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Becoming unicorn doesn’t mean much, want to grow 200-300 times from here: Urban Company CEO Abhiraj Bhal

Home services startup Urban Company CEO Abhiraj Bhal in an interview with Moneycontrol talks about why people ordering from home is a permanent shift, not just a pandemic-induced one, vaccinating delivery partners, dealing with the pandemic and more.

Mumbai / June 02, 2021 / 11:42 AM IST

Home services firm Urban Company on April 27 was valued at $2 billion, when it raised $255 million from Prosus Ventures (Naspers), Dragoneer, and Wellington Management, with participation from Vy Capital, Tiger Global, and Steadview Capital. The deal came up in regulatory filings. It was a big deal by most accounts, but Urban Company did not announce the deal or talk to the media about it, being busy dealing with the horrific second wave of the Covid-19 pandemic in India.

More than a month on, co-founder and CEO Abhiraj Bhal is seeing shoots of recovery. He is convinced that customers ordering home services online is a long-term trend and here to stay, not a pandemic-forced temporary shift in behavior, like some suspect. He bases all his decisions on this conviction. In an interview with Moneycontrol’s M. Sriram and Chandra R. Srikanth over Zoom, he talks about dealing with the pandemic, bouncing back, expansion plans, and why becoming a unicorn- celebrated by many startups- does not mean much to him. 

Over the last few weeks, you have been sharing initiatives by Urban Company, in light of the second wave of Covid19. Have things got better compared to where we were towards the end of April/the first week of May?

The second wave has been very unprecedented in its scale and magnitude and I don't think any organization in India has been left untouched by it. All of us have suffered significantly both in a personal capacity as well as in our organizations. At Urban Company from the onset of the wave from March onwards, our entire focus became how we can help our partners, customers, and our internal employees. For customers, the whole focus became around safety. We had a lot of learnings from the last wave and throughout the pandemic, several initiatives that we took and didn't stop. Around PPE kits, to ensure they are well stocked with masks, face shield, coveralls, etc. We ensured that partners are continuously tested. 

We have kicked off a nationwide vaccination campaign. In the next 3-4 days, 50 percent of our service partners will have got the first jab and by the end of June, we expect 75-80 percent of our partners to get one. The last 20 percent is always hard because people may have hesitancy or may have been recovering from Covid. This is at a base of 35,000 partners. It is a sizable effort and we are paying this free of cost to our service partners. We are also showing this as a live status on the app. If you go to the app you can see how many partners in your city have been vaccinated and whether the partner assigned to you has been vaccinated. 

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The second effort that we have put in place for partners is a broad-based Covid help program where we are providing immediate financial assistance to partners in lockdown districts to medical assistance to help with insurance. We also have a bereavement support program. Many of them are almost frontline so vaccination drives are very critical to taking care of them. 

The third constituent is our employees- we put together a task force that has been working around the clock to help with testing hospitalization to oxygen. All our employees and their families are getting vaccinated by Urban Company. We have also announced efforts around unlimited sick leaves and mental health. 

Urban-Company-Funding-Timeline

What has the last year been like? There must have been many ups and downs. And what does the next phase of growth look like? 

The last year in many ways has been very transformational for the company and an inflection point for the company. In terms of scale, as of March before the covid wave, we were almost 2x of the pre-covid peak. Even after the lockdown last year, when business came to a screeching halt, it bounced back very rapidly. By October, we were at 140% of pre-Covid peak and by March we were at 2X of the pre-Covid peak. And we were seeing very rapid acceleration. April and May have seen a little bit of a dent but nothing like last year.  With each cycle, we are becoming more efficient. We are confident that the business will already hit March levels in June-July and from there it will rapidly take off.  

Consumers are looking to avail home services more seriously. Post the wave, there is this surge of consumers who want to get things done for personal grooming and home needs. They naturally rely on a safer, more organised option, rather than a local option. 

You will naturally see this in your own behavior. For the next few months, if you want a beauty treatment, going out is not going to come naturally for some time. Similarly, if you call someone for home repair, you want to know whether he’s been vaccinated if he’s wearing a PPE kit. There is a quality control mechanism in place. 

