Imagine being a mother of two young kids, taking a bus from Bengaluru to Chennai, one of the busiest inter-state routes in India.

The seats are smelly. There’s an old film playing on a ragtag TV. The brakes barely work. Every turn makes you a little queasy, a little unsure of whether you’ll reach your destination safely. 

Even though ~120 million people in India are expected to travel by bus every year by 2026, the quality and comfort of bus rides haven’t kept pace with the growth and, in some cases, have worsened.

Now, imagine you’re on another bus on the same route.

You can track your bus live on an app and connect with the Bus Captain inside the bus. In case of any changes in your schedule, you can easily change your boarding location from your app, and the bus knows the new place where to expect you. The seats are comfortable and clean. The braking system is gentle, and there’s a washroom inside! You and your kids can enjoy the journey and arrive at your destination in high spirits.

The second bus is a ‘SmartBus’ by IntrCity, a Blume Fund I portfolio company.

When thinking about IntrCity, a recent quote from Wim Wenders’ highly acclaimed film Perfect Days comes to mind.

The world is made up of many worlds. Some are connected, some are not.

In India, a country with a vast and diverse landscape, this quote rings especially true.

For years, many worlds in India remained disconnected due to poor infrastructure. IntrCity is on a mission to change this, creating a modern, tech-enabled bus fleet buoyed by the surge in road infrastructure and bridging the gaps between these 'worlds. '

The Noida-based company has raised $35 M from Blume Ventures, Mirabilis Investment Trust, Omidyar Network, Helion Venture Partners, Entrust Family Office, Ujamaa Ventures, and Samsung. IntrCity SmartBus is India’s largest inter-city bus brand and serves over 300,000 passengers monthly on 30+ routes across 16 states.

They’ve created a new category of interstate travel, a far cry from when it was impossible to know if you’d get to your destination in a bus without a scratch.

But buses aren’t how they started.

The Journey Within: From RailYatri to IntrCity

Before Kapil Raizada and Manish Rathi, co-founders of IntrCity, made bus travel stress-free, they were busy providing accurate information to customers frustrated with the rail booking experience in 2014.

They recognized the untapped potential of traveler data, with over 40 million Indians embarking on long-distance journeys daily.

Manish: “We believed we could create a business, even if we could capture a small fraction of those 40 million on our platform.”

They launched RailYatri, and the platform gained early traction. Users asked questions about train travel, such as schedule, station stops, journey time, etc., which RaiYatri’s impressive real-time data-fetching APIs answered.

Manish: “We used data to solve many user problems. Being transparent with data builds trust internally and externally.”

A quick sidebar: After this early brush, data became an integral part of their cultural fabric, which came in handy when they launched IntrCity. Now, back to RailYatri.

After early growth, Manish and Kapil found it difficult to monetize the platform. While RailYatri provided a truckload of meaningful travel data, neither travelers nor businesses wanted to pay for it.

As Manish explains, one key reason is that the data didn’t improve the traveler experience.

Manish: “We observed that over a million people went back home because their train tickets didn’t get confirmed. This was beyond our control. Secondly, the number of trains hasn't kept up with population growth or travel demand. So there was no customer experience value-add that we could do.”

Arpit Agarwal, Partner at Blume Ventures, mentioned how difficult it was to run the operations for RailYatri and its real-time location products as the Indian Railway Catering and Tourism Corporation (IRCTC) decreed that it would be the sole provider of mapping railway data in the public domain. 

At the same time, growth was happening in an adjacent space.

Manish: “The Government doubled down on encouraging shared mobility via a vastly improved road infrastructure.”

Switching to buses felt like a natural extension. In 2017, the RailYatri team integrated bus APIs into their platform.

Manish: “If a traveller’s train journey wasn’t confirmed, we sent a nudge to book a bus ticket. Buses are seen as the poorer cousins of trains. We believed we had an opportunity to change that.”

This time, they leveraged data to build a centralized system like RailYatri to connect long-distance buses and craft a standardized travel experience.

Arpit recalls, “When they presented to the board that they were going the bus route, we unanimously agreed. The only criteria and caveat was that we had to do full-stack. Ops, tech, customer experience; everything.

By 2019, the full-stack IntrCity experience was taking shape with its app and ‘SmartBuses.’ The first SmartBus was launched on the Delhi-Lucknow-Delhi route in early 2019.

It’s important to note that RailYatri still serves lakhs of customers daily.

Here’s what Ashish Fafadia, Partner at Blume Ventures, says about the transition:

Ashish: "The RailYatri to IntrCity journey is about organizing the unorganized sector. The bus operators operate in fragmented pools. A few dominate specific routes and areas, but it is mostly an elongated long-tail, who don’t have any data on customer behavior. ”

“IntrCity had data and insights on traveler behavior on the back of hundreds of thousands of people logging into the app. There was an opportunity to come in, put the customer at the center and use data to build a vastly better customer experience.”

What makes a bus smart?

Manish: “Introducing a washroom inside the bus was a game changer.”

Even before going to the sanitary side of things, Manish reminded us that the bus business in India is at least two to three generations old. Bus operators run a fleet of buses with limited tech and consumer knowledge.

The biggest job-to-be-done for the IntrCity team was to make buses a viable alternative to trains on long routes.

