Maha Shahzad: Bus Karo is profitable, and the taxman takes 70%

A rare piece of good news

Muzamil opens the episode by admitting he had been away for a month, painting the shelves on a new set. He came back to wars, fuel prices “touching the sky,” and a political crisis. He wanted to return with something positive.

The positive thing is Bus Karo. Muzamil lays out why it matters. Pakistani mobility has become “a complete graveyard.” Airlift shut down. Swvl, “a very very famous and very very celebrated startup,” left. Uber left. Careem left. Inside that market, Maha Shahzad’s company kept its head down and recently announced it had reached profitability.

This is Maha’s second appearance on the show. Muzamil calls her “one of the most authentic founders” he has spoken to, because so many founders act in a scripted way and she came in as herself.

Operating profit, during a fuel crisis

Maha is careful about the headline. Bus Karo has been operating-profitable since April. She held off on announcing it because, with the world in a bad state, she did not want to “get up and start celebrating.” She calls it “a small little victory” that shows the model can work. The company has not “gone into the grave yet,” she says, though it came close a few times.

The fuel spike hurts everyone, but the model softens it. Bus Karo runs high-capacity vehicles and carpools. If you buy a bike or a car, you carry the fuel cost alone. On a shared bus, that cost is split across many people. So the average fare rise has stayed fairly small.

Billing is another story. Fuel prices now change constantly, so B2B clients receive different pricing for different days. One client told Maha he would need to hire a person just to verify Bus Karo’s bills.

The numbers behind the business

Muzamil asks for the current numbers, and Maha gives them plainly. About 30,000 people use Bus Karo every day. Most ride twice a day, five or six days a week, which comes to close to 60,000 bookings a day. Retention is around 99 percent, so it is mostly the same riders coming back.

The company does more than a million and a half bookings a month. It runs over a thousand vehicles across three or four major cities. Annualised top line is about 8.5 million dollars.

Muzamil then explains, for viewers, why profitability matters so much. He points to Krave Mart, a grocery startup that stayed focused, reached profit, and eventually got “a pretty cushy exit.” Without profit, he says, a business is “a novelty,” a pastime you keep funding. With it, the model is sustainable, and that is a validation for all of Pakistan’s ecosystem.

The subsidy that misses the poorest riders

Muzamil mentions the government’s new fuel concession for citizens, which he understands applies to bikes. He asks whether public transport can come into that scheme.

Maha says he has found her “biggest pain point and frustration at this time.” A bike, she points out, is itself a privilege. The people on the cheapest commute cannot afford one. They ride on the back of someone’s bike, or in a large bus or van that runs on diesel, and there is no relief on diesel.

She is not against helping bike owners. But that alone “cannot fix the problem,” because most of the population travels on buses and vans. Worse, on some days diesel rose much faster than petrol. The fare for a person in a sedan and the fare for someone riding two hours on a bus “just became very very similar.” Maha calls that “absolutely ridiculous.”

The real maths on electric buses

Muzamil raises electric vehicles. Even his mother-in-law, a firm Honda and Toyota buyer, called him to ask about BYD. He wants to know if there is a business case for electric buses in private public transport.

Maha has spent ten years in mobility and rebuilds the EV spreadsheet every year, with “zero success just for now.” A rider will not pay more because the bus is cleaner. “At this time you are thinking about food, clothing and shelter,” she says. The only way change comes is if it is cheaper for the end consumer, and today it is not.

Muzamil pushes for a number, because there is “a huge difference between raising slogans and getting numbers.” Maha gives one. Diesel would need to rise roughly another 70 to 80 percent before EVs win on a straight comparison. An imported electric bus also costs about twice as much as a used diesel bus, and depreciates worse. So a government that wanted EVs to go mainstream would have to cover about half the cost.

They agree on the bigger picture. Electric fleets would cut fuel imports, steady costs, and use up spare power capacity. But Maha does not think the private sector will drive this. Public transport, she says, is the government’s job, and the fuel levy should be going back into it.

Raising money for a public transport company

On the government, Maha is blunt: “Interest and execution are two very different things.” The government seems to care about transport, but she has never been able to sign an agreement with it. Most public transport, she says, is run by people with no link to technology or efficiency.

Fundraising is hard on several levels. Outside AI, money is scarce because nobody knows where the world is heading. Then there is the Pakistan discount, and riders who pay very little in dollar terms. Maha jokes about the pitch she has to make to foreign investors: AI companies are showing 1,000 percent week-on-week growth, and she charges riders 30 cents.

Her answer is local capital. Every startup ecosystem, she says, runs on early cheques from its own people. Until Pakistanis, “including me and you,” start writing even small angel cheques, the same few companies will keep appearing on stage.

She is raising a pre-Series A now. Bus Karo has operating profit but not yet net profit. Banks will not give her working capital lines because she has no house to mortgage. So money that should come from debt or invoice factoring comes from selling equity instead.

The 70 percent problem

Then Maha gets to the main reason the money goes out. “I raise funds from investors to pay taxes for an unprofitable company,” she says.

The mechanics are simple. When Bus Karo invoices a business client, that client is legally required to withhold 7 percent of the invoice as tax. Bus Karo’s margin is about 10 percent. So more than 70 percent of what the company earns is taken “before it ever got to me.” Last year, as a loss-making company, it paid about twice its operating burn in tax.

Maha says she has spent most of the roughly 2.5 million dollars she has raised on tax. Not on technology, user acquisition, or branding. Meanwhile most of the transport sector pays nothing, because operators are not registered companies. “You have to be insane to want to run a company here,” she says.

Muzamil asks why the government has not been moved, given how connected she and Muneeb are. Maha says they have opened every door. This is a “lifeline problem.” Today, she says, about 90 percent of her own work goes into solving it. Ride-hailing companies fought a similar five-year battle before a ride-hailing tax regime was created. Nothing like that exists for a model like hers.

Muzamil suggests a workaround, such as billing riders individually. Maha calls that inefficient and absurd for a client with hundreds of employees. She notes that IT firms solved their tax problem by registering in Dubai and turning staff into freelancers. She does not blame them, but transport cannot scale that way. Even a bank CEO, she recalls, thought he had the world’s worst tax rate until he heard hers.

Why she will not leave Pakistan yet

Muzamil asks whether Bus Karo will go international, as many startups do once they have proof at home. Maha says the model can work in many markets. But her focus is Pakistan. Fix two problems, tax and working capital, and she says, “I can scale this business a 100x of what it does today.” If that is possible, she asks, why go anywhere else? If not, she will have to leave like the others.

For the next few years, Maha expects the hardest stretch. “If you are not a masochist you should not be building a business for Pakistan,” she says, and then puts it another way: if you do not love suffering, you cannot build for Pakistan right now.

She also says there is more to life than money. She could have made more by not building for Pakistani users, but she has no regrets. “When I sleep at night, I sleep very well,” she says. She thinks investors will return once a few companies show real results, and that “Pakistan is a very solvable market.”

Muzamil closes with a direct appeal. This is not a feel-good startup story, he says. It is “a very very real social problem,” and only operators with experience on the ground can solve it at scale. If the state wants to tax cars heavily, he says, let it, but put that money into buses so the bus gets cheaper as the car gets dearer. “We cannot close all the doors,” he says.