Short Takes: Disrupting African Travel, One Ticket at a Time

Full Transcript

(00:01)
Wyclife Omondi: Yeah, entrepreneurship is hard. It’s your baby and you’re so tied to it, and that makes pivoting a bit difficult.

(00:16)
Darius Teter: Today on Grit & Growth, we dive into the challenges of bringing digital solutions to industries that aren’t fully ready for them. A quick heads up: Stanford Seed will be accepting applications for the Stanford Seed Transformation Program. You’ll have the opportunity to participate in a cohort of like-minded entrepreneurs from across your region. Please apply at stanfordseed.co/grit. Applications are due by May 1. Our guest set out to modernize transportation across Africa, but quickly realized that change doesn’t come easy, especially when existing systems depend on cash transactions, manual processes, and pen and paper. So how do you convince operators to adopt a new way of doing business? When do you hold your ground and when do you pivot? And what does it take to scale across multiple countries while navigating deeply ingrained cultural habits?

(01:17)
Wyclife Omondi: My name is Wyclife Omondi. I’m Kenyan, co-founder of BuuPass.

(01:23)
Darius Teter: In this short take, we explore the power of persistence, the necessity of adaptation, and the strategic partnerships that help transform a bold idea into a thriving multi-country business. Before launching BuuPass, Wycliffe took an unconventional path. Born and raised in Kisumu, Kenya, he earned a scholarship to study in Singapore and then moved to the United States to pursue a degree in economics. Along the way, he took a gap year to work in the Philippines, gaining global perspective on business and innovation. But it was the student competition, the Hult Prize, that set him on the path back to Africa. Along with his co-founder, he developed a business model to tackle one of Africa’s biggest challenges: transportation inefficiency. Their idea – using digital ticketing to bring transparency and convenience to a simple bus trip – won them the competition and a million-dollar grant. And with that funding, he returned home and launched BuuPass, determined to prove that digitizing Africa’s transportation sector wasn’t just possible. It was necessary.

(02:27)
Wyclife Omondi: When we started, we – our vision was to organize seamless movement of people. So we saw, for instance, if you want to book your ticket, you have to go to the bus station and book. You don’t know where the bus is coming from. You can’t book your seat, you can’t pay via local payment method. So we wanted to digitalize the bus network so that people can travel freely and access other opportunities.

(02:53)
Darius Teter: But I had to ask, why BuuPass? I mean, what does BuuPass even mean?

(02:57)
Wyclife Omondi: Buu is sort of, how do you call it, informal word for bus. So it’s a common phrase for bus in Sheng, what we call a version of Swahili. So that’s why we called it Buu. So buu means bus and pass means ticket.

(03:16)
Darius Teter: BuuPass promised efficiency and transparency, and the concept resonated right out of the gate, but only with some people. Bus operators, they like the idea, but station workers and ticket sellers, not so much. Like all disruptions, there are winners and there are definitely losers.

(03:32)
Wyclife Omondi: ​​​​Remember that cash leakage is one of the biggest problems we are solving. So the main user is the person that’s used to inefficiency, and a typical bus operator loses about $3,000 a day due to fraud. So when you want to cut $3,000 a day, so many people benefit from that, and that was the biggest blocker. So the owners had to be very firm and say, you are working for this bus company. This is the way we are going to work, and the technology has to be adopted.

(04:10)
Darius Teter: Those station workers had been gatekeepers for years, getting bus owners on their side and starting to show that digitization could work for everyone. Wyclife and his co-founder, Sonia Kabra, pushed on

(04:21)
Wyclife Omondi: The biggest blocker was not even the bus owners themselves. Because for them, they sense the value proposition, the fact that if they sell tickets online, they can get more customers. Instead of waiting for those customers to come to the station, they can predict demand. Because if many people book for weekend, I know how many buses to locate in Nairobi, which is the CBD [Central Business District], or Mombasa, which is on the coastal side, etc. And then they can also be able to write their analytics. And because most of the bus operators are financed, they have the records to take to the bank to show that this is how I’m performing and this is why you should extend the credit to me.

(05:04)
Darius Teter: Combined with better demand forecasting, stronger financial records, and more paying customers, bus owners welcome these changes. But I want to make another important point. Cash transaction businesses struggle to document their success to the satisfaction of traditional lenders who demand a pattern of demonstrable positive cash flows in lieu of collateral.

(05:24)
Wyclife Omondi: If you have a 50 percent occupancy, you are less likely to make profit or break even, but if you have a high percent occupancy, your unit economics are good. So they’re also seeing not only that they’re [not] losing customers, but also adoption of technology increases their revenue and increases the way they can expand their businesses. So the value proposition to them was very clear.

(05:48)
Darius Teter: The model was transferable, too. Operators want a full bus, a full train, or a full flight. Passengers want to know exactly how many seats are available in real time, and together it changes everything. Before BuuPass, passengers had to travel as much as 30 kilometers just to buy a train ticket. But now with a few clicks, they can book instantly right from their banking app, M-Pesa, or even a local merchant app.

(06:12)
Wyclife Omondi: We use the train here in Kenya.

In 2017, we digitalized the whole government train, and now 98 percent of all the train ticketing passed through our platform. There’s still about 2 percent of people that go to the station.

(06:28)
Darius Teter: Winning over the government-run trains was a major milestone, but BuuPass had an even bigger vision. They wanted to connect all forms of travel under one digital system.

