Professional Documents
Culture Documents
Round 2 Case
Round 2 Case
IN MARCH 2019, during Nostrobank’s investment vehicle arm Venture Fund’s annual meet, its
India chief Namit Joshi wanted to introduce Nostrobank’s portfolio companies to the head of
Middle East’s Sovereign Wealth Fund (SWF), Tahim al Amir and Prince Ahmad, who were on a
state visit to India. SWF had committed CHF 52 billion to the Venture Fund.
The founders of Cashgo, Hoya, and Doordeliver, the pick of Venture Fund’s portfolio, were
assembled at a Delhi hotel except one — Naitik Mehta, the founder and CEO of CTC
Technologies. The word on the street was that Mehta was fighting a battle to keep control of
CTC, the owner of Bengaluru-based ride-hailing company Speedo.
The German conglomerate, led by Charles Fischer, was an early backer of Speedo, having
invested CHF476 million in two rounds. But Mehta became increasingly concerned after
Nostrobank took a large stake in Brown Technologies Inc in early 2018, his direct competitor,
and began talking about merging the two. Brown Technologies was slated to go public, and
Charles Fischer would have wished for nothing more than Speedo selling out to Brown so as to
give the US-based company complete dominance of the Indian market while collecting higher
proceeds from Brown’s IPO.
Most entrepreneurs do not mess with Charles Fischer. But Mehta was an exception. Anticipating
Nostrobank’s moves, he launched a new venture — Speedo Electric in April 2017 and kept it away
from the parent, CTC Technologies. He then got Prakash Zaveri who is a veteran industrialist
and angel investor, Excel Fund, and Hexon Partners to invest INR420 crore in his new venture in
a series of funding rounds starting March 2019.
The premise was grand. Speedo Electric’s mission was to become “a platform to work with
driver-partners, cities, vehicle manufacturers, battery companies, and others to make
sustainable technologies cost- effective and viable in daily mobility.” In July 2019, Fuji Motor
company committed CHF310 million into the new venture.
This was nothing short of a coup. A startup with no underlying technology, market access, or
even customers, had fast become a unicorn. Apparently, since it did not want to be left behind,
Nostrobank also invested CHF255 million in Speedo Electric in the same month.
But the big question was whether Mehta would succeed in shared- and electric-mobility, a
segment with no global blueprint, let alone in India. Will Speedo Electric turn out to be just
another giant experiment or will it be the “vehicle” that propels Mehta to be the pioneer in a
completely new category of mobility? More so, at a time he was trying to achieve profitability
in core business and managing half a dozen experiments going on at the parent company.
This case study is to be used only by students of XLRI as a part of their evaluation process
The history of Speedo and Naitik Mehta
Mehta is not faint hearted when it comes to entrepreneurial experiments. In 2010, his XLRI
institute batch mate Aditya Singh and Mehta started Speedo Trips. They started with a website
and took rental bookings over email and phone and fulfilled the orders through a bunch of taxi
operators they had tied-up with. Soon, the duo launched an app that matched riders with
Speedo’s “driver partners”.
Speedo has raised CHF3.2 billion to date and is currently valued at CHF5.6 billion. Key investors
in the startup include Nostrobank, Excel Fund, Fincent, Hexon Partners, and Terex Global.
In due course, apart from upgrading its fleet with a variety of cars from hatchbacks, sedans, and
SUVs, Speedo even added auto rickshaws. The startup had the Indian market all to itself until
2013 when Brown entered the country. Brown (then led by its aggressive founder John
Hampton) had the capital to burn and attracted riders with discounts and driver partners
through incentives. Mehta got a shot in the arm in 2014 when Nostrobank invested in the
company.
Both Speedo and Brown burnt a slug of capital, as much as CHF300 million-CHF400 million at
their peak in 2015-16, on costumer and driver subsidies. The playbook was similar — discounting
fares and incentivizing drivers to shore up ride numbers.
In early 2015, RideForYou (RFY) was up for grabs as survival became tough for the third player
in the taxi-hailing market amid the Speedo-Brown onslaught. Brown was close to buying RFY,
but Mehta outbid it and acquired the company in a CHF210 million stock-and-cash deal.
In mid-2015, the company launched Speedo Café (a food-delivery service) and Speedo Store (a
grocery-delivery service), only to wind them up within months. This setback, followed by a
funding drought, valuation markdown, and tough competition from Brown forced Speedo to
stick to its core cab-hailing business. It also shuttered RFY and fired around 1,000 people in
August 2016.
In 2017, Mehta acquired Foodstep to compete with BrownEats (Brown’s food delivery service)
and adopted a similar approach of discounting to sustain in a market dominated by two big
players — Ketto and Zolo. In 2018, Speedo went international with its core offering, entering
Canada and New Zealand, followed by the UK. The company wants to reach 50 cities globally.
