How redBus made it to the world's top 50 innovations list

Business magazine Fast Company recently released its 2012 list of the World's 50 most innovative companies. One of the companies to be featured on the list is the Bangalore-based redBus, an online bus ticketing company.

redBus was founded by Phanindra Sama, Charan Padmaraju and Sudhakar Pasupunuri. All the three founders were friends from BITS, Pillani.

In this exclusive interview with rediff.com, the ever-smiling Phanindra Sama, CEO of redBus talks about the company's journey and its achievements.

On being selected as one of the world's 50 most innovative companies

Not even in our wildest dreams, did we ever imagine that we would be chosen as one of the world's 50 most innovative companies in the world. This recognition has given the team whole new inspiration to work a lot harder.

The team from Fast Company had been talking to us about what we do for almost a month. When they asked about the innovation aspect of redBus, I said it was not actually a big innovation; it's not like a discovery.

I saw a problem, and being an engineer, I went ahead and solved the problem.

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When we decided to go ahead with the venture, we faced many questions, like there were hundreds of bus operators who were not exactly literate and how we were going to make them computer literate.

Many dissuaded us by saying it was not possible and why we wanted to get into such an area, why would people book bus ticket on the Internet, and so on.

Another question that we faced was, how much money would we make from a bus ticket that costs around Rs 500?

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Using open source technology

Some of these questions made us think and that's when we decided on open source technology. Right from the call centre we use only open source.

We have seven call centres in the country and when we were setting them up, many told us we had to buy software and it would cost lot of money. But, then there was no other option. It was critical for us to be in all these places.

Thus, we looked around and came across this software called Asterisk which is an open source software for telephony. Because it was open source, we downloaded it and it worked!

Like any start-up, we faced criticism, and many condemned us for 'our ignorance'. Even then, we pursued it. Today, all our call centres are working fine. In fact, now industry players say, 'if redBus uses it, that means it works!'

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Like Fast Company said, "redBus has an innovative way of doing business. Innovation means doing the right thing and not doing an unknown thing."

On Cloud Platform

"All our IT infrastructure and servers are on the cloud platform. We moved to the cloud three years ago, when hardly anyone in India was doing that. Compared to those who moved bit by bit, we moved to cloud 100 per cent. All our 90 servers are on the cloud.

Moving to the cloud platform was one of the innovative practices we did when it was not popular.

It was very critical for our business that we moved to the cloud as it gave us around 40 per cent saving in cost. This gave our business sustainability.

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Another successful idea

Usually, a travel agent gets more commission if he sells more tickets. Somehow, we at redBus felt this business model is not sustainable as the agent may become a parasite on the seller.

Though the whole world follows the model, we decided not to follow it. We decided irrespective of the volumes we do, whether it be 100 tickets or 1,000 tickets, our commission would remain the same. If we try to squeeze more commission from them, the operators make no money.

This idea gave a lot of comfort to the bus operators and increased their confidence in us. We have been following this from the time we started functioning. This, we feel, is an out of the box kind of business model.

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Dealing with customers

When rediff.com first wrote about us, there were many irate customers on the message board, but we tried to find solutions to each and every complaint. We are certain, there will be less complaints this time. We are learning every day.

Much of our operations are set in place now.

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Journey so far...

Year-on-year, we have grown three times and it is a big number. And, with hard work, we are discovering better and better things each day.

When we made the first business plan, our ambition was to have a turnover of Rs 1 crore (Rs 10 million). That was a big number for us.

But, we got our encouragement from this reality show Kaun Banega Crorepati. The prize money that was offered on the show was Rs 1 crore. We thought it was a magical figure, and we felt that if ever our company made Rs 1 crore turnover, we would have achieved something.

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In the first year, our turnover was Rs 50 lakh! But in the second year, we made Rs 5 crore (Rs 50 million). Then, we wanted to cross the magic figure of Rs 100 crore (Rs 1 billion) and last year, we did that. Now, we aim to cross about Rs 300-330 crore (Rs 3 to 3.3 billion).

This year, we would have sold tickets to 5 million customers and we have tied up with 700 bus operators.

Even our employee strength has gone up from 200 to 500 in the last one year. For me, I am the same person, the same CEO, and the only difference is that I now have to learn to manage 500 people.

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This is our journey, and it has been fantastic so far. It was one of discovery and lot of learning. It was a journey of excitement and disappointment.

The high points of the journey

There are quite a few high points in this journey so far. Being named as one of the world's top 50 most innovative companies is a high point.

When the MD of the Government of Goa Transport Corporation in a press release said "That four months after tying up with redBus, for the first time, their inter-state routes became profitable, it was another high-point. Indeed, that was a very fulfilling compliment. We were so happy that we could make a difference."

Some mails like the one saying, that he would not have attended the interview if not for redBus, are also very satisfying.

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It is very inspirational and motivational for us when people say that this kind of a business model is not present anywhere in the world.

I believe from this idea, a lot more impact can be derived in a vast country like India. It can also be replicated in other countries. Thus, I feel that we have to focus on this idea and work harder.

I also believe that if you do one good job, your life is worth it. But, the important thing is, whatever you do, do it well.