Hussain M Elius is a Bangladeshi entrepreneur. He is the co-founder and CEO of Pathao – a technology platform built to develop tangible solutions to battle the country’s biggest infrastructural problems. With a local team of passionate changemakers, Pathao is redefining moving in the densest city of the world while simultaneously creating a new class of employment for thousands of people.
Cruising through a traffic-clogged city on a motorbike is probably the best option for reaching one’s destination in the most time-saving way possible. Banking on that, Pathao has witnessed a meteoric rise in the capital in the past few years, and the company has expanded to the parcel and food delivery space as well.
At the helm of its success sits the app Pathao—which enjoys almost 80 percent of the market share.
The Fintech team recently went to the office of Hussain M Elius, the CEO and the co-founder of Pathao. Here is an excerpt of the conversation for our Fintech readers.
FINTECH: At a very young age, you have been able to make Pathao a successful brand? How did you start your journey?
H. Elius: It was not an easy journey that I can tell you. Starting a business is not a simple matter in Dhaka. In fact, it’s not an easy job anywhere. People only learn about the success story; they are barely aware of the fact that the success story might have happened after enduring multiple failures.
Pathao is not my first venture. I had tried four other businesses, but those didn’t click. In between 2008-2013, my friends and I started a music streaming site, a CNG ride hailing platform, a car ride sharing platform and finally, a venture of resource scripting. The last one was quite successful as over 5,000 businesses used to take our products. We were able to get some capital through that particular venture. Then in 2015, we started Pathao.
FINTECH: Did Pathao get success from the very onset?
H.Elius: Of course not – We had to put in a lot of effort to bring Pathao to where it is right now. We started Pathao as a courier service. During the time we started it, the e-commerce in the country had started to pick up, so the demand for an e-commerce delivery service increased rapidly within a short span of time. This gave us the opportunity to scale up our business.
We used to make our deliveries using motorbikes. This led us to think like goods, whether we could create a platform to move people from one place to another place in bike. Concept wise, it was nothing new as the service was already available in countries like India, Indonesia, Thailand, and others. But in Bangladesh, it wasn’t tried at that point.
At first, we started small. We had only 5 bikes and everyone would call my personal number and I would schedule the rides in an Excel sheet. It was a completely manual operation. It was tedious. Everything changed when we launched our app in December 2016. That’s when things kind of blew up and we ended up changing our entire business model around our app.
FINTECH: What happened after you launched your app? How did you convince biker to join your service?
H.Elius: We did not have any engineers when the app first launched. The first iteration was built by me and my co-founders Adnan and Fahad. An app allowed for an immediate response. We started informing people on the Facebook group that they would have to use the app and stopped taking orders from anywhere outside of the app. At first, it created a lot of friction for customers who were used to giving orders – and changing their mindset wasn’t easy. However, we considered that in the long run how much the customers would gain through the app. We are now running both on iOS and Android phones, and the implementation of the app created much greater access and eased to customers and drivers alike.
Along with developing the app, we rolled our sleeves and got down on the ground. We would ask people where they wanted to go and tell them that “I’ll take you there on this bike for a 100 taka”. They would be very confused and scared, naturally, since we are taking them on a bike and it’s an alien concept to them. But we kept up and pushed people to get on the bike and take the first few rides. We did this for three days and gave them our card to call us and book.
On the fourth day, they would start calling us. After the fifth day, they started talking to their friends about us. We pushed our customers from the ground level. Since we addressed a need in the market, our service quickly got product-market fit and expanded. We launched the service all across Dhaka, believing that everyone should have this service. And we have received tremendous response from the market. This idea that making the product for a large group of people and making sure that there is no entry barrier for customers is critical in an emerging market.
FINTECH: Do you think Pathao has been able to change the way of commuting in Dhaka? Also, how does it ensure quality control?
H.Elius: I believe, with Pathao, our most significant success was not creating a new technology – but rather a new category of transportation— “motorcycle sharing”—in the country. You have to understand that Dhaka was not a motorcycle friendly city in comparison to others in the region. The culture of sharing rides or taking a motorcycle was not perceived to be safe. Before Pathao, the city had a preconceived notion that motorbikes were unsafe. Furthermore, people in Bangladesh are not very open to the idea of apps in general. Things have changed after they witnessed the acceptability and the success of Pathao.
Besides, there are other things which I would say Pathao has achieved during its journey. Just a few years ago, most people in Bangladesh were not used to using any app beyond a few social networks like Facebook.
Once Pathao gained popularity, we observed a few changes coming around us. First, many people were buying smartphones because they wanted to use the Pathao app. When you address a massive problem and find a viable solution, the market will find the way to reach out to that solution.