This case study is to be used only by students of XLRI as a part of their evaluation process
The attrition problem
Speedo has had a troubled history when it comes to retaining key people. The company has
many times launched new services and hired senior executives from large firms to run it, only to
watch them leave soon. While Speedo did manage to attract key people from large
organizations, its highly contextual and nearly inexistent process and organizational culture
prevented these high-profile hires from fitting into the company’s way of working. Coming from
large and process-oriented organizations, it was difficult for these senior professionals to fit into
Speedo’s culture. This people-organization fit is still an unsolved problem for the startup.
Meanwhile, there has been a lot of speculation on why senior executives with impressive track
records do not stick with the company.
“Speedo is an extension of the XL Mafia,” says a Speedo employee who did not wish to be
named, referring to the alma mater of the company’s top leadership.
“Most of its founding team started Speedo immediately after their studies. At XLRI, they would
catch up at 11 am in the morning and spend time up to 4 am the next day at Bishus’ canteen.
They work the same way in Speedo, helping it scale very fast, but that does not sit well with
people at different stages of life and career.”
Mehta may see himself as the Hannibal taking on the Rome of Brown, but the loss of key people
deprives him of the human capital he so desperately needs for the great battle.
As a result of the stiff competition up to 2018, Brown and Speedo ran out of the necessary
financial resources to keep discounting to gain market share. They had to raise fares by around
15%-20% in non-peak hours in major cities to achieve profitability. Consequently, both have
seen a stabilization in their market shares.
However, for consumers this meant longer waiting times — from an average two-four minutes
a couple of years back to 12-15 minutes as drivers have become highly selective in search of
better- paying rides. Even though Speedo is present in more cities than Brown, the latter
dominates the metros where more trips are recorded.
Though growth has stagnated, CTC has projected that it will turn in a profit this year.
Meanwhile, the competition is turning fierce in the international markets. In the UK, Speedo
faces Brown and at least seven other ride- hailing companies such as Findcab and Myride. While
This case study is to be used only by students of XLRI as a part of their evaluation process
Brown has already turned profitable in Canada, Speedo will have to battle Garex, Taxigo, Perch,
Rider, and Chinese taxi giant Meishu in addition to Brown.
In the food-delivery business in India, Foodstep is all but finished even as market leader Zolo
battles its close competitor Ketto. Both have moved beyond food delivery to either set up cloud
kitchens or open the B2B food-supply chain.
One of Speedo’s biggest investments was in Speedo Play, the connected- cars and
entertainment ecosystem. The entertainment segment is now an intensely competitive market
with streaming service providers such as Rhythm, Webcoms, E-kart Prime, and UPlay offering
content directly on smartphones. It is unclear how Speedo Play will find synergies with the
Speedo Electric venture.
INDIA faces the same set of problems as the rest of the world when it comes to electric vehicles
(EVs). The main problem is the battery.
Lithium-ion batteries are expensive, and they have a limited shelf life of only a few thousand
charge-and-discharge cycles. This means frequent expenditure on new batteries, a significant
capital cost.
The next biggest problem is the charging infrastructure. Unlike a fuel station where one can refill
in four-five minutes and drive for another 350kms-400kms, most EVs take much longer to
charge fully. But even after that their range may be limited to 120kms-150kms. Given the state
of global research on Li-ion batteries, end-use technology is still a few years away. Speedo
Electric has started on-boarding cycle rickshaws, but most of them run on lead-acid battery
technology which works for short commutes.
Unlike Speedo cabs, for which a mobility industry ecosystem already exists, Speedo Electric
must build one comprising EVs and Li-ion battery makers, charging stations, supply chain and
reverse logistics as well as inducing supply-demand for ride hailing.
The government of India has said it will create policies conducive to EV mobility, but it is not
clear if operators and customers will be joining the marketplace any time soon. A 2016 report by
a globally accredited consulting firm puts Indian market in the ‘hesitator’ category for the
adoption of electric passenger-vehicles.
This would imply that the players may choose to wait-and-watch. Speedo’s core competence
has been technology — creating app-based platforms that bring suppliers and buyers together.
Stitching together a new ecosystem might prove to be a big challenge for a company whose
culture revolves around building platforms rather than knitting up partner networks with shifting
loyalties.
This case study is to be used only by students of XLRI as a part of their evaluation process
Stakeholder dynamics
The startup world is aware of the tension between Mehta, Nostrobank, and Excel Fund — the
fund that backed one of India’s e-commerce giant Yeskart. The heart of the problem is the
control of the company. However, unless Speedo starts generating positive cash flows and
profits, Mehta must continue to depend on the deep-pocketed funds for financial support.
Dealing with Charles Fischer, widely seen as a maverick, has not been easy either.
