Shohoz Founder and Managing Director Maliha M Quadir talks with Ruhul Kader about the evolution of Shohoz, dynamics of ride-hailing business, the meteoric rise of Shohoz and its fast-expanding universe, the theory of growth, critical qualities for founders, and lays out Shohoz’s game plan for becoming the super-app of Bangladesh.
Future Startup
What is it that you are trying to build with Shohoz? What do you want to be in 5-10 years down the line?
Maliha M Quadir
The ambition is to become the largest online destination for Bangladesh. It is a broad statement and includes many things. For now, we plan to address three verticals. These are logistics, transportation, and fintech.
We might evolve as a product and go beyond these verticals. That is in the future and I think that’s the case with any growing entity. You see an opportunity and synergy and you go for it. For now, however, we know this far that we are building a platform around logistics, transportation, and fintech.
We have already built things in transportation and logistics. We are not into fintech yet but we will be. We are working on figuring out our strategy in fintech.
Our logistics and transportation are in full swing. In logistics, we have food deliveries. We are working on trucks which we plan to launch soon. The ambition is anything that moves move through Shohoz.
We have been doing very well in ride business. Our food business has been experiencing accelerating growth. We are the leader in the online ticketing vertical. As our logistics and transportation businesses mature, we are moving into other potential verticals.
We are taking on one vertical at a time. First, we are targeting the most necessary verticals and then moving to the next.
Future Startup
If you take that ambition of being the largest online platform for everything necessary or everything that people need, where do you stand now?
Maliha M Quadir
If we include ticketing, we are the largest. We sell five types of tickets i.e., bus, launch, movie, cinema, and events. No one else does this in Dhaka.
If we take this factor into account, We have the highest number of distinct services on any single platform in Bangladesh. As we are working for five years in this industry now. The majority of the bus operators sending their tickets through us. All these are “Shohoz branded tickets”. We are touching the lives of a great number of in that way.
We have served a great number of people in aggregate. About fifteen million unique people have touched us including transactions and visits. These are some figures we have never talked about before. Our app has been downloaded for over five million times.
I think these are impressive numbers. In that sense, we have touched the highest number of people in Bangladesh. bKash is of course at a different level. Excluding bKash, in the consumer-tech, we have been able to reach the highest number of people.
Future Startup
What’s the game plan? How do you plan to achieve your ambition of becoming the largest online platform?
Maliha M Quadir
We are building our businesses. We are building food and ride-sharing, for example. We are looking into the crux of these verticals. We want to go deeper and build meaningful operations in the long run.
The central piece to our strategy is driving differentiation through localization.
We have learned over the years that Bangladesh as a market is meaningfully different from other markets. Our people behave differently. Our customers behave differently. The needs of our customers are unique. They demand a localized response.
The advantage we have is that we are building for Bangladesh market. We are from this soil and our bread and butter is this market, which puts us in a better position to respond to these unique needs.
We are putting efforts into building a strong passionate brand that people love. As a company, we are customer-obsessed. We are a customer-first company. That is at the core of our brand strategy.
Every decision that we make, our customer comes first. We are now putting some of those stories out to facilitate our brand-building efforts.
Future Startup
You have mentioned about localization. What are a few things that you are doing in terms of localization? Essentially localizing means building things for the Bangladeshi people, customizing to what are the needs of the local people. Could you give us a few examples that these are the things we have done differently from others?
Maliha M Quadir
There are initiatives and features we have released and there are features we have been working on that I could not talk about due to confidential nature of the work.
What I would tell you though is that we have built a process within the company that is cognizant of this understanding of localization, and customer obsession. It does not necessarily need to be a killer feature, rather customer experience is the key. Just to give an example, we go into every detail of product development down to the what color Bangladeshi people like and so on. We have already done localization in our branding.
We are doing driver training. It’s not that big of a thing for a market like the US, but it is an important thing for our market. Driver training is something that we feel strongly about as an organization.
We have done studies on it and found out that nobody ever gave the bike drivers training on road safety or anything for that matter. We are doing that out of obligation with our own money. This is an expensive initiative which we are doing in association with BRAC.
Drivers are not paying us a dime for this. Moreover, nobody organizes training for drivers because we are a marketplace and we merely enable. But we are invested in this market and the development of this market. That’s why we are doing it.
