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This Startup Is Reinventing the Yellow School Bus. Here's Its Playbook for Winning Over the Hardest Customers (Like Public Schools). Zūm started out selling its "Uber for kids" service to parents. But then its founder realized they could sell to school districts, and have a much bigger impact. Of course, that was easier said than done.

By Liz Brody

Key Takeaways

  • Zūm is a unicorn tech company.
  • They make public school transportation faster and greener.
  • Here's how they overcame some tough obstacles.
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This story appears in the September 2023 issue of Entrepreneur. Subscribe »

Courtesy of Zūm

How do you drive a big yellow school bus with 70 kids goofing around in the back every day? "You just gotta tune out the noise," shrugs Marllury Urbina, who's been doing it in and around San Francisco for 22 years.

She's always loved the job, but it's come with stress. Out the door at 4:50 a.m. every day, she got used to maneuvering hilly city streets with one hand on the wheel while the other held a sheet of paper with directions for changing routes. There were student names to memorize, and antsy moms and dads to please. People always wanted to know — was she late? Did she already come and go? She had no way to communicate with parents, so she just started getting out of the bus and drawing an X in chalk on the ground, as if to say, Yes, the bus was here.

Urbina saw the world start to change. Uber coordinated fleets of cars. Google Maps made directions easy. But the school bus industry was stuck using paper and chalk-drawn X's. And then, finally, it seemed progress would come for the buses too — or maybe not?

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In 2015, a startup called Zūm sped in on Silicon Valley va-voom. It could revolutionize Urbina's job with modern technology, if only the company could figure out a way in. But that wouldn't be easy. Yellow buses are part of an old, deeply entrenched, $50 billion global industry of large fleet operators — and to compete against that, Zūm would need to win over the huge, change-resistant, slow-moving bureaucratic public school districts that hire them.

This is the moment that kills many innovative companies. Medical brands that can't sell to hospitals. Tech startups that can't get hired by governments. A founder realizes that their outré-clever innovation is worth nothing if it can't lure big customers away from their comfort zone.

So, how do you do it? That was Zūm's billion-dollar question — and here is the playbook it came up with to make the sales.

Ritu Narayan, who started Zūm to get her daughter from school, says, "It's all her fault!"
Image Credit: Courtesy of Zūm

RULE No. 1 Get a toe in the door.

Zūm did not set out to conquer impossible enterprise clients. It was born out of a much more personal problem — one that ate at an immigrant mother named Ritu Narayan as she worked inside a cramped cubicle at eBay.

Narayan built a career off defying expectations. She grew up in Delhi, where women did not typically become engineers, but she did — and left for the U.S. at age 24. She worked stints at Oracle, IBM, and Yahoo before running a senior product team at eBay. One day, her daughter's ride from preschool fell through. What was she supposed to do? Drop everything to go pick the kid up? Then it kept happening. Narayan had watched her own mother have to quit her career to raise children. "And I'm here sitting in the heart of Silicon Valley, which solves any problem," she says. "Why not this one?"

So she started building a solution. It was a rideshare service like Uber, but specifically for getting kids around. Maybe the babysitter fell through, and the child needed to be picked up at school or had to go to soccer practice. Parents could use Narayan's app to summon a car, driven by someone who'd gone through intensive background checks and also had childcare experience, and then they'd be able to track it and communicate in real time. The service launched in February 2015, and to name it, Narayan held a little contest among people she knew. As if on cue, a 12-year-old came up with the winning entry: Zūm (pronounced zoom). Narayan's brothers, Vivek and Abhishek Garg, joined as cofounders.

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Immediately they discovered that there was a small market for this. Some parents used it for emergencies; others paid for daily or weekly school pickups. There were even a few competitors in the space, including Shuddle, which raised $12.2 million. But Shuddle ultimately folded, and Zūm started looking to acquire more clients.

One day, they were chatting with the assistant dean of a local private school, and they learned something interesting: The school was using a big bus to regularly shuttle a few students between its two campuses. Maybe Zūm's drivers could handle this instead for less money? Narayan and Vivek convinced the school to give them a $50,000-a-year contract, and it opened their eyes to the kind of revenue that was immediate and dependable: What if they became a transportation solution for parents via schools?

As it turns out, school systems — both private and public — have a need for what's called "alternate" transportation, generally jobs not covered by basic yellow school bus service. For example, it might be helping students whose commutes are too long or too challenging for the regular routes to accommodate. Zūm started going after these small contracts, and by the end of 2018 it had several between $50,000 and $1 million.

