Uber’s spending $400m in India. Ola just raised $320m. (Each of those, if you’ve been reading Capital Mind, is greater than all the IPOs in 2014 in India, put together) This money will go to something, someplace. They won’t buy taxis, but will help finance drivers who would like to buy a car. (Uber, Ola) I’ve used both services – Ola and Uber – and am watching the landscape change rapidly. From being expensive beasts, they’ve both gone to the lower end of the taxi ecosystem – and Ola even has autorickshaws on its network. How do they work? I have been speaking with drivers and in general, the concept is: You pay less (through discounts) and the driver gets paid a lot more. Uber and Ola are funding the difference, largely as “acquisition cost” for customers. I tweeted this lot: 1/ Uber and Ola pay their drivers a different amount from what you and I pay when we take a ride. 2/ Uber is prepaid, Ola has prepaid options. Effectively, money goes from you to the startups, and from them to the drivers. 3/ The drivers see the Rs. 10 per km plus x,y,z rate. Plus a Rs. 100 per ride bonus if they do a minimum number per day. (5 for Ola) 4/ What you and I pay is a discounted fare plus coupons plus whatever else. Half or less of what driver gets. 5/ So we pay less than an auto would cost us. The driver gets more than what he…