We deeply care about the experience and safety of our customers. We are investing in internal tools. We have built tools to manage complaints of our customers better. We are now using them at scale. We have been investing in building safety tools for our customers. Our driver education programs, as well as technical development initiatives, are for ensuring a safer experience for our customers.
Future Startup
How much has the company evolved over the past years? There are things that we could from outside see such as funding, new verticals launched and so on, what are some major changes that we could not see from the outside?
Maliha M Quadir
Organizationally, we are a bigger team. We have been able to build a stellar leadership team over the past year. Our management team has people with many years of experience in running similar businesses in the world’s some of the largest companies.
The team is highly experienced and dedicated. We finally have a team of great people that we could not afford a year or two ago. When you grow as a company, you get lucky to attract good people. That’s a big change within the organization.
We have a proper office finally. I have always been shy about investing money in real estate. We always try to be frugal and careful when it comes to spending money. We got a really good deal with this office. We have also realized that we need good workplace for our people because the place you work out of has an impact on your productivity.
Internally, we have become a much more process-driven organization. We have a long way to go in building systems and enduring processes, but it has started. Startups are scrappy organizations. You almost always have resource constraint. By nature, you move fast. These traits of a startup makes it hard to maintain the process. But as you grow as an organization, you have to building these processes. It sometimes slows you down. The new pace could create a momentary cultural challenge within the organization. This is a necessary trade-off. The process ensures quality and operational excellence. We are putting a lot of work into building these processes.
Our accounts and finance are organized. We revamped our call centers. These are getting the house in order. Previously, we had a comparatively small brand guideline. We now have a robust brand guideline.
While building these processes, we are also tackling the question of efficiency and speed. For entrepreneurs, I think growth versus stability and process versus speed are some of the dichotomies that one needs to balance daily.
Operationally, we prepare to be lean and nimble. That’s what our current team size tells about us. Given the size of our operations and verticals, we are a relatively small organization.
We have 6-7 offices for foods as food doesn’t travel well. We make our food drivers wear uniforms, check hygiene in our unique satellite offices in the morning and night. We are still short of staff, which we prefer as an organization. Stretching your capacity is always better when it comes to the size of the team than having people more than you need.
We are also putting HR practices and policies in place based on our experiences in this market over the past few years.
Future Startup
What are your goals for different verticals, for example, food and tickets?
Maliha M Quadir
To become number one in pretty much every vertical where we operate. We are #01 in online ticketing. In foods, we are on track.
Future Startup
How big is your food operation?
Maliha M Quadir
We are doing 3000 orders per day. Our food operation is relatively new. So this is a good growth within a short period. If we continue this growth, we will be #01 in no time. We are #02 in ride-sharing in the motorbike segment. We are not in cars.
Here comes the issue of growth versus stability. That’s a dilemma. Our strategy is that we need to make sure that there is sustainable and stable growth.
You can grow pretty fast and become number #01 in almost any vertical if you spend like crazy. We don’t want to do that. There are several reasons for that. It is not only about growth. It is also about sustainable growth. It is often tough for organizations to handle sudden growth. So, stability is important. Often it is a tough job to balance stability and growth.
Future Startup
You are doing 3000 food deliveries a day, you food business has grown significantly...
Maliha M Quadir
We are now covering entire Dhaka. We have a small presence in Chittagong where we just started on a trial basis with one office.
Future Startup
How does your food operation work?
Maliha M Quadir
We have taken a more hands-on approach to our food delivery business. Food is quite a sensitive area and error tolerance level is very low. We hire delivery men, on a part-time basis. They work in shifts. They have to wear our uniforms. We check them for uniforms, shoes, and hygiene.
We have been able to build a large coverage of restaurants. We already have 1500+ and will hit 2000 very soon. That’s the target. We are particularly conscious about ensuring a quality feel to our customers. The delivery men carry the food in proper insulated manner. We are trying to find a sweet spot between quality and availability.
Future Startup
Business-wise, how are you doing in food?
Maliha M Quadir
Food is doing well. Quality is important in food. We have excellent service quality.
Our repeat orders in food are quite good compared to industry standards. In that sense the business is good.