Despite this new line of business, Zūm was still very much the company Narayan originally envisioned. Parents were using the app to get rides for their kids, while the work for school districts was being fulfilled by Zūm drivers in their own cars. But in 2019, Narayan bumped up against the kind of existential question that many entrepreneurs face: What business was she in, and did her old ideas have to fall away to fulfill her company's true potential?

Those thoughts started to percolate with one of Zūm's contracts in California's Oakland Unified School District, which paid Zūm $400,000 over three years to transport special education students with especially high needs. After it got going, Narayan was meeting with the transportation director, who walked her into a room where parents were often faxing — yes, in 2019! — their pressing concerns about school bus issues: Did it come yet? Did Tommy get on? Then the director shared how antiquated the bus system was, with walkie- talkies being used to coordinate with drivers. Narayan left that day wondering, If Zūm was transporting 10% to 20% of the kids in its school districts, why not go for 100%? Why not become a full-fledged yellow school bus company — but one wired for safety, efficiency, and user experience, kitted out with ace technology designed by the best engineers they could find?

Narayan started to think through what this would mean. First, there was the question of whether they could even get the big "100%" contracts. "Districts are very hard customers to sell," says Narayan. Many of them owned or leased their bus fleets, and only contracted with private vendors for part of their daily transit needs. And the school bus industry — with 500,000 buses carrying more than 25 million children across America today — was dominated by a handful of large operators with long legacies.

If Zūm decided to go for it, there was another question: Could they be both a school bus company and an on-call service for parents? That seemed unlikely; those were very separate businesses, and too difficult to run simultaneously. This was harder for Narayan. She was proud of Zūm's origin story — of being a working mom helping other working moms. Now she might abandon those women. "There came a point where if you don't make a decision, it's too late," she says. "You lose the edge that you have created in the market. But it's so tough because you could be giving up everything you've done so far, too. This is where you die or you fly."

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Narayan spent around eight months wrestling with this decision. Her inner circle was split too. Her brother Vivek, who serves as chief operating officer, advocated for switching. "Uber and Lyft had raised billions of dollars, but they were not profitable," he told her — which was to say, Zūm's original model might be iffy. But at least one investor and board member was not so sure. "We were a bit intimidated," admits Bryan Schreier, a partner at Sequoia Capital, which bet early on Apple and Airbnb and led Zūm's $5.5 million Series A in 2017. "We're used to founders dreaming big. But to us, school buses seemed like a super entrenched business, and it was really hard to see how a startup would truly reinvent it."

Narayan and Vivek, however, had come up with another differentiating factor. They wouldn't be just any old high-tech yellow bus company. Theirs would also help districts convert to electric vehicles. Over 90% of school buses run on diesel — a head-scratching figure, given the growing concerns about climate change. Zūm's founders believed that technology, combined with sustainability, was a strong value proposition for school leaders. "That started to sound a bit more promising," says Schreier.

Narayan finally felt confident to make the pivot to yellow buses: Yes, she'd be walking away from her original vision for Zūm, but she'd be building a sustainable company and making the planet healthier for all those children she loved serving. Now all they needed was to figure out how to actually pull it off­ — and to find a school district willing to hire them.

RULE No. 2 Find the lone wolf.

Kimberly Raney has always done things differently. In 2016, when she became director of transportation at Oakland Unified School District — two years before Zūm came on her radar — she wasn't your typical leader. (This is a woman who spent 18 months traveling in an RV with her wife, 12-year-old kid, two monkeys, a cat, and a rescued pig.) She'd been a manager at FedEx and had run a package delivery company. So when she landed at Oakland, she looked around and went, What the heck? "It just amazed me to see the lack of technology," she says. "I'm 48, and the buses show up the same exact way as when I was a kid."

Raney had a big job. The district contains 99 schools and partners with the city, using its public buses to get most of its students to class. But it awards big contracts to private vendors for about 1,500 special-education children, who are ferried door to door. Especially for this kind of delivery, it seemed obvious to Raney that the parents should be able to track their kids, the same way they could follow a FedEx package.

That's why when Zūm first pitched her in 2018, she was intrigued. At the time, Zūm was hunting for "alternative transportation" jobs, and Raney gave them the $400,000 contract — as a "trial run," she says, "to see if they could actually do what they said they could do." Raney was the one who showed Narayan the fax machines that had prompted her to rethink the company.

