Business Insight
Mobility

This startup is the fastest growing in the US. Here's the journey of how they started the business.

Josh's Product Letter
February 2, 2024

Getting kids to school safely is an age-old challenge that has accompanied public education.

But for nearly 100 years, few entrepreneurs have disrupted the legacy public transportation system. It's still a common sight in the U.S. to see drivers talking on their walkies and loading kids into yellow buses that spew out fumes.

Today, we're going to meet Ms. Ritu Narayan, an Indian entrepreneur who has revolutionized this 'transportation to and from school'. She's a rising female CEO in Silicon Valley and the founder of Zūm, a sustainable environmental business with electric school buses. Zūm is currently expanding its business across the U.S. in San Francisco, Seattle, Chicago, and beyond.

(Source : Zūm)

The dilemma every working mom faces

Narayan's mother had to leave her job to raise her children. Ms. Narayan says she didn't know why her mother quit at the time and was focused on her education. But when she got married and her children started school, she faced the same dilemma as her mother.

Ms. Narayan was a product executive at eBay at the time, and there were times when she had to drop her children off at preschool, and the school bus would miss or not show up.

And even with a childcare plan in place, she often had to leave work early, and the lack of available safe and reliable transportation meant she was late or had to give up on commute. I think all parents with children can relate to this.

(Source : Zūm)

Faced with the same dilemma her mother faced 30 years ago, Narayan said, "I can't believe how little has changed." She realized that her problem was universal and transgenerational, and she was determined to find a solution that would open up new possibilities and opportunities for all parents.

Emailing parents to test the hypothesis

Narayan's initial hypothesis was to create an "Uber for working dads/working moms." The product was first named Liftee. To test the idea, she created a landing page for a preliminary prototype and emailed a group of parents in the Palo Alto area.

The subject line was "Drivers, please be parents." It indirectly touched on parents' safety concerns. It was a risky business to put your child in the car of someone you don't trust. You had to trust their driving record, the cleanliness of their car, whether they were going to be on time, etc. The email said she could solve that problem.

(Source : Zūm)

In the next 24 hours, over 300 parents responded, showing interest. They also heard Liftee casually mentioned in conversations with other parents, and were contacted by Google, who wanted to make it an employee benefit.

"It hadn't even been released yet, and people were trying to contact me in all sorts of ways to get it."

(Source : Zūm)

Investing in detailed user research over a quick launch

Realizing the strong demand, Narayan wanted to launch the app quickly, but decided to take a different approach than her competitors: she decided to spend most of her time interviewing customers and conducting market research because it was a "child safety" service.

Narayan spent a whole day talking to parents to understand their most pressing concerns. The real-time tracking technology was easy to build, but it was more important to make sure they hired good, trustworthy drivers and how they communicated that, so they created a separate training program for drivers.

(Source : Zūm)

It's not that they didn't do product design during their research - the first version was a website that collected information in Google Sheets, assigned drivers via PDF, and took payments via Paypal.

Everything was done manually in the early days, and the average customer didn't know about it. Then, after running a competition to name the service Zūm, the service launched in 2018. 

(Zūm, the name of a child who won first prize in a contest)

Pivoting to B2B despite high retention with B2C app

Zūm's B2C(Business-to-Customer) app launch was a huge hit with parents. It had 90% weekly retention, 40% daily retention, and within a few months the team was able to hire hundreds of drivers across six San Francisco Bay Area locations.

(Source : Zūm)

To get more parents to sign up, Narayan visited schools across the Bay Area to pitch the app to parents. But what she found was an untapped market that she hadn't anticipated. Narayan discovered a need in the B2B market: schools.

(Zūm provides small SUVs, vans, minibuses, and coaches with operators, Source : Zūm)

Many schools wanted smaller vehicles because 10-20% of their routes were inefficient - it took 30+ buses to pick up 5 kids. This was due to decades-old infrastructure and inflexible systems in public schools. Zūm was able to deploy SUVs on routes with 5~6 students and mini buses on routes with less than 30 students.