For quality control, we have the traditional approach where continuous feedback is used to weed out bad drivers or customers. You will have bad customers who will decrease the platform experience for the drivers as well. Our rating service provides a data-driven solution. When a first-time driver or customer is using the app, we do not have any data points. Once they start exhibiting consistent behavior – we could develop a pattern, and can choose to fix it or remove the problem.
Hypothetically, if one customer infers that a driver is reckless, that may not be an accurate estimation of the drivers’ skill because that’s just one data point out of, say, 100. However, if we see that these experiences are consistent and 20 to 30 customers are drawing the same conclusion, then there are more data points to say that yes, the driver is in fact very reckless. This feedback allows us to grow while the quality can be controlled.
FINTECH: How about Pathao Cars? Is it doing well?
H. Elius: It’s doing well but I think it could even do better. The car ride-sharing market is a bit more competitive because we have Uber here. So, it has a different set of challenges. Rental companies mostly own cars because for most individual cars in Dhaka are expensive to own; hence only affluent people can afford them and they are not the ones that will drive for Pathao. They have chauffeurs who drive them. For bikes, the people who own them are the ones that drive it.
Despite these challenges, we have been seeing a consistent growth. Recently we have been launching out a few product level improvements such as fleet management to tackle that problem. The fleet owner will be managing it with the tools provided by us. Hence, even if the owners don’t drive the cars, they can still engage and control. These new initiatives should give a further boost to our growth.
We are constantly looking out for new ways of doing things, finding new growth opportunities; you can hope that we would be doing more things as we go in the space.
FINTECH: You have also launched Pathao Food. How big is your food delivery business?
H. Elius: We launched our food delivery business to give our riders an opportunity to earn more. Please note that we consider ourselves as a rider-centric company that gives the riders utmost values. For that reason, we don’t have an option of showing the destination in our app, so that the riders could see it and decide whether they want to take the passengers there or not. So, the idea of opening up Pathao food came to our mind when we found that during a certain time of the day, the demand for motorbike is not that high and our riders could utilize that time by delivering something else: food.
Technically, it is quite similar to rides. We have restaurants on our platform. You open the app, choose a restaurant and a menu and then place an order. As soon as an order comes in, the rider nearest to the shop receives the order, goes to the restaurant, pick up the parcel and deliver it to the customer.
The process is pretty simple. We currently don’t have many formal relationships with the restaurants. We simply list all the restaurants and menus on our app and when a customer places an order, we fulfill the order.
There is no call-center; no bottleneck. Because of the size of the fleet, there is always someone near a restaurant. Our average delivery time is now 40 mins which include preparation of the food as well. As we establish more restaurant partnerships, the time is likely to go down. In our current setting, orders directly go to the riders. As we go, we plan to send it directly to the restaurants so that they can start preparing the food when the rider is on the way. It will bring down our delivery time even further.
In the future, we want to make the process such that the restaurant will inform the driver when to come and pick up the food, instead of the driver waiting for the food getting ready. It will increase our efficiency.
Besides, restaurants are always changing menus which make it difficult for us to fulfill many orders. It also affects the customer experience. That is why the partnership with restaurants is critical. When we have partnerships, restaurants will update us when there is a change in the menu and we can update it in real time.
We are developing an app for the restaurants called Pathao Resto. It will be a way for the restaurants to talk with Pathao. We are releasing the app in a few weeks. This will allow restaurants to directly receive the orders from the customers. Once we launch the app, it will pave a way for more exclusive deals for us with restaurants and other services.
FINTECH: In Bangladesh, it’s very hard to get funding for starting a tech business as the traditional lending arms like banks and NBFIs don’t want to fund a new tech startup. So what will be your advice to the aspiring new startups?
H.Elius: Let me tell you one thing, banks and NBFIs usually don’t fund the tech startups anywhere in the world. These traditional lenders have lots of limitations within their organizational structure to fund these types of business. This is because a tech business usually starts with an idea and initially an idea doesn’t have a value to everyone. Banks and NBFIs keep the money of common people and lend it out to business after evaluating the possibility of financial returns and the collaterals the potential borrower is willing to mortgage to them. A young aspiring tech entrepreneur simply doesn’t fit the bill here.
Tech startups are funded by venture capitalist firms that understand the risk and are willing to take it for the sake of equity in a business. There are every possibility that if a VC firm invests in 10 business, 9 might fail and one might click but that one business might be good enough to bring profit for the firm. In Bangladesh, the VC culture has started on a very small scale. The more it will expand; the better will be the tech startup scenario of the country.