Beginnings are usually beautiful. Beginnings are also usually small.

Take a look at this photo for instance:

Early Ola Team. Source: http://www.startuptimes.in/2014/10/ola-cabs-business-revenue-model.html

When Bhavish Aggarwal and Ankit Bhati started Ola Cabs with this small team of fresh-faced cherubs, they probably weren’t thinking big. Yet, as we stand here seven years later, Ola is anything but small. After having raised nearly $2 billion (Rs 13 thousand crore)  in funding, the company is reportedly raising another $2 billion (Rs 13 thousand crore), which would make it India’s second highest funded startup ever (behind Flipkart). It also employs over five thousand people directly and provides employment to nearly a million drivers across India.

While it is moot if this scale is a result of Aggarwal’s ambition, a large part of the credit should go to two other companies.

To wit, the Devil and the Dragon.

The Devil

Ola’s initial value proposition was simple—provide an electronic channel for Indians to summon a reliable taxi to their doorstep. Given the number of cabs and the number of organised taxi companies in India back then, this was not a particularly ambitious idea. In another universe, Ola could have built a small but meaningful and profitable company offering technology-led services to these cab companies. But in our universe, things were different primarily because of another company that offered an apparently similar service in the US.

Uber.

Founded in 2009, Uber was originally called UberCab and like Ola, allowed users to hail a taxi (restricted to black luxury cars). However, it later dropped the ‘Cab’ suffix and expanded to allow any individual to drive for Uber using their own car, subject to a background check and specified car requirements. This proved to be a game-changer.

From a mere taxi-hailing service, Uber now saw itself as a company whose primary competition was private car ownership. The idea was that if Uber can give users the ability to summon an inexpensive and reliable ride almost instantly, it could conceivably be better than users owning their own vehicle.

Uber was now a company that could potentially make private car ownership obsolete.

This pivot and ambition enabled Uber to become arguably the biggest startup ever—investors flocked to invest in the company pumping in more than $10 billion (Rs 65.5 thousand crore) at a valuation of close to $70 billion (Rs 4.6 lac crore). 

It was but natural that investors started seeing Ola as ‘Uber for India’ and started pumping money into the company. While being seen as a peer for Uber benefited Ola in terms of investor interest, there was a dark side as well.

AUTHOR

Sumanth Raghavendra

Sumanth is a serial entrepreneur with more than eighteen years experience in running startups. He is currently the founder of Deck App Technologies, a Bangalore-based startup attempting to re-imagine productivity software for the Post-PC era. Sumanth’s columns appear regularly in leading publications. He holds MBA degrees from the Indian Institute of Management, Bangalore and Thunderbird, The American Graduate School of International Management, USA.

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