Pavan Guntupalli: On a Rapido ride
Summary
The co-founder of Rapido on the ride-hailing platform’s rise to prominence, his personal journey as a founder who failed many times before succeeding, and why we need to fill vehicle seats in Indian citiesIt’s not every day that you are driven around by the co-founder of one of the most promising Indian startups, but Pavan Guntupalli, co-founder of ride-hailing app Rapido, has no hesitation slipping on the mandatory khaki shirt for auto-drivers in Bengaluru and getting behind the wheels of the sky-blue electric auto rickshaw parked in front of the Rapido headquarters in Bellandur, asking me to sit behind as he navigates the pot-holed filled service road outside. He enjoys driving, says the 33-year-old with a ready grin, although he doesn’t own a car—he is fully invested in shared mobility, both personally and professionally.
Rapido, founded in 2015, completed a billion rides recently, and has cemented its place among the top 3 companies in its category in India; the other two being Uber and Ola. Although Rapido started as an exclusively bike-taxi service, it added autorickshaws to its fleet in October 2020, and in December, it started providing cabs as well. In July, the company raised around $120 million ( ₹1,000 crore) in its latest funding round led by existing investor WestBridge Capital, taking the valuation to $1 billion and making it one of India’s freshest unicorns. It recorded revenues of ₹497 crore in the fiscal year ending March 2023, while its Gross Merchandise Value (GMV) grew to ₹2520 crore in the same period, a number that has increased 3X in the current fiscal year as per valuation reports.
A few features set Rapido apart—it runs on a subscription model for its driver partners or “captains" instead of the more prevalent commission model, where the platform takes a commission on each ride. The Rapido app offers customers the ability to offer a top-up fee while booking their ride, over and above the suggested price, to incentivise Rapido captains directly when demand outstrips supply. Then there are the small touches—I noticed, using Rapido frequently over the past month, that the one-time pin (OTP) to start the ride has remained constant across bookings, removing a small but not insignificant point of friction.
“Ride-sharing as an idea wasn’t unique, it was happening globally when we got into it. But we felt that the current solutions were not affordable. If you think of a middle-class person, someone who is commuting every day in a city like Bengaluru, using cabs or autos twice a day is not affordable. We thought a two-wheeler could be the solution, but there was uncertainty about whether people would accept two-wheelers as taxis," says the entrepreneur. They launched in Koramangala in Bengaluru, and in the first month, the entire team of 19—including the co-founders (apart from Guntupalli, there’s CEO Aravind Sanka, whom he met in high school, and Rishikesh SR)—drove as captains. “It was more than a pilot project; it was a commitment to make it work. There was no turning back."
One of the key cornerstones of the company has been impact, says Guntupalli. “We clearly said, hey, we want to build a business, but one that is changing hundreds of millions of lives. That has been one of the core philosophies that we follow to this day—while pursuing initiatives, while making business model changes." They also asked themselves if women would feel comfortable using bike taxis. “It was a challenge, and we were driven by the belief that if we could make a woman feel safe on a stranger’s bike, it would be worth it," says the founder. Today, almost 22% of their customers for bike taxis are female, and they are introducing female captains (along with measures to ensure their safety) as well.
Although bike taxis continue to be in a legal grey area in some states, including in Karnataka where the company is based, where there was a recent crackdown on them following protests by autorickshaw unions, earlier this year, the Union ministry of road transport and highways issued an advisory to state governments about them. Titled “Motorcycles fall within the definition of contract carriage as per Section 2(7) of the Motor Vehicles (MV) Act, 1988", the directive provided regulatory support to the model. “This move now allows motorcycles to operate legally as contract carriages in India, potentially opening up new transportation options and income opportunities," reported Business Standard.
Rapido’s inception story is an interesting one. The team got together for another startup, called TheKarrier, which took off in 2014. It was an intra-city truck and goods transport vehicle aggregator, which combined technology and a network of owners to connect drivers and customers in a hitherto unregulated industry. “It was quite a game-changer in last-mile logistics. We were doing 250-300 orders per day, and since in this space the ticket size is big, we were earning substantial revenues," recalls Guntupalli. But the founders were dissatisfied at some level —they didn’t feel like they were creating sufficient impact.
The core idea behind Rapido came from the experience of running this business. “We used to provide labour for loading, unloading, etc., and we realised that these guys were spending almost all their daily earnings going from one assignment to other," he recalls. Travelling by buses was unreliable and time-consuming, and autos and cabs were costly. “Then we started noticing that many of them would take a lift with one of our sales people on bikes, who would also be going from one point to the other," he says. That is when it struck the three co-founders that pillion-riding on bikes is the one affordable way for low-wage-earners to commute. They experimented using WhatsApp, getting the sales persons and daily workers to communicate over the messaging app to coordinate pickups and drops, and they realised that it was working.
