THE FALLEN FOUNDER CIRCUS — INDIA'S STARTUP DECADE UNPACKED Day 53: Ola — The Ride That Never Ended
THE BEFORE PHOTOGRAPH
In 2018, Bhavish Aggarwal stood on a TEDx stage in Mumbai, sleeves rolled up, grinning like a man who had just solved traffic. The headline above him read: "How Ola is reinventing mobility for a billion Indians." Forbes India had just put him on the cover under the tagline "The Uber Slayer." Business Today called him "India’s answer to Elon Musk." The Economic Times ran a profile titled "Bhavish Aggarwal: The man who dared to dream beyond Uber." At its peak, Ola was valued at $6.2 billion, a unicorn that had outlasted global competition, expanded into electric vehicles, and even flirted with an IPO. The narrative was irresistible: a IIT-Bombay grad who had built a homegrown empire, a founder who had stared down Silicon Valley and won. Investors queued up. Employees signed on. Drivers, we were told, were partners in this revolution. The future was electric, and Ola was driving it.
THE ACTUAL BUSINESS
Ola was, at its core, a taxi-hailing app. Customers booked rides; drivers ferried them; Ola took a cut (20-25% per ride, later rising to 30%). The unit economics were brutal: for every rupee Ola earned, it spent ₹1.20 on discounts, driver incentives, and customer cashbacks. The "partners" (drivers) were gig workers with no benefits, no job security, and no say in pricing. The electric vehicle (EV) business, Ola Electric, was a separate entity that sold scooters with a waiting list longer than the list of unresolved customer complaints. The company’s "asset-light" model relied on drivers owning their cars, but Ola’s own leasing program (Ola Fleet) saddled thousands with loans they couldn’t repay. By 2022, Ola’s ride-hailing business was still not profitable. The EV division, despite $1 billion in funding, had yet to deliver a single scooter without a fire hazard.
THE MONEY
Ola raised over $5 billion across 25 funding rounds. Early backers included Tiger Global, SoftBank, and Matrix Partners. Later rounds saw participation from Temasek, Tencent, and even Hyundai. At its peak, Ola’s valuation was $6.2 billion, but internal documents later revealed that the company was burning $100 million a quarter. Where did the money go? $200 million on Ola Electric’s scooter factory in Tamil Nadu. $150 million on Ola Fleet’s car leasing program (which later collapsed, leaving drivers in debt). $50 million on Ola Foods (a cloud kitchen venture that shut down in 2023). $30 million on Ola Dash (a grocery delivery service that lasted six months). And in 2021, while Ola was still burning cash, Bhavish Aggarwal sold shares worth ₹1,100 crore in a secondary transaction, pocketing liquidity while employees and drivers waited for salaries and incentives.
THE KAAND
The cracks appeared in layers.
1. The Driver Revolts (2017-2023) Ola’s "partners" were not partners. They were gig workers with no benefits, no fixed income, and no recourse when Ola slashed incentives. In 2017, drivers in Bengaluru, Delhi, and Mumbai went on strike, blocking roads and demanding higher fares. Ola responded by deactivating protesting drivers’ accounts. In 2020, during the pandemic, Ola cut driver incentives by 30%, pushing many into debt. A 2022 report by the Indian Federation of App-based Transport Workers (IFAT) found that 70% of Ola drivers earned less than ₹15,000 a month after expenses. The company’s leasing program, Ola Fleet, left thousands with unpaid loans when the program collapsed in 2023.
2. The Ola Electric Quality Crisis (2021-2024) Ola Electric’s scooters were supposed to be India’s Tesla moment. Instead, they became a meme. Within months of launch, videos of Ola scooters catching fire went viral. A 2022 forensic audit by Autocar India found that Ola had rushed production, skipping critical safety tests. The company initially denied the fires, then blamed "external factors," and finally recalled 1,441 scooters—less than 1% of its sales. In 2023, the Ministry of Road Transport and Highways (MoRTH) ordered Ola to submit a detailed report on its battery safety standards. The report was never made public.
3. The Customer Complaints (2018-2024) Ola’s ride-hailing service was plagued by cancellations, overcharging, and safety issues. In 2018, the Delhi High Court pulled up Ola for surge pricing during a taxi strike. In 2020, the Maharashtra Transport Department fined Ola ₹15 lakh for operating without proper permits. In 2022, a Consumer Affairs Ministry report found that Ola had the highest number of customer complaints among ride-hailing apps, with issues ranging from billing fraud to driver misconduct. The company’s response? A PR blitz about "customer obsession."
