if you’re talking about one’s immediate family—wives, for example, it matters a lot. They have to buy into what you’re doing, otherwise it’ll be very difficult. Before getting married, I used to be on tour 20 days a month. After marriage, I continued that—and my wife (Sarika) was fine with it. My colleagues in sales, who also travelled a lot, showcased Sarika to their wives as an example!