New Blog
This blog post first appeared first on old medium publication (https://medium.com/startuprad-io), and was moved to this blog with the relaunch of our website in summer 2024.
Executive Summary
Jochen Engert won the German Startup Award 2022 as German Entrepreneur of the Year. He is the co-founder of Munich-based Flix a unicorn recently valued at 3 bn US$ and the owner of Greyhound Lines. He shares in this interview his entrepreneurial journey, and his experience in winning 90% of the local long-distance bus market in less than a decade, without owning even one bus. We talk about the rough times during COVID when the service was shut down for 8 weeks, their expansion into different countries, acquisitions, and investments. He also shares some experience from his business angel investments.
“We are getting to profitability pretty soon”Jochen Engert Co-Founder Flix
Subscribe Here
We are always sharing new resources with you. Find all of our options below. We want to make sure that we provide what’s best for your growing team, so please take a look at these additional ways in which can help!
“Our families, even our girlfriends thought we were crazy leaving our consulting jobs to start this ‘bus thing’.”Jochen Engert Co-Founder Flix
German Startup Awards 2022
This interview is in media partnership with the German startup association (Bundesverband Deutscher Startups https://deutschestartups.org/). Their German Startup Awards #GSA22 honor each year outstanding female and male founders and investors in special categories. You can learn more about the winners in our interviews and on this website: https://germanstartupawards.de/rueckblick/rueckblick-2022
You can also have a look at our history, we also interviewed many winners of the German Startup Awards 2021 already.
“Our initial hypothesis was that you need one central player to orchestrate in order to put up a national network.”Jochen Engert Co-Founder Flix
Our Sponsor Startupraven
A startup’s journey can be a tough one, but it doesn’t have ́to feel like you’re alone on your quest! Invest in others’ success with us by joining our community of entrepreneurs who are building amazing things every day — no matter how big or small their ideas may seem at first glance.
The best way to find investors and cooperation partners for early-stage startups. Sign up here: startupraven.com
“During the height of the pandemic, a lot of businesses were funded, that would not have gotten funding in a normal time.”Jochen Engert Co-Founder Flix
The Video Interview is set to go live on Thursday, December 15th 2022
“During corona, we shut down almost all our operations for 7–8 weeks completely, during March and April 2020. … That was absolutely dramatic … we saw demand collapsing by up to 70%”Jochen Engert Co-Founder Flix
The Audio Interview
You can subscribe to our podcasts here.
“If you want to be a founder, you are always on sales, to clients, investors, and also people you want to hire”Jochen Engert Co-Founder Flix
The Founder
Our guest today is Jochen Engert (https://www.linkedin.com/in/jochen-engert-61a4a31/), the Supervisory Board Director (formerly CEO) and Co-Founder of Munich-based mobility unicorn startup Flix (formerly Flixbus). Jochen studied at the University of Ottawa, Canada, as well as at Stuttgart University and in Koblenz at WHU. He has also been a consultant at Boston Consulting Group for 5 years, prior to starting Flix.
The trigger of Flix was the 2009 coalition government contract, where the ruling parties stated they wanted to de-regulate the bus service in Germany, for the first time permitting long-distance buses. Before the de-regulation there was a law in force forbidding long-distance bus connections, competing with train service. So they founded GoBus, later re-branded to FlixBus, then to Flix.
“ … for all operational complex businesses: Operational excellence, passion for detail and laser focus on customer centricity and ultimately customer technology … that is something that compounds, …. Building ultimately a competitive advantage, that is very hard to impossible to replicate ”Jochen Engert Co-Founder Flix
The Startup
Flix started as GoBus, later FlixBus (https://global.flixbus.com/). Today they operate FlixBus, FlixTrain, FlixCar, Kâmil Koç in Turkey, and Greyhound Lines in the US. They were valued at 3 bn US$, when they raised their last VC round (Series G published in June 2021). They raised in total more than 1,2 bn US$ from 17 investors, including General Atlantic, TCV, Silver Lake HV Capital, Permira, BlackRock, European Investment Bank, UVC Partners, Mercedes Benz Group, LMU Entrepreneurship Center, and Cherry Ventures (you can find an interview with Filip, the founding partner of Cherry Ventures here).
Flixbus operates buses or, in many cases, just handles marketing, pricing, and customer service for a commission on their software platform, on behalf of bus operators.