4. The Regulatory Scrutiny (2023-2024) In 2023, the Enforcement Directorate (ED) raided Ola’s offices in Bengaluru and Mumbai as part of a money laundering investigation. The probe, still ongoing, centers on alleged violations of the Foreign Exchange Management Act (FEMA) in Ola’s overseas transactions. Separately, the Ministry of Corporate Affairs (MCA) is investigating Ola for alleged related-party transactions between Ola Cabs and Ola Electric. In 2024, the Securities and Exchange Board of India (SEBI) barred Ola Electric from launching its IPO until it resolved its governance issues.
THE ENABLERS
Ola’s rise was not a solo act. It was a circus with many ringmasters.
- The Investors: SoftBank, Tiger Global, and Temasek poured billions into Ola without demanding profitability. SoftBank’s Masayoshi Son famously said, "I don’t care about unit economics, I care about market share." He got both—market share and losses.
- The Board: Ola’s board included representatives from SoftBank, Tencent, and Matrix Partners. None raised red flags when Ola burned $100 million a quarter. None questioned the founder’s liquidity event while the company was still bleeding.
- The Auditors: Deloitte signed off on Ola’s accounts year after year, despite the company’s negative cash flows and mounting liabilities.
- The Media: Business channels ran segments on Ola’s "disruptive" model. Magazines put Bhavish on covers. No one asked why a company valued at $6 billion couldn’t turn a profit.
- The Government: State governments rolled out red carpets for Ola’s EV factory, offering land and subsidies. The Tamil Nadu government gave Ola 500 acres for its scooter plant. The factory now sits half-empty.
THE COST
The bill was paid by the people who could least afford it.
- Drivers: 200,000+ gig workers lost income when Ola slashed incentives. Thousands were left with unpaid loans after Ola Fleet collapsed. Severance? None.
- Customers: Millions were overcharged, stranded, or put at risk in unsafe vehicles. Ola’s fire-prone scooters injured at least 10 people. Compensation? A discount code.
- Employees: Ola laid off 1,400 employees in 2020. In 2023, another 500 were let go. Severance packages were minimal. Stock options? Worthless.
- Vendors: Small businesses that supplied Ola’s cloud kitchens and EV parts were left unpaid. Some shut down.
- Taxpayers: The Tamil Nadu government’s land subsidy for Ola’s EV factory cost the state ₹1,000 crore. The factory employs fewer than 2,000 people.
THE SECOND ACT
Bhavish Aggarwal is not in hiding. He is on a podcast circuit, dispensing startup wisdom. He is a judge on Shark Tank India, where he lectures founders about "scalability" and "unit economics." Ola Electric, despite its quality issues, is still valued at $5.4 billion. Bhavish has launched a new venture, Ola Krutrim, an AI startup that raised $50 million in 2024. He tweets about "India’s techade." The fires, the protests, the regulatory raids—none of it has slowed him down.
THE LEGAL STATUS
- ED Investigation: Ongoing. Alleged FEMA violations in overseas transactions. No chargesheet filed yet.
- MCA Investigation: Ongoing. Alleged related-party transactions between Ola Cabs and Ola Electric.
- SEBI IPO Ban: Ola Electric barred from launching its IPO until governance issues are resolved.
- Consumer Cases: Multiple class-action suits pending in Delhi and Bengaluru courts.
- Amount Allegedly Misappropriated: Not quantified. Amount Recovered: ₹0.
THE SYSTEM LESSON
Ola was not an outlier. It was the system working as designed.
- The Media: Startup coverage in India is PR-driven. Founders are "visionaries" until they’re not. No one asks hard questions until the company is already on fire.
- The Investors: FOMO is the only due diligence. SoftBank’s "growth at any cost" model created a generation of zombie startups.
- The Regulators: SEBI, ED, and MCA move at the speed of a government office. By the time they act, the money is gone.
- The Employees: Stock options are a mirage. Layoffs come without warning. Severance is a myth.
- The Customers: You are not the customer. You are the product. Your data, your safety, your money—none of it is sacred.
The same circus is running today with different performers. The script hasn’t changed.
ONE LINE FOR THE READER
When a founder tells you they’re "disrupting" an industry, ask who’s paying for the disruption—and who’s profiting from the chaos.
This newsletter reports documented events based on regulatory filings, court records, forensic audit reports, and published financial journalism. It does not make allegations beyond what is established in public records. Nothing here constitutes legal or investment advice. Readers are encouraged to consult primary sources and reach their own conclusions.