Remember 1st mover advantage? Meru cabs started a decade ago in Mumbai. Now it struggles to remain relevant in the market it (kind of) pioneered. In the ‘Pre App’ era — radio taxis were as ‘on demand’ as we got. Since then a lot has changed — mainly the rules of the game. The highly regulated models of the past were based on asset ownership, political capital and a continuum of the status quo. All of this is now irrelevant
As per an article published in the economic times; Ola cabs is ahead of Uber in the race for market share. Uber’s website states that– they are present in 29 cities of India. According to Forbes, Ola is present in over 100 cities.
To see how things truly stand, we take a look at the number of Installs in metros where both Ola & Uber are operational(see graph above).
While numbers for March & April are still being computed, if this trend is anything to go by, Ola’s lead will not last. Setting aside losses for the time being, both companies are earning nearly the same amount of revenue (Ola is @ Rs 384 Cr, Uber is @ Rs. 374 Cr for FY 16–17).
One wonders what purpose the 73 additional cities that Ola currently operates are really serving.
Time & again, we see this theme playing out where foreign players who’ve established dominant positions in one market are able to cross leverage cash flows to dominate new ones.
Am I betting against Ola? No, I believe there is space for multiple operators in most economies. The key risk for Ola, like so many other Indian startups, is the weakening of investor appetite. Most fund managers and their IC’s never expected such long and hard fought battles. They now need cash exits, not valuation gains.
Thanks for your time,
Ashish
- Team KG
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You can reach me on ashish@kalagato.com