In 2018 — just 6 years after its founding — the company had a 90% market share of intercity bus travel in Germany. This was a result of mergers and acquisitions in the country. At the time and to this day, they don’t own a bus in Germany. They have a long success story of acquisitions:
2014: Meinfernbus
2016: Megabus in Central Europe
2016: Postbus of German mail operator “Deutschen Post”
2017: Hellö from Austrian Railway Operator “Österreichischen Bundesbahnen”
2018: Swebus in Sweden
2018: Polskibus.com in Poland
2019: Eurolines with European routes
2019: Kâmil Koç, in Turkiye
2021: Greyhound Lines in the USA
Their clientele is also interesting, as of February 2018, 60% of the company’s customers were female and 33% were between the ages of 18 and 25.
“ We now operate more than 5.000 destinations. That would be impossible with the right scalable software.”Jochen Engert Co-Founder Flix
Venture Capital Funding
Their last published funding was published in June 2021, raising 650 m US$ at a 3 bn US$ valuation.
Tune in to our Internet Radio Station here:
Feedback
We are always looking for ways to make the show better. Please take this opportunity and share your feedback with us! You can also suggest topics or interview partners that you’d like featured on future episodes by leaving a comment below — we would love to hear from YOU!!!
The Interviewer
This interview was conducted by Jörn “Joe” Menninger, startup scout, founder, and host of Startuprad.io. Reach out to him:
Keep Up to Date
Here is our publication calendar: https://calendar.google.com/calendar/embed?src=012i27ak525qi3smgjl8v9tbio%40group.calendar.google.com&ctz=Europe%2FBerlin
All Links and Show Notes
Here is our blog post:
Topics Discussed in this Interview
In this interview we are talking about Ottawa, Canada, USA, Dallas, greyhound, greyhound lines, greyhound buses, unicorn, mobility, FlixBus, FlixCar, FlixTrain, saas, platform, unicorn founder, BCG, WHU, mergers, acquisitions, international acquisitions
Automated Transcript
[0:00] Startup Red Dot IO your podcast and YouTube blog covering the.
[0:13] Music.
[0:19] Hello and welcome everybody this is Joe from celebrated Rous starter podcast in YouTubeblock from the german-speaking area Germany Austria and Switzerland as well as the founder of startup dot radioed Woods number one Tech entrepreneurship radio today I have a guest here Ian hey how you doing,hey hey thanks for having me,probably my pleasure you are here because we do a recording in our series with a German startup Association and you have been awarded the German startup a wordfounder of the Year 2022 and not surprisingly you founded a company many people may know in Europe as Flixthe the green buses driving around they not necessarily owned by you but we’ll get later get into that as well as a you just bought last year Greyhound in the u.s.a. you also own,um some stuff in Turkey Poland Central Europe and so on and so forth but we’ll get into that presume first congratulations to the word very well deserved.Thanks a lot and it’s really been a big honor as this award is also been given out by fellow entrepreneurs and I think something that’s.I just took in representation of our team and for everything that I think the team has achieved over the years.
[1:46] I understand I understand and.
[1:50] Right now I usually start out with the going through the life at least what they tell on LinkedIn of the entrepreneurs and I found you studied in Ottawa in Canada.Why Ottawa and I assume you had to wear some warm socks there.
[2:08] That’s absolutely right now I was I was I guess overall fascinated by North America the US and kind of Canada in particular.I’m a big skier myself it’s a very passionate about skiing that doesn’t really explain why I chose Ottawa because it’s not.
[2:25] Specifically known for skiing when there’s still some skiing around but I just felt Canada in itself is a great place to be and also spend some time during University.I just love the combination of,from Canada is a country and then in order when particular that people speak English and French so felt I could connect to both languages meet a lot of people there from Canada locally but also Internationals,I mean I just had a fantastic time to what is your favorite dish in Canada was it poutine.I did I did like 14 and he’s really liked it now just like the whole culture around,it’s a sports bars and everything that you’d sort of haven’t do there in terms of like watching sports having some beers with friends and having some most cases unhealthy food really enjoyed that.That’s part of the Allure for me watching football as well,Ben also studying in Stuttgart and the how will soon get to that and you’ve been working with BCG Boston Consulting Group then.You found it Flix in 2011 and on your LinkedIn to me it looks like you did it in parallel with BCG,I know the working hours from Consulting can be sometimes quite demanding how did he manage that.
[3:46] It’s very true I mean how do we get to set of to do and launch Flix in the first place.
[3:53] So we actually one of my co-founders and myself we met at BC G the other guy down here.He’s on Tech co-founder he’s a former friend of Andre they know each other from school and the three of us were sitting together multiple times around look.
