A cab aggregator and the Prime Minister, both, are trying to reach for the stars. However, the path to utopia is rife with untold perils.

A New Startup in town

The start-up capital of the country, Bengaluru (just in case you forgot) witnessed the entry of a new cab aggregator- Hoysala Caabz 🚗 and it wants to disrupt the market.

This story is important because we need to talk about something that's been driving me nuts for quite some time now.

Why can't anybody truly break the Ola/Uber duopoly (read as a situation where two firms have almost complete control over the market)?

Like why?

Let's consider the case of Hoysala Caabz,. This new cab aggregator is slightly different, in that the founder wants to rally support from disgruntled Ola/Uber drivers and even offers a bouquet of incentives to go along with it.

But how would Hoysala Caabz actually go to market? That is the real question.

Case 1- Complete Cornering

A hypothetical scenario where Hoysala Caabz gets every single Bengaluru driver currently plying his trade on Ola and Uber to switch. In the event that this unlikely scenario materializes customers will be forced to download Hoysala Caabz and they will rule the roster. However this is wishful thinking. So, let's move on to the more pragmatic case.

Case 2- Partial Cornering

A more likely scenario where you see a few disgruntled drivers switch to Hoysala and then wait for the customers to roll in.

But why would the customers roll in?🏃🏃🏃

Unless the company can offer ridiculous discounts (which it can't) or it offers the largest bouquet of partner drivers (which it doesn't), there aren't any real incentives for customers to download Hoysala.

At which point, you see a weird dilemma creep into the minds of the few disgruntled drivers who have committed to the young startup.

The only way the cab aggregator survives is if everybody stays put and keep boycotting Ola/Uber. However considering very few customers show up in the early days survival becomes difficult as is and there is a real temptation to go back.

This is a classic case of the prisoner’s dilemma where a driver might prioritize his/her own self interest over the group. And as more drivers succumb to the temptation, the dream of challenging the duopoly slowly vanishes into thin air.

Perhaps this is why so many local cab aggregators in the past have tried and failed.

In any case, we wish Hoysala succeeds and kicks ass👍.

The Mission to $5 Trillion

On Independence day, Prime Minister Modi reiterated his government's ambition to carve a $5 trillion economy out of India. Since then, there's been a flurry of activity on this front, most importantly a notification from the Finance Ministry.

The Story

In order to get inputs from some of the most important stakeholders driving the economy, the Finance Ministry thought it would be nice if it asked public sector banks (PSBs) to initiate a month-long consultation process with bank officials starting from the branch level. The hope is that these good people could offer suggestions on how to reach the magic target of $5 trillion.

While it's true that we will only find out what came of this whole consultation hoopla after a month, we thought it would be nice if we could source some suggestions that will perhaps take center stage as we move along.

Did somebody say Consultation?🤔

Whilst visiting one of these multi level consultation programs, the CEO of State Bank of India, Mr. Rajnish Kumar had this to say when asked about the economy and ways to rejuvenate it.

Suggestion 1:  Government must spend 💸💸

When the government spends and it spends well, there’s a pretty good chance that some of this spending actually does some good. A road connecting an industrial hub to a port has the potential to create jobs, improve lives and increase productivity across the board.

However, when it’s not done right, as is most often the case, it’s a bit of a sh*t show and ends us wasting taxpayers hard-earned money. I am sure Mr. Rajnish (the CEO) was alluding to the former when he talked of government spending.

Suggestion 2 : No supply-side constraint (Not really a suggestion this, but you know...)

Translation - While some have heard whispers of banks being reluctant to lend, Mr. Rajnish seems to think otherwise. According to him, most banks are well funded and are ready to pounce on lending opportunities. Unfortunately, not enough people/businesses seem to be asking for loans. Therein lies the problem.

Suggestion 3 : Let's wait to see if Monsoon changes sentiments 🌧️

The Indian economy is still largely dependent on Agriculture. Maybe a good monsoon could gives us the necessary boost. Cause you know, when farmers earn well, they spend and when they spend, they help the economy... No? Okay.

Anyway we will have more on this story as we start getting additional details. Until then, lets hope that some of these suggestions actually work.

Give it a thought?

Also, we want to leave you with this little nugget from our twitter so the next time you go and plan your finances you'll keep this in mind.

That's it for today. Until tomorrow...