The redbus success story – How Struggle for Bus Ticket paved way for $100 Million Idea

Redbus.in is one of the most successful Indian startups which over the years has revolutionized the way people book bus tickets. And, it all began when the co-founder and CEO of Redbus Phanindra Sama could not get a bus to visit his home on a festival.

How the Redbus idea was born

The story goes back to 2005, when Phanindra was employed as a Sr. Designer with Texas instrument in Bangalore. He had planned to spend the festival of Diwali with his family in the city of Hyderabad, however, destiny had something else in store for him. Owing to the notorious Bangalore traffic, he could not reach the bus stand on time and he missed his bus. Frustrated and angry, he returned back to his place and spend the Diwali alone in his flat.

Although, he missed his bus, but as things would unfold, he thought of a life changing idea. So, after this he tried to gain information about how the procedure buying and selling works, and he was left with some incomplete facts. The lack of communication between the agents as well as the customers unsettled him to such as extent that he started thinking to find solution to this problem.

Phanindra realized that there were some major issues within the then existing bus model, and he thought of internet as the best solution for solving the issues associated with booking of bus tickets. He came up with an idea to put bus booking information on a platform where customers could access it hassle freely and book their seats easily. The idea to bring technology and bus ticket booking into a single window by giving an e-platform to the customers for buying tickets marked the beginning of a revolution called Redbus.

Turning the Redbus Idea into Reality and Struggles Encountered

Since Sama was could not proceed with the Redbus idea alone, he managed to convince his two friends Charan Padmaraju and Sudhakar Pasupunuri from Pilani to work on the idea with him. The initial phase leading to the starting of the Redbus was quite troublesome for all three of them. Initially, they needed to come out of their comfort zone which was their biggest challenge. Each of them had a decent and well-paid jobs, which they were required to quit to devote their time in laying foundation for the Redbus.

For the initial 5 months they dedicated their heart and soul in creating the software called BOSS. The software would give bus operators the facility to manage their bus bookings while giving all three of them the status of the seats for each bus. However, something happened which gave all three of them a setback. None of the bus operators believed in their proposition and they refused to be a part of the online bus ticket booking model.

So, out of desperation the three of them went to the market themselves and started distributing their Redbus cards outside IT companies during the time of the lunch. And on 22nd August, 2006, they managed to succeeded in selling their first for Triputi to a woman who was employed with Infosys and they also managed in selling the remaining four tickets in next few days. This was the defining moment and from there on the idea picked up and there was no looking back since then.

Initial funding

Surprisingly, the first funding that Sama and his friends has asked for was INR 3 million. However, when one of the VC’s decided to spend some time discussing the Redbus proposition with them, he revised his plans and provided them with a funding of 30 Million INR that was ten times more that they had wished for. So, in the month of February 2007, they received their first ever funding which they were supposed to utilize over a period of three of years for expanding the business operation

Acquisition by Ibibo and associated controversies

Five years into the Redbus journey and the company had surpassed all the objectives and milestones that it had set. in 2013, Phanindra Sama was approached by the Ibibo for takeover of Redbus and was offered an attractive sum of $100 million. Taking into consideration the future prospects of the company and his own life, he along with his friends decided to sell his company. Following the takeover of Redbus by Ibibo, Sama decided to leave for a short vacation with his parents for 10 days. However, within that period of 10 days, the whole scenario changed dramatically and his fortunes had turned into dejection.

When he was holidaying in London with his parents, some of the most important designations in the company started falling apart. The decision of selling the company by Sama brought about a drastic change in the working style of the company and employees were filled with fear and anxiety. The COO as well as the three other people quit their job. Sama’s sudden decision to sell the company had the employees in a state of fix and majority of them felt cheated by Sama as most employees suffered losses as their ESOP’s did not get their money. On his return, Phanindra tried to calm the situation, but he could control the anger of the employees and most of them were not in a position to trust him again.