Especially, ‘Pathao’ and ‘Indrive’ are delivering thousands of customers easily to their destinations every day, and following this successful practice, more new ride sharing services are also being launched.
While ride-sharing is booming, the Nepali brand ‘Tootle’, which is considered a pioneer in this sector, is struggling to survive.
Tootle, once an icon in Nepal’s startup scene, faced a swift downfall. Founder Shikshit Bhatta’s journey from success to selling the brand and ending up in police custody serves as a cautionary tale. We aims to share this ‘story of failure’ to impart valuable lessons to aspiring entrepreneurs.
The Beginning of Tootle!
“After graduating in Telecom Engineering, Educated Bhatta worked at United Telecom (UTL) for seven years. Meanwhile, after completing his MBA with a ‘Gold Medal’, he also worked at Nepal Investment Bank for four and a half years.
Around 2015/16, while having coffee with business friends Anand Bagaria and Sanjay Golcha, a business ‘idea’ blossomed – providing a ride-sharing service on motorcycles.
Three educated, Sanjay and Anand came to the conclusion of putting into practice a new idea born while looking for an alternative to unorganized public transport and expensive taxi services in Nepal.
They registered Hyperloop Pvt Ltd and Nepal’s first ride sharing service – Tootle was born.
The three people invested 24-24 lakh rupees with the agreement that the educated person would buy the software he was making earlier for 12 lakh rupees and he would invest another 12 lakh rupees.
In the role of Chief Executive Officer (CEO), Shikshit began to take over the leadership of Tootle, and after some time Sanjeev Rajbhandari, the founder of Mercantile Communications, also joined the team as an investor.
Even though motorcycle taxis have been operating in other countries of the world, it was a completely new concept in Nepal.”
“In the early days, we lacked an understanding of the market size and how to develop a sustainable business model,” reflects the founder.
Pioneering Nepal’s first mobile app-based ride-sharing platform, Tootle faced initial challenges in attracting riders and familiarizing people with motorcycle taxis.
Compounded by issues with digital payments and limited internet access, the reliance on app-based ordering posed hurdles. Despite these obstacles, the team persevered, integrating third-party services and offering discounts to build trust.
Gradually, Tootle gained traction, with the number of riders growing to 80-90 thousand by 2019-20, facilitating 25-30 thousand rides daily.
Tough Challenges Begins!
“Nearly a year into Tootle’s operation, an unexpected expense arose. Initially relying on free Google Maps, the partners were taken aback when Google sent a bill of around 70 lakh rupees after a year, along with additional charges for arrears. This unforeseen cost, absent from their initial business plan, forced them to switch to local maps.
As they adapted to the change, new legal hurdles emerged. With no existing regulations for ride-sharing in Nepal at the time, taxi unions lobbied against private vehicle rentals, creating uncertainty for Tootle’s future.
Navigating legal ambiguities and technical challenges, Tootle, which had dominated Nepal’s ride-sharing scene for three years, faced a formidable competitor with the entry of Pathao Nepal, a successful Bangladeshi company, in late 2018.”
“Meeting the successive challenges demanded better technology and agile service development. As the saying goes, where there’s scarcity, stress follows. Over time, differences of opinion emerged among the founder & investors – Sanjay, Anand, Sikshit and Sanjeev.”
Was Tootle in Loss ?
“While Tootle fostered respect for labor and contributed to the development of the digital economy, the founder, despite highlighting the organization’s social achievements and commercial expansion, struggled to account for profits. Instead, the focus remained on increasing investments.
Originally, a 20 percent profit was anticipated according to the business plan. However, as the company expanded, losses mounted, and profitability remained elusive. Admitting to a lack of business experience, Bhatta acknowledged the challenge of translating investment into profit.
A startup, like any business, requires meticulous planning and execution to achieve success. Failure to do so is a common reason for startups failing worldwide.
Despite its popularity, Tootle neglected fundamental startup principles. According to a successful startup entrepreneur, losing sight of its startup status ultimately led to the company’s downfall.”
Debate arises!
