Giovani Ravagnani: “We have the potential to grow tenfold in the next two years”
Giovani Ravagnani is head of legal at Buser, Brazil's leading collaborative road transport platform which, since its foundation in 2017, has already transported over two million passengers. In this interview, Mr. Ravagnani takes us through how Buser has revolutionized Brazil's collective transport market, the company's main legal challenges due to its disruptive innovation model – with several ongoing lawsuits seeking to suspend Buser's operations – and its plans for 2021 and beyond.
Leaders League: What is Buser and what does it do?
Giovani Ravagnani: Buser is a digital platform which is helping democratize and open up, in a regulatory sense, the collective road transport market in Brazil. Historically, collective road transport in Brazil has been a thankless experience with limited routes available and only a handful of companies to choose from. When purchasing a long-haul bus ticket, you were often left with a bitter taste in your mouth at having paid over the odds. Still today, the cost to benefit ratio and user experience are terrible and high prices mean a large part of Brazil’s population is priced out of affordable access to public transport. Analyzing Brazil’s collective road transport market, we quickly understood that the key problem stemmed from a lack of competition.
Buser was born on June 2, 2017, initially as a bus-ride-sharing page on Facebook where the benefits of ride-sharing for passengers were regularly shared. In less than 30 days, without any marketing and relying only on word of mouth, the page reached 10 thousand followers. A route between São Paulo and Belo Horizonte was swiftly established and Buser’s first trip took place on July 7, 2017, lasting a mere one hundred meters before our vehicle was seized by authorities. This is a snapshot of how our story would develop over the following years. It showed us that demand for fairly priced and high-quality collective transport existed.
Our fleet of buses is executive standard, the seats are superior grade and our prices are much more competitive than those of our rivals. Additionally, we meet the highest safety standards in the market. These qualities have captivated consumers and given us the ability to take on the huge companies which have dominated the Brazilian bus market for the last 50 years. Buser began as a collaborative platform – passengers would split the bill of a chartered bus – in partnership with bus chartering companies. Thus, like Tinder, Uber or 99, we help connections to happen. The only difference is that we help people to find each other and, later, to find a bus chartering company. Recently, Buser has consolidated its ride-sharing business and evolved – we are now considered a multiservice collective mobility platform, one that is entering into new segments, such as a marketplace for bus tickets sold by major companies as well as parcel shipping.
We are winning the war against those standing in the way of innovation
On February 26, the 10th Federal Court of Rio de Janeiro banned Buser from operating in the State of Rio de Janeiro. What are the main legal challenges which Buser faces today due its model of disruptive innovation?
Buser’s main regulatory challenge is a federal rule which states that land charter operations must, mandatorily, occur within a ‘closed circuit’ system, which means that bus companies must always transport the same group of passengers both ways on any specific journey. This federal rule also forbids passengers, on the same bus and route, from having different destinations.
We believe this rule was created and imposed as a market barrier. So, when I say that Buser goes to court to fight for its existence, this means we are fighting to demonstrate the unconstitutionality of this rule requiring the mandatory sale of two-way tickets, as the market will only become efficient if we can overcome this ‘closed circuit’ charter model. Were this to occur, we would be able to charter one-way trips and create a more flexible road transport system, fulfilling consumer demand. This, for example, is how air travel works.
Our first legal victories were obtaining injunctions, which have been upheld in many Brazilian states and courts to this day, sparing Buser from the effects of this rule. We can highlight Minas Gerais as the main state to have removed obstacles to Buser’s operation and opened the market for our company. Today, I consider Minas Gerais to be the ‘blue ocean’ for Buser, from a regulatory, legal and normative standpoint.
The Federal District is a market we are having a hard time breaking into, despite having several routes which cross it or on which passengers embark or disembark from our buses. The Rio de Janeiro State legislature is split. We recently overturned one of the decisions which we had lost back in April. We have both favorable and unfavorable decisions there, regarding both Buser and our partner companies.
São Paulo is a state in which we are well-positioned and enjoy several favorable decisions, both at federal and state levels. At a state level, it is here that we secured the best appellate ruling in the country, which cited the evolution and growing importance of technology in the world. As for the South of Brazil, we don’t yet operate charter routes there, only traditional bus routes.
I truly believe in the positive role of technology and this I why I joined Buser. When I was a senior legal manager at 99, we obtained several precedents in favor of innovation, during the 99/Uber legal campaigns in Brazil. As such, I truly believe we are currently winning the war against those standing in the way of innovation.
Everything is about organizing data and storytelling. The story we are trying to tell is that of democratization, which is innate to Buser, but which we have not yet managed to embed into our legal arguments. For example, to what extent can Buser democratize access to collective road transport? We must translate our figures into data which any judge will immediately understand. One figure we have is that 45% of individuals which use Buser have a maximum family income of up to two minimum wages, in other words, at least half of Buser’s clients are individuals hailing from economic classes C, D and below. So although digital platforms are generally accessed by younger individuals with access to smartphones and the internet, this data shows they are also accessed by individuals which are price sensitive.