[4:07] We’re not going to do Consulting for ever we wanted to do something entrepreneurial.Actually in in 2009 the German government had announced their Coalition contract back there was Merkel investor Village.Who said we’re going to deregulate the German market for long distance Coach Services.So to understand there’s something like Greyhound egg actually didn’t exist in Germany so it was forbidden to run.Bus networks in Germany to like initially protect the trains from competition the law was almost 80 years old.And then in 2009 but we still has a deep into Consulting work and didn’t have too much time to look left and rights.And then started in 2010 PhD research projects or Andre myself effectively did this in parallel different universities different research topics and stuff but,this was the moment where we were in fact still employed by BC G but they kind of gave us a sabbatical and we had a bit more time to look.I’m also into other things and that was when we got even more excited about the opportunity of the market deregulation and that was ultimately how we ended up also,sounding Flix looking deeper into it and over time transitioning from spending more time on research on the PHD stuff to founding the business and this was more of a gradual process that happened over like multiple months,and that’s why this has this his in parallel I guess in the CV and as you said I think I started the PHD but ultimately never finish it.
[5:31] I think it’s good and bad it’s always a bit of a you want to finish the stuff that you started but the same time if I hadn’t started the PHD I think I’d never got have would have gotten the chance to actually launch Flix and ultimately be here today.
[5:44] Two hints one,hopefully you forgive me it explains a lot that you didn’t finish your PhD when you started working more and more in Flix instead of your PhD work on the other hand at the question is what was your topic.
[6:01] Yeah I’ve actually I’ve spent a lot of time during my Consulting times in B2B environments so industrial engineering industrial goods Etc.And I’ve actually researched on Industrial Service pricing so I was fascinated about.How you do service right and how you price these services and that was what I was spending time on the research front,I said spend a lot of time and research and actually.Also put a bigger study quantitative study with multiple companies never got to publish anything around it and but I said learned a lot for me and I said have.At least had the flexibility to then look into the Flix opportunity and back then and that’s the in hindsight.It looks obvious but back then everybody thought we crazy like why would you launch a bus business in Germany during that time and what would you not just finish your PhD go back to Consulting of those save job good employer,one and everything around it and everybody else said including our.Family is Friends wife’s meanwhile wives beg their girlfriends thought we completely crazy to do this bus thing then.And we just felt this is such a big and unique opportunity that we couldn’t resist and in the end it was the combination of.
[7:14] Is the market being deregulated so this doesn’t happen all that often and at the same time we felt it’s in.An old-school traditional industry with like true family owned businesses actual entrepreneurs,um who are lacking one thing that we felt we could bring to the table which is the.The brand that sort of the platform logic we help them to orchestrate everything around it I mean ultimately partnered with them and felt this is it a unique combination that we just.We just couldn’t like pass and we felt if we don’t do it we’ll and someone else does it and this is working out and there’s going to be a big and successful business.We’re going to regret it for the rest of our lives and that ultimately made us jump on and try it out and ultimately launched.
[7:55] Mrs. Lee I have seen your partner country when he did presentation at t0 darmstadt where he was also starting and not finishing his Ph.D they still invite him over so I think there are no hurt feelings on both sides hereand we just started talking about some basically what we’re striving you was political decision when I was growing up in GermanyI wasn’t aware of the legal restraints but I thought it very odd that you could drive every almost.Every Big City by Bond but you have this amazing really big network of German autobahns which are already known around the world but you could not use it by bus little disclaimer here for our American audience,yes there are buses driving on the Autobahn but they cannot go as fast as they wantonly on the vehicles with people in it like no trucks like No No BusesI can go as fast as they want really sorry if you want to speed you have to rent a car and going a little bit back more to the series topic you found it Go bustlater renamed to Flix bus and now renamed to Flix because you do a lot morethat was basically a political driver we saw the opportunity how did you approach the problem because.
[9:14] As we said before in the beginning you did not own the buses I do understand in some countries in your now owning,part or all of the bus fleet but in Germany you still don’t right yeah that’s right I mean when we may be looking at how the business model works.
[9:32] Initial hypothesis on this Market was that.
[9:36] You need someone to orchestrate all the different players so ultimately put up a nationwide Network to have a big brand big customer awareness and also the scale to build technology around it to invest into marketing.And there’s tons of companies out there who know how to operate coaches and bus services and.And they would probably be much better than than on that then we would ever be and that’s what we felt.
