ACCELERATING SUCCESS

Asheem Man Singh Basnyat

Managing Director, Pathao Nepal 

To reach business success, the perseverant Asheem Man Singh Basnyat had to reconcile what he wanted with what he was willing to risk. He did everything to make Pathao Nepal work.

Asheem Man Singh Basnyat, Managing Director of Pathao Nepal, calls himself an accidental entrepreneur. “While growing up, I had never thought of starting a business as I was more interested in joining the army. I was fascinated by the uniform because the army legacy runs deep in my family with my father being a seventh-generation army personnel.” However, destiny chose a different path for Basnyat who today is running Pathao, a tech-based ride hailing and delivery business that has become a household name in just five years of its establishment.     

“To be honest, Pathao is not my first venture. I previously tried my hand in a few other businesses which were failures,” Basnyat shares, candidly adding that during that course he even went bankrupt on more than one occasion. “There was a time when I had zero bank balance but these failures have taught me lessons which I am definite no business school could ever be able to teach,” he states. 

Basnyat emphasises that Pathao has been a success because of the team. “People often think I am the person leading the team but there have been many instances when the team has guided me,” he says. 

The trials, the sweat, the challenges and the learnings have been a huge part of Basnyat’s entrepreneurial journey but he wouldn’t change a thing even if he could; it is what has moulded him to become the person he is.

In this edition of Business 360, we spoke to Basnyat about his work, what drives him and what has made Pathao the success it is today. Excerpts:

What are your personal strengths that have seen you through some failures and now the success with Pathao? 

I feel I am an arrogant leader at times and though arrogance is usually perceived as a negative trait, I believe it has helped me move faster. My nature of getting things done in the now has brought certain things on track. I always say - Decide in the snap of a finger and get it done with a bang on the table; this has helped me keep a fast pace at work. We have been able to launch six different services within five years. If I had waited for things to stabilise one service at a time, it would have taken us 12 years to launch these six services. I feel this is a strength and a blessing for me. Fortunately, things have gone the way I wanted but there is always a risk associated with this trait. 

Why Pathao for Nepal? 

The major reason I chose to launch Pathao is due to the fact that it has endless possibilities. Moreover, a small company can move faster than a bigger one which has many processes in place. When we brought Pathao to Nepal, it was a young company with young technology and the risks associated with it were high. No one had any prior experience at all. But I saw this as a benefit because we could course correct as we went along. If Uber were here, it would not have been very Nepal-centric as our country would just be a speck in their global operations. However, for Pathao, Nepal was a big market and the parent company saw many possibilities here. We have the liberty to change and reinvent the wheel to make Pathao adaptable in Nepal. The other aspect is that Pathao has its roots in South Asia; the mindset and experiences are similar - ranging from the good to the bad – and this has guided us in many ways. A young company with a young mindset has made it possible for us to make a mark in the country. 

What was the initial investment and what challenges did you face when starting the company?

Investments are done in two aspects; global and in Nepal. The parent company has invested millions of dollars as they launch this service in multiple core locations. The other intangible investment they make is sharing their experiences. One of the key global investors sends people to provide various training programmes to us and this cannot be valued in terms of money. If we had to hire consultants to substitute these training programmes, it would cost us a lot and we probably would not have received industry experience. Regarding the investment in Nepal, our authorised capital is Rs 20 crores. 

When launching Pathao in Nepal, the technology was not a problem and we were able to deal with the government’s attempts to scrutinise the technology. However, changing the mindset of the people was a very big obstacle. Initially, the job was considered low-level and was looked down upon. Also, the thought of taking a ride with a stranger wasn’t acceptable for all. But over these years, there has been a massive change in mindset. These days, there are many famous vloggers who proudly call themselves Pathao riders and reveal their names and faces on different social media platforms. Similarly, many people have shared and tagged Pathao in their stories. It was a different scenario initially and people would literally wear face masks and use fake names in order to hide their identity. Now we can see many people calling themselves Pathao saviours and share their names. It has been a long journey but we still have some way to go. We can still hear stories of a Pathao service provider whether it be a captain, a rider or a food delivery person being treated badly. I hope someday people will address our service providers with respect and I attempt to add dignity to this job. One lesson I have learnt since this journey began is never to lose hope. There was a time when the government had announced that it would close down Pathao and it was quite disheartening.

How does the Pathao model work in Nepal?

We have six services as of now. We began with the two-wheeler model. It’s basically a gig economy where a person has their vehicle registered and serves during flexible hours and pays a service fee. Our taxi service also follows a similar model but the commission cost is less as the operational cost is high. We have launched three-wheeler service in Chitwan as these rides are more popular there. We also have the food delivery service where we have tied up with various restaurants. We are, in fact, the fastest food delivery service provider in Nepal. The other service we have is the bazaar, which is basically a quick service whereby we deliver emergency goods and even gifts. Recently, we started the parcel service and we deliver home-made food too. We are working on a few more models which we will be launching pretty soon. I think we have been successful due to our adaptability. We have adapted as fast as we can and we became a household name in the first couple of years itself. These days some people are providing ride-sharing service even in Humla by using our name. We do face a backlash now and again as people misuse our brand name but on the brighter side, it is good to know that our brand name has reached across Nepal. 

