Monday, 04 March 2024 04:38

50-year-old mom built a $1.3 billion startup inspired by unreliable school buses: It was ‘an aha moment’

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Sometimes, the ride to school for Ritu Narayan’s children arrived on time. Sometimes it didn’t.

Whenever her kids’ transportation plans fell through, the longtime tech product manager at companies like eBay and Oracle had to enter crisis mode and drop everything at work. She thought of her own mother, a former teacher in India who faced the same problem decades ago — and ultimately put her career aside to raise four children.

Narayan’s solution: She left her job to create Zum, an AI-backed electric school bus service that launched in 2015. It started as something of a self-funded Uber, chauffeuring kids to school with a fleet of vetted private drivers. Parents arranged rides ahead of time and tracked their child’s location through Zum’s app.

It caught on quickly with Bay Area parents. “The demand was super clear,” Narayan, 50, tells CNBC Make It.

Then, in 2019, she asked some local schools to promote Zum to parents. Instead, the schools offered to enlist Zum as a privatized school bus fleet, with electric vehicles and tracking abilities.

Narayan faced a turning point: Stick with her original vision, inspired by her mother, with its clear market and high demand? Or completely revamp Zum’s services and infrastructure, while jumping straight into competition with larger established bus companies?

The customer base would be larger — more than 25 million U.S. studentsrely on school buses. But chasing them could collapse her company.

She took the risk. Five years later, Zum is valued at $1.3 billion, and Narayan was named to the inaugural CNBC Changemakers list on Wednesday. The startup has more than $1.5 billion worth of contracts in place with over 4,000 private and public schools across California, Washington, Texas, Illinois, Tennessee and Maryland, Narayan says.

Here, Narayan discusses her thought process behind that difficult decision, why her choice paid off and her advice for anyone facing a dilemma that seems to pit emotion against logic.

CNBC Make It: Why was the decision to change Zum’s focus so difficult? How long did you deliberate?

Narayan: It took me a while — eight months, or so — because there was a personal story attached to the founding story. [My mother] faced this problem in India and I was here, sitting in the center of Silicon Valley, the center of innovation, facing the exact same problem.

I knew [Zum’s original model] was changing the lives of working parents. Working women would write to us how they went back to the job, started to advance more — because they didn’t have to run at 4 p.m. to pick up their children — and got promoted.

It was a success. So it felt like, in a way, you were letting them down by not having that service anymore. What helped me make a decision was when I could internalize this: In the end, I’m still serving children and I’m still serving parents.

Did it feel like a big risk to abandon a business model that was experiencing some success?

Yes, absolutely. We didn’t have specialization in running buses, so it meant a new set of capabilities that we would have to build. We had to reorganize the team, convince our board and investors.

We got momentum [from winning a five-year, $53 million contract with the Oakland Unified School District, which began in 2020]. There was a large customer, and their launch was a success for us. So everybody got aligned around something immediate and large to solve.

Then, the pandemic happened and all rides to school stopped for around five [or] six months. That gave us a “when life gives you lemons, you make lemonade” type of situation. Since we weren’t in day-to-day operations, and we didn’t have to really serve existing customers, we used that time to very quickly enhance our product.

What’s your best advice about recognizing windows of opportunity and knowing when they’re worth the risk?

One of my investors calls it a crucible moment — where you could die, or you’re just surviving, or you could fly.

I have to give this analogy: A parent is always seeing, when a child is around, what could go wrong. It’s by default. [You need to be] always thinking about how the market is evolving, how the business is evolving, how the competition’s evolving, how the customers’ needs are evolving.

Many times, the needs change in the market. Many times, you land upon something unexpected, which happened in our case, which is even bigger than what you initially thought.

In those cases, [you] have to evolve, because it’s that crucible moment. If you don’t make the right decision, you wouldn’t be as successful as you could be.

This interview has been edited and condensed for clarity.



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