As the second wave abates, we have already seen an uptick due to this reason. We have to do a lot of work to keep up with the demand. There is an opportunity for market share to shift from offline to online. The offline world has been hit and can't be aggressive and capitalise on the opportunity the way we will. 

In terms of geography, before the pandemic started, we were only in 10 cities. Now we are in 30 cities. Outside India, before the pandemic, we were in one international city (Dubai). Today we are in 7 cities. India will go from 30-50 cities by the end of the calendar year and 100 by 2022 end. People are trusting us a lot more. Folks who would otherwise have not used us, are using us now. 

Earlier it was limited to young professionals, young couples, a little more new age. Now we see older people use us- getting haircuts, getting homes disinfected, etc. I think we are at that point where we are breaking through, from being a useful app for some to being a mass app for home needs for India at large. It is completely up to us to capture it. There is competition, there always will be, both offline and online, but so far we have been able to do well, and now it is up to us how we capitalise. 

What is giving you the confidence that this trend will continue? Even considering the third wave, at some point won't people resort to using offline players more?

Future predictions are always hard but we always focus on what is in our control. I’m particularly confident that there is a broad-based behavior change that all of us are seeing, which was not just pandemic driven. That behavior change was happening pre-pandemic too. The change was- “Get things to me” rather than “Me going for things”'. People want their home to be the point of consumption and things to come to them. I’ll watch a movie on Netflix rather than go to the theatre. I’ll order home rather than go to a restaurant. 

Very similarly, for a haircut or beauty appointment or a massage, I was ordering these things in. And this was happening before the pandemic. The pandemic accelerated this behavior, and this is a long-lived pandemic, not a short-lived one. So that is only accelerating and cementing this trend. Consumers using online platforms as their primary option is a trend that's here to stay

And what impact has growth had on your finances? For FY20 you had revenue of Rs 263 crore and a loss of Rs 155 crore. Will your economics improve? What does FY21 and further look like?

No comment.

There is a trend among Urban Company service partners, to acquire a customer and then encourage them to contact the service partner directly, rather than going via UC and thus making it cheaper. How do you view this? Is it a threat to growth?

It happens a little bit but is not a common behavior And we don’t stop this behavior. Partners are welcome to try it, and most of the time they will realise that they are the ones losing in the bargain. See, the pricing power that comes to the platform doesn’t come to them directly offline. There is no haggling around the price on the platform. And the consumer isn’t just counting 20% of UC’s commission and deducting that. It is a slippery slope. He will tell the delivery partner to do it much more cheaply. So one is, just from a monetary perspective the partner loses out. 

Two, their respect goes away. A lot of people tell us that when they go as a UC professional, they get a lot of respect from the security guard and the customers. There is also inherent safety baked in. and on our platform, last-minute rescheduling and cancelations don’t happen (as in, the customer is not refunded if it does happen).

In the offline world, the customer says, “Come at 9 am”. Then at 8:45, he will say, “Boss, actually I’m going jogging now. You come at 10 please.” Now the consumer doesn’t realise that for that poor guy, that one hour is gone. He is not going to be able to find another gig on the fly in 15 minutes. The customer will pay him only for the one hour he uses, not for the one hour the partner loses, right?

There’s the training we do, subscriptions, insurance for partners, personal loans. Sometimes partners will try, out of sheer curiosity. But mostly they realise it is not worth their time and energy. And actually, those who try and then realise, they are the ones who become the most loyal.

That said, this is India, it happens all the time. But we are keeping enough value levers on both sides of the platform. Even consumers realise that offline you won't get the same professionalism. He may cut corners, he may not be on time. 

Lastly Abhiraj, what does this unicorn milestone mean to you? And now that you have built this platform with so many partners, what sort of adjacencies do you see?

I think it's a very small milestone that is a long and hopefully fulfilling journey the company will see in the next 10-20 years. I would want Urban Company to grow 200-300 times from here in my lifetime, and so in that journey, this is maybe the first milestone in a 42-mile marathon race. Doesn’t mean much beyond that. 

On adjacencies, we are looking at several new categories, which we will let you know about. New categories for your home, which we don’t play in today- we want to launch and scale that.
M. Sriram
Chandra R Srikanth is Editor- Tech, Startups, and New Economy
first published: Jun 2, 2021 11:01 am

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