[10:00] The model should be some sort of a partnership between us and these typically as a family-owned small medium sized businesses,that are doing all sorts of positive is already there on Charter Business they run School transportation public transit networks all sorts of stuff.And they would run the part of their Fleet for us under our branding together with us and that’s kind of how we set it up in the first place and we told them look we’re going to invest into.The brand the platform built the technology to all the sort of network planning optimization pricing yield management and all the marketing around it and your,operate these buses for us I mean there will partner and will share revenues with you and that’s that was the initial hypothesis and the initial model and that actually survived since the early days we would have so few Evolutions here and there but,ultimately this is still the model in which we operate so we failed.
[10:50] We’re not going to be the good and the best operators but this is what our partners are are really really good at the very efficient very good quality operators,and that’s how we partner.
[11:01] That’s why that’s so helped us also to scale faster than everybody else the original model in this industry is complex heavy its as it intends its integrated so people try to,some try to do everything so being the retail and sales platform the marketing platform and at the same time the operators.And the old school companies in the space of the transportation companies also the train just a tray of folks cetera.
[11:27] They sort of dude and think this and leave this business out of an SEO perspective they’re like how do we use our assets efficiently and not really think about it from a customer-centric point of view and that’s that’s been the big differentiator from us to everybody else out there we were very focused on the customer,when optimizing the product service levels pricing how do we do marketing efficiently etcetera and this was the game changer and I said then,I’ve had sort of the luck and I guess also lots of work to ultimately persuade them to partner with the strongest operators out there,oh man this has been ultimately the sort of secret source of our success that this partnership has been much stronger than any other set of any other business in our industry because it helped us too,scale a business that historically has been kept bikes heavy and you need a lot of capital to build this,come with us being very focused on the platform technology marketing and brand side I mean I said then partnering with these these mm private family-owned businesses,we sake a box human capital expenses meaning all the Investments like in physical stuff that needs to go in there exactly we’ll all the investment that goes into the fleet into building of the operations mean we were.We’re also using the existing infrastructure from our partners they have existing Depots that they operate out from if you need to build this from scratch it’s hundreds and hundreds if not billions of,investment and that you needed to put up to effectively run a network like ours and I mean you mentioned ground.
[12:53] Some ground is still operated in this more traditional model of an integrated business with own sort of sales Outlets retail etcetera,but also own Fleet owned assets on depose own terminals own maintenance has on all of this,this has been the story way of doing it and we’re sort of us have disrupted the industry biology medley partnering with the industry and helping also them to participate in our market like us individually none of our partners could have.Um effectively participated in this market because like they’re all typically local at Max Regional but none of them could have built a nationwide or like above Regional level,Network that we ultimately put together with hundreds of partners that we now having them on our sides operate on networks across Europe.The US and also meanwhile other countries like like Brazil.
[13:44] I have some fun memories of traveling Greyhound winner was in college because they didn’t own a car and sometimes you could either fly or go by gray Honda and as a student college student you always take the Greyhound and.
[13:59] You are not the only ones looking at this opportunity back then in Germany you had.Very first competition with the long-distance bus called Mind fan boss which literally translates to my long-distance bus.
[14:16] At one point they’ve been larger than you but they disappeared and you prevailed can you tell us why it was it was quite interesting like in the early days.
[14:26] In Germany when the market was deregulated what happened was pretty much what everybody expected that tons of players were coming up on the market.Intense competition so we’ve had a few startups apart from ourselves we’ve had the big corporate so Deutsche Bahn the German State Ray guys put up.Something that work from even two Brands UK transportation companies came over and large networks it’s very intense competition in the end.There was awesome mine families who were sort of growing the fastest who were like building the biggest customer traction especially in the first 12 years,and we always knew that ultimately this Market needs to consolidate at some point to make it to make it work and to make a profitable and to make it sustainable in the end.Um and then we leave at some point also started talking to the founder team of my farmers and sort of had a chat around hey what’s your philosophy and your vision about this business and we immediately clicked in terms of.We have the same ambition level we need to build something that’s,as last thing that’s sustainable that’s that’s working that ultimately also gives a good and healthy business to our partners and also have the same idea around product standards quality how do we run this business out as a business model work.That’s what we felt.This is a very very exciting opportunity to put these two businesses together and that’s then then then how we did it and I mean as you mentioned we launched under Go Bus initially there’s that was the first brand
that we thought would work.