Food needs continuous optimization just as logistics. There’s a lot of work there and we are working on that.
Future Startup
You have agreements with the restaurants and you take commissions?
Maliha M Quadir
We have agreements with all the restaurants we work with. Our model is commission-based. We take commissions from all the restaurants who sell on our platform. However, we are on an evolution phase where all restaurants don’t pay us a commission yet. We are working on that and we hope to get there soon.
For delivery charge, we give the entire delivery charge fee to our delivery man.
We are at an early stage with food. Our business is growing. We are adding more benefits to our restaurant partners. The business we generate for our restaurant partners is growing rapidly. We huge potential in food as we move forward.
There are three variables where we have to optimize and find synergy in the near term: the cost of the delivery men, commission, and the delivery charge. All three need to be optimized. At the same time, food operation is not that simple either. We employee delivery men based on demand and supply. There is a balance. You have to ensure that you have enough delivery men when the demand is up and also that your delivery men are not sitting idle. This is a challenging dynamic to maintain.
We are looking into things like cross-selling - joint offers to customers. It’s happening. Some offers have been given. This is another big thing that we want to work on - we want to offer food to our ride customers and maybe offer them tickets and other services. This is where the super app thing comes in. You can get everything that you need in one place.
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Future Startup
Do you use the same driver for food and ride both, say, for instance, the ride-hailing guy doing food deliveries during off-peak hours? Is that happening?
Maliha M Quadir
There is an optimization possibility there but that’s not happening currently. There is a lot of work to be done in productization.
We are doing a lot of work on scalability and stability on the platform level. Features are being released almost every month. The goal is to build a world-class tech product, made in Bangladesh. And that’s not an easy task. Particularly when you have to scale. It is quite difficult to build that tech. I don’t think I can appreciate how difficult it is. I don’t think that anybody understands. There are so many challenges in ride-sharing. This tech is immensely challenging and takes a huge amount of resources. It is robust.
There are all types of challenges in food. Some people want instant delivery. Others may wait for an hour but the quality has to be exact. There is a service level agreement that you can’t ignore or take lightly. We need to look into all these things.
Future Startup
How big is your tech team?
Maliha M Quadir
It is around 50 to 55 people. Tech is at the core of what we do. Our tech people are building solutions daily. There are solutions for ride business. There are recommendation engines for food. We are using some of the cutting edge technologies to design solutions.
Future Startup
Could you tell us about the truck business? When do you plan to launch? What is going to be the focus, market-wise?
Maliha M Quadir
We are going to launch soon. Market-wise, we will be serving both the consumer market as well as the B2B market. It doesn’t matter if you are a consumer who is looking for a truck for changing residence or if you are an SME looking to send your goods to different parts of Dhaka or if you are a big company sending stuff to the Nilphamari or wherever you want. We’ll play in all three segments.
We aim to build a marketplace for renting trucks both for long and short distances. This is a difficult industry. It is not an industry we think about when we think about digitization. However, we have been into building a marketplace for trucks for a long time. As I have said earlier, we had half of our job done in 2017 – for both trucks and ride-sharing. Then we decided that this is the time for ride-sharing and pushed our truck plan a little back. Finally, we are here.
We are excited about truck business. The industry is tough. A few smaller players are working. There is no major player there yet. It’ll take time to be able to get to a scale. We have worked in the bus industry, if anything we can tell about truck is that it will be really tough.
It is an offline industry. Much more than the bus. You have to have the DNA for that.
We have worked in the bus industry. We have the team that worked on the bus. They will be working on truck. We understand truck better than anyone in the market. The most important thing to understand is issues with the roads. Roads have their unique problems. We have experienced these while working on the bus. We believe we can use that experience to crack the truck market. The industry will take time to develop. More than the bus. But we are on it.
Future Startup
Tell us something about ride-sharing. We spoke last time in 2018. You just launched ride business. How much has the industry evolved since then?
Maliha M Quadir
We started ride-sharing in March 2018. We are doing 50,000 rides per day. Mainly, inside Dhaka. We are doing well in Chattogram as well. We only operate in motorbikes segment. We have been seeing excellent month-to-month growth.
