Dhaka, Bangladesh’s capital, is an insanely densely populated city.
Growing up here, Elius Hussain says, one thing is always on your mind. The traffic. The horrible jams. How you have to sometimes wait for hours before you can even get on a bus to go home.
“You say Jakarta is bad. You’ve not been to Dhaka.”
Regardless of which city makes for the more catastrophic commute, it’s obvious that mobility is an issue in Bangladesh’s capital.
How to beat the traffic
Pathao, the startup Elius runs, transports goods and people on two wheels – to beat traffic. It’s basically the Go-Jek of Bangladesh, and it’s growing fast, making thousands of trips a day after launching in 2015.
Ferrying people on motorcycle taxis wasn’t the plan from the start. Pathao was born in 2015 as a delivery service. Its fleet of motorcycle drivers and bike messengers bring parcels to clients in Dhaka and beyond. The service thrives on the back of the growing demand for reliable ecommerce deliveries in Bangladesh. Pathao works with Rocket Internet’s Daraz, among others.
Pathao’s story screams for a comparison with Go-Jek.
But, in mid 2016, Pathao decided to introduce on-demand motorcycle rides.
It’s just like the service we’re already familiar with from Go-Jek, Grab, or UberMoto. You launch a request on the app, hop on the back seat of a two-wheeler, and get dropped at your destination for a fixed price. It’s faster and more convenient than the experience of riding in one of Dhaka’s auto-rickshaws or manual rickshaws.
Learning from Indonesia
Pathao’s story screams for a comparison with Go-Jek – now a unicorn startup in Indonesia. It started out with a similar trajectory.
Back in 2010, Go-Jek had a small fleet of motorcycle drivers who did ecommerce deliveries within Jakarta. Go-Jek also offered bikes for personal transportation. Customers ordered in advance through a call center.
The difference is, motorcycle taxis were already a thing in Jakarta. Informally run two-wheeled taxis are a common form of transportation in Indonesia’s capital. They’re known as ojek.
“We don’t have an ojek culture in Dhaka,” Elius says. “Why hasn’t anyone done this before?”
Despite the lack of a precedent for this mode of transportation, Pathao’s motorcycle taxis caught on. In the beginning, it was a fleet of 100 drivers, employed by the startup.
“We had the first recurring customers, we saw people are using this every day, twice a day. The business was novelty,” Elius recounts. People tell him: “I’ve always thought about it, but never did it.”
The next logical step was to open up to third party drivers who wanted to make some extra cash. Pathao now has approximately 500 freelancers who average three to four rides a day, Elius says.
Go-Jek boasts some 200,000 drivers, but that’s after six years of growth. Most of its growth occurred between 2015 and 2016, when the fleet swelled up from 800 drivers to its current size. Pathao got to 500 in under a year.
Its freelance drivers, unlike Go-Jek’s, do not wear branded uniforms and helmets. Most bring their own smartphones. For now, Elius wants to keep things lean.
“The first couple of people are also innovators in their own sense. They’ve not taken this on as a 100 percent employment opportunity. We have to build that trust first.”
Early adopters of the service are students, and people taking rides to and from the office.
What’s surprising, Elias says, is that female customers make up about a tenth of the rides. He expected a lower ratio.
“In Bangladesh, being a conservative Muslim country, there’s definitely a stigma attached to women riding on the back of a man’s motorbike,” he explains.
But convenience and price beat the cultural norm, at least for some. Pathao’s rides are priced so that they cost less than an auto-rickshaw. A typical ride would come out at US$1.52, while a comparable auto-rickshaw trip would be around US$2.5.
The logistics business is also growing
While Dhaka residents are warming up to the idea of hopping into the back of a stranger’s motorcycle, Pathao’s core business is still in deliveries.
“We now work with 500 different merchants, growing 25 percent every month. We deliver over a thousand packages a day mostly within Dhaka. At first, it was 30 percent outside Dhaka, now it’s 40 percent outside.”
When Pathao launched this service in 2015, it originally wanted to offer deliveries on demand, like an instant courier service. But it turned out merchants weren’t interested in speed. They wanted reliability. Traditional logistics providers were lagging too far behind.
“Even next day deliveries didn’t work. You have to go to their office, they don’t pick it up. There was no tracking. These companies operate with a franchise model; the prices are not standardized. Even within Dhaka they can charge two different prices,” Elias says.
Pathao’s system offered an improvement on all of those fronts.
“But our system was built with on-demand in mind. We were observing other companies – Uber, Lyft, Go-Jek.”
Elias wasted little time before taking cues from some of the region’s – and the world’s – biggest startups.
Pathao is his first venture, born out of a business incubator he was running with two friends, Fahim Saleh and Adnan Shifat. Adnan is now Pathao’s CTO. Before that, Elias and Adnan had run a UI/UX consulting firm that was building products for international clients.
Elius went to business school in Dhaka, but his coding skills are self-taught. It started when he was still a kid. He would, for example, figure out how to write simple code to help him solve math problems.
Pathao has some 80 employees in three offices across Bangladesh now, discounting the delivery fleet drivers.
The startup runs on a seed investment of an undisclosed amount, from “local and foreign investors,” says Elias. He is looking into raising venture capital, but it’s tough in Bangladesh, he says, because there’s no precedent of any successful local startup.
“Right now our priority is getting rides in order. That’s our focus for now: to get the on-demand delivery infrastructure in place. Then we get consumer deliveries back again – the on-demand courier service, which we stopped a year ago, then we can do this to support other verticals,” Elias grins.
It hopes to one day branch out into various types of delivery services, like food delivery. Pathao does have some local competitors in Dhaka, like Amarbike.Their fleets are smaller and they lack the scalable infrastructure Pathao’s app already has, Elias argues.
Uber launched in Dhaka late 2016, but has yet to introduced its motorcycle-based UberMoto feature.
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