The argument was about spending too much on education technology. The CEO wanted to invest heavily to make the company strong in technology, but other investors wanted to save money by outsourcing. They disagreed on whether Tootle was mainly a ride-sharing or a tech company.
The financial plan made at the start wasn’t followed. The CEO, successful as an entrepreneur, admitted failure in managing finances properly.
“Spending on technology and staff was high but necessary,” said the CEO. “I couldn’t stick to the financial plan we made.”
Educated CEOs don’t like unnecessary expenses. Other investors agreed, saying, “The CEO didn’t handle accounting badly, but couldn’t manage income and expenses well.”
Company in Loss but CEO’s popularity arises!
“Despite ongoing losses, Tootle and its CEO Sikshit remained in the spotlight. Sikshit, hailed as a successful startup leader, was frequently invited to speak at events by various agencies, organizations, and educational institutions worldwide, earning him the title of a ‘celebrity CEO’.
However, accusations arose from partners claiming Sikshit focused more on public appearances than on company strategy. One partner remarked, ‘While the company needed sustenance, Sikshit seemed more involved in public functions, discussing topics like gender and climate change.’
As tensions escalated, partners requested Sikshit to prioritize business matters, but their pleas went unheeded. Frustrations grew, leading to heated exchanges in board meetings. Feeling sidelined, Sikshit began avoiding meetings and embraced his celebrity status outside.
Despite criticism, Sikshit defended his approach, arguing that promoting the company through public speaking engagements was more effective than traditional advertising.
However, some partners disagreed, emphasizing the need for Sikshit to focus on making the company financially sustainable. When partners Sanjay and Anand exited the company in 2019, they withdrew their combined investment of over 3.5 million rupees, along with 2.5 million rupees in subsidies.
By then, a total of 6 to 6.5 million rupees, including investments from four partners and donor grants, had been spent, reflecting the company’s mounting financial strain.”
New investors, old momentum!
After the departure of two founding partners, Sikshit continued to lead Tootle with support from another partner, Sanjeev, for a while. Additional investors were brought in by Sikshit, although he claimed to be running the company solo in conversations with Online News.
However, sources revealed that only one group, Mandala Digital Holdings Company, invested in Total, including former Prime Minister Sher Bahadur Deuba’s son Jayveer Singh Deuba and businessman Shivank Thapa.
The nationwide lockdown in 2020 due to the Covid pandemic dealt a severe blow to the ride-sharing business. The entry of Indrive in 2021 intensified competition with Pathao, further plunging Tootle into crisis.
Despite attempts to update Tootle’s system, Sikshit struggled to keep pace with Pathao and Indrive’s advanced technology and user-friendly interfaces. Pathao’s focus on business over celebrity status also contributed to its popularity.
While Pathao optimized its technology, Tootle regressed from Google Maps to local maps, impacting user experience. Pathao’s efficient rider acceptance system also outshone Tootle’s, making it more practical and popular.
As Pathao and Indrive gained momentum, Tootle’s market share dwindled rapidly. Despite this, Sikshit failed to initiate a revival strategy. Initially focused on two-wheelers, Tootle later expanded to taxi services but faced challenges.
A decision to waive fares for riders post-Covid exacerbated the company’s troubles. Although venture capitalists were eager to invest, Sikshit declined, fearing loss of control over the company.
Allegations of VAT evasion in 2019 tarnished Total’s reputation, although the issue was later resolved. Nevertheless, it dealt a significant blow to the company’s credibility.
Left Tootle but debate didn’t!
Recently, Educated Bhatta ceased its Tootle Service on May 2078. In a surprising move, Tootle’s parent company, Hyperloop Pvt Ltd, struck a deal allowing the delivery service ‘Jap’ to utilize Tootle’s trademark. This agreement triggered a dispute between Shivank and his associates, revolving around allegations of copyright infringement and betrayal.
Following a complaint filed by Mandala Digitals with various authorities, law enforcement detained the individual in question.
