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She may have named her company Easy Auto, but Padmasree Harish’s business is anything but easy on the pocket—or on effort—for her. Ten years ago, the entrepreneur started her first venture: a web hosting and design company that also did work for the Bengaluru Traffic Police on the technology front. So, it was almost inevitable that she should think of a solution for Bengaluru’s rapidly growing auto grievances.
The idea took form back in 2007, when Easy Auto was started under parent company Smart Commuting Services (P) Ltd. as a pilot program to be licensed from the Government of Karnataka. Unfortunately, Harish had to stop operations soon after, as she was unable to procure an operator’s license. Getting auto rickshaw drivers to use mobile phones for text messaging was another challenge she couldn’t conquer. So, the venture did not take off as planned.
“Auto drivers just didn’t want to learn how to send an SMS in English; this led to operational inefficiencies,” says Harish. Plus, many drivers were running autos without any legal permits.
Easy Auto was re-launched in October 2009 after a year’s hiatus—with a new model and renewed entrepreneurial energy. “Earlier, there were too many hiccups; we spent more time mending than growing,” Harish exp-lains. However, in the midst of rethinking and remodeling, one factor remained constant: providing service. “Even on a rainy day, I’d get 200-250 calls enquiring if we still ran Easy Auto,” she says. Therefore, it was certain that a viable, commercial model was the need of the hour.
Today, Easy Auto works on a revenue-sharing model. Harish’s 250 autos have been fitted with GPS to track the autos. They also have LCD panels (running a program custom-made for Easy Auto) that display informative content and advertisements, the company’s primary revenue stream. “Narrowcasting is very popular in the West as an effective marketing tool,” she explains, pointing out that the concept is still newfangled in India.
Harish’s auto drivers are trained to use the GPS; using the system, employees at the centralized call center (where auto rickshaw bookings are made) can find out which autos are free for hire within a half-a-kilometer radius of the customer’s location. The customer is then connected to the driver to give directions. “Right now, our success rate is only 38 percent,” admits Harish.
Despite receiving about 300 calls a day, Easy Auto manages to make just about 100 trips. Commuters also have the option of registering themselves on Easy Auto’s website to check the status of auto availability. “Until I have a critical mass of autos, I cannot commit,” says Harish. Hence, her drivers are also allowed to take on customers they may find on the way.
Drivers are paid a fixed salary of Rs.500 a month (generated from ad revenue) in addition to the day’s earnings, plus health insurance of Rs.1 lakh for the entire family. When it came to reworking her business model, providing monetary incentives seemed to be the only answer.
In a city like Bengaluru that’s bursting at the seams and crumbling catastrophically—thanks to its efforts at underground transportation—haggling with autos is a nightmarish experience for commuters. Ever since the BBMP put a ceiling on the number of permits for auto drivers (86,000), there has been an influx of illegal auto drivers. “Since the ceiling is for the urban Bengaluru area, drivers register themselves in rural Bengaluru (outside the BBMP area) and then operate in the periphery of the city,” Harish explains.
As a result, drivers have to bribe traffic authorities to ply in certain areas, thereby forcing commuters to pay one-and-a-half times or twice the standard fare. Then there’s the woe of repaying loans taken to buy the three-wheeled vehicle with interest rates as high as 42 percent, if procured from private money lenders. “An auto driver needs to earn Rs.700 a day at least to fulfill his financial obligations and feed his family,” says Harish. The cost of a single auto is about Rs.1.7 lakh, but drivers get funded only up to 70 percent of that amount. “In areas like the IT belt, auto drivers charge extra, as they feel that people there earn a lot,” says Harish.
Obtaining funding hasn’t been a cakewalk for this gritty entrepreneur, either. She faced considerable roadblocks while trying to convince banks to grant her a loan. “[Banks] have a stigma against auto drivers,” she quips. However, unwavering in her goal to service at least 50 percent of her clientele, Harish has managed to attract the attention of venture capitalists. Her angel investor also happens to be her IIM-B professor (Harish had pursued a course in entrepreneurship at IIM-B right after her first take had collapsed in 2007). The professor is helping her set the right tone with VCs. “We are on the verge of signing a deal,” she says. “This will help me increase my fleet of autos to a critical mass of 500.”
Sourcing potential drivers shouldn’t be a problem, considering Harish already has a list of 1,000-plus applicants. Once that’s done, she plans to look at innovative revenue-generating ideas through Easy Auto, such as retailing items like mineral water and newspapers. Besides, her current advertising clientele has been handpicked to comprise only brands that are relevant
to a middle income population—the bulk of her commuters.
Surprisingly, what has not been a challenge is operating this business as a woman. “Auto drivers have been very curious about my guts,” says Harish. “It’s been easy, being a woman!”
©Entrepreneur March 2010
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