The winds of change are blowing. The Indian start-up fraternity stands tall with elan as we witness one of the most promising acquisitions of the year 2013. South Africa based Naspers group recently acquired India’s seven-year-old bus ticket booking travel portal redBus.in for a whopping $138 Million. Yes! That is INR 800 Crores. One of the largest acquisition deals in India. As part of the acquisition deal, redBus now becomes a part of the ibibo Group, which is a joint venture between Naspers and Tencent, a Chinese Internet company. This acquisition pumps in the much-needed steroid to the redBus team to further strengthen their technology and market reach. On the other side, it also boosts the market portfolio of the ibibo Group by adding bus ticket reservation to their existing portfolio of air travel and hotel booking.
The acquisition also comes in as a great breather for the investors’ fraternity in India. They have started believing that successful exits can happen in India too. We hope that there will be more of funding avenues coming up for the Indian start-up souls. In a country like India, where every citizen walks with more than a dozen path-breaking ideas, the investors will be scouting for the best and the smartest of the ideas to multiply their bank balance.
As the team at redBus celebrate their success story, let us look at some of the keys take away points from their journey.
1. Look for a problem around us.
Most of the time, we oversee the problems we face in our daily life assuming their solutions do not have the potential to make it big commercially. It is not necessary to always disrupt the ecosystem with a path-breaking solution to make it a grand success. Google was not the first search engine. Facebook was not the first social network. However, what they have done is refine the existing systems with the missing links, be it making it more user-friendly, simply no-nonsense results or a better layout. Off-course, every minor change at such a big level needs a lot of planning, street smart algorithms, and testing. Booking systems were already in the market for Air, Train, and Hotels. The only missing part was the ground travel booking system for buses. And the redBus team identified that and cashed in.
2. Identify an untapped market and be an early mover.
Successful acquisition of redBus will now catapult a lot of new .coms and .ins into online bus ticket booking. Although not all of them will be a great success down the line, however, some of them will surely generate good revenue from the market. Some of them will definitely try to find out the loopholes in the current system and improve upon them in their own product. However, being an early mover in the untapped market, redBus will, most of the time, hold the advantage. Because they have learned the bus booking market from the ground-up, they had no one to copy from, already built a relationship in the market and already have a large portfolio of vendors and a proven success story as they penetrate into new geographical locations across the nation and the globe.
3. We never own a customer. We always serve a customer.
In a growing market where we have multiple options for one single thing, customer loyalty is a hard thing to earn. We can never think, dream and assume that we own that one mighty customer. It is only the quality of our service that binds the customer to a brand. Through thick and thin, they have kept their customers on priority. They have been transparent. Never gave a second thought to go the extra mile to help resolve a customer’s issue. In the process, they have demonstrated and built a sense of reliability among their user base who now, in return, keeps coming back to avail of their awesome service.
4. Remain focused on what we believe.
Seven years of hard work, dedication, self-belief, and perseverance have paid them a dividend of Rs.800 Crores. It has not been an easy journey, being the one-of-the-first in this untapped market of online bus ticket booking. From pricing to delivery, marketing strategy to a robust business model, they have sailed through the storms and learned it the hard way. And as always said, there is never a rosy road to success. Just stay focused. Dedicate ourselves to the dream we have dreamt of. Breath in patience. The results will follow.
5. Do not be too generous in distributing equity to investors.
It is learned from various news sources that during the acquisition, the redBus founders were left with less than 20% stake in the company (Let us assume the news is correct and they actually had 20% stake). The remaining 80% stake was distributed among three other earlier investors from their initial funding rounds. Now, what does that mean? Founders only got 20% of the Rs.800 Crore. No doubt, 20% is big enough an amount. However, in the last seven years, had there been other options to meet the requirements then, thus avoiding more of investors and keeping intact a greater stake in the company, they could have been richer by few more crores now. Having an investor is always like giving away a part of your property. However, we assume, whatever made them take those decisions to give away that many % of equity over these years, was the best possible solution, at that point in time, to their problems.
Irrespective of whatever we may learn from their journey, no one can and no one should take away the pride and the moment of truth & celebration from the redBus team. They deserved it. And they have it now. Cheers to the redBus team.
Do share, what you think, we can learn more from this redBus acquisition. Or share your thoughts, if you disagree on any of the key take away points.