Anayet Rashid exudes all the characteristics of an aspiring entrepreneur. His neatly trimmed beard, careful choice of attires and soft-spoken and well-versed conversational ability—all speak of a person who means business.
He indeed means business.
Rashid was one of the winners of Startup Challenge 2017, organized by the ICT Division of the Bangladesh government. Rashid won his laurel there for his startup idea “Truck Lagbe?”
Fintech team recently went to talk with this young entrepreneur. Here is an excerpt of that interview.
FINTECH: Tell us about how you got started and how the idea came about.
I have a few other businesses. One of the businesses that I have is Arku Food. Along with a few frinds, we started ‘Truck Lagbe’ from there. As for the idea, it came about from necessity. The thing is my work involved food distribution. It’s a light product and that means with distance in transportation the cost increases. Our production route is through Cumilla. The products get distributed to the whole country via Cumilla. When the goods are transported to the North of the country that becomes really expensive. There is often discrepancies in the pricing by transport service providers. There was this one time when it cost me Tk32 thousand. On a later time a same delivery on the same route by a same model truck cost Tk8 thousand. I came to know that trucks often take a delivery and then come back empty. From there I got the idea and we started studying the market. We spoke with the relevant people in the industry and then started Truck Lagbe.
FINTECH: How big is the truck service market? How did you gather the primary business intelligence on this?
By conducting survey. Initially we talked to drivers and owners, learned about how they operate. After that we started our work. By size, there are seven to eight types of vehicles. I’m talking about the big ones. The 18 feet ones are for particular types of load. These run on particular routes. The owners wouldn’t let them operate in other routes. Then those that transport export products, for example, they don’t normally carry any other types.
All of these are vital information that we looked into and learned from to create our business model. As for size of the market, there are approximately 2 lakha and 76 thousand vehicles in the country for transporting cargo. Among these vehicles there are about five thousand for long-routes. These carry export cargo. They are also called covered vans. But the number is not static at all. It’s increasing every month. So, the number is quite significant. I can give you a fair idea about the financial transaction that takes place. Everything you see, more or less, including the furnitures around us, the cloths we are wearing – at one point was transported through trucks. Other than that you have the daily needs like food items that get transported everyday. Three lakh vehicles carry cargo each day and every truck charges Tk10 thousand. You can figure out from here how big the market is. It’s huge.
FINTECH: Since there is a lack of proper record keeping and therefore a lack of data, what kinds of challenge you faced to decide on a concrete business plan or to take confident decisions?
The whole thing is challenging. There are about 27 categories of cargo vehicles. People in this industry aren’t tech-savvy. And it’s not like the ride-sharing service. Our service doesn’t have the same demand. You need transparency in this industry. We are trying to solve this problem. Our initial challenge was to persuade the owners; try to convince them about what is possible through this technology based service. It was tough. We didn’t earn anything in the first month of our operation. Now, we have 1200 vehicles adding to our service every month. But this was so difficult at first. It was a challenge to bring business from them. Another problem was the fact that Bangladeshi truck drivers don’t use smartphones. That was another big challenge. And that’s why we decided our model shouldn’t be only smartphone based. So, we take the location from our trackers.
We also had to deal with the brokers, who naturally thought this was going to be bad for them. On the other hand, the drivers also thought this was going to be bad for them. We had to break it down for them and convince that this is going to be an enabler, not a competition.
FINTECH: Where was the app developed and by whom?
It was developed completely in-house. Since we are essentially doing matchmaking, we developed the app with that in mind. We had to think about transparency, being flexible to the industry’s unique needs and prioritizing our necessity for building trust. But we are about to launch a new version within July. We have fed into it all the things we learned in the last one year.
FINTECH: You won the ICT Startup award. Was that enough for your initial funding? How did you manage funding?
As I mentioned earlier, I have businesses, and I also look after businesses I got from my parents. That is actually the source for the funds I needed. From the ICT Division fund we got only Tk10 lakh. But the pace at which we built up the business, that Tk10 lakh funding was almost nothing in that regard. But it helped of course. We didn’t expect to win really. It was a pleasant surprise. I would say, what helped more than the money was the validation we got from that. That was very important. And we are always grateful for that and support the ICT Divisoin’s initiatives.
FINTECH: Pathao secured foreign VC funding. Do you think you might also go for something like that?
Yes, of course. In Bangladesh the funding situation is different compared to overseas. Here the investors want full control. That’s why we have been very disappointed from all our interactions with local investors. There is a difference in thinking and approach. Everyone wants easy solution and easy investment. Our industry is very fragmented and people don’t want to invest in a fragmented industry. We hope something good will happen in the country. But we have had talks in few places outside of the country. We are hoping for a positive result.
FINTECH: One of your slogans is ‘truck – firti pothey bhorti thak’. You talked about that a little already, but is that one of your biggest selling point, in terms of bringing owners onboard?
When we started out our target was to move forward with that ideology. When a truck comes back from the destination it can carry another cargo obviously. It later struck that it can pick up something on its way from Rajshahi, for example. That will cost only three thousand taka. We are trying do that matchmaking.
The selling point is that there is no middle-man. What we are promoting now is that you will get your truck immediately. And everything will be under control through technology. You can track the vehicle at all time and no matter where it is. You will also get every detail including information about the cargo, where it is headed. All the vehicles with us are verified. That means information about the ownership of the vehicle, registration documents, pictures of the vehicle. The trackers enable users on both end to take action immediately if there is an incident.
FINTECH: What the adoption has been like from the truck owners? Did you struggle to convince them? Has it helped that app based service is now quite familiar?
We had to do it from the ground up. We had to demonstrate everything to them. This was new to them. There was confusion at first. We had to work a lot to earn their trust. We had to convince them about security. At first the whole thing was a joke to them. We had to change their perception.
But yes, you are right in this regard that familiarity with app platform helped us. And then there are many different types of truck owners. Many of them have other businesses. Some are very respected lawyers and doctors even.
FINTECH: Shohoz also work with vehicle owners. One of the things that the owners appreciate most is the record keeping, which stops double selling of tickets. In your case what is the biggest gain for owners?
Shohoz and we have similarities, but the work is different actually. We are still a growing platform. Changes will be gradual and slow. There is a company in China that took nine years to come to a satisfactory stage and start making profit.
The transportation sector has a myriad of different issues and it’s a hard nut to crack. So, our app helps keep record of course. We don’t have the problem of double ticketing to begin with, our role is matchmaking. I wouldn’t say we were able to attract the owners very easily. They thought about profit first, naturally. When we showed what are the benefits many were interested automatically.
FINTECH: Did you have any legal obstacles? What is the legal framework for loss and damage? Are you taking out insurance?
We don’t have any legal obstacles. Since we only do the matchmaking, we don’t take the responsibilities. It is still what it used to be naturally. Our role is to build up efficiency and provide the service of the vehicle at the right time and fulfill the needs.
We are not carrying the goods. The trucks are doing it. You are also not purchasing the goods from us. Regarding loss and damage, we don’t have any contracts with shippers. However, we have contracts with some corporate shippers exclusively. It varies from shipper to shipper. We are not really liable for paying damages if loss or damage happens. Robbery and stealing happens
FINTECH: Where Truck Lagbe will be in a year?
We hope to grow three times the size we are now. I also believe Bangladesh will be completely digital soon as well. And that’s why digital platform like us can go a long way.
- ‘Fintech services have to optimize their costs and reach to a wider demographic for the sector to grow’ - March 8, 2022
- ‘5G will boost fintech operation with faster connections and secured processes’ - December 20, 2021
- ‘It would help everyone if we are allowed to provide new digital services’ - December 14, 2021