Monday, October 01, 2012

Coordinate the less sophisticated public transportation


I have recently noticed that there is no app to coordinate the bus system in places like Bogota where the system is NOT all centralized. I have to explain how the system works here in Bogota for everybody to understand. There are two bus systems in Bogota, one that is coordinated by a private-public partnership (TransMilenio) and the other that is a collection of private providers with their own buses (Lets call the second one TransOld for easy understanding). For TransMilenio you have a couple of apps that can tell you about how the system works but nothing that actually tracks where the different buses are. For TransOld is even worst because there each provider has their own way to coordinate the buses. That means that you will find a person hired by the provider every X kilometers controlling how the bus drivers are doing in terms of  time-to-the-next bus. As a user you do not have a clue about when is the next bus going to arrive. Keep in mind that buses from the TransOld system stop wherever they want not at your usual BusStop making the entire process even more desorganized.


The idea is pretty simple. Build an app that can help both private providers of the TransOld system and users of the system. For the providers the app will help them track their own buses and coordinate them via cellphone. For the users the app will show them where the bus is on the map. The app will allow specific searches so you can find out which bus you need to take to go to X location. Then it will tell you where the closest bus is and how much time do you have before it gets there (probably with some connection with Waze for traffic). We can probably do some type of similar app for the Transmilenio, not to help the provider but to help the users in real time. 


I am actually not sure about the business model here. We can probably charged the provider some amount that can be less than the salary of the people he hires to do the job now. From the users perspective, we can probably charge for the premium app giving them a basic app for free. The business model is limited to the amount of people that have smartphones (I am guessing) and the amount of people that will invest in the premium app. Assuming that the TransOld system transports half of the passenger of the Transmilenio that means 2.5M people in Bogota, the revenue from app sales will be at probably around US$1M. We will probably need to charge US$0.99 every year to give the users the necessary updates. The revenue from the providers is a little bit more difficult to calculate. Assuming (a) that each provider has at least one person controlling the process right now at minimum salary (US$250/month), and (b) that TransOld has at least the same amount of the buses that Transmilenio (~2K), the subscription revenue will be US$6M a year. Now, imagine in how many cities you can introduce this system and multiple our US$7M by that number. It is probably a US$100M business just in Latin America.