UB-Idea Series: The Timeshare Taxi Fleet

One of the great worries as Indian cities grow and do so in an unplanned way is the access to the automobile increasingly for some and lack thereof for most others. And of course, the pollution and the traffic chaos go hand in hand without saying. Last week I had the misfortune of having to traverse some hundred kilometers in one day from one end of Hyderabad to the other and back and I did this in auto-rickshaw in part and in a car-taxi the rest. Hoping to get some respite from the dust and heat I decided to call the much hyped citi-cab service but somehow I ended up calling a competitor to citi-cab called Call Taxi. The cab arrived almost an hour after I called and to my chagrin, the car, a Maruti Omni, did not have air-conditioning and so for all practical purposes I traveled in an auto-rickshaw.

I know of many people in Hyderabad who own a car but seldom use it. Some of these car owners use the cars to drive their families around during the weekends but some others have the cars but cannot drive them. So they employ either a part-time or a full time driver who himself might live quite a distance from the car-owner's house and therefore will have to use his own transportation to get to the car-owner's house before getting behind the wheel. These drivers are not very reliable and their turnover is very high. Also these not so automobile-savvy car-owners have a hard time taking care of their cars. Between the unreliable drivers, car maintenance and the big monthly payment (EMI), these car-owners sometimes wish there was an easy way. And IMHO, there is one.

I call it the Timeshare Taxi Fleet (kinda sorta like the timeshare resort homes) that will be set up with a two-part tariff. The business idea basically is that many of these people who travel by auto-rickshaw a lot and sometimes use a car-taxi pay a membership fee to own a piece of a taxi fleet. The taxi fleet along with the drivers and all the scheduling etc is managed by the company that will run this business. When the members need to use the taxi they call a number and the taxi will be available for them within half-an-hour. Then the member will pay at a rate similar to what they would pay an auto-rickshaw but for more comfort like nice cars, well maintained interiors, air-conditioning to name a few. An online portal could be used to make any advance reservations including any rentals for multiple days. Between the convenience of having a nice car and a driver in minutes and the lack of all the pains associated with owning a car, this would be a great alternative to buying a car for most people.

Let me illustrate this idea with a few more details. Say a hundred people in Hyderabad are interested in this. Say we wanted to buy ten cars, we would use the membership fee (which is on an amortization schedule and if a member leaves, they will get the remaining value of their membership) and buy ten cars. But when someone actually uses the car, they will have to pay for the car per auto-rickshaw rates. For longer duration uses, there will be discounted half-day, day and weekly rates. These rates, however, will be higher than what you would pay for EMI and driver's services combined to discourage some people hogging the cars too much. There are a lot of logistics that will need to be worked out (including what if everyone wants a car at the same time or if nobody wants a car) but they are beyond the scope of this blog. GPRS, GPS, online portals, route and docking (where the cars will be parked when idle) optimization programs, cell phones etc are some of the few technologies that will be in use in the business model. Over time, many of those that currently have a car will most likely find this much more attractive than owning the car and will switch and there will be many copy-cat services. But the first one to move will have an enormous advantage.

If anyone ends up using this business idea, please let me know as courtesy. There is no obligation whatsoever beyond that. I will be gladly willing to develop the idea further for a business plan.

Indian Urbanization

Much has been said and written about the haphazard growth of the Indian cities. Some have argued, and in my opinion with a lot of sense, that brand new cities built from scratch is our only hope for sustainable urbanization. Apparently there are some active projects of brand new city building including the $1.07 Billion Nanocity in Haryana headed by the Hotmail Sabeer Bhatia and another project near Bellary in the state of Karnataka. Whatever the status of these projects and whether or not these actually happen it is inevitable that planned urbanization will happen in some shape or form soon. An interesting viewpoint is expressed in an article in the Mint magazine that basically amounts to saying that urbanization and not rural development is key to India's future.

Scalability and sustainability are important factors that the planners of these urban centers need to keep in mind. At the rate India is growing, what may be a good plan today may be woefully inadequate in a couple of years. It is also important to learn from the mistakes of other countries in the way they developed their cities. One of the major complaints that is heard in the United States is the urban decay that the so-called anti-suburbanists lament about. Bigger houses, urban sprawl, big box stores, and lack of proper mass transit etc are all results of decades of suburbanization that began with construction of highways and the American obsession with the automobile. And judging by the uncontrolled growth in India's cities so far, I can tell you that the same is happening in India - only with even less planning. And that is scary.

