Daybreak - Namma Yatri is affordable and driver-focused, yet Ola and Uber remain unfazed

Episode Date: May 12, 2023

Last year in October, the Karnataka government banned Ola and Uber autorickshaws after they were caught overcharging. A month later a new app was launched and it was almost antithesis of Ola and Uber. It charged zero commission from drivers and no cancellation or surge charges from riders. Plus, the government supported it by saying it would be listed on its e-commerce behemoth, ONDC.Yet, eight months later, Namma Yatri is not growing as much as expected in terms of registered drivers and users. Tune in to find out more.Recommended reading: Your Namma Yatri auto driver may still be on Uber, OlaAlso, listen to: Gaurav Munjal of Unacademy on being confrontational, paranoid and transparentDaybreak is produced from the newsroom of The Ken, India's first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, analytical business stories.  

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get an alert as soon as we release our first episode, please follow Intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Once upon a time, there were two kings who ruled the jungle.

Their names were Ola and Uber. They pretty much had complete control over the ride healing market in the South Indian city of Bangalore. But over the years, their monopoly caused quite a bit of unrest in the jungle. Both of them had been caught overcharging. And their drivers were upset with them over how much they were taking away from their earnings. The customers too had quite a few complaints. So last year in October, the Karnataka government decided to ban Ola and Uber auto rickshars.

But to be honest, no one took it quite seriously. Ola and Uber autos continued to ply the roads of Bangal. And then, just a month later, there was a new kid on the block. Mind you, this was not just any other kid. It was supported by the government itself. And it was built by Just Bay, a tech startup that was backed by SoftBank. The government even said that the app would be made available on India's open network for digital commerce or ONDC. The government endorsed e-commerce giant.

The app is called, as you may have very well guessed by now, Namay-R-3. And in terms of what it was offering, it was quite the disruptor. The platform said that it would charge zero commission from drivers. That obviously would make the drivers quite happy. And it also said that there would be no surge pricing or cancellation charges on the app, which would obviously make the customers very happy. Thanks to these driver incentives, many local unions from Bangalore two began backing the app.

Now, it has been eight months since the launch of this app, and the two kings of the jungle might have taken notice of this new kid, but they are far, far away from losing sleep over it. Why is that? Welcome to Daybreak, a business podcast from the Kent. I'm a host, Nickas Sharma, and I Don't Chase the New Cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business store.

that is worth understanding and worth your time. Today is Friday the 12th of May. Buy the drivers for the people. 100% direct payments to drivers. This is the tagline of Namayatri. The timing of the app's launch was just perfect. Drivers were very angry with Ola and Uber. Multiple drivers told again that the two were charging users

100 rupees for two kilometer rides. And they were taking over. way just a little less than half of it as convenience fee from the drivers. The government mandated fare for the same distance in Bangalore is, by the way, just 30 rupees. The Ken reporter, Sasjadakundo Chaudhury, spoke to Sashi Kumar S, who is an auto driver in Bangalore. And you know what he said about Ola and Uber? He called them bogus. Those are his exact words. He complained about how they take more money from customers and charge a commission from auto drivers. He said that if the trip is 55 rupees, the driver only gets 35 rupees. Plus, he likes the new app's name. It gives him a sense of

belonging, you know? Nama is a word in Canada that translates into our. He says that this was a big factor that drove him to sign up on Nama Yatri. Nama Yatri charges the government-mandated fare of 30 rupees for 2 kilometers and 15 rupees for every kilometer beyond that. And it charges 10 rupees more as pickup charges. For more than 5 km distances, the app shows a price range to the rider. The extra charges are for the time spent in traffic or in waiting. And what is even more interesting is that the rider can actually negotiate the excess charges with the driver and arrive at a mutually agreed fair.

Among other things, the app also has a very cool live dashboard. It allows users to see the total number of completed trips overall, the number of ongoing trips, the number of available drivers, and even how much money drivers have made so far. As I record this, according to the Numbayatri app, drivers have made over 25 crore rupees as earnings and have completed more than 16 lakh trips. On the 13th of October, for example, which was a few weeks after the Nama Yatri app was incorporated, its fresh driver sign-ups peaked with over 2,000 sign-ups. And on the 1st of November, the day of its official launch, the platform added nearly 1,000 more.

