The fault in Ola's Star: Bhavish Aggarwal
Let’s play a little game of this or that?
Bisleri or Coca-cola, Tata nano or Tata Nexon?, Maggie or Yipee ?
Okay, Don’t even answer that, We all know who's winning.
This was a little exercise that we had to do for a big lesson
The lesson here is, that one of biggest advantage of having a direct consumer-facing businesses is that you know if the customers are liking the product or not immediately, and in today’s world with social media influencers and platforms like Twitter, Facebook, Google reviews, it is even easier to know if a product has touched the hearts of customers or not!
But this is a kind of double-edged sword, no? For companies that have mediocre products, they get bashed all over the internet and people boycott their products even before using them!
Something similar is happening with Ola currently, it is difficult to ignore that something is wrong with the company, when you are late for the office and 3 drivers cancel your ride! Or when you see burning vehicles all over the news and are terrified to buy one! So let’s see what is happening with it.
Let’s start with its newbie business, Ola electric, New-gen, Classy are the words people used to describe its vehicle when the company revealed it for the first time. It was actually the first time in India, when people were excited about an EV, the excitement was so much that the company bragged about selling more than 1,00,000 scooters on day 1 itself, which amounts to sales of more than 1100 crores😲.
Quite a feat to achieve, even when you don’t have a product ready, this is something only Ola can pull off.
The company promised to deliver the scooters in just a month, and then we all know what happened, they failed to deliver on the promise and kept pushing their deliveries month on month.
The company blamed it on the semiconductor chip shortage, but the question is if the production wasn’t in place, why make the promises of delivering the vehicle in a month?
The customers were pissed with the delay in delivery and even after they managed to deliver the scooters two months later, there were a ton of complaints across Twitter that said the scooters were faulty.
They were faulty to the extent that a small bug in their software caused a major accident of a 65-year-old.
Faulty, Dangerous are the adjectives people now use to describe the vehicles. Okay, they are new to this, maybe the management is trying to learn how to operate like an automobile company, let's discuss its Ola cabs, people aren’t talking about the cab business now, as much as they did back in 2017-18, not only people even Bhavish Aggarwal has forgotten that it has a cab business.
The pandemic was the toughest time for all cab companies across the world, even then Ola decided to focus on the EV segment and let the company operate on autopilot, and guess what happened, many drivers left the company, and the number of cabs on the roads decreased.
In 2017-18, many people joined Ola and Uber as drivers as the incentives were quite high, people even left their stable jobs to work for them, but the pandemic struck and the situation of these drivers was grim, they had to pay hospital bills, have to keep up with the expenses even when there were no rides during the lockdown, Ola failed to provide them any stable income and they were forced to leave the cities and work in their hometowns, as a result now we have much fewer cabs on the roads.
The shortage of cabs has led to skyrocketing fares now, due to which people are now looking at hope with rickshawala.
It wasn’t just a pandemic that has hit Ola cabs, even the company has reduced the incentives that they provide to the drivers to improve margins, but there is very less left for the drivers and due to that many of them have left the company.
As per the sources, Ola’s calculation and revenue sharing with the drivers is vague, which is not the case with Uber. All these things impacted its top line, as it fell by more than 60% in FY21.
What is really the problem with OLA, the company was a pioneer in the start-up ecosystem, founded by a bunch of passionate IITians, and now is failing?
The first problem with the company is the CEO itself, close sources reveal that Bhavish is aggressive and wants to have it all, the company has burned cash by venturing into a lot of unrelated businesses, Ola money, Ola cars, Ola foods etc. I know you don’t know all of these businesses of Ola, because as I said good products make noise, while the bad ones generally shut down in silence.
In 2015, the company launched Ola cafe which was shut down after a year or so, in 2017 it acquired 95% stake in Foodpanda for Rs. 200 crore, it further invested Rs. 1200 crore in it, further Foodpanda bought Holachef, In 2019 both companies were shut down.
In Dec 2021, when everyone was going gaga over the grocery delivery business, it also joined the bandwagon and launched Ola dash, the company soon realized its not as easy as they thought and decided to scale it down and fired over 2000 people.
Then we have its Ola cars, the platform for buying and selling used cars. The company tried to promote it aggressively but it seems like it is going nowhere as customers complained of high prices, low quality cards and other issues. Recently they have planned to shut down their business in some cities.
The company has burned lakhs and crores in these businesses, just to be the worst one in the Industry.
As per sources, the company’s ambition to become the best in every industry has led to downfall and it’s not Ola’s but Bhavish’s ambition to become the master of all. He looks for an opportunity in a business, but lacks the capability to execute it correctly. His attitude isn’t just wrong with the business, but also with the company, the attrition in the top management of the company says it all. Multiple senior executives have left the company
Recent exits from the company are of its Ola vehicle commerce CEO, Arun Sirdeshmukh and its chief of group strategy Amit Anchal.
As per reports, Arun managed the leading Ola's electric division and amidst the complaints of faulty scooters, and pressure of delivering them on schedule he decided to leave the company. Company’s CFO has now taken over the role and would manage day to day operations, but is it possible for a person to manage the finances and lead an EV company? You tell us?
People in the top most positions are the backbone of any company, a company is definitely not a one man show, but it seems like Bhavish Aggrawal has a hard time accepting it.
All the internal rift and management issues can push Ola electric to the bottom of the EV race? Because as per the recent day Okinawa has pushed Ola to the number 2 position. The sales of Ola have declined month on month.
So, what do you think will Ola be able to thrive or just survive with being number 3 or 4 in all the industries?
DisclaimerInvestment/Trading is subject to market risk, past performance doesn’t guarantee future performance. The risk of trading/investment loss in securities markets can be substantial. Also, the above report is compiled from data available on public platforms.
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