Energy, water, mass transit, recycling, and many other issues related to sustainable and environmentally friendly growth will offer many entrepreneurial opportunities. It is a good time for budding entrepreneurs to start thinking outside the box in anticipation of the needs of the new as well as old urban centers.

The Indian Conundrum

I was at the ISB Happy Hour today after the classes. This is an attempt at replicating some of the well known weekly get-togethers at the top US business schools to bring the faculty, students and alums together to foster more interaction at a social level. Although I was skeptical as to how much I could really mingle in an hour-and-a-half, "I got my money's worth" as I told someone while exiting the party an hour later. First, I had a nice Kingfisher, the desi beer which is fast replacing the "imports" in the US - Corona, Heineken, and Fosters as my favorite. Then I got a chance to speak with Prof. Waterman of Wharton for a bit and to top it all, Prof. Finn of Kellogg gave an emotional speech that was truly heartfelt. And as if this party was meant to keep giving, when I went to the rec center lawn later in the night, where this was still going on albeit with sparse left over janta, I ran into an alum that had just started working at the Acumen fund and a batch-mate that turned down an admission to the Kennedy School of Government because he would "have kids, grow old, and contribute in India than anywhere else."

The few minutes I spoke to Prof. Waterman were great because he talked about what he did when he was not teaching and among other things how he felt the ISB students held up against those at Wharton. He felt that the best at ISB were better than the best at Wharton. When asked if the same held true on the other end of the distribution, he quietly smiled as if in affirmation. Among the interesting things he works on is being an expert witness in anti-piracy trials of the recording and motion picture industries. He couldn't give us any more details because of confidentiality but he seemed to enjoy his consulting gigs quite a bit.

Then I moved on to listen to Dr. Mark Finn who was given the microphone to talk about his shopping experiences in Hyderabad. Although the premise for getting the mic was decidedly dumb, Dr. Finn took the chance to give back a sliver of gratitude that is no match for how much ISB students adore this guy. As if this was meant to be the night of reaffirmation of the decision I took to go to the ISB, Dr. Finn as well said something that amounted to the students at ISB being a cut above the students he taught at Kellogg. He said and I quote, "ISB students think big and dream big."

Talking of some of the very good professors that comprise the visiting faculty at ISB, it is hard to leave out Prof. Robert Stine that taught us the first half of the statistics class. I listened to Dr. Stine's interview on the ISB radio last night and some of the things he said got me thinking about how far India has come in the last few years and how far it promises to go in the next several years. The new economy versus the old has brought about its share of interesting conundrums but in the end the questions of sustainability and equity invariably come up.

Dr. Stine in his interview cited a couple of examples that illustrate this strange juxtaposition of the old and new economies. A few years ago, when the faculty accomodation was still in construction, Dr. Stine would travel each day to the school and on his way he had the pleasure of witnessing these paradoxes that modern India had thrown up. He saw fiber optic cable being laid along a community where people didn't have running water and another time he was bemused as the advertisement for Java programmers and a loaded cycle rickshaw being hauled by a scrawny guy appeared in the same frame. These pictures abound in India now - ask any visiting foreigner or just look around yourself. These pictures may be quite interesting now but the educated and the smart among us need to start thinking and think fast as to what these rapid changes in our society have in store for us.

I am yet to read Edward Luce's book (In Spite of the Gods: The Strange Rise of Modern India) but I assume that his book is full of such pictures as well. But to keep this change in our economy pointed upward it is absolutely important that this growth be inclusive. The undercurrents of communism and naxalism (the Maoist movement) are still very strong in India and a large scale social unrest led by these leftist entities looms large. There was an article in The Hindu last weekend that puts the possible sentiments behind such a potential unrest in perspective. It is time the like-minded among us start thinking of how to prevent a disaster of that kind and help effect a public policy change before it is too late. Did I mention the guy from the Acumen fund and the guy who gave up admission to the Kennedy School?