[15:54] Then relatively quickly figured.He’s very difficult to get all the domains that you need and Google was always asking us did you mean Globus when we typed in covid so we felt that’s not not a very good starting point to build a brand.And then looked into what’s other possibilities and ultimately came up with Flix where we felt,hey this is great it’s International everybody can say pronouns it righted it works in multiple languages I’m all the domains were available.Amanda we had a similar discussion on with mine Farmers on how do you build a brand out of these two and actually Flix started as a blue Brands a Flix bus was blue initially when families was Green.And then we said we need to make the best of both worlds like bring the teams together unite them creates.More as a pure some of the pots of this needs to be one plus one is three years and then also on The Branding side said look let’s take the green is very much.The color that also transports how eco-friendly this mean of transportation is but let’s use Flix as the name because it’s much more International it’s going to work also outside of Germany we get we want to expand across Europe and multiple other countries,this is the sort of future brand and that’s kind of how we put it all together,and that’s ultimately how it work for us and also how we explain it to the team explain to the customers on my name built this sort of ongoing story from there and this was end of 2014 so early.
[17:14] Only two years into the market launch and we actually put these two businesses together to create the German market leader.And then use this basis to expand further across Europe when youwhen you talked about ditching go bus and coming up with Flix I had a picture in my mind of three guys sitting around a table in Hofbrauhaus drinking beer with wizard that approximately how he did it.
[17:38] There was a lot of brainstorming involved in there may have been a few beers involved too.
[17:42] But it’s been intense discussions for sure with like among stars plus so that the small team that we had back then and I said ultimately felt Flix is the is the way to go and today still very happy with it because.I mean as you said earlier on we now the company’s called Flix SE so that it’s a stock holding Corporation and we also built not only Flix bus but Flix train on the side there’s services around it so we just use flex as the.As The Guiding Brands but also built additional products and services around it,in an older interview you talked about unit economics Flix would only make sense if you make profit on every trip.
[18:27] I think that was also one of the reasons why you.
[18:34] Why you’ve been doing that good because you started out with the profit per trip.
[18:41] Do you think in the current market environment we are recording this
towards end of August and do you think the founders out therealso should focus more on generating profit or at least having profit inside not just generating a website with a sicilian website visitors and say oh yeah you know we will sell diamonds to themyeah no no I mean I guess from the very first day our philosophy has been.We need to build this into a stain sustainably working business and this needs to be also making money,first of all apartments because they run all the risk of the the investment into the fleet the driver is all the operations which is massive,and then over time also for us as a as a global business and on the platform and Technology side,so we always were very focused around healthy unit economics in general I’m so and I mean coming back down to what you said terms of every right needs to be profitable that’s how we try to manage our Network and this is.We’re all the complexity of our business comes in when you when you want to break it down to every single trip and every single part of the line and trips are you operating these are we would usually operate.
[19:52] Not like an airline business in A to B connection but it’s an a to F connection all the combinations in between,so they can be B to C or B to D or C to F and everything that you can sort of Imagine on that line and that makes all the complexity of our business and that’s why,technology is a powerful for us to really break it down into every single detail of our network and to optimize every single detail,and that’s been I think one of the driving forces behind.
[20:17] Our sort of thinking about it like how can we be customer Centric how can we optimize every single detail of our business to ultimately make this profitable and I said,we needed to create healthy unit economics relatively early on for partners to continue to operate with us and continue to invest with us and expand their Fleet so this was a,I think a very different mindset from pay you build a venture back business and like burn a lot of money from the early days until at I don’t know decades thereafter I’m profit is going to be inside at some point so I said we’ve always managed portfolio.You have a network of multiple lines and like the longer the lines are live the closer you need to go to profitability and then into profitability relatively early on so that was that was the mindset,I’m coming back to your question in terms of what’s the sentiment in the market and how should found us think about profitability and unit economics I think it’s the the underlying.The underlying reason of a business is to make money that’s why people build businesses and that’s what businesses for and if you don’t have a path to that.For unhealthy Unity comes or for no way to get there then it’s just probably it’s just not a business and as I think.The setback and the sort of sentiment change on the investor side is something that I feel is actually very healthy from the heydays through the pandemic where a lot of businesses were funded that.