They were close to raising Series A funding for TheKarrier. “Our investors were like, dude, you are killing it, let’s raise the next round. And behind the scenes, we were in this turmoil. We had growth but that sense of purpose wasn’t there. It was a hard call," recalls Guntupalli. Almost overnight, the company pivoted from being B2B logistics providers to B2C transportation providers. “We gave a notice period to our clients, completed that, and started working on Rapido. Today, we are super glad that we did not think about it too hard," he says, laughing. “If we had any MBAs around — nothing against MBAs! — but if there were smarter, more logical people around, we’d probably have not gone through with it."
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At the time, Guntupalli, then in his early 20s, was already a serial entrepreneur. “This is my eighth startup slash attempt. For my co-founders, it will probably be their second or third," he says, as we bowl along Outer Ring Road in the auto being driven by Guntupalli. Born in Hyderabad, he is the youngest of three and his siblings are doctors. “They both said ‘becoming a doctor will be too much pressure for you, don’t even attempt it’. So I decided to do engineering, got into IIT Kharagpur," he says nonchalantly. Growing up, the family had seen financial ups and downs—his father was in real estate and his fortunes had been fickle. “At one point, he rolled in in the state’s first Maruti car, and at another he literally walked 9-10 km to save on bus fare," he recalls. “But that didn’t make me afraid of being in business. In fact, you could say that I had exposure to risk."
At IIT Kharagpur, he read something that he still holds as an abiding inspiration: a biography of Reliance founder Dhirubhai Ambani that created a huge impression on him. “I wasn’t a big reader, in fact I don’t even remember the name of the book, only that it was a biography of some sort, but I still remember the feeling that it evoked: that if one person envisions something, he can change the course of the country," he says. “I know that there are many aspects to his life and career, but the fundamental vision was something that moved me."
After graduating, he took a couple of years to gather experience, working with Samsung Electronics and living in Suwon , South Korea while travelling around the country. “Their infrastructure and quality of life really inspired me, it made me think that I needed to come back to my country and do something. But I only had the will—zero direction, no clarity," he says. He quit his job and came back to India, something that surprised most people, including his parents. “I told my dad in a haughty manner — ‘I am in the driver’s seat, I can see the way.’ I tried a bunch of things, from real estate to mining, tiles, exports, running a marketing agency—in some, I just failed, while in some I failed and lost money." Two years in, he was at the lowest point of his life while working as an unpaid intern and tele-caller in a transportation and logistics company in Hyderabad. “It was Christmas eve, and I was sitting in the office and thinking ‘what the hell am I doing?’…I realised that my inputs and direction were wrong, that’s why I was failing continuously."
He decided on a fresh start, moved to Bengaluru and met Rishikesh, with whom he started a fin-tech/instant payments company called IMPStant, built on IMPS (immediate payment service) infrastructure used by Indian banks for money transfers. This was in 2013, when the unified payments interface (UPI), the backbone of instant money transfers today, was still being built. The idea was perhaps a bit ahead of its time, says Guntupalli. “The IMPS protocol itself was bad. We built an inter-bank wallet, worked with NCPI (National Payments Corporation of India, which developed UPI) but couldn’t lift it." He had always stayed in touch with his former classmate and close friend Aravind, who was working with Flipkart in the logistics space. He decided to join hands with Guntupalli and Rishikesh—the partnership that would lead to TheKarrier and ultimately to Rapido.
Back at the Rapido office, Guntupalli talks about the challenges the bike taxi sector has faced in India. These are teething troubles, he feels, and the regulatory environment has to change to accommodate something that he strongly believes has the ability to financially empower millions—not only by allowing them to use their two-wheelers (“and everyone in India, or their father or brother or cousin or uncle, has a two-wheeler," he says) to earn a living but by ensuring mobility to create opportunities for themselves. He talks enthusiastically about working with various state governments to create a more welcoming regulatory environment for bike-taxis and ultimately, for blurring the lines between the “white number plate and yellow number plate" in India—such as working with the West Bengal government on a “one-tap licence" scheme, an initiative to switch between a private and commercial vehicle licence.
“New-age economy needs new-age solutions. Of course, the fundamentals have to be preserved—the tax fundamental, the safety fundamental—but we also believe that you can’t stop these solutions. It took 70 years for somebody to step up and ask, ‘hey, can this bike be used as a taxi?’. Our worry is that if we give up on this, it will take another 15-20 years for someone else to step up," he says. A core insight has driven the company: the fact that 95% of two-wheelers are driven by a single person without a pillion rider. “We want to fill those seats, make traffic less, and maybe in 10 years, when these bikes become electric, make cities greener. Two-wheelers are the common man’s vehicle in India. We need to start utilising them efficiently."