Global Startup Stories: ZoomCar
I did something pretty crazy. My co-founder and I, both Americans, gave up full scholarships at USC's Marshall School of Business and at Cambridge University's Judge School of Business, and moved to Bangalore to start India's first car-sharing company, ZoomCar.
Literally hundreds of people told me that this would never work. Some of the nay-sayers really stand out in my mind. Four years ago, I was a first-year student at Harvard Law School, and I described my idea to Professor Alford, the Vice-Dean for International Legal Studies. One objection he brought up is that car-ownership is a huge status symbol in India - so people would prefer to own a car rather than share one.
I thought I was pretty clever when I replied: "Oh come on Professor. It is nothing compared to here in the US. Zipcar is doing great, even though no country in the world has a stronger car culture than America. Have you ever tried to take a date on the bus? Because let me tell you Professor, it does not work!"
Professor Alford is a genuine scholar, so he looked me in the eye and said "Well David, you realize you have to isolate your variables, right? It may not have been the bus." Meaning that the important variable in my failed dates was me. It was the most educated insult I have ever received - as well as a valuable lesson in experiment methodology.
Nevertheless, I was confident that car-sharing would be a tremendous success in India. The incredible density of Indian cities is perfect for car-sharing because each car has a huge population within a small radius of its location and because owning a car here is expensive and inconvenient. For the vast majority of people in this country, a car is completely out of reach. By offering cars by the hour or by the day, car-sharing democratizes transportation by extending the benefits of car ownership down the income ladder. At the same time, by providing a convenient alternative to car ownership, car-sharing reduces the number of cars on the road - desperately needed in Indian cities where traffic and pollution are already at catastrophic levels.
Most of our members get around day-to-day with a two-wheeler (motorcycle or scooter), metro, employer transport (shuttles and buses), or "auto-rickshaws" (3-wheeled kerosene-powered death traps: my own primary method of transportation in India). Cars are only required a few times a month for errands, family visiting from out of town, longer trips, and of course dates. Other customers own a small car, but want a larger more rugged vehicle for a trip to the jungle or the mountains, or want a nicer car to celebrate a special occasion. The ability to pick the right car for the right trip is particularly important as electric cars develop further in India. ZoomCar was actually the first car rental company in the country to offer a plug-in Electric Vehicle, the Mahindra REVA E2O. We've also started a joint marketing partnership with Uber, #RideSmartBLR, to educate Bangaloreans on the many smart transportation options available other than owning a car. The campaign has been joined by The Ashoka Foundation, Grallo (a local "journey-sharing" start-up), and Campus Diaries.
What really differentiates ZoomCar is that we are the only company in the entire country that focuses exclusively on self-drive. India's largest domestic car-rental company, Carzonrent, is ~95% chauffer-drive; and India's largest foreign car-rental company, Avis India, is ~98% chauffer-drive.
The macroeconomic situation in India is going to spell the end of the chauffer-dominated model in the next few years. Imported cars in India face tariffs over 100%, and until recently the domestic Indian automotive industry was all but non-existent. This meant that every car on the road was extremely expensive. With driver wages so low, the percentage cost increase of adding a chauffeur to each trip was negligible. Today, more and more (and better and better) cars are produced in India - both by foreign producers like Ford and Honda and domestic producers like Mahindra and Tata. At the same time, urban wages are rising rapidly. This compounded effect of decreasing vehicle costs and increasing labour costs means that percentage cost increase of adding a driver to each trip is going up exponentially.
Cost is not the only reason for this shift towards self-drive. A taste for privacy and independence is growing, even among people who can easily afford a chauffeur. The three big luxury car brands in India (Mercedes, BMW, and Audi) have shifted their focus in this country from the back seat to the driver's seat - making vehicles that are more exhilarating to drive yourself.
ZoomCar is seeing this increasing shift towards self-drive. In the 16 months since we launched in February 2013, we have grown from seven vehicles at one small pick-up point in a corner of Bangalore to having about 200 vehicles at over 25 locations across the city. Despite that extremely rapid growth, we have had to turn away customers every single week since we launched because demand has exceeded supply - that's 72 weeks in a row! We recently launched in our second city, Pune, and demand there has been similarly overwhelming.
I've been quite lucky to have wonderful mentors throughout my life, and ZoomCar would never have gotten off the ground if it weren't for them. I took four classes with the Professor who delivered that brutal take-down about my dating abilities. And three years after that conversation, he ended up becoming a small investor in ZoomCar! He was joined by a mentor of mine from Wharton and by another mentor from Cambridge, the Director of the Centre for Entrepreneurial Studies. One of our largest investors, Lady Barbara Judge, has grown to become both a close mentor and a good friend. But of course, mentorship isn't always tied to investment - I meet my Sunday school teacher for lunch every time I go home, and my high-school librarian likes just about every single post on ZoomCar's Facebook wall. And that only scratches the surface of the many older people who have taken their time to help me at every stage of my life.
Making the transition from the US and UK to India would not have been successful if I hadn't found amazing mentors here in Bangalore as well! I found some of those mentors in the Microsoft Ventures Accelerator Program, who have provided guidance on technology, hiring, and fundraising. That guidance is really helping us take ZoomCar to the next level, because even though ZoomCar has a huge head start in this industry, constant technology innovation is the only way to maintain that lead. ZoomCar recently became the first car-rental company in India to offer a mobile app, and we have many more improvements in our product pipeline.
The Microsoft Accelerator has connected us with a network of entrepreneurs and mentors in Bangalore that will remain valuable friends for as long as I am in India - and hopefully longer.