So when Zūm's founders decided to become a more full-service yellow bus operation, the first person they thought of was Raney. Maybe she'd be willing to give them a shot.

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But you don't make a pitch like this out of nowhere. Instead, Vivek started having conversations with Raney, talking theoretically about how Oakland could tech up its whole transportation system. He found out in 2020 that the district's contract, which would pay $11.5 million annually, was coming up for renewal for all their special-education students, and potentially could be worth $115 million. The current vendor was First Student, which has been around for more than 100 years and, with about 40,000 buses, is arguably the leading operator in the country. But anyone could submit a bid. And Zūm decided to go for it.

First, though, it had to figure out: Would it try to become a school bus company all at once — acquiring and operating a whole fleet? Narayan decided against it; that was too much to start. For this bid, they'd propose partnering with an established operator that would use Zūm's platform in its own buses. Meanwhile, her team doubled down on its technology.

Zūm took the software it built for ridesharing, and scaled it for an enterprise level. Fleet operators could save time and money with route optimization and collect data on driver performance. Drivers would have tablets that guide them by voice through the streets, alerting them when a child was sick and rerouting them to save time. Parents would have apps that let them always see where their kids were. And the schools got dashboards showing where every vehicle, driver, and child was at any given moment, with more information (like driver history, students' special needs, exact time a child was picked up or dropped off) available with a click on an icon.

As the engineers worked, Vivek shared some of this potential with Raney. The idea was to give her a sense of the capabilities she could get for Oakland if she asked for them in the Request for Proposal (RFP) — the document she was working up to solicit bids for that next big contract. And sure enough, when Oakland did issue its RFP in January 2020, it required, for the first time, real-time tracking, route optimization, and electric buses. Zūm had three weeks to submit its proposal.

By now the founders had realized: If you want to win over a difficult client, you need to learn to speak and think like them — which is why they hired a vice president of partnerships named Sarah Skinner, whose career in education included working with public school districts on data-driven strategy. When Oakland put out the bid, Skinner says, "We asked, 'Can you provide your routing data and the number of students that need transporting? Because we want to understand if we can optimize these routes.'" After Oakland provided the information, using Zūm's new tech platform, the company found a way to do the job with fewer buses — 76 instead of 103 — while reducing the number of children who spent an hour or more commuting from 70% to less than 10%. Oakland's fleet, it promised, would be fully electric no later than 2025.

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Raney and the other decision-makers were sold. Zūm got the contract. "It was a risk. We'd be taking a first chance," says Raney, who's not sure she'd have been so bold "if I wouldn't have had so many conversations with Ritu and Vivek, and really seen that they care about my opinion to fix things immediately. But I knew they would do everything in their power not to fail."

Zūm had turned a sympathetic supporter into its first big contract. Now it needed to leverage this into getting many more.

Image Credit: Courtesy of Zūm

RULE No. 3 Be ready to fight.

With Oakland secured, Zūm was developing a playbook for other districts: Get a toehold with the small alternative vendor contracts. Find an innovation-minded adopter who can become a champion. Build a relationship and show them how your company differs before they look for a vendor. Then, go all out to win.

Later in 2020, just across the bay, San Francisco's public school district put out its RFP for school busing. Looking to transport at least 3,500 students to 122 schools for five years, its scope was more than twice that of Oakland's, and it asked each bidder to submit a price. As with Oakland, the incumbent was First Student.

To win the bigger contract, Zūm decided it was time to compete head-on. Now that they'd successfully launched their technology in Oakland, they moved to become a "full-stack" yellow bus service: They'd lease the fleet, integrate their tech, hire drivers, and become electric in San Francisco by 2026. They put in a bid for $152,121,000 for five years.

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But Narayan was not naive about the steep road ahead. At some point soon, this wouldn't just be about winning contracts — it would mean doing battle with incumbents. "When disruption happens, the old guard tries to protect their territory," she says matter-of-factly. "They'll try to remove the new player from joining the trade associations or other places of importance so they look like a small clown who will soon get out of the business."

The fight happened fast. San Francisco gave the contract to Zūm, and unlike in Oakland, First Student did not go quietly. It protested the award — and when that didn't work, it asked a California court to intervene. It also sued Zūm. It alleged in part that its former operations manager who was hired by Zūm misappropriated trade secrets during the bidding process. Narayan says the two companies settled. Zūm kept the contract.