The ride is a burn heavy business for everyone. It is a two players business in almost every market. There’s Uber and a local player in most markets. Now that Uber is retreating, it is players like Grab and others. It is not a winner-take-all kind of business. People – both bikers and users – want options.
Future Startup
You mentioned it is a burn heavy market. How are you doing business-wise?
Maliha M Quadir
The burn fluctuates depending on the competitive landscape. What we have been trying to do is understanding our customers well and then designing incentives for them accordingly. So that we don’t have to rely on promo-codes and discounts all the time.
We have made some progress through understanding various metrics. Employing them to control the burn. That’s being said our growth is good. We have focused more on training and safety aspects. We intend to offer people a safe and good experience and build differentiation in the market.
We are giving proper feedback to the drivers. We have been doing this for a while now. We are giving both positive and negative feedback to the drivers. We learned a few things as well. For example, communication psychology is different among drivers. We have to maintain constant communication with the drivers. We are working on that – giving them regular feedback, doing engagement activities with them, et cetera. These are happening in a more structured manner.
Future Startup
You want to build a super app. One hypothesis probably is, I am guessing, that when a user comes for a ride they would eventually start using other products and services, which means the user has now more reasons to stay with you and you have a better competitive moat? The question is though, it sounds great on paper, does it happen in reality? Does it help?
Maliha M Quadir
Yes, it happens. Ride customer takes food and vice versa. At the same time, you have to nudge customers to make this happen. So both things are happening. It may increase further if we push certain things. When people think that this app is useful, I am getting several services, they keep on using the app. But you have to ensure good service quality.
Future Startup
In terms of super-app, do you plan to open up the platform, which, to some extent, Grab is doing in Singapore where they are bringing in ecommerce and streaming on the platform through third-party collaboration?
Maliha M Quadir
That’s a possibility in the long run. Right now, we have a lot of things to do and services to be built in-house. But that is something we will do. We will open up an API where people can come and sell. The decision is about having services of your own versus allowing third-party service providers.
Future Startup
You have 3,000 orders in food and 50,000 in rides every day. How does your retention look like?
Maliha M Quadir
We have checked the retention rate against the big ride-sharing players at different stages. Our numbers are quite good. I was nervous at first whether we would be able to build a sustainable business. But if we compare, the retention rate of other big players which we have got, we are doing well. I won’t share the numbers but we are doing very good compared to any major player.
Future Startup
What are the challenges for Shohoz now?
Maliha M Quadir
Finding good people. This is a national problem in Bangladesh. People are not willing to take ownership of their work. People are not passionate. This is, partly, a failure of our education system. Our universities are failing to teach our young people the basics of work ethic and career development. People don’t understand the basics of reputation - building and maintaining it. They don’t do their work well because they don’t understand the importance of reputation and doing good work. Work ethic, it seems, is a foreign concept in Dhaka.
They focus more on making money as opposed to personal and professional growth. People would change jobs for a mere BDT 5,000 or 10,000 raise. I have got good CVs with years of working experiences in 5 to 6 companies within a few years. I don’t look into those CVs anymore - people who switch jobs every other month. We’re taught that unless the boss is unbearable, at least spend two years in one company. Otherwise, people will question you. People - that’s the biggest challenge.
Future Startup
How much have you evolved as a leader?
Maliha M Quadir
I had to be organized. I use a calendar to schedule my days and weeks. My day starts at 8:00 am and ends at 10 PM. There are no weekends. I’ve become good at delegation, I guess. The most important change I would say is that I have developed more perspective. Now I don’t get excited or nervous easily.
Future Startup
What are a few things that founders be mindful of in an early-stage company?
Maliha M Quadir
Financial management. I am careful about costs. I think founders need to be involved in everything when it comes to spending. It helps create a frugal culture.
Be humble.
Don’t be complacent. Startups require relentless pushing for a long time.
Invest time in networking.
Be transparent with your people and the investors.
Future Startup
Is there any particular quality or a set of qualities that helped you as a founder?
Maliha M Quadir
I’m just getting started and learning every day. There is a lot of scopes for me to grow. I have a long way to go.
For founders, I think having the drive is important. Insatiable desire to do better is a must have quality for any entrepreneur.
Transparency needs to be maintained throughout the organization.
Finally, lead by example.
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Note: This interview was conducted in July 2019.
