Survival and resilience.
From the dotcom bust of the late 1990s to the global economic recession of 2008, no crisis has perhaps seen a stronger emphasis from companies across sectors, irrespective of their age or size, on these two words. Such has been the impact of the Covid-19 pandemic that even the icons of aggression in the corporate world — the startups — have been forced to take their eyes off the sales charts to focus on survival, at least for the time being.
Over the last one month or so, as venture capitalists huddled together to come up with the cardinal ‘do’s and don’ts’ for the businesses they are invested in, many startups were forced to trim their workforce and cut salaries. Worse, according to sources, the possibility of shutdowns is looming large if the virus continues to spread.
But urban-mobility startup Bounce, despite bearing the brunt of the lockdown, has been keeping itself busy and is confident of emerging out of this rough phase relatively unscathed.
“We have projects to keep ourselves busy for the next few months. It may not be a black-and-white situation, but will be more of grey, wherein there will be a scaled-down version of everything,” Vivekananda Hallekere, co-founder and CEO, Bounce, tells ET Prime.
Ever since the beginning of the countrywide lockdown, the company’s services have been suspended and Bounce expects sluggishness to continue for another six months. However, the Bengaluru-based startup is not worried as it has sufficient funds to see through the crisis.
On a full tank
Having raised USD105 million in January 2020, the six-year-old startup, which is the most-funded in the two-wheeler urban-mobility segment, is sitting on cash reserves of around USD90 million-USD92 million (around INR700 crore at the current exchange rate). Bounce has scooped up USD250 million in funding from marquee investors such as Accel Partners, Sequoia Capital, B Capital Group, and Falcon Edge among others.
This, according to Hallekere, is sufficient to see the company through the next 30-32 months. However, he has had to take a few tough decisions. Bounce has significantly brought down its employee count (20% as per reports) and also cut down its burn rate from around USD7 million to USD2.6 million.
Hallekere says while pay cuts were in response to the pandemic, the layoffs enforced last month were part of a staggered move which was started in the last quarter to trim its workforce.
“We let go off people in our customer care, which was the second or third such round. We used to have around 150-plus people in the customer-support vertical where we have ramped up the self-serve component significantly,” Hallekere says, adding that the company has outsourced the job of building products around its carpool plans to a firm that supplies contractual manpower.
Betting on a bounce back
Bounce, which has more than 30,000 two-wheelers across Bengaluru and Hyderabad besides 25 smaller cities, was clocking about 1.5 lakh rides a day with Karnataka’s capital alone clocking 1.2 lakh rides. The company’s largest market, Bengaluru, accounts for the single-largest chunk of its fleet at 20,000 two-wheelers while Hyderabad has around 5,000.
Bounce expects the downtrend triggered by the pandemic to persist for another six months before the demand for its services recover. Hallekere attributes it to the inherent nature of the business model.
“Unlike a car-pooling service or a cab-hailing model, the user here is the rider himself,” Hallekere points out.
According to Ankit Acharya, senior manager-communications, the company’s fleets were sanitised daily even before the blanket lockdown was implemented. “During the partial lockdown, we started sanitising our bikes every hour or so as we started operating a limited fleet,” says Acharya.
Last week, Bounce launched long-term subscription plans starting from INR899 for employees in companies that offer essential services. However, the planned launch of a car-pooling service in Pune has been deferred on account of the lockdown. Hallekere says, “This is a bad time to launch a car-pooling service. We believe there will be some reluctance on the part of users to pool car rides once the lockdown lifts. We will wait and watch until things get normal. Everything is ready,” he adds.
The model is similar to Quick Ride’s, but with more social layers wherein users will be able to travel with co-passengers who share similar interests.
The electric route to profitability
Bounce has also been working on its own electric bike, currently codenamed N3310. The company has been doing crash and tamper-proof testing of the N3310 with the aim of launching it once the supply chains are restored. According to Hallekere, the N3310 can cover up to 63km on a single charge.
“Fuel bills, our biggest cost, will go down significantly as we introduce more EVs in our fleet. We will aggressively go after it as part of our roadmap to profitability,” he adds.
The electric bike has been built to make it steal-and-tamper proof, says Hallekere. For example, it is sturdy enough to survive a fall from a height to 15-20 feet without any significant damage. Earlier scheduled for an April launch, it has now been deferred by a few more months.
Thinking on its feet
A quick solution that the company has developed during the lockdown period is a mechanism to operate elevators through bluetooth-enabled smartphones, doing away with the need to physically touch buttons. This reduces the chances of virus spread.
“We have already deployed this solution in our office. We are trying to partner with lift manufacturers and maintenance players. It is a low-cost solution which can be done with small changes,” Hallekere says.
Since the idea came from one of the founders of Tiger Global and Tencent-backed MyGate, Bounce is also trying to explore the possibility of a collaboration under which the security and community-management platform can offer it as one of the solutions for gated communities and apartments in its service network.
Grocery delivery
Bounce is also planning a foray into grocery delivery, a segment which has seen the entry of a number of startups since the onset of the blanket lockdown — including Meesho, BharatPe, DealShare, Box8, Snapdeal, JioMart, NoBroker, and ShopClues — ever since the demand for essential services started rocketing.
Bounce boasts of more than 4,000 kirana stores in its network. Depending on the city, these stores either function as a pick-up and drop-off point for the company’s two-wheelers or as battery-swapping stations for its EVs. In some cases, they double up as both. For example, in Bengaluru, they serve only as battery charging and swapping points while in a smaller city like Hassan where Bounce has an all-EV fleet, kirana stores double up as both.
“We have our own network of mom-and-pop stores. We are [now] trying to take grocery orders from consumers and deliver the same,” says Hallekere, adding that the service is expected to be launched soon and that the company will continue to scale the kirana model into smaller cities.
The road ahead
With the lockdown now extended up to the first week of May (speculation is that it may be pushed further), operators in urban transport and mobility space such as Ola, Uber, Bounce, Drivezy, Vogo, and Rapido have found a way to go semi-operational by collaborating with essential services providers in deliveries and government bodies for transporting frontline medical staff.
Bounce has also partnered with delivery companies such as Zomato and Swiggy apart from firms like DriveU under which the company has offered its under-utilised fleet to enable delivery of essential services. To be sure, similar collaborations have been struck between companies such as BigBasket, Flipkart, Uber, and Rapido.
“DriveU had people, but did not have bikes. Hence we partnered so that they too can continue to work,” Hallekere adds.
According to Acharya, the company is now working with 15 startups that operate in different spheres of the essential services delivery segment including the likes of Zomato, Swiggy, Cure.Fit, and DriveU to name a few, thereby opening a new revenue stream. Depending on the nature of the requirement, Bounce offers its fleet, manpower, and in some cases both.
“Likewise, frontline workers in the medical sector, doctors with the special Covid-19 passes to be more specific, were able to use our bikes even during the initial weeks of the blanket lockdown. We accord an exception to them by allowing access to our bikes,” Acharya says.
In the beginning of April, Hallekere, along with 70 other tech entrepreneurs including Mekin Maheshwari (founder of Udhyam.org and the former chief people officer at Flipkart) and Abhiraj Bahl (founder of UrbanClap which was later renamed as Urban Company), was responsible for starting an initiative dubbed ‘Startups vs. Covid-19’ wherein companies under its umbrella could pool their resources and help each other.
“What started as a small project has now expanded to about 1,000 entrepreneurs with the likes of Sachin Bansal and Ratan Tata jumping onto the bandwagon,” Acharya adds.
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