The feud intensified last year over the bid for Seattle's public schools, but in this case, Zūm was the aggressor. The district gave the contract to First Student, its vendor for 30 years. Zūm protested, saying it had come in at a lower price, and pointed to errors in evaluating the two bids. In response, the district canceled that RFP and put out a second. First Student won again. And again, Zūm protested. The district's final solution was to split the contract between the two companies — three years for around $40 million each — starting on July 6, 2022, with just two months to go live before school started. "It's just what we had to go through," Narayan says.

RULE No. 4 Play every hand you have.

In 2022, there were 19,269 public school districts in the U.S. — and Zūm started plotting to get all of them. As part of that strategy, they eyed Los Angeles Unified School District. It's the second-largest district in the country behind New York, with nearly 600,000 students in more than 1,400 schools and centers covering 710 square miles. If Zūm won a big chunk of business there and executed well, it would prove its ability to handle the needs of most other districts. But that's easier said than done. Although the L.A. district has a projected expense fund of $12.9 billion this school year, it's said you can't even sell them a pencil.

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This district gets most of its students to class via the 3,000 buses and other vehicles it owns. They outsource the rest. When the latest bid went out for what would be 405 buses, Zūm threw its hat in. To up its chances, the company hired yet another industry vet — Liz Sanchez, who'd been in the C-suites of First Student and National Express, Zūm's fleet partner in Oakland. Sanchez became Zūm's executive vice president of school transportation and started calling up her contacts in Los Angeles. "I had good relationships there," she says. "This is a very small industry."

Still, the district had a new transportation director that Sanchez didn't know, so Zūm leaned in hard on its strengths. As a tech company, it was acquiring more and more data: money saved with route optimization, commute time decreased, emissions cut. They could also prove things like a 98% on-time pickup rate in Oakland and 4.9 out of 5 stars based on over a quarter million parent satisfaction ratings across all districts on the app. (Whenever it's a three-star rating or below, the founders and executive team get notified and someone calls the parent immediately.) It all made a convincing case for Los Angeles, which awarded Zūm the contract last June. Over five years, it will pay over $400 million.

Zūm's vehicles are all carbon neutral and by 2027 will be fully electric, with batteries that give power back to the grid.
Image Credit: Courtesy of Zūm

RULE No. 5 Evolve your story while staying true to the narrative.

Today, a little over three years after winning their first district, Zūm services more than 4,000 schools in six states and has $1 billion in multiyear contracts. Having raised $200 million, the founders say the company is winning about 75% of the contracts it bids on, and will be profitable next year. "We are only, like, 0.6% of the market share," Vivek says. "So there's way more room to grow."

(Update: It hasn't gone without hitches. Since this story went to press, a new contract with Howard County public schools in Maryland got off to a rocky start with missing buses and delays, due in large part to a national shortage of drivers. Zūm has apologized and is giving updates on its site on how it's resolving the situation.)

If Narayan could go back and do anything over again, it would be those months of debating whether to abandon Zūm's founding vision to embrace the bigger possibility. "I wouldn't take that long!" she says with a laugh. She knows why she clung to her personal origin story. It was what her investors, employees, and first clients all bought in on. But she came to realize that a skilled entrepreneur is able to evolve that narrative as circumstances and opportunities shift.

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Today, as she continues to do that, Zūm's narrative is increasingly about clean energy. If all goes to plan, next year as students head back to school, Oakland will consist entirely of Zūm's new electric buses, a fleet designed to send power back to the city grid. In line with a push from state and federal funding for electrification of the industry, Narayan's early bet on sustainability is proving on the money. According to the Environmental Protection Agency, if half the school buses in the country converted from diesel to electric, it could cut more than 2 million tons of carbon dioxide every year and, with vehicle-to-grid batteries, store enough energy to power the school laptop of nearly every student for a month.

And yet, in an important way, this isn't all that different from Zūm's original story. The company began with helping children. It still does. Electric buses mean cleaner air for young brains and bodies, while shorter commutes help them show up fresh for class; cheaper transportation gives schools extra dollars for education. And Zūm's more than 1,000 drivers now have their students' names and individual needs at their fingertips and don't have to worry about telling parents they'll be late — including drivers like Marllury Urbina, who used to write X's in chalk at the pickup stop. She left one of the big incumbents to work for Zūm.

"I plan to keep driving my bus," she says, "till the wheels come off."

Related: This $12 Billion Startup Nearly Imploded. When the Founders Revealed Their Wild Plan to Save It, Their Team Was Like, 'Whaaat?'

Liz Brody is a contributing editor at Entrepreneur magazine. 

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