With the number of unregulated ride-sharing services increasing; how do you deal with it? 

The first thing that we are trying to do is spread awareness among the people. We are trying to spread the message that Pathao is a ride-sharing service that has to be booked through our app to a larger mass and we have been successful to some extent. We are also trying to make concerned government authorities aware about how such rides are unsafe because there will be no record of such rides. What if somebody has used a fake vehicle registration number plate? Moreover, the government also loses revenue. As per our calculations, with every such offline trip the government loses revenue of Rs 5 to Rs 7. Hence, the government too needs to act on this and the users also need to be aware. We cannot take any action against such riders because it is not in our jurisdiction. People need to understand that to use our service, they need to use the Pathao app and the system will connect them to the nearest rider who has a better rating. We want riders with good ratings to earn more and consumers to get better experience. This is how our system works. 

Among the verticals that you have mentioned which has performed well and why?

I call the two-wheeler, four-wheeler and food delivery services our core verticals. The remaining are our supplementary verticals. However, even the three core verticals are very weather-centric. There have been days when we have done more taxi rides than bike rides. For instance, when there is a heavy downpour then bike rides are almost nil but taxi rides and food deliveries increase. But when we have pleasant weather and during the festive seasons, we have five to six times more bike rides than taxi rides. So, weather plays a big role on the service that customers choose but the contribution they have to the company’s annual growth is similar. At present, we are focusing more on food delivery service; we want to change the perception that people have to cook or visit a restaurant for food. We are also trying to promote the cloud kitchen concept. Our next focus is on these home-based family-run businesses. 

There have been some issues related to safety and commissions in the past. How are you addressing them? 

We have been trying to create awareness among the public about our service and how they can avail it and stay safe. The other aspect deals with privacy. Pathao has zero tolerance policy on data sharing and data selling. We don’t share data with even our sister organisations. We are concerned about data protection in the same way that we are concerned about physical security. 

When it comes to commission, the globally practiced commission model is 30% to 35% on average. However, we have been charging only 15% for four-wheelers and 20% for two-wheelers. Moreover, we also pay VAT to the government from that commission. There have been voices raised that we should reduce our commission but what one has to understand is that we are a business and we also have other costs involved. So, do we reduce our commission and compromise on other areas? Or do we operate on 0% commission basis but sell consumer data to earn? We can also operate on 5% commission and our company might be able to sustain but we will not be able to run other services. We will not be able to run a 24/7/365 call centre led by 70 people and will have to compromise on that service. There are also costs incurred in training our manpower. Moreover, this may lead us to close down our insurance policy. We do not want to compromise on the safety factor at any cost. It may be a bit expensive but safety of our riders as well as our users is our number one priority. 

Could you elaborate about Pathao’s insurance policy? 

We were the first company to start the insurance policy. Initially, the total insurance amount was Rs 6 lakhs, with Rs 5 lakhs for accidental coverage and Rs 1 lakh for medical. The insurance policy is for both our riders and service seekers. Later, we increased the insurance amount to Rs 11 lakhs with Rs 10 lakhs for accidental coverage and Rs 1 lakh for medical purposes. 

There are two ways to claim the insurance. It’s either RTA (Road Traffic Accident) or RTI (Road Traffic Incident). In both cases the first responder is the traffic police, so we first have to report it to a traffic police. If it a heinous act, then one needs to first go to Nepal Police and they will collect the evidence. Then the concerned person has to visit the hospital and collect the medical reports. After obtaining these documents they have to contact our help desk. In fact, our help desk will also help in obtaining these reports, we provide assistance throughout the process. It is then our help desk makes the claim for the insurance and will follow up until the cash is received. Once the money has been received by our help desk, the claimant can come and collect the amount.  

How do you view the government policy for ride-sharing services and what do you think needs to be immediately addressed?

The main problem with our government is they only talk. Before introducing any policy or regulation they need to consult with the concerned stakeholders and get suggestions. Government officials need to read and be informed about the sectors they are planning to introduce rules for. Secondly, they don’t listen when others have something to say. They just talk and at times the talks are so absurd, you start wondering about its possibility. This is very commonly found in both bureaucracy and politics. We have forwarded a case study on ridesharing which incorporates its definition, purpose and objectives to different concerned authorities and every time there is a change in leadership in those bodies, we have resent the document. I doubt if they ever read it and when we try to explain certain things they say they know about it. But when it comes to action, they lack clarity. The situation is such that when we meet government officials, they talk about framing policies for ridesharing service and when a person associated with taxis visits them, then they talk about closing down Pathao. However, I am quite hopeful at present that there will be some solutions as three provinces have already talked about ridesharing in their budget announcements.

The first thing that everybody needs to understand is that ridesharing is a viable industry for Nepal. Once that has sunk in, then we can have regulations and think about expanding the sector. There should not be any conflict whereby the provincial government says ridesharing is legal and the federal government says it isn’t. Around three years back the court had asked the government not to close down ridesharing services and instead frame rules and policies for their operation but nothing has happened on the policy front. 

