Terence Zou, CEO and founder of RYDE Technologies, did not wake up one day and decide to improve the lives of commuters in Singapore. But a bad personal experience, coupled with business acuity, was a compelling enough reason for him to start carpooling app RYDE as an alternative means to travel. Indeed, as the proverbial saying goes, when life gives you lemons, make lemonade.

Zou recalls that two years ago, he was stranded at the city’s premier shopping haven, Orchard Road, as he was unable to flag down a taxi. “I went to Takashimaya to shop. I wanted to get a taxi to go home, but couldn’t. I was stranded there for two to three hours. In the end, I called a friend to give me a ride home. So, that was how I started thinking [about developing a carpooling app],” he shares at a recent media briefing.

And the rest is history. RYDE was founded in September 2014 and the app was launched in April 2015. It attracted a growing number of users as popularity surged. So far, the app has 20,000 users, comprising drivers and riders. In November, it successfully courted investors to raise $1.5 million in a seedround funding. Last month, RYDE launched its third iteration with improved features.

How the app works is pretty simple. Drivers and riders get to post their rides and requests respectively through the app. A proprietary algorithm then matches drivers to riders travel ling on a similar route. Both parties may choose to accept the match based on their preferences. Fares are calculated based on distance to defray costs. They are paid to the drivers directly. But if drivers are feeling generous, they may offer rides for free. All users of the app have to pay an annual subscription fee of $30.

Seizing opportunity
Prior to RYDE, Zou had little knowledge of the dynamics of transport. He had never worked in the industry before. But in the truest sense of entrepreneurship, that did not deter him. Instead, Zou saw and seized a business opportunity in carpooling when it presented itself. It was a confluence of sharp business acumen and an unfortunate circumstance.

“It’s a little bit of both. I’ve been driving around, so my perspective is from a driver’s [point of view]. I haven’t been taking too much public transport such as the MRT and taxis on a daily basis. So, when you really need one [and you don’t get it], it hits you.

“Secondly, I think [that carpooling] is a pie that is overlooked. Of course, there is a business part to it. People look at taxis, private hires and other solutions, but carpooling is something that has not been explored [in this manner], though people are starting to explore it now,” he tells Enterprise in an interview.

For background information, Zou draws on statistics from the Land Transport Authority (LTA). According to the LTA data, there are 11 million trips made in a day on average in Singapore. They comprise travel by buses, trains, taxis and cars. Private cars make up 30% of those trips and the average occupancy is only 1.7. With 600,000 private cars available to be mobilised, there is a huge potential to be tapped, he says. “This is a resource allocation and optimisation issue.”

Beyond that, there is also a social aspect to it, Zou says. With carpooling, RYDE — in theory — should reduce the amount of vehicles on the road. RYDE Technologies describes itself as a social enterprise that attempts to solve the congestion and pollution issues facing cities today. As such, the company is registered with the Singapore Centre for Social Enterprise, an entity that encourages and promotes social entrepreneurship.

Zou does not think that being socially conscious means RYDE has abandoned its financial goals. On the contrary, it is still a business. “The other part is to reduce the carbon footprint. That is the difference that we can make. I think this mission would be fulfilled [while making profit],” he says.

Overcoming challenges
When Zou started the company, it was no easy feat. For one, a business derived from carpooling was largely sailing in uncharted territory legally. There were concerns that a car owner who offers to carpool could be seen to be operating a pirate taxi service, given that payments meant solely to split the cost of transport could be perceived to be profit-making.

But thankfully, the LTA brought clarity when it announced a set of rules and regulations governing carpooling in March last year. That was a month before RYDE was launched, much to Zou’s relief. “We were very happy that they made the announcement in March. The fact that Singapore was the first to clarify its position means that it is one of the more forward-thinking countries in terms of the sharing economy,” he says.

Attracting the right talent and building the team was challenging, according to Zou. Convincing stakeholders that RYDE would succeed was another challenge. Also, the algorithm employed by the app requires careful tinkering. “Much work, trials and tweaking is involved. We are constantly improving it,” he says.

Perhaps Zou’s leadership and expertise were what enabled RYDE to overcome its challenges. A graduate from Harvard Business School, Zou’s résumé includes stints in investment banking, hedge funds and private equity at various financial institutions. He also taught finance and economics at the National University of Singapore, Murdoch University and SIM University. Prior to a career in banking and finance, Zou served in the Singapore navy for eight years. “So, that was my experience. They are all the qualities I needed to build a start-up with confidence because management, strategy and financing are important,” he says.

Now, as RYDE prepares to enter the Hong Kong market in the second quarter this year, Zou remains unfazed at the increasing competition here. GrabHitch is the latest to join the fray, apart from a host of other existing carpool apps and websites. “Some models try to do everything. But I think [carpooling] is something that we understand. We are confident,” he says.

This article appeared in the Enterprise of Issue 714 (Feb 8) of The Edge Singapore.