[21:36] Probably wouldn’t have gotten funding in normal times and I think is more of a normal time that we see versus a catastrophe or a crisis I’m right now,and I think that sort of sharpened focus on unit economics on healthy businesses on a path to profitability something that’s actually very very good and it also differentiates the,good businesses from the no businesses and and in that sense.We feel we’re in a very good situation because we’ve had our crisis like through the pandemic that was incredibly hard and tough.And we it wasn’t our fault in this case right like it was not our fault that the global pandemic it’s our markets and travel demand is just collapsing but we’ve sort of navigated through this and now we’re in a position where,Tomatoes come back we’ve put a lot of work and effort into driving efficiency driving automation improving profitability overall it and how we can manage and steal our business.I mean that’s why we’re not in a very good situation of a very healthy Network and business overall.I mean and we’re not yet there because there’s still sort of the aftermath of the pandemic visible in our numbers but,we’re getting to profitability very soon I’m and then I think,I said in a very good spot and this is always been a driving force behind us to build a healthy and ultimately sustainable business,not everybody is following on a regular basis our neuter a Bops we do on a monthly basis andif they would they would know that food sometime during the pandemic you completely shut down all the coach operations how long did it last.
[23:05] Yeah this is relatively on Independent make so.
[23:09] And this is again the benefit of having a portfolio of countries we’ve seen the impact of that covid had on Italy in the early days so we’ve reached I’ve received.WhatsApp messages from our local,um managing director sending me pictures of empty shells and like what’s going on and like we obviously kept track of demand collapsing in Italy and numbers going down and stuff.And we kind of could prepare what was going to happen across what are the countries.
[23:34] And as you said we had to shut down the almost entire network except for a very few exceptions but.Thumb over March and April 2020 so almost seven eight weeks we didn’t run any any operations and this is dramatic to see,maybe sis.Collapsing completely from growing massively I mean we’ve been used to Growing significantly end and also in january-february 2020 we were growing 40 50 percent over the previous year and suddenly the whole business disappears so this was absolutely dramatic.Um and back then we didn’t know if it’s ever going to come back and if we’re going to survive this and what was going to happen so this is a very very difficult time but ultimately.
[24:17] Had this incredible team there that found Solutions I brought all the passion to the table and help us navigate through this this time and through this crisis and I think in the end how does also come out of it stronger.We talked about it earlier also allowed us to do both moves like the acquisition of Greyhound I’m too even.
[24:37] I’m also expand our Market leadership in the u.s. I’m consolidate this market for us and help us build a sustainable footprint there too,I mean I think this is just thanks to all the passion and all the incredible work that the team has put into Flex over the sort of more than two years of pandemic and it’s great to see now this unfolds that demand is coming back the people go back to travel.And it feels like a much more normal environment now and it’s great to see that all of this hard work now pays off you.
[25:08] You’ve still have an incredible team but according to crunchbase you also had incredible investors who funded you up to Serious G right now with 12point two billion u.s. dollars at the last published valuation of 3 billion US dollarsyou’re also active as a business Angel we could lay to do that can you give us a few hints about good fundraising have you numbers you wait to profitability thereget us all the team and have an idea how you actually get your clients because I frequently see people who either,have an awesome idea but no idea how to make profit out of that or they have an idea how to make a profit but not how to get into this business,yeah I mean it’s I guess also would you need for fundraising changes over the stages that you’re in so that the later you go,the more it’s going to be about all the details all the numbers acid healthy unit economics customer acquisition cost lifetime values Etc so there’s a lot of,very granular and detailed you do legends from the investor side and that’s totally makes sense.
[26:16] I think in the early days you need to start off with a Clear Vision and a clear strategy on how to make this work just as you said there needs to be a big Market out there.From that you can tackle and you need to have very clear solution for actual problem that people had and the problem that people have and had in our Market was the lack of.Um sustainable and affordable Mobility it was just not there you could either use your car which is come I mean especially nowadays even more expensive it’s just incredibly expensive to run your car if you look at not only from a gas price but also from a full cost perspective.And then it was expensive train tickets and that was pretty much it so we created this alternative and that’s why we’ve been so successful because we’re solving an actual problem and with end a very sort of catering for a very big demand.And then I said over time I think.
[27:02] You still need to get people excited about the long-term vision and the the the long-term strategy and if you don’t get the excitement from the investors and is probably not going to be the right investor for you so there needs to be this,early excitement and his passion and his love for the business are also on the other side and if you don’t receive this and you probably shouldn’t spend too much time on these investor discussions that’s at least my big learning.And then I said It ultimately comes down to all the details of the numbers you need to prove that.Business is either already profitable has a clear path to profitability or at least as healthy unit economics that you can build from and that you can sort of Drive efficiency over time Drive improvement over time,did you have a clear way to do this and this is what I think you need to demonstrate and that’s the ultimate goal to the affect the ability that The Foundry management team needs to bring to the table too.
