Greg Moran, co-founder of mobility solutions company Zoomcar, says although he is from New York, he is practically an Indian for the past eight years. “I have my PAN card and Aadhar, so I am almost a citizen,” he laughs.
In 2012-13 he set up the self-drive car rental startup Zoomcar, which now has around 8,000 vehicles on its platform. The business has now pivoted to the subscription model and has the backing of investors such as Sequoia Capital, Ford Motors, Mahindra&Mahindra, among many others.
At his office in Bengaluru, Moran told The Passage that Zoomcar is planning to partner with Chinese mobility companies to help them with its IoT capabilities.
The Passage: How is the subscription model working for Zoomcar?
Greg Moran: Right now we're in nearly 50 cities across the country. We have over 8,000 cars on our platform, which is 100% marketplace. We have short, medium and long-term plans for users. One can rent a car for a couple of hours or days, on a self-drive medium plan they can rent it for six months or a year, and on the share subscription plan they can rent it for two to three years.
With our share subscription plan, people can subscribe to the car intended for personal use, and whenever they're not using the car they can share it back on our platform, and we in turn rent out the car to short-term users. The same car gets used in two ways, one for short-term rental use and the other for medium and long-term subscribers. That's where the duality comes. That's the marketplace aspect.
Globally no one has worked on this model. For this kind of product to work you have to comply with local regulations. It's important that you have a good product market fit one side and a regulatory market fit on the other.
Ola is going through a lot of such regulatory challenges.
The Passage: How has been your take off in tier 2 cities?
Greg Moran: It's good. Typically, tier 2 markets have a very quick adoption curve for technology and what that offers. A solution like this can resonate even more with people who don't have as much disposable income, because we're providing a very convenient and flexible access to cars without you having to break the bank.
Although, we are not profitable at the company level, we are profitable in all our markets.
We have two core assets when it comes to technology: leveraging shared subscription at scale — a very sophisticated technology product and our IoT capability.
A lot of companies in China are interested in collaborating with us, particularly because our IoT services have a lot of direct applications in China
The Passage: What is your market share?
Greg Moran: We have 70% market share for short-term rental right now. For the medium- and long-term share subscription we have a 100% market share. No one is doing share subscription right now in the country. That's a big advantage for us.
The Passage: Do you plan to raise funds anytime soon?
Greg Moran: Since our inception we have raised USD 83 million across multiple institutional rounds. We have been fortunate to have good partners — Sequoia, Ford and Mahindra, which ended up being a very strong local partner in India.
As opportunities show up in the future we will bring stronger partners on the financial and strategic side of things. Our business is more capital-efficient compared to Uber and Ola because we have very good unit economics. And then, as a marketplace we don't have to go out and spend huge sums to get customers.
The Passage: When are you launching overseas?
Greg Moran: I think over time we’ll be in the US but probably not directly under the Zoom brand.
We could potentially engage in a technology and product partnership with the folks over in the US or Europe. We can offer our IoT capabilities, which can be used in a lot of applications, not just in cars but other vehicles, machinery, etc.
What we have to offer is not limited to only technology companies, we can potentially bring wider-reaching applications.
But, for now, we will be in the India market. There's so much to do and build in India. There're a lot of markets out there that are similar to India in terms of its characteristics, like parts of Southeast Asia or parts of Africa.
A lot of companies in China are interested in collaborating with us, particularly because our IoT services have a lot of direct applications in China. So, definitely, we're comfortable to collaborate with others.
The reality is we know the Indian market very well, but we're not going to presume to know foreign markets better than the local players.
The Passage: How are the mobility services in China?
Greg Moran: The Chinese market is a lot more mature. China is probably ten years ahead of India. For instance, there is no comparison between the scale of Didi versus Ola — Didi is five times the size of Ola.
I think the maturity of the market is the biggest defining characteristic. The infrastructure in China, both from private and public standpoints, is far better than India’s. The overall innovation around business models in China has been phenomenal.
One area which hasn't necessarily taken off as much in China is fractional car sharing, where people (usually three to six, depending on the carmaker or model) buy a car together and split the costs. That's probably because, strangely, the Chinese players didn't invest very much in IoT. I think India has a clear advantage over China in terms IoT applications and software around the IoT.
Globally no one has worked on this model. For this kind of product to work you have to comply with local regulations
The Passage: Could you emulate Shen Zhou, the Chinese car rental company which later launched Didi-like cab hailing service?
Greg Moran: You have to be a little more specialised in India, given some of the regulatory and technological nuances.
Companies in China often do everything. The super app culture is quite big there, but in India not quite as much. To be honest, the appetite for horizontal integration from the investor community is also much greater in China than in India. Capabilities that require you to do ride-hailing at scale require incredible amount of capital. Ride-hailing is the most capital intensive industry in the history of humanity. If you look at how much money has been raised by Uber, Didi, Grab, Go-Jek, Lyft and Ola combined, at the top of my head, it's over a hundred billion dollars.
So, the short answer is that it's pretty unlikely for us to start a cab-hailing service.
The Passage: Investors say compared to the US, the Indian market is more similar to China’s. What do you think?
Greg Moran: India is neither like China nor the US. But if you had to compare, of course it's more like China than the US just by definition, because they are both emerging. But China is much more developed.
India is very different. China focuses on the super-app culture, horizontal integration and India doesn't do that. India has a very weak public infrastructure and very weak government support, it’s the opposite in China. Chinese institutions are much more robust, and from a financial standpoint the regulation is very clear in most cases.
In terms of GDP per capita, China is four to six times bigger than India. In terms of overall data accessibility and smart phone penetration, China is way ahead of India. It’s pretty hard to compare the markets.
I think you can compare India to newer markets in Africa. India and Indonesia are far closer.
The Passage: What can Indian startups learn from the Chinese market?
Greg Moran: The one thing that Chinese startups have done incredibly well is the rapid scale, especially on the consumer side. Oyo has probably taken to the Chinese market more than any Indian company. They are one of the few Indian startups that have moved into the Chinese market and are seemingly doing decently well.
There are also lessons around how to creatively fundraise. Chinese investors and founders are very aggressive in fundraising. Some of those strategies and tactics are being adopted by Indian founders, not only in India but in foreign countries as well.