This was the busiest day so far. On the same day, over 11,000 new users also registered on the app. But wait a second. Let me say that again. November was the busiest day for the app in terms of user and driver signups. It is May now. As of today, the app has a little over 56,000 registered drivers. What is even more concerning is that only 15 to 20% of them are actually hitting the road

at any given point of time. Let us compare this to Ola and Uber. Uber has between 55 to 60,000 autos in its Bangalore fleet. and Ola has between 65 to 70,000. But don't you think that Namayatri's number should have been more substantial by now? Especially considering that its model is almost an antithesis to Ola and Uber. Stay tuned to find out why this is happening. Sashwatha spoke to many auto drivers in Bangal

and it seems like the availability of trips on the Namayatri app has become quite an issue. Many auto drivers told us that the app does not offer as many trips as Uber and Ola. So after what seemed like a promising start, Namayatri's driver registration started plateauing. Though there were minor surges in January and March. The March surge was because of the ONDC tie-up announcement. At the Indira Nagar auto stand in the eastern part of Bangalore, a driver said that in the two weeks that he had downloaded the app, He has not taken a single ride.

Why? Because all the fares displayed were under 100 rupees. He argued that driving on his own and charging rates set by himself, which by the way are through the roof in Bangalore, he makes way more money. So the problem right now is quite clear. Driver acquisition. So Sashwatha decided to get the full Namayatri experience for himself.

He took 12 rides across the city. He realized that there is not. much of a difference compared to an Ola or an Uber, but the number of driver cancellations was noticeably low. It only happened to him once. And I can vouch for this too because I have been using the app to travel to work and elsewhere for over a month now. No cancellations so far. Plus, the wait time is much lower for me compared to the other apps. But for distances below 5 km, Nama Yatri prices are slightly higher. For longer distances though, it was comparable or slightly lower.

This is except when there is a surge pricing on Ola and Uber. Sashrida also noticed a major glitch on the app during one of his rides. The auto driver could not enter the one-time password to start the ride. Even after reaching the destination, the user app showed the driver is three minutes away. But the driver told us that it was a rare case. Now, even though there are lesser drivers signing up for the app, the Justpe founder of Imal Kumar does not say, seemed to worry. In fact, he insists, despite the very nature of the app, that Namayatri was not

started to disrupt the market. It does not want to rival Ola and Uber. Coming up next, I tell you what Namayatri is planning in the future. Kumar told the Ken that the driver acquisition is not really worrying him because some auto drivers signed up out of curiosity. But later, they did not complete the process, such as uploading their driver's license. Meanwhile, Sean M.S., who is the company's chief growth officer, said that the driver's registration numbers will resume rising once the user demand is up. And that is exactly what Gisbe is trying to focus on, getting more users to sign up on Namayar 3. Which kind of makes sense too, considering that one of the main complaints of the drivers against the app so far has been that there are not enough riders or trips. And this plan has a lot more writing on it too.

Namayatri's revenue plan is to introduce a nominal subscription fee for drivers. Now, this is a little tricky because it kind of goes against what they were initially offering to drivers, which was zero commission charges, but they say that they want to create a system that lets riders use different modes of public transport through Namayatri. And that is why Kumar insists that Namayatri has never thought of itself as a rival to Uber and Ola. But how are they going to get more users? ONDC, the government's e-commerce Baymit. People will be able to book

Namayatri rides through the ONDC app, which promises to offer a much, much wider reach. For now, Namayatri is in a good place. Instead of spending millions on customer acquisition, it is going to piggyback on ONDC. It is counting on the network to push organic growth. Now, it all depends on how popular ONDC becomes and more importantly, how auto drivers feel about this new subscription model.

Until then, the two kings of the jungle can rest easy. I think at the end of the day, my interviews are just about whether we are on the same wavelength or bandwidth. For example, number one, there will be a lot of compromises on work-life balance. Now, if people who work closely with me fundamentally disagree on this, then we don't usually end up hiring them. That was Gaurav Mungal, the founder of Anacademy.

You've probably heard of him. You've most probably heard about Anacademy, the company he started with a YouTube channel in 2015 that became one of India's leading attacks worth nearly $3.5 billion. Gorof Manjal is at the center of it. I asked him questions about how he finds great talent for his organization. When he interviews potential candidates, what does he ask them? What does he look for?

There will be a lot of late nights. There will be a lot of Saturdays. I will call you at 1 a.m. to discuss something. So I think that's second. In general, people who are confrontational do really well in life. and life or unacademy. Both. In general, what I've realized is that even some of the best CEOs,

I mean, I know of some CEOs in India who are not taking tough decisions in a market like these because they're non-confrontational. They don't want to admit that they're wrong or to tell somebody that they are wrong, etc. I am Rohan Dharma Kumar and the host of First Prince. A fortnightly leadership podcast from the Ken's newsroom. The link to the podcast is in the show notes of this episode. Go ahead. You want to listen to this one. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform.

What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters, subscriber-only apps and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website. I am Snigda Sharma, your host, and today's episode was edited by my colleague Rajiv Sien.