Home Startups Why Google's first direct investment in India was daily task-management app Dunzo

Why Google's first direct investment in India was daily task-management app Dunzo

18 min read

Name of the Company: Dunzo

Name of Founder(s):

Kabeer Biswas, Ankur Aggarwal, Dalvir Suri & Mukund Jha


Investors & amount raised:
$12-million from Google, Aspada Investments and Blume Ventures


The holiday season is here and e-commerce companies are not alone in inspiring a spirit of generosity. With endless gift-shopping lists to manage and with only so many hours in a day, many would have liked to offload the heavy lifting to a third party.

Luckily, people can ‘Dunzo it’ today.

Founded in 2015 by a quartet of youngsters in Bangalore, Dunzo allows one to find people who are willing to run any type of errand – be it rounding out shopping lists or picking up and dropping off chargers forgotten at home.

“It may seem presumptuous to some, but you will be surprised at how quickly this has generated interest among people,” says co-founder of the hyper local startup, Kabeer Biswas. “While unburdening them from banal jobs that take up too much effort, it has enabled them to prioritize their time better,” he adds.

While sceptics may attempt to start a dialogue on how this time-saving technology may be actually abetting laziness, the Bangalore-based startup has silenced critics by drawing the interest this year of one of the most successful businesses in the world.

To do or not to do
Dunzo is an app-based service that lets users ‘hire’ people, who in turn, run errands for them or carry out odd jobs on their behalf.

“Need to get something picked up from another part of the city? Want to avoid trivial paperwork? Or get a pair of shoes repaired? Dunzo can do all these and much more in less than half the time,” says Biswas.

He explains: “Think of Dunzo as a product that completely eliminates the need for users to search. If I want something from a store, I first need to know where that is, figure out a way to reach that location and then take out time to actually make the purchase. With Dunzo, users simply need to set up tasks on the app which our partners will carry out all at once in just a fraction of that time.”

How does this work?

When users create a task (or list of tasks) on the app, an algorithm will determine the best place to execute it from as well as the best partner for that job, based on several parameters including location, his job history and even the credit rating of the user.

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“Once the partner and user have been paired, the user can add, edit or cancel tasks by using the chat interface on the app. They can also send relevant images for cases where their needs are specific,” said Biswas. “For instance, I needed a tube of ointment and a razor blade – both of a certain kind. I simply sent my partner pictures of what I use, who in turn sent me images of what was available on the store, and once confirmed by me, bought it and dropped it off at my residence. This can be done for literally anything,” he added.

According to the co-founder, the startup intends to use body cameras to enhance user experience, facilitating an even faster transaction in the process.

So does that mean that users do not have to pay for a task before it is completed?

Yes and no.

“We are a product company that is building tools for users to facilitate transactions like these. This means that if I am a high credit user and I want to buy an iPhone, I am allowed to do that without being charged for it beforehand. In such cases, partners use prepaid cards that are recharged by us based on the value of items that need to be bought,” says Biswas. “If you are a low credit user, however, you may need to pay in advance to ensure there are no disputes later,” he adds.

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Unusual beginnings
Interestingly, the service was initially run on Whatsapp back in 2015 when Biswas himself would run tasks for people. He began hiring freelancers to help him when the requests started growing.

“All the marketing was done through three friends I had reached out to when I first moved to Bangalore. It was pure word of mouth and we grew without putting aside any money for marketing,” said Biswas. “At some point, I contemplated setting up a website. It was around that time that I met Dalvir and together we ran the beta version, completing 50-60 transactions a day,” he added.

What followed thereafter is even more interesting.

“I had a chance meeting with Karthik Reddy of Blume Ventures, who quickly took a liking to what Dalvir and I were dabbling in,” says Biswas. “Incidentally, Blume was in touch with another team who were doing something similar. That was our introduction to Ankur and Mukund, and the rest is for all to see,” he grins.

After securing a modest funding from Blume and Aspada, Dunzo became Google’s first direct investment in India this year. With a massive $12-million investment in the Bangalore-based startup, the tech giant has picked up a significant stake in the company.

“I initially had to put in about Rs 25 lakh from the money I had saved from my previous startup,” says Biswas. “These rounds of investments are a real shot in the arm for us because we can now hope to achieve the kind of scale and technical robustness that we have envisioned for the company,” he adds.

Launched only in Bangalore and certain pockets of Pune as of now, Dunzo has seen 3X growth compared to last year. According the startup, the coverage in Bangalore alone went up to about 80% of the city from 40% in just the last 9 months, supported by a team comprising of 1500 partners.

“Our task times have also improved quite a bit, from 70 odd minutes to less than 45 minutes on an average,” says Biswas. “A lot of efficiency and technology has gone into this and we will end up doing 100,000 transactions this month,” he adds.

Toughtask ahead
Biswas recalls his “favourite” transaction on the platform – one that involved a “jadi booti” from the mountain which Hanuman himself was believed to have carried on his palm.

“Although nothing feels unusual anymore, we were quite amused when one of our customers enquired about a certain jadi booti which a man claimed to be having a stock of,” smiled Biswas. “The customer read about this man in a publication and wanted to know if we can pick some up for him. That was quite something,” he added.

Does the startup get entangled in legal or criminal disputes for getting involved in questionable transactions?

“Dunzo is not directly part of any transaction – we are merely connecting users to partners on the ground who can run certain tasks for them,” he says. “Beyond that, we are not liable or have any information about the transaction that is running between the two people,” he adds.

Currently taking care of three broad categories – pick up and drop (objects), purchases and repairs – the startup has decided to let go of low frequency transactions which gave them no structured way of giving customers a good experience.

“Government-related tasks, for instance. Like picking up PAN cards, passport renewals or submitting paperwork to municipal corporations,” says Biswas. “We also do not take up tasks like repair work around the house because there are other players who are doing it well enough already,” he adds.

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While citywide expansion and a deeper thrust in technology are on the cards for the startup, it is currently tinkering with a supplementary business model by building a merchant network.

“This will serve as our main revenue stream in addition to the commission we charge on certain transactions,” said Biswas. “For products where users do not specify a store – which makes up nearly 40% of your needs, including medicines and groceries – Dunzo directs traffic to a partner merchant and takes a commission on the transaction,” he added.

According to him, the large play is to send 30% of the transactions to partner merchants who will plough back anywhere between 8-10% of the transaction value to the startup. “This is imperative to us because everything that a user typically pays for a task only covers the costs on the partner side, that is, for running tasks,” he adds.

While stocking up on supply to meet demand is a problem in any industry, a challenge unique to Dunzo is to how to price time.

“Suppose someone wants to buy tickets for a match. This will involve partners standing in queue, but how do we tell users beforehand that it will take Rs 300 or even Rs 600?” asks Biswas.

Currently, everything is calculated on the basis of distance, which admittedly is not foolproof.

“Our average rate is Rs 75 and our lowest task starts at about Rs 45, that is, Rs 45 up to 3 km and Rs 15 a km thereafter. So we try and price the time spent in the store and the distance covered etc. into the price that we show based upon distance itself. Honestly, it is not the best way to price, but is the easiest way for users to comprehend. Time is slightly more ambiguous,” he says.

Going forward, the startup also wants to get into bike-sharing. “With such a dense network in place, we believe that it will give us a high frequency transaction,” says Biswas. “Regulations need to be in place, but it is something that we will surely pilot in the weeks and months to come,” he adds.

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