(06:38)
Wyclife Omondi: We’ve also expanded to flights. So we’ve aggregated the equivalent of Google Flights or Expedia, but the niche here is we enable you to use local payment methods so you can actually search for flights to London, to New York, and you pay via M-Pesa or Airtel money. So that’s the niche.

(07:02)
Darius Teter: With buses, trains, and flights all running through BuuPass, the next challenge was scaling across borders. Expanding into new geographies means new regulations, new business cultures, and a host of other obstacles to overcome.

(07:16)
Wyclife Omondi: So we are operating in five African countries, so Kenya, Uganda, Tanzania, Rwanda, and South Africa. The operation, the market penetration vary. Of course, Kenya is the dominant because we started from here, but South Africa has really increased; 30 percent of the revenue comes from there and other countries as well. So we have a total team of about 54 across all the entities. We decide our expansion strategy with our investors and also we look at markets that meet the criteria of us operating in those markets. So for instance, does it have the bus network that deserves disruption, etc., does also, it has established local payment methods that we can use, whether it’s M-Pesa, MTN, etc. Also, we check in terms of the bus, rail, and flight networks and distribution channels as well. As I mentioned, we rely on distribution either through banks or telcos. Can we integrate with them? Are they open to technology, etc. So those are the key ingredients that we check, but mostly because the transport operators we operate with go cross-border. So today I can book my bus ticket here from Kenya to Uganda or Kenya to Tanzania. So when I sign a bus company that goes cross-border, I automatically scale with them.

(08:51)
Darius Teter: On a previous episode, we looked at the challenges of operating across fragmented markets in Africa. Wycliffe laid out some important conditions for success. Is the transport network right for disruption? Can we piggyback on transport operators to reach new countries? Are digital payments well established and can we integrate with their apps and the mobile network providers? Next up, how to find the capital to scale BuuPass.

(09:16)
Wyclife Omondi: We raised venture capital, which makes us a start-up. You have to achieve hyper growth with sustainable unit economics. So break even and making sure that we are scaling sustainably. We got investors like Google and other local angel networks, Five35, so many local investors. Then now we are just closing our seed round, which is the second round of investment, which $30 million round. And for this we’ve got investors, both local; 40 percent of the round came from previous investors, so they want to double down on their investment because they’ve seen the potential of the company and how it can grow. Then in terms of the new investors, we’ve actually gotten most investors from Silicon Valley actually.

(10:16)
Darius Teter: With expansion well underway, BuuPass had to decide how to enter new markets. In some countries, they launched under the BuuPass name. In others, they white-labeled their technology. But in regions like South Africa, they took a different route: acquisition.

(10:32)
Wyclife Omondi: We are exploring different ways of growing or selling directly license technology and acquisition. And it’s very common in this industry. So for instance, when you’re starting, there’s a company called redBus in India that does same thing as us, and they were acquired by a South African company called Naspers for 200 million in 2017. And even if you look at flights market, when Google was entering flights market, they had the option to acquire Booking.com or Expedia, etc., but they went and acquired ITS software, which is the platform that provides Expedia and the likes with inventory. So acquisition is a common strategy. So what’s important is doing the analysis of build and buy and realizing if you are to go through acquisition, what value will it add to you and will it be much different if you are to go alone and penetrate the market.

(11:33)
Darius Teter: From a student competition win to multi-country expansion, BuuPass has been constantly adapting. But as Wycliffe knows, growth isn’t just about holding your ground.

(11:43)
Wyclife Omondi: Yeah, entrepreneurship is hard. There are bumps and there are good sides. It just gets you to get started and join communities like Stanford Seed program or Founders Network or whatever support mechanism that’s closely available to you. And be open to learning and mentorship. So when you start your business, you’re always, it’s your baby and you don’t want anyone to correct your baby and you’re so tied to it and that makes pivoting a bit difficult. So BuuPass, we’ve learned by pivoting, if something doesn’t work, we reiterate and go, but also as the first go in Africa, when you go alone, you go this far, but when we go together, we can go much further. So value partnership and collaboration to make your business more successful.

(12:36)
Darius Teter: For BuuPass, the mission remains the same: seamless movement across Africa. And as they continue to grow, one thing is certain: they have to stay flexible and adapt to the challenges of multimodal transport and different countries and different partnerships.

(12:51)
Wyclife Omondi: So we want everyone in Africa to travel seamlessly without worrying about where they get their tickets, the prices, comparing different modes of transport, and also providing value to the transport operator so that they’re able to make their business much more sustainable and grow.

(13:15)
Darius Teter: I would like to thank Wycliffe Omondi for sharing the BuuPass story. From digitizing transport to scaling across Africa, his journey proves that success isn’t just about growth. It’s about forging the right partnerships, overcoming resistance, and making strategic pivots to adapt in every market. I’m Darius Teter, and this has been a Grit & Growth short take. Stanford Seed will be accepting applications for the Stanford Seed Transformation Program. This 10-month, part-time program includes a combination of face-to-face teaching, networking, and virtual learning, all based on everything the Stanford Graduate School of Business has learned about building businesses. You’ll have the opportunity to participate in a cohort of like-minded entrepreneurs from across your region. Founders and CEOs of companies based in sub-Saharan Africa, Indonesia, and South Asia with annual revenue of at least $300,000 are eligible to apply. For those interested, please apply at stanfordseed.co/grit. Applications are due by May 1. Erika Amoako-Agyei and VeAnne Virgin researched and developed content for this episode. Kendra Gladych is our production coordinator, and our executive producer is Tiffany Steeves, with writing and production from Nathan Tower and sound design and mixing by Ben Crannell at Lower Street Media.