This task is difficult because long-haul bus journeys have many friction points, creating discomfort. Will my bus arrive on time? Will they stop for refreshments? What if the bus is delayed?

IntrCity used its data-first DNA to address this.

The first step was to develop an app that accurately tells customers the bus location, eliminating guesswork.

The second was to allow flexible pick-up and boarding points. As cities expand, one of the biggest advantages of bus travel is the proximity to a commuter’s home/drop-off location.

IntrCity elevated the customer experience several notches by taking a leaf out of the hospitality business’s playbook. They pioneered the concept of a ‘bus captain,’ similar to a flight steward, who would oversee the cabin experience. Then, there were quality-of-life improvements, such as digital luggage tags, which reduced the odds of a traveler losing their bags. They also juiced their resources well, converting their city offices into ‘lounges’ for passengers at night.

However, there are also a variety of under-the-hood elements that make a bus smart.

Manish: We call them SmartBuses because the buses are actually smart. They feed data to our cloud 24/7. If we see a bus getting unusually delayed over a few instances, we can identify patterns almost immediately and change our routes and timings accordingly. 

There’s also a sense of standardization that tech enables. Be it from Delhi-Lucknow or Chennai-Bengaluru, customers enjoy a sense of familiarity and comfort that keeps them coming to us.

The IntrCity team observed that customers chose them for the superior hospitality and seamless tech, which were the centerpiece of the IntrCity customer experience despite higher prices.

But that’s just one side of the story.

Bus, Bohot Ho Gaya

Bus operators are crucial to understanding the IntrCity story.

IntrCity doesn’t own the buses it operates. Instead, the buses belong to bus operators. IntrCity’s business model is to run a 'highly managed marketplace' matching demand (customers) with the suppliers (bus operators).

IntrCity enters into an agreement to operate and refurbish buses to match their standards and protocols in most cases. The bus operators and IntrCity split the revenue from ticket sales.

Why would bus operators want to join hands with a tech company instead of going solo?

Manish: “The key insight is that bus operators are not in the consumer business; they are in the asset business. That’s what we tell our partners. You're in the asset business, and we'll help you grow your assets. We'll reduce your risk of not paying off the EMI you took to buy the bus. Our value proposition is clear: You grow your assets, and we'll handle the revenue.

Initially, there were concerns, but now people are ready to say, ‘Do you need more buses? Let me know, I will add more buses to the SmartBus fleet.’ That’s the extent of the shift in their perspective.

Secondly, the technology and the ‘changing customer’ are not their thing. Customers are tech-savvy and demand the transparency and hospitality they see in other transport modes. As asset owners, operators struggle with the practices, policies, and technology.

When they find a partner like IntrCity, who does all of that, this is one less worry. That's how they see us.”

Vikram Gawande, from Blume Ventures’ growth investment team, adds, “Bus operators have immense trust in the IntrCity team as they can recoup their investments in the asset (bus) within three years and enjoy healthy profits after that.”

The COVID Factor 

One can only imagine how difficult it must have been for a transport and mobility company during national lockdowns. 

Manish says that while business was tough, it would have been at least 10X worse if they didn’t have an asset-light model. Their business model allowed them to keep afloat during COVID and use this crisis as an opportunity to double down on their product.

Manish: “I think we grew stronger with each COVID wave, building something new in our product, as we were convinced that this phase will pass.”

During this time, they also shifted a large chunk of their bookings to their website/app, improving their unit economics.

Manish: “As online consumption patterns accelerated, we doubled down on our website, and now 30% of our ticket sales come from there. Compared to that, native airline and bus service websites typically generate only 10-15% of their ticket sales.

While IntrCity faced many stressful moments during COVID, they came out stronger.

Inside IntrCity: The Road Ahead

Manish and Kapil have created a data-driven company culture, and their future initiatives are based on this DNA.

Manish: “We are a very measurement-driven organization because that's what helps us provide the best. Our success comes from measuring things that matter and a culture of ensuring things gets done.”

Narayana Murthy said, “We believe people, but data is what we look at. This is 100% true for IntrCity.”

Ashish talks about another side of IntrCity’s culture - grit!

Ashish: “It has been an uphill journey for them, but they've managed by being super gritty and obsessing about unit economics. They are not just looking at the macro business details but going deep into every transaction and every experience. They have been super frugal, open to changes and evolution, and possess loads of guts.

They have managed to put their head down and just focus on execution, converting IntrCity to a profitable enterprise, which is a rare breed in the Indian digital ecosystem.

Arpit adds, “Among all the amazing things they’ve done, Kapil and Manish should take credit for having the heart to do the tough things. Learning and perfecting.

IntrCity's next milestone is a public listing. The company plans to list in the next 12-24 months and grow its business in the public market.

The journey has only begun, though. Vikram suggests there is enough scope for expansion, with upwards of 90% market share and 95% total operable routes up for grabs.

In a short but significant run, IntrCity has proven to be a shining example of a company succeeding by prioritizing customers and using technology to solve real-world problems. As they grow and expand, their commitment to innovation, data-driven decision-making, and a culture of grit will serve them well.

The road is long and winding, but there’s always light at the end of the tunnel if you travel long enough. And IntrCity knows a thing or two about how to make long journeys comfortable.

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