Tracking the Unreasonable Institute Fellows: Cycle Chalao
In this series we check in on Unreasonable Institute graduates. The Institute puts 25 entrepreneurs a year through an intense training and mentoring program to speed the development of their social enterprise. Here we’re tracking their progress and lessons learned.
Frustrated with both the traffic in densely-populated cities and with the lack of affordable transportation options for traveling within a city, Raj Janagam decided to try to bring bike-sharing to India. He piloted a program in Mumbai, and is now working through Cycle Chalao! to develop the bike-share model on a larger scale. Janagam was a 2011 fellow at the Unreasonable Institute, and spoke recently with Dowser about his progress and challenges so far.
Dowser: How did you get the idea to start a bike-sharing program?
Janagam: What we basically do is very similar to the bike-sharing model that is present in the U.S. these days, and in Europe. But it was not in India.
In 2007, there was a small initiative in the capital for renting bicycles in key places like railway stations. But it didn’t scale up and there were issues with the government and management. I got this idea out of frustration with not finding a short-distance commute option in the city. I live in Mumbai, which is a city of 25 million people, and roughly around 8 to 10 million people everyday use local trains and public buses–which are long distance public transport options. But the problem starts when you get out of these buses or trains and you have more distance to cover in your journey, you won’t find an auto-rickshaw or a cab. So people end up wasting a lot of times. So just like me, when I used to go to college, I never used to find an auto-rickshaw at the right time.
So that frustration led to an idea of why don’t we have a bicycle rental model in place. And from there onwards, I have learned what is a bike-sharing system. It took around one and a half years for me, and three friends [to do] the research, asking questions like, why doesn’t this service exist and what are the problems in bringing that service to light?
A lot of organizations supported us by giving research grants, research support. In January 2010, we launched a small pilot initiative of bike-sharing in one suburb of the city, connecting one railway station to a nearby college, and giving subscriptions to college students.
What we found was an amazing response. We started off with only 30 bicycles, and had 33 subscriptions within the first week. We also got the money for the entire month’s operation, and we found a model that is sustainable through membership money alone. In the next couple of months, we got advertising money, we found sponsors. We also held events promoting bicycles and thereby got more funds. Which we put back in and continued that project, and have spread to another station in the city itself over the last year.
What challenges have you faced in growing Cycle Chalao!?
The first challenge is investment, and the second challenge is government support. What we realized is it’s a huge infrastructure investment model, and unless there is state support in either getting parking spaces or even getting subsidies for constructing these bike parking stations, the business model itself cannot take off very smoothly.
We pursued with the local city municipality and with the ministry at the country level. The first news was that the city awarded us a contract to run 300 bicycles as a pilot in one part of the city, and the second part was the Ministry of Urban Development taking us on board in developing a policy to implement bike-sharing systems across the country. The target there is to get into 10 cities over five years.
So right now we are working at these two levels, but the policy drafting also has several other groups like us. We are working with them, and with the municipality we are waiting for final clearance and once that happens, we get $730,000 as the gap funding. And $700,000 that private corporations are putting in through advertisement and sponsorships. That is what is going to developing the first-of-its-kind bicycle-sharing system in Pune city, India.
Can you explain what you mean by gap funding?
The city has imposed certain restrictions. We charge $3 to $4 per month per cyclist, but the city municipality has asked us not to charge anything, and only charge $10 for the entire five-year period. It’s kind of a free service to citizens. The city said instead of charging them, we will give you the gap funding that you need.
In the first pilot as well, we didn’t have bicycles to meet demand. We are sure that will happen again in the city itself. The target the city has given us is to reach three users per bicycle. Once we reach that, the city will consider another proposal of scaling it. The overall goal is to have 2,000 bicycles in the city within these five years.
How do you prevent people from keeping the bikes out for too long?
Free is the basic model. You can only use it for the first half an hour for free, and if you have to use it for more than that, you will be charged additionally, and the $10 would deduce immediately.
The target is really the lower-income group, who travel by public transport and to take a cab is very expensive. And we do not have credit or debit card usage.
The major difference between what we are doing here and what is running abroad is that there there is an attendant at every location, unlike the completely automated bike-sharing systems.
The attendant basically does two things. One thing is the security, and the second thing is the maintenance and transactions. He will be assisting all the people, whether it is getting a subscription, or checking in and checking out, and then securing the entire system.
So these people will be time and again, each time will be educated on how and why to use the service.
That is how we do our monitoring, on the ground at the location. We have identified the first 25 locations to put 12 bicycles each across the city. These locations are transportation hubs, residential complexes, and large office spaces, where there is high demand for these services.
So, why Pune?
Pune city has been called the bicycle capital of India.
There are a lot of cyclists in the city already, but over the years because of heavy infrastructure changes, the city has been becoming more car-friendly. But the local municipality wants to again revamp the cycling infrastructure, and make the roads better. Pune is the only city in India that has a dedicated bicycle corridor — 125 kilometers of bike lanes within the city itself.
There are very few social enterprises in India that are working on urban mobilization, and one is called Parisar is in Pune. So basically the credit of Pune municipality floating this proposal goes to the advocacy work of Parisar.
The other thing was the availability of funds. The city had immediately earmarked certain funding for bicycle promotions, and that was diverted to bike-sharing.
How did you benefit from participating in the Unreasonable Institute?
Being at Unreasonable, what really helped me personally was I was able to sit and talk with people who are already managing the large business and others who have failed at managing large businesses. The mentors at Unreasonable are the guys who told me what it takes to fail, and that was an eye-opener for me.
That learning is not something I got in my business school. And the entire family we have now, the network is simply amazing. I always lag behind asking for support. There’s always support there.
It’s always been really silent and dark before any good news has come, and how do you manage yourself at times when you’re bootstrapping. That’s something outside of the routine business learning that you get being at Unreasonable — that was very important for me personally