Once they realized there was a demand, Zūm started selling aggressively and won a $1 million contract with the Children's Healthcare Commission in Palo Alto. They also won several smaller contracts to replace regular routes.

But doing B2C and B2B at the same time was a huge resource drain, and most of Zum's growth was in B2B. The school district contract was much more lucrative, so after about eight months of consideration, Narayan decided to make a product pivot.

Finding new opportunities in an outdated legacy 

Zūm was in the business of "replacing" 10-20% of the routes at the time, but as more and more contracts were signed with school districts, Narayan began to reach out to transportation officials who were using outdated infrastructure for the remaining 80-90%.

But the municipality didn't want to change these contracts. Narayan persevered and convinced municipal officials and school district transportation managers. The key factor in her persuasion was to leverage the company's strengths: electric vehicles and software capabilities.

(Operate electric buses + supply dedicated software, Source : Zūm)

Electric vehicles were an inevitable change in the market, but school bus transportation was not yet, so she expected government support and market expansion in this area. After eight months of deliberation, Narayan decided to completely shift her business to B2B.

Optimize operations while strengthening software

Rather than trying to be a one-stop shop for school buses, Narayan partnered with an existing electric bus operator and decided to upscale the Zūm software to enterprise-level capabilities.

The technology has helped her streamline the bus fleet in Oakland to 73 buses from 103, reduce the number of students who spend more than an hour traveling to school from 70% to 10%, and secure a 98% on-time pickup rate and 250,000 five-star reviews.

(Source : Zūm)

Key Features

  • Drivers can notify parents and schools in real time when a child is sick with a voice-activated tablet
  • Drivers can reroute based on real-time demand
  • Parents can see their child's location and status at all times
  • Schools can view vehicle, driver, and child locations
  • Driver cameras can prevent incidents such as bullying and drug use on school buses

To give kids a sustainable and safe world

Today(2023), Zūm serves 4,000 schools in six states. Since transitioning to B2B, in 2021, Zūm raised an additional $130 million in Series D funding, bringing its total valuation to $1 billion, and aims to deploy 10,000 electric buses nationwide by 2027.

(Committed to electrify 90% of diesel buses by 2027 + become 100% carbon neutral, Source : Zūm)

"We're only 0.6% of the market, and we're expecting big growth. We're going to continue to help kids and parents. With electric buses, we're going to get cleaner air for their brains and bodies, we're going to shorten their commutes so they arrive refreshed for class, and our 1,000+ drivers have their students' names and individual needs at their fingertips. I'm going to keep driving Zūm until the wheels all look alike." - Ritu Narayan (interviewed with Entrepreneur)

By 2022, there will be more than 20,000 public school districts in the U.S., and Zum hopes to be in every one of them. We're excited to see Zūm's growth continue.

What we learned from Zum's business development process

 

1.Create a "landing page for pretotypes" first to find a PMF.

Zum was able to identify the needs of a specific target audience before making a business decision.

 

2.Gain "customer trust" through user research before the actual app launch. 

As the founder of Zum is a mom, she understood that hiring a reliable driver was the most important issue for her core audience and solved it first.

3. Find the right balance between B2C and B2B.

Zum quickly let go of the founding narrative they had built through B2C in favor of a bigger vision and shifted to B2B, which is a testament to Narayan's flexible thinking and rational decisions.

Narayan started as a small transportation alternative app, but as the business grew, the vision kept getting bigger and bigger, and I thought it was great that Narayan wanted to lead the way to a 100% electric school bus society. You see, founders grow like products, businesses, and companies grow. 

💡 Don't forget that your problem can lead to social innovation. If you stay flexible and persistent as an entrepreneur, you'll be able to grow your startup into a scalable business.

Written by Josh’s Product Letter (Link)

Original Text: 육아로 커리어를 포기하려던 엄마, 1조 가치 전기 스쿨버스 회사를 만들다

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