ENTREPRENEURIAL JOURNEY OF
MR. PHANINDRA SAMA
Co-founder & CEO
Debesh Prasad Rath
PhanindraSama is the co-founder and CEO of redBus. redBus is India’s
largest bus ticketing company and a Forbes Top 5 Startup in 2010.
PhanindraSama graduated from BITSand studied electronics because he always wanted to be an
electronics engineer. He then got a campus placement with ST Microelectronics. He worked there
from May 2002 through April 2004. While he was with ST, he worked with FGPAs. The job there did
not satisfy him because it was not an aggressive company but employee friendly with very few
He then decided to apply to Texas Instruments in Bangalore. He found the job interesting and
fascinating and did very well there.
The moment when the idea struck:
One holiday in 2005 he planned a trip home to see his parents .When he went to his regular travel
agent to get a bus ticket, he told him that he did not have a seat on the bus and recommended him to
try another travel agent.
The first question that came to his mind was, “Why does this travel agent not have a seat when
another travel agent has a seat?” he went to the other travel agent and he also told him that he did
not have a seat. He gave him a few other travel agents, but overall, getting the names and numbers of
the other travel agents was difficult.
He went home and thought that there might be some travel agent who had a seat available still. That
actually pushed him to go ask a travel agent exactly how the business works to understand why he
could not get a seat.
Problems identified converted to Opportunity:
The biggest problem of all was that people could not buy return tickets. Every time he arranged a
bus to visit his parents he had to call them and have them book a return ticket so that he knew he
could get back.
Consumers in India face a lot of difficulties. He realized if there was one server that every bus
operator could arrange the business with, it would solve all of these problems. He asked the travel
agent if there was software that made all of the arrangements available, would he secure his tickets
through that software for a small charge? He said, “Absolutely!” Anything that could save him time
on all those telephone lines was welcome.
He realized that he had a good idea, so hedecided to ask bus operators if they would use that type of
system if he built it to which they too said yes. Both the travel agents and the bus operators were
willing to pay for the system. The benefits were clear to each side.
Development of Redbus:
Phanindra and his 6 other friends (co-founders) wanted to create something and none of them wanted
to leave their jobs. They decided to spend a weekend making a prototype and then put it on a server
and invite the world to contribute to it. They actually started RedBus with a „Hello World’ program.
After getting „Hello World‟ program working, they moved to the next step.
After the product was completed and ready, the logical process was to give the software to bus
operators which would grant them access to inventory. The next step would be to create software for
travel agents. The third step was to create a Web interface for consumers. By May 2006 they had the
prototype software ready for the bus operators and Phanindra started making rounds to the bus
operators and started selling the software while still having the job at TI.
He could not sell a single thing for two months after spending so much time building the product.
Some didn‟t have computers and those who did did not have internet access.
During that time The Indus Entrepreneurs had called for business plans under
theirEntrepreneurship Activation Program. That was the first time they launched that program, and
they called for people who had ideas and just needed mentoring. Redbus gained three mentors and
they helped them put it together.
The mentors realized a common problem that Redbus was facing. Customers don‟t like incremental
products. They need a solid reason to purchase the product because they are going to take a huge risk
by purchasing it.
Their mentors asked Phanindra and the other Co-founders to go visit bus operators and ask them
questions to understand what it was the bus operators really wanted. They found that the only thing
bus operators really wanted was increased sales. That meant they had to start selling to consumers
first, and once people started buying it, then when they sell it to the bus operators it would simply be
to streamline their supply chain.
The question how to sell with no inventory. If consumers came to the website and did not find an
entry, they would just leave. It seemed like a non-workable solution, but they followed their mentor‟s
advice to create a website and host it. They then went to the bus operators and got minimum
allocations for two weeks. It took them one month to go live on the site because no payment processor
gave them an account. They did not know how the bus industry worked and Redbus was a new
company, so they were worried about charge backs.
Marketing and early days Promotion:
When the founders were working, they would take a stroll after lunch. There used to be people
standing there trying to sell them credit cards. They decided to do the same thing. They created
distinct handout cards explaining that they sold bus tickets on the Internet and they asked everybody
to give them a chance and book with us one time. They had their people hand out those
advertisements at all of the tech spots in the city.
The result was that they had a very high hit rate. People would tell their friends all about it, and in a
way advertise for them. They would tell their friends they had met the founders. That is how the
first word of mouth spread started happening. RedBus then started doing something similar at the bus
stops. One of the co-founders ran into a journalist while distributing cards at the bus stop, and that
journalist was fascinated, so she wrote about them. That was the first time they had been written about
in the news. RedBus gained a lot of traction from that. It was a very consumer-friendly story and
people could relate to it. A lot of other journalist started to pick it up and they gained media coverage
because of it.
Initially, the founders had a lot of savings. They had no idea how much money it would require to
start a business. They started in August 2006 and they ran the company with our money. Later, when
RedBus was selected by TiE, they received a lot of interest from venture capitalists. There were a lot
more VCs in 2006 than there were ideas for them to fund.
They came up with an initial plan of 13 lakhs but that was a ridiculous number for a VC. So they went
back to their drawing boards and came up with a plan for 3 crores. A VC named Seed Fund agreed to
fund their business for 30% of the company share. The company was evaluated at 10 crores at that
time, six months into business.