What is the market share of Pathao and whom do you consider to be your main competitor? 

There are around 50 ridesharing and nearly 10 food delivery companies at present. Meanwhile, there could be approximately 30 logistic companies right now. I don’t think there is any other quick commerce company. What we need to realise is Pathao does not do everything itself. We just create a platform for service providers and seekers. When it comes to ridesharing, our biggest competitors are the fake Pathao drivers who wait on the roadsides and claim to be associated with us. 

Pathao currently has around 70% market share in ridesharing with the remainder split between other companies as well as the fake Pathao drivers. According to our recent calculations, we have grabbed 60% market share of the food delivery business with our second largest competitor doing 30% business and the others at 10%. We do 3,000 to 3,500 food deliveries a day. We recently started logistics service, the market for which is huge, and we have 1% market share in this vertical. But we aim to be among the top 10 in the next one year, top five in the year after that and the market leader in the third year.   

There has been a rise in the gig economy globally; how do you see its growth in Nepal? 

There is just one drawback in our country; we cannot file our own taxes. This is why those who are self-employed do not pay taxes and it is not that they are not willing to pay. They are just not willing to take up all the difficulties in the tax payment process. I believe the government should introduce a tax system for the gig economy. It is time the government classifies the gig economy and clarifies the taxes or the amount of tax that needs to paid. If I am providing services using my own means, then a certain amount from what I earn needs to be taxed. The closest thing which I think the government has done in the gig economy is it collects a Rs 500 tax annually from taxi drivers. But tech-based gig economy has not been classified. I think it is necessary for the government to allow people to file their own taxes because for example, if our riders could do so then they could show exactly how much they earn and could avail loans from banks. At the moment, that is not happening and our riders are left out from the financial ecosystem and this is really concerning for the long-term development of Nepal. 

Opening a startup in not a very big deal, in fact, opening any business is not an issue provided you have the finances. The major concern always lies in the sustainability of the project. What I personally feel is that one should first identify the existing problems (needs) in the market and then launch a product or service to solve that problem. Of course, one should also calculate the financial feasibility of it. These days, startups are being opened to provide solutions for a non-existent problem. To be honest, some startups are being opened by people just for the sake of the business card – to be called a CEO or founder – and the source of funding is usually the family or friends. They neither create any economic nor social impact. What is even more surprising is despite having zero revenue they claim to have a company valuation of crores with no data to back it up. Due to such entrepreneurs (I don’t even think ‘entrepreneur’ would be a right word to refer to them by) actual impactful startups have also been misunderstood. So, when a startup which really could solve a problem tries to seek investment from a venture capital fund or an angel investor then the investors are reluctant to invest due to these fads. As a result, the concept of investing in an idea is gradually fading away. Currently, investors are only willing to invest in a mature company. It is rare to hear of them investing in a new company even if it has a potential. They invest in companies that are around for six to seven years but such firms can always avail loans; it is the new ones that need such funding. Also, the rate of return on the investment has to be high because the banks are providing quite high interests on fixed deposits so investors find it better to deposit money in banks. 

By 2027, the ridesharing market is projected to grow by 25% making it a $218 billion market internationally. How is Pathao positioned for this?

It is quite amazing that many global economic trends do not affect Nepal. For instance, during the global financial crisis in 2007-08, Nepal remained unaffected. We are somehow immune to such trends. It is like ‘nothing works in Nepal, yet everything works in Nepal’. Yes, internationally the figure you mentioned could be true but the market here is very small. What we at Pathao definitely know is in the next three years we will be present across the country. Having said that what I would like to mention is that if the government had promoted this type of business when we initially launched, we would be doing a lot better now and it would have helped in other ways too. At present, I think in Kathmandu one in every five people owns a two-wheeler and the number of people buying four-wheelers is also rising, which is increasing the import bill and traffic congestion is also increasing. 

Is there any mechanism to verify riders?

We do have a rider verification mechanism. Any person who wants to be associated with us needs to first open a rider account with us. They are then trained and examined. If anybody does fail the examination, then they are retrained and examined again. Once they pass this test then we ask them to bring some original official documents and then the verification process starts. It is only after this process we determine their eligibility. Security is a big concern for us so we have never compromised in the rider verification process. 

Is there a success story of a rider that you would want to share?

Since the last five years of our establishment, we have had over a hundred riders who have done more than 10,000 trips, which means that on an average they must have earned over Rs 10 lakhs each. The fact that we have been able to provide an opportunity to so many people to earn a decent livelihood is in itself a big success for us and the riders. However, there is one story of an army sergeant I have always shared with people. After having retired from the army, he had gone to the Gulf to work as a driver and when he was in Nepal on a holiday, he heard about Pathao and the ridesharing concept. Fascinated by the idea, he requested his friend for his taxi for a couple of days. Realising it was a pretty good source of earning he started working for a taxi dealer in shifts. In one month itself he was able to earn more than Rs one lakh and he thus quit his foreign employment and decided to stay back. This may seem like a small story for some but for us it is a huge thing. It makes me feel proud that in our own small way we have been contributing to not only the national economy but also the social fabric of the country.