Ride Sharing Goes Hyperlocal with Jugnoo

Serial entrepreneur Samar Singla was about to begin his PhD in applied physics at Stanford University when he deliberately chose to leave the heart of the technology universe — Silicon Valley — to launch his ventures back home in India.

He moved to Chandigarh, a city known more for its Le Corbusier architecture than for its entrepreneurial infrastructure. And that suits Singla just fine. “San Francisco was crazy. There’s so much noise and distraction,” he says.

His latest startup, auto rickshaw business Jugnoo, seeks the same haven from crowded entrepreneurial scenes and business markets as Singla himself. Launched in 2014, Jugnoo harnesses India’s ubiquitous yet underutilized auto rickshaw capacity to provide commuters with rides at around a third of the price of car-based options. Singla has targeted tier-two and tier-three cities that the well-funded transportation disrupters like San Francisco-based Uber and Bengaluru-based Ola Cabs largely neglect. “They’re focused on the top 20 percent of the demographic,” says Singla, a native of Punjab. “We’re focused on the bottom 80 percent.”

The Right Motivation

Traditionally, auto rickshaw drivers got six, maybe seven, customers per day. “They were only busy 30 percent of the time,” explains Singla. It was hardly an efficient process for driver or passenger. Singla wanted to use digital technology to upgrade the experience for both.

Singla wasn’t worried about attracting customers. India’s consumers are quick to switch platforms for the right price, he says. But he did have to win over the drivers. Auto rickshaw operators were accustomed to haggling to get the best fares for the few rides they provided. When Singla tried to sell them on his standardized pricing platform—one rate, rain or shine—they were wary, even as he explained that the system could yield more money. “Changing behavior is always difficult,” Singla says. He began with the few drivers willing to give Jugnoo a chance. Once the early adopters saw their earnings increase, more joined. “If you provide value to people, they will eventually understand,” says Singla. “It takes time and effort, but it works.”

From the start, Singla and co-founder Chinmay Agarwal (now chief technology officer of Jugnoo) envisioned creating an on-demand delivery service for businesses using auto rickshaws rather than simply focusing on the traditional consumer business. But they knew they would need to grow the driver network until they had enough extra capacity to add deliveries to the mix to avoid alienating drivers. Customers are local businesses like restaurants, retailers, or print shops for whom the logistics of delivery were onerous and something they were eager to offload.

Jugnoo’s network of auto rickshaws completes 30,000 rides and 5,000 deliveries daily

A Hyperlocal Approach

Singla calls the Jugnoo model “hyperlocal commerce,” which focuses on the value of proximity and instant gratification. “Getting the product right away is the biggest priority—and customers are willing to pay a few rupees more for that,” Singla says.

Jugnoo reports that it now completes 30,000 rides and 5,000 deliveries a day. Still, Singla has not been able to completely avoid the long reach of Uber and Ola. “They are willing to burn money on taxis, which creates artificial pricing pressure on us,” Singla says, “so our margins aren’t as decent as we’d like.”

But Singla is having the last laugh. Business customers are willing to pay a premium for the convenience and reliability Jugnoo provides. While not a loss leader, the less lucrative ride business makes the more profitable delivery division possible.

An app to ride: (l to r) Jugnoo co-founders Isha Singla and Chinmay Agarwal.

The Benefits of Being an Outsider

Drivers initially resisted Jugnoo’s fixed pricing—until they saw that they could make more money.

And Singla, whose other startups have been based on Jugnoo-like platforms for moving companies and fitness trainers, and on applying technology to the poultry feed business, still has no regrets about locating in Chandigarh. “We’d much rather be here quietly doing our thing and building our technology.”

Thus far, Singla has found much of the talent he’s needed to staff his 200-person company locally with satellite offices in the United States, Mexico, Romania, Hungary, and the Philippines. “If we ever can’t find the talent we need, we’ll move. But that hasn’t happened yet,” he says. “And being in Chandigarh keeps me sane.”

This story originally appeared on the Digitalist.