[27:50] Not only run this business but also pitch it and explain it to investors that’s a crucial part in fundraising that many people underestimate.If you think if you ask people do you want to be in sales most Founders and managers would say I’m not so sure about it but.If you’re finding a business and trying to raise money you’re always in sales you’re selling your story you’re selling your business you selling your your Equity pitch all the time,you’re also selling your vision to potential employees exactly and that’s it that’s the same that’s the sort of other side of the story,you need to sell this also to the people that you want to join your team so you’re always on sales if you are um.
[28:30] One question I had When I Was preparing for this interview would you agree to be the called The Uber of buses.
[28:38] Not really because of course we’re kind of in a similar Market at the same time.I’m over as addressing the urban mobility and transport problems we are addressing the mid and long distance space so it’s a it’s a different segment of the mobile Global Mobility Market if you will and also our model is different in terms of,we’re not working with single individual operators or people that are typically Drive these Uber cars will working with companies.Some that employ these drivers that invest into the fleet Etc as those professional structures they also have other businesses that they operate in and only sort of work part of their their business with us,it is different in that sense and to be fair.
[29:23] There’s been a lot of negative noise around uber and like how the model works and if it’s sustainable etcetera so I wouldn’t want us to be,to deeply associated with it acknowledging that we’re kind of in a very similar Market in addressing a similar problem at a different segment.
[29:39] And now we leave the question open if boober ever becomes profitable in your opinionlast year talking to Lucas karofsky he said you have to go deeper and work on the details to outperform your competitors he gave for example the idea thatthey used to get the orders in the app and then had to send a fax to the restaurant to actually get this and at one point,they just made an app and the restaurant side and confirmed it,that’s it but you have to go deep into the details to actually do that go deeper than your competitors would you agree to that,I would absolutely agree I think it’s especially true for all.
[30:23] Um operationally complex businesses that operational excellence Excellence passion for detail,some answer that laser focus on customer centricity and ultimately also uses technology is something that’s compounding over time so if you improve a little bit every single day and also drive this into your culture,because something that compounds and that and people completely underestimate that compounding effects that you can build out of this this is this is incredible and this has been,differentiating us again from everybody else because we’ve been,Building Technology has been dedicated for our specific industry for our use cases files very specific problems,I’m in building it on a granularity on a level of detail that nobody else did and this is compounding and this is differentiating and this guy ultimately creates a competitive Advantage is very very very difficult if not impossible to replicate.
[31:15] Um so I absolutely agree and this is also what I think if you’re on the investor side would you should look in and founding teams on.What’s their ambition especially as an in these operational complex businesses to really get into.All the depth of the details of the business understand this to optimize it to find new and innovative solutions this is where big businesses are being built,hmm.
[31:41] Talking about building big businesses awesome ee give me all the q’s I think this is awesome and you have a long and successful history.Of Acquisitions mind found those we already talked about then in 2016 you really got to work with Megabus in Central Europe,puss puss of the German male operatorDeutsche Post stated that they were going to do it in the past we used horses and just delivered the mail and maybe we can do it in the belly off buses and also transport people not from from the customer perspective hellofrom Austrian Railway operatorRiffTrax you should expand sweepers and Sweden 2018 polsky bars in Poland 2018 Euro lines with the European roots in 2019 you already bought something in turkey and.And now political correct to say turkeyand a 2021 Greyhound lines in the US and first thing I had in mind how do you make good Acquisitions basically first you need to make surethis alliance with you and secondly you have to make sure at one point.
[32:53] You can get the unit economics out of it like End plus everything on your platform because it doesn’t make sense to have like 20 countries 60 platforms and 90 operating models that will completely bankrupt your company instantly,yeah yeah no I mean I totally agree I mean on MMA I think.For us this is always been a an integral part of our growth strategy we always felt.There’s a massive value in also integrating existing businesses onto our platform and this is for I guess a few things first of course consolidation in these markets help us to drive profitability for sure but.
[33:31] We believe that we’re all timidly the best owners for pretty much all of these businesses because we are we’ve built this technology that’s just Superior to anything that you would find in the market.And this is where we’re driving massive synergies on the cost sides on the one hand but also on the how do you optimize this business on the other end and it’s just.Every like time and again is incredible for me to see what the hell little Technologies and software Solutions data understanding.The incumbents are managing these businesses as at this is incredibly complex I mean we’re not operating around 5,000 destinations and just the sheer,sort of mathematical number of combinations that you can you can build in these in this vast amount of destinations and like without network,it’s just incredible to manage without the proper technology and that’s where we’ve created a lot of value by.Integrating these businesses in two hours and especially into our technology and that’s I guess also the.