We cannot democratize transport without discussing public policy, by which I specifically mean the three branches of government, judiciary, executive and legislative. Our public policy strategy is interacting with these three pillars as, inevitably, this legal discussion will end up in Brasília at either the Superior Court of Justice (STJ) or the Supreme Federal Court (STF). I believe the matter is not yet mature enough for Brasília and that our cases are still a long way from reaching the higher courts. For example, as soon as our cases come close to being tried, appellate judges take their foot of the pedal – they want more time before evaluating such a sensitive subject and are apprehensive of banning digital platforms due to the potential of public backlash. As such, I feel we are close to reaching the ‘unbannable’ stage, as previously achieved by Uber.
Bus magnates are in the Senate, the Chamber of Deputies and serve as Governors, thus, they can exert great political pressure against our platform
In late March, the São Paulo State Court (TJ-SP) ruled in favor of Buser’s operation in the State of São Paulo. What have been Buser’s key legal victories throughout Brazil over the past 12 months?
Our victory in São Paulo is a great case to highlight as, although there was no mention of merit, a lateral discussion occurred which we consider a victory. In 2018, the Brazilian Association of Land Transport Companies for Passengers (ABRATI) filed an Allegation of Disobedience of a Fundamental Precept (ADPF/574) before the Supreme Court seeking to ban Buser.
This ADPF went before the Supreme Court at the end of 2019. Regarding the requests, the first was to suspend Buser’s operations along with the collective chartering model in Brazil, and the second was to permanently ban Buser. Justice Edson Fachin stated that there were no grounds to admit such a request. In addition, the Attorney General’s Office (AGU) announced that, in terms of merit, there was no justification for banning either Buser or collective chartering services from operating in Brazil. ABRATI filed an appeal, which is set to be judged soon, however, we consider the chances of the original ruling being overturned extremely slim. Thus, although the Supreme Court’s ruling did not have its merit discussed, it was a very important decision at the time because it showed there is no danger of Buser ceasing its operations. The decision also represents one of the most important changes in Brazil’s transportation market in recent years.
In São Paulo, we also had an encouraging decision from the Regional Federal Court of the 3rd Region (TRF-3), with three partner companies also benefitting from this ruling which guarantees their right to operate via Buser. Lastly, we have also secured victories in the Federal Court of Paraíba and another at the Regional Federal Court of the 2nd Region, in Rio de Janeiro State. As a whole, these scattered legal decisions are slowly but surely cementing the legality of Buser’s activities.
In May 2019, Brazil’s Supreme Court ruled, based on the constitutional principle of free competition, that it is unconstitutional to ban the activity of private Uber, Cabify and 99 drivers. What are the main similarities and differences between the legal challenges which Buser faces today and those that Uber, for example, faced in the past?
Both cases are strikingly similar. We are talking about two highly regulated markets – the taxi and collective road transport sectors - which are essentially closed off and in which few interested parties may operate. Historically in Brazil, a handful of individuals and companies – taxi drivers and bus magnates - have run this market and effectively dominated it for decades.
Additionally, both cases involve digital platforms which have created new ways of delivering the same result for users but with an experience that is one thousand times better and at a much cheaper price. Both platforms have rating systems which create a self-regulating reputation-based ecosystem, which passengers, drivers and companies are subject to. Those who don’t respect the rules are automatically banned. Both platforms are growing at terrific speed because they are capitalizing on the transport sector’s stagnation. The market got comfortable, did not innovate and continued to deliver low quality services – all of this ensures the speed of our growth is even faster.
The key difference is that the firepower – that is, political power – of taxi drivers is much smaller than that of bus magnates. The owners of bus companies are in the Senate, the Chamber of Deputies and serve as Governors, as such, they can exert great political pressure against our platform. In fact, it is a thousand times greater than the pressure exerted against Uber and 99, which makes our fight much harder – and much more fun too.
Another difference is that in Buser’s case, any ‘blood’ being spilt occurs behind closed doors in the shape of political wrangling and there is much less actual violence on the streets themselves. We are not seeing the types of fights which occurred when taxi drivers kicked in the doors of Uber drivers – our fight is political.
“There is great consumer demand for fairly priced and high-quality collective road transport”
In the first quarter of 2021, Buser reached the milestone of two million clients and was recently named one of Brazil’s most promising startups by Brazilian newspaper Estadão. What are Buser’s expansion plans for 2021 and beyond?
Buser is celebrating its fourth year in business in 2021 and it will be an historic one. Our expectation for this year is to continue growing in the number of passengers, routes and partner companies as well as preparing for the imminent recovery of domestic tourism.
Additionally, Buser is entering a period of diversification. In addition to launching our marketplace for bus tickets in partnership with major national bus companies – a division showing great promise, despite the fact that it has only been operating for six months – we also launched a new service in May: cargo transport.
Buser Delivery is aimed at companies (B2B) catering to platforms and logistics integrators, e-commerce, industries and small transporters. Our objective is to attract small and medium-sized companies which do not have their own transport solutions, whilst simultaneously optimizing the storage capacity of our fleet across Brazil.
Urban transport is everyone’s dream at Buser, we are not sure in what form yet, and we will probably test five or six models until we find the best way to launch this division – but it’s certainly in our plans.
Buser has a long road ahead before reaching all of Brazil, which also means that our business opportunities for growth and territorial expansion are countless. We have the potential to grow tenfold in the next two years – so we’re very excited!
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