Nostrobank did come on board with a CHF255 million funding in Speedo Electric, but it did so
after the latter had already secured sizable funding from Hexon Partners, Excel Fund, and
Prakash Zaveri.
Nostrobank has been investing in renewables, including EVs, in other countries. While Mehta
may have reasons to believe that he has earned some protection against takeover, especially
after the funding in September 2019 by Fuji Motors and Fin Motors, he may have to watch
Nostrobank’s moves very closely.
Speedo Electric is an audacious attempt in a nascent market and success can almost surely make
it a dominant player. However, the curse of being a true pioneer (like Speedo Electric) is that
there are no established playbooks. When Mehta started Speedo, he could look at Brown, Plift,
Biza, and Meishu to borrow ideas. But Speedo Electric has no such examples to follow.
Further, EVs need to solve the range and charging infrastructure problems before they see
mainstream adoption.
While it is no surprise that platform strategy has remained at the heart of Speedo Electric’s
stated vision, it is unclear whether a platform approach will be enough or whether Mehta should
focus first on building an industry ecosystem of partners and other stakeholders.
Putting together a coalition of diverse players with shifting loyalties and changing contracts is
easier said than done, especially on a scale that he has never attempted before.
This case study is to be used only by students of XLRI as a part of their evaluation process
Here are some unanswered questions:
1. What are the strategy levers available to Mehta, and how does he put together a
coherent winning strategy for Speedo Electric?
2. Can Mehta script a success story in a segment where there are no play books to
refer to? How will Mehta negotiate this challenging path while managing Speedo
and its half a dozen initiatives?
3. Can Mehta assemble a team, delegate effectively and find a business model to
succeed? Does he have the organizational muscle to manage the complexity
when most of his trusted lieutenants have left and new leadership hires are
proving to be short-lived?
4. Maintaining a robust charging infrastructure will be key to success. What will be
the implications on the overall ecosystem and business model if non-
conventional players make an entry into this domain or some existing
conventional partners go out of business? How can Mehta ensure a future-proof
ecosystem of players?
5. How can Mehta manage the constantly evolving consumer and supplier
segment? Is it sufficient for Speedo Electric to be platform-centric? Are there
elements of strategy that should go beyond an IT platform?
6. How can Mehta create a partnership model that obtains B2B players’ alignment
to the common strategic dimension, but remains sufficiently flexible to operate?
This case study is to be used only by students of XLRI as a part of their evaluation process
Exhibits
Exhibit 1:
Speedo Fleet Speedo acquired ZCabs, owned Saurabh Seth joined in Jan 2017
2015 by Cadabra Cabs India in and left in Dec 2017. With new
January 2015 and renamed it logistics companies entering,
Speedo Fleet to focus on competition is intensifying.
leasing business.
Exhibit 2:
This case study is to be used only by students of XLRI as a part of their evaluation process
Recent Exits from Speedo
Name Designation
Exhibit 3
This case study is to be used only by students of XLRI as a part of their evaluation process
Financial Timeline of Speedo (in INR Crore)
Loss
Exhibit 4
This case study is to be used only by students of XLRI as a part of their evaluation process
Exhibit 5
1
15
6 40
7.5
4.5
25
This case study is to be used only by students of XLRI as a part of their evaluation process
Submissions Guidelines:
1. All assumptions should be clearly mentioned at the start of the submission
2. There is no limit on the number of slides for the submission
3. Any supporting information should be included as part of Annexure
4. Number of annexure slides should not exceed one slide per question
5. Please mention the source of data and references wherever applicable
6. Use font type Cambria with font size 44 for the headers and font size of 20 for text
answers
7. Scoring will be done on the quality of your solution (feasible, logical, flexible) and
quality of presentation/presenter (competence, argumentation style, resource
efficiency)
8. Total duration of the presentation must be 10 minutes (each member must participate)
followed by 5 minutes of Q & A
9. Sacrosanct deadline for the submission is 9:00 AM, 9th July 2021. No further extension
will be provided
10. Upload your submissions at https://forms.gle/WV7iGLDvw8SVBgXP9 .Only one person
per team needs to submit. PDF format only. Max file size is 10 MB. Naming convention
to be followed is TeamNumber_R2.pdf
11. Evaluate your team members at https://forms.gle/yZskH6HqbM24suEy8 .
Every member of the team must fill in this form, after the case has been submitted
12. Details of the presentation schedule and final round will be communicated later
Take suitable assumptions and use your best judgement wherever necessary. You may reach
out to us at evalcom@astra.xlri.ac.in. Only in case of critical queries you may contact Vaibhav
Sharma (8638409932) or Sanishtha Bhatia (9674005222) for clarifications.
This case study is to be used only by students of XLRI as a part of their evaluation process