16 March, 2023
We all know just how nightmarish the office commute can be, particularly if you’re living in a major city like Mumbai, Bengaluru or Delhi-NCR. From dealing with endless traffic jams to long queues at railway or metro stations or even that last-minute dash to book a taxi on a ride-hailing app—the struggle is real.
For 32-year-old Jerin Venad and the three other co-founders—Rushabh Shah, Ankit Agrawal and Sankalp Kelshikar—of Mumbai-based bus service app, Cityflo, it wasn’t an eureka moment that led to them finding a solution for the everyday office commute. Rather, it was a long learning curve for the founders who, initially intended on offering an improved alternative to public transport and slowly realising that a significant chunk of their customer base (over 70 per cent) were actually car owners who didn’t mind paying a premium for a clean, comfortable ride.
Jerin Venad, Rushabh Shah, Ankit Agrawal and Sankalp Kelshikar were fresh out of engineering college (IIT-Bombay) and wanted to offer a new-age solution for commuters
According to Venad, personal cars typically ferry about 8-10 per cent of commuters in a city like Mumbai but occupy 75 per cent of road space. “We realised this is where our market was—someone who wanted to reclaim their commute time relaxing or catching up on work, instead of driving themselves,” says Venad.
“In hindsight, what we were doing was similar to what Starbucks did for coffee in India. Many people were willing to pay more for a nicer experience. We premiumised the commute experience for office-goers,” he says.
Today, the company, which launched operations in 2015, has collectively raised US$ 10 million in funding over three rounds, and is set to grow its trajectory in Mumbai, expanding into other cities like Hyderabad and potentially Delhi-NCR too. About 98 per cent of the business is Mumbai-based where the company services roughly 12,000 passengers a day. Venad believes that going forward, the potential is immense.
Edited excerpts from a chat with Venad:
"A bus service made the most sense, as you have the benefit of shared mobility and it is, technically, the ultimate carpool machine," says Venad
CityFlo has partnered with a Pune-based specialty vehicle design company, Pinnacle, to aesthetically redesign their bus fleet to make the experience more premium
My co-founders and I were fresh out of engineering college (IIT-Bombay) and wanted to offer a new-age solution for commuters. A bus service made the most sense, as you have the benefit of shared mobility and it is, technically, the ultimate carpool machine. We initially pooled in about ₹10 lakh as seed money to get the business off the ground.
In terms of operations, we map out routes connecting residential and business hubs in the city. For example, Thane to Bandra-Kurla Complex or Andheri to Lower Parel with no stops in between once a bus covers a specific residential or business cluster. It’s closer to an airline model, in that sense. We have a fleet of Bharat Benz buses that offer a smooth, comfortable ride. We’ve partnered with a Pune-based specialty vehicle design company, Pinnacle, to aesthetically redesign our bus fleet to make the experience more premium.
From 7 am to 10 am, and 4.30 pm to 9 pm, there is a Cityflo bus plying every 15 minutes. Currently, we have about 20-odd routes in Mumbai and we’re also running a small pilot project in Hyderabad, to test the market there.
In our earlier avatar, we had priced ourselves on the lower end, at about ₹70 per ride. We soon realised that it was close to impossible to become profitable and had to scale down our operations. That’s when we began talking to our customers and realised that they were, in fact, willing to pay a premium for a high-quality bus ride. So we increased the rate to an average of ₹200 per ride and improved the overall experience.
“A PRODUCT LIKE CITYFLO IS NOT MEANT TO BE EXCITING OR DYNAMIC. IT’S MEANT TO BE RELIABLE”Jerin Venad
There were several learnings for us here and in many ways, we were naive about scaling up in an industry which has historically been very tough to grow.
Today, we are operationally profitable and will be profitable on a company level in two-three quarters. About 60 per cent of our business is now subscription-based. We’ve tried keeping the model very flexible for commuters and on an average, a subscription would cost around ₹ 7,500 to ₹8,000 per month.
Cityflo owns the app and everything that the customer pays comes in as revenues. We are not an aggregator but a bus service company. We use the capital to build tech, marketing and grow the business. For instance, the capital needed to buy the buses is done by our bus owner-partners. While some own and operate buses themselves, others give it to a third-party firm or company to operate. We share a fixed percentage of returns with them, irrespective of whether the buses are running full or not. We have about 220 buses in our fleet in total and a very small percentage is owned by us.
"Cityflo is at the intersection of mobility and hospitality, so people are paying for the quality of time," says Venad
I wouldn’t call ourselves ‘disruptors’. Cityflo is at the intersection of mobility and hospitality, so people are paying for the quality of time. A product like Cityflo is not meant to be exciting or dynamic. It’s meant to be reliable. Like your comfort food, dal chawal, which you would crave for regularly. Even if you have a flexible day routine, you are still trying to find your 9-to-5 in that. That’s what Cityflo is doing.
We tried solving several pain points. For instance, giving users a hassle-free commute, ensuring the drivers are always well-groomed and a focus on cleanliness. Our head of cleaning was formerly with Qatar Airways. We believe there is no reason why the interiors of a bus shouldn’t look and be clean like an airplane.
Primarily, it’s been important for us to deliver consistency and a reliable service. You have to remember that car owners already have a good option to commute, so what makes us different or better? Also, this is a capital-intensive business and scaling up in this particular industry has been challenging.
CityFlo is looking to grow almost ten-fold in the next three years
"We believe there is no reason why the interiors of a bus shouldn’t look and be clean like an airplane," says Venad
Our permits are different from the public transport permits that say, BEST uses. We require an employee transportation permit to operate. If you go to see, no one has a problem with people using buses over cars; it’s ultimately helping reduce congestion on the roads. In fact, we even use the BEST bus depots during the day to park our buses when they are idle. This becomes an additional revenue stream for them.
I’d say we were fortunate to raise the first round of funding very soon into our launch, about ₹4 crore within two months of operations. The year 2015 was an exuberant time in the start-up funding cycle and that gave us a much-needed boost. We’ve raised a total of US$ 10 million so far. We are currently at revenues of ₹50-55 crore and will use funds purely to grow and scale up. We are looking at another round of funding as well.
We are looking to grow almost ten-fold in the next three years. I think we’re ready for the challenge of the next phase of growth. When we look at a city like Mumbai, we see the opportunity for ferrying 1 lakh passengers a day. BKC itself employs 1.5 lakh people and we serve around 10 business hubs including BKC, Worli, Lower Parel, Colaba and so forth. That’s almost 25 lakh people working in these hubs. Delhi-NCR is a massive opportunity too. We will use our learnings from Hyderabad to expand in the capital, probably over the next 12-28 months.