A police official revealed that the detainee was released upon reaching a settlement. “Upon meeting the demand of the complainant, which included Shivank Thapa, with a sum of 65 lakh rupees and a formal apology letter, an agreement was brokered,” stated the investigating officer. “Subsequently, we entrusted Bhatta’s welfare to his family.”
The legal proceedings are ongoing in the Patan High Court, with the involved parties refraining from commenting due to the ongoing legal battle.
Meanwhile, Rubik Joshi, one of the founders of Zapp, asserts that they obtained the right to use Tootle’s logo through a contractual arrangement.
“We have secured the official usage rights of Tootle’s logo through a contract with Prashant Shrestha, a Hyperloop owner. Although we haven’t acquired the company, we’ve obtained the trademark rights registered under his name by the Department of Industry,” Joshi explained.
Joshi emphasized that the initiative to revive the nearly defunct brand stemmed from Hyperloop’s proposal.
“Tootle, pioneered ride-sharing in Nepal, and it’s a cherished brand among Nepalis. Hence, we decided to take it under our wing,” he added.
Apart from Joshi, Keyush Shrestha and Shreyashkrishna Shrestha have also invested in Zapp. The company has relaunched ride-sharing under the name ‘Tootle by Zapp’.
Joshi clarified that upon securing the rights to use the Tootle brand, they discontinued the old app and developed a new one. Additionally, Zapp slightly modified Tootle’s logo.
“However, despite our actions, evidence suggests that the old Tootle by Zapp app is still operational,” noted the police official. “Even the complainant submitted screenshots from the app store as evidence.”
Reincarnation of Tootle!
Zapp, which has been providing delivery services since 2020, has restarted tootle service from August 17 through a new app.
Meanwhile, 25,000 riders have joined Tootle, said Keyush Shrestha, founder and chief operating officer of Zapp.
“Now 4 to 5 thousand rides are being done daily,” he said.
Shrestha says that there is a plan to provide delivery facility by integrating Zapp in Tootle soon. In addition, he said that Tootle is also working to provide ‘advertising services’.
In Short!
How Tootle became popular or the rise of Tootle?
Meeting a Big Need: Imagine trying to get around Kathmandu, where buses are unreliable and taxis are expensive. Tootle came in as a solution, offering a fast, cheap, and safe way to travel.
Job Opportunities: Tootle didn’t hire riders as employees. Instead, anyone with a two-wheeler and a license could sign up to work for them. Riders made money by picking up passengers through the app, and Tootle took a small cut. It was a win-win situation.
Making Safety a Priority: Tootle made sure that both riders and passengers felt safe. Before you even booked a ride, you could see the driver’s details and track their location. Plus, there was an emergency button in case anything went wrong.
These factors helped Tootle grow quickly and become a popular choice for getting around Kathmandu.
The Downfall of Tootle
Tootle, once a popular ride-sharing app in Nepal, seems to have faded into obscurity for several reasons:
1. Lack of Innovation: Tootle started strong as a unique local business idea, but it didn’t evolve much beyond that. It remained limited to Kathmandu and exclusively for two-wheelers. Even when a four-wheeler version was introduced, it was a separate app rather than integrated into the main one.
2. App Issues: The biggest gripe with Tootle was its app. Many users, faced frustrations with its functionality. It often crashed, didn’t work well with data connections, and had bugs like not allowing users to cancel rides. Additionally, Tootle’s own map had inaccuracies, making it difficult to navigate.
3. Costs and Exploits: Tootle’s pricing remained unchanged for years, despite inflation and rising fuel prices. Coupled with the high commission fees for riders, it became less profitable. Some riders even exploited the system by accepting rides and then canceling, leading to partial compensation.
4. Impact of Lockdown: Like many businesses, Tootle suffered significantly during the lockdown. With people staying indoors and fewer riders available, profits dwindled. Even after the lockdown lifted, Tootle struggled to regain its footing, facing tough competition from newcomers like Pathao.
These factors combined to contribute to Tootle’s downfall, leaving it overshadowed by its competitors and struggling to stay relevant in the rapidly evolving ride-sharing market.
