Most successful entrepreneurs have built busi­nesses not on ideas that sound useful to a majority but those that actually try to solve a problem—a real problem faced by people around us. redBus is just one such business that was started as a solution to a problem its founder personally faced, and went on to build a product that was never known to the Indian market. 

In the fall of 2005, when Phanindra Sama made plans to visit his family for Diwali, the unorganised bus operating system in the country played spoil­sport. He tried three travel agents to book a bus ticket from Bangalore, where he was working as a senior designer at microchip-maker Texas Instruments, to Hyderabad, where his family lived. Each one of them came back with the same response: “there are no bus seats available from Bangalore to Hyderabad.” 

At that time, there were about 30 buses that plyed on that route. Yet, Sama recalls he couldn’t manage to get a ticket. His plans ruined, the electronics engineer set out to understand how the bus operators' and travel agents' business worked. “I realised that each travel agent just called two to three bus operators to find a ticket, and gave up his search after that,” Sama says. Most travel  agents did not have the complete list of all the buses operating on a certain route and bus operators were not in touch with all the travel agents in the city. 

In Internet businesses, the winner takes all because of the large efficiencies of scale." - Phanindra Sama (@phanindrasama)

So, Sama came up with the idea of building a webpage which would list all bus operators on a cer­tain route along with the number of seats each bus operator offered. Using their online listings, travel agents could just log onto that system and see which bus had seats available and book tickets for their cli­ents, instead of calling several bus operators with no results. Though Sama saw business potential in his idea, when he pitched it to his two batchmates from BITS Pilani—Sudhakar Paspunuri and Charan Padmaraju who were working with IBM and Honeywell at the time—he definitely found a ready audience, but they weren't as enthused as him to take the entrepreneurial plunge. They wanted to thoroughly understand the potential of the market before doing so. After talking to several bus operators, consumers and VCs however, they were convinced of the novelty of an online bus ticketing service, and the impact it would have on that aspect of the transport business. In August 2006, the three quit their jobs to develop the first version of the website. “Our passion was to build something that didn’t exist. There was no system like this in India. In fact, if there had been one, we wouldn’t have left our jobs to do this,” Sama says. 

But, even though the website was in place, the rest didn’t quite work out as planned. When Sama went to these bus operators with their proposition of computeris­ing their bus ticketing services, he faced stiff resistance. The opera­tors weren’t interested in changing their decade-old system of book­ing tickets manually. “They told me that people wouldn’t buy bus tickets online and that you can only do that with plane tickets,” Sama recalls. They were comfort­able booking tickets the tradi­tional way and hesitant of going digital. “We were also too young to create an impression on people who were working in the business for 20-30 years,” Sama says. 

Baffled about what to do next, the trio sought refuge at TiE Ban­galore where their mentors advised them to go directly to their con­sumers who were actually facing the problem redBus was trying to solve, instead of bus operators who didn’t have any direct benefit from the service. Once consumers began flocking to use the website to check out bus routes and make reserva­tions, they would be able to prod the bus operators to come on board to sell bus tickets. 

Introducing a completely new product in a market may logically require huge budgets and a high-voltage marketing campaign but the redBus product was such a basic need in the market that easy, low-cost marketing methods (distributing pamphlets in buses and a few online ads) was enough to get people to visit the website. 

As a stream of users slowly trickled in, Sama and friends went back to bus operators armed with a compelling argument—that as their buses only ran with 80 per cent occupancy, they should allow them to sell the remaining 20 per cent online. The bus oper­ators agreed, and the team at redBus hasn’t looked back since. 

Last year was a game changer for redBus as in July 2012 the company breached the milestone of having sold one crore bus tickets online. Its revenues more than doubled from Rs100 crore in 2011 to Rs300 crore, and the team size grew from 200 to about 480 people. 

Sama confesses that most of their business has grown through simple word-of-mouth, because the product and its features speak for themselves. Earlier, people had to rely on the whims of a few travel agents to book bus tickets, and to be prepared to shell out different amounts each time. With redBus, they not only got access to a stan­dardised price, they could also book return tickets in advance. The redBus platform enabled tick­ets to be bought online, over the phone or from their 30,000-plus brick-and-mortar outlets. 

Much like booking movie or plane tickets, redBus allowed cus­tomers to view the layout of the bus to select their preferred seat. The service also forced bus opera­tors to share the exact time of departure and arrivals. Before that, bus operators would at best give indicative timings. 

Confident as he is about his product's inherent value, Sama says he isn't bothered about the fledgling competition in the busi­ness. Clearly, he knows redBus has managed to negotiate for itself a formidable first mover advantage of creating a unique, high-demand product. In fact, since redBus launched, several copycat businesses have sprouted but they disappeared as quickly. Take, for example, Mum­bai-based online ticketing service Ticketvala.com which was acquired by Makemytrip, or Ticket­goose that has bus routes across India but strongly focuses on south India, or CustomerNeedz.com and TicketKaran—each of them are either too small or too restricted to a certain geography to be considered as possible competition for redBus. 

“In internet businesses, the winner takes all because of the large efficiencies of scale. There is only space for one market leader and that leader continues to grow at the cost of other companies,” Sama explains. Today, with almost 1,003 bus operators on board for over 10,000 bus routes across the country, Sama claims redBus has captured 65 per cent of the online bus ticketing market in India. But, it's in no hurry to diversify into other travel services. 

“In the next four years, we should be able to do a billion dollar turnover by just selling bus tickets in India,” Sama says. Tall order, that! But, judging by the exciting ride they've been on in the past few years, Sama & Co. certainly have a knack of achieving what others haven't even thought of, much less made possible.

In June 2013 redBus was acquired by the Ibibo Group, a subsidiary of South Africa-based media firm Naspers Ltd, for $135 million.