How Rapido has disrupted the ride-hailing business with its unique business model and offerings

In the rule book of running a successful start-up, embracing failure will probably be amongst the top to-dos. But if, in October 2015, the founders of theKarrier—a failed logistics start-up—were told that they could reach a valuation of $820 million in 2023, they would have been incredulous. In 2015, the founders decided to pivot their one-year-old start-up to what is now known as Rapido, a ride-sharing bike-taxi platform.

How did the founders come together? High-school buddies Aravind Sanka and Pavan Guntupalli—who were working with Flipkart and Samsung, respectively, then—attended a summer programme in 2014. That is where their paths crossed with Rishikesh S.R. The trio decided to get together and start theKarrier as they realised that there was a market gap for intra-city trucks. But due to scaling and credit-availability issues, they had to pivot. This time, Bengaluru’s traffic situation provided the inspiration. They realised that people wanted an affordable daily commute. That turned out to be the right call.

Now, Rapido is ready to challenge the cab-hailing biggies for a slice of the pie. Its unique proposition? Instead of the prevalent commission model that charges close to 30 per cent on each ride from the driver, Rapido banks on a subscription model. This option makes it cheaper for the consumers as well. “The cab-hailing industry has been stagnant for the last five years. The subscription model will help grow that. We wanted to do something that is not just accessible to the top 7 per cent of the population, but millions of people who live not just in the Bengalurus and Delhis but also the Patialas, Siliguris and Jaipurs of India,” says Guntupalli. He expects cab-hailing to contribute 15-20 per cent to the business in the next two years.

While Rapido was aggressively growing in the bike and autorickshaw segments, players such as Uber and Ola were disrupting the cab market. But Guntupalli noticed that it was an exclusive affair for the elite. “Of course, the cab operators brought some efficiency and technology into the market, but despite all this revolution, 10 years later, how come the buses are still overcrowded and people are still going through such a hassle while booking cabs?”

In metropolitan cities such as Mumbai and Delhi, people travel by cabs, but things are different for cities such as Faridabad, Aurangabad or Jabalpur, says Sanka. “People in those cities travel in unconventional tempo vans, minivans, often known as erichis. So, our team started to craft different solutions for different cities based on their unique transport ecosystem.”

Sanka says Rapido’s focus is on affordability, and it explores new vehicle segments to provide tailor-made solutions.

It is now looking at parking infrastructure solutions so that a single ticket on the Metro rail lets the commuter cover the last mile from train to home using some Rapido ride. Sanka says Rapido wants to leverage its large distribution network to expand into logistics. Rapido is also studying how people transport goods, especially in Tier II and III towns.

Rishikesh underscores the affordability theme. “Our ultimate objective is to enable, in whatever way we can, mobility solutions that add value to our captains and consumers,” he says. “Rapido has always been in this unique position of being a low-cost player. We are already operationally profitable with our latest cab service offerings and are providing the lowest price for our cabs without discounts,” he says. In FY23, Rapido recorded Rs 497 crore in revenue and Rs 2,520 crore in GMV, according to the company.

Rapido’s focus on growth is centred around leveraging existing infrastructure to cater to more people without compromising on convenience or safety.

“We’ve come a long way, and the major factor that has continued to sustain us is that we are working at the ground level to identify and understand the real problems affecting mobility. Solving the dilemma around convenience vs affordability is what we are all about,” says Rishikesh.

From facilitating a mere 500 rides a day to a staggering 1.5 million rides daily, Rapido’s meteoric rise is a testament to its ground-level understanding of real problems. “If the solution requires us to innovate in e-rickshaws, buses, bikes, etc., we will do exactly that. It’s about leveraging the existing infrastructure better—how we did with bike taxis,” says Guntupalli.

@PLidhoo