[34:30] Out the clear path versus always we need to integrate onto our platform there’s no way around it periods so there’s no,we connect the old system to our system there’s no apis or something we just throw it away and integrate it onto our business we may build a few features that are specific for these very markets but you mentioned turkey turkey,Works different as a as a market so customer behaviors difference we had to build a few features that we didn’t have before.But in itself it’s still the same platform we run out of that exact same technology stack,it’s the same Tech that operates Germany that operates in turkey that is also soon to be operating in the US so just take Greyhound as a second example certainly a massive business everybody knows it in the US and as you said earlier it’s quite interesting like,you hardly meet anybody who doesn’t have any sort of a person and the many cases emotional association with with Grant doesn’t necessarily always have to be positive but at least you have one so it’s a good starting point to tell to use that brand value for us,and.
[35:33] We will integrate this onto our business very soon into our text tank the existing Tech that ground is using is older than the average age of our engineer.It was very difficult for them to maintain it they actually in some cases needed to get people out of retirement,to sort of continued to maintain the technology s and their sales platform pretty much sounds like the banks who still higher Cobalt developers out of retirement because their systems are sold exactly and this is,this is this this just gives you some very.Clear picture of how much potential upside is therefore is not and there’s at that’s the cost of things that we can be much more efficient on running the technology of the the start that part of it and up and then also optimizing it.
[36:18] And I mean it’s much easier to sort of optimize such a complicated network over many decades with like incremental improvements Etc,but when we filter our own dedicated software that helps us optimize it internet work that makes proposalhow do you operate this business most efficiently where’s the demand how do you build the network I’m around it how to build dedicated schedules how you optimize it few minutes here and there and cetera so there’s all this again coming back to the level of detail that you need,to Indian Run a profitable and sustainable business and I already told youbefore the interview that this question would come you have so many routes so many destinations more than 5,000 he already said what is the longest distanceyou can cover with flakes I would have in mind something from Portugal or something on the Algarve Coast to Central or Eastern Europe or something from non-load Sweden to Southern turkeyyes your buses can not swim but they can go on ferries it’s good as it’s an interesting question and probably it’s pretty much on par if you look at North America where you can.
[37:25] You can meanwhile go from coming back to already part of this interview to get to Canada and you can probably with a few interconnections go all the way down to Mexico if you want.Um and at the same time you can go from the Eastern parts of turkey all the way down to Portugal that’s over 5,000 km all across Europe.That’s probably the longest distance that you can cover this one I’m not sure if anybody has ever done that and I’m certainly not going to be the first but in theory you could to be fair most of our customers are traveling.
[37:58] In the ballpark of two to five hours which in Europe is 200 to 500 kilometers in the US you can take the same number but translated into miles and it’s the same so 200 to 500 Miles as like the typical distance is that the people traveling with us.And that’s where also the bus is just a very very efficient means of transportation very efficient on the cost side and also on the,I’m sustainability ecology side so our carbon footprint is very very efficient,um and that’s I think where it makes just the most sense to use a bus for for you travel mmmwhat one quick question your headquartered your Greyhound operations your yes operations in Dallas not as you usually do either in New York or in Silicon Valley I assume it’s mostly for the reason that Greyhound is already there.But do you already know a few good places to have breakfast and dinner in Dallas.Indeed like with when we launched the u.s. we actually set up our first semen in Los Angeles.
[39:01] Um because we started on the west coast and felt The Valleys just incredibly expensive and it doesn’t make sense for us.Then we also built a team in New York where we had the first set of Flix headquarter pre pre ground.
[39:16] And as the ground team is significantly larger than our Flix team I’m husband we decided to also move our US headquarters into dollars and feel it’s actually very good place to be.Not only for breakfast and dinner locations and and good steak but also for for talent I think the sort of the telemarketing is great and it’s.Not yet as competitive as it is in the valley or New York I’m so I think for us it’s actually a very good location and there’s good flight connections into Europe.Unto which also plays a role in terms of how often can you be there on the ground and it sort of manage and help the teamsyou’re already hinted at stake my personalTexas Road House so sorry a little detour but also you company took a little detour because you are operating as Flix not only as Flix bus because you are now also doing train connections at least here in Germany can yougive us a little bit of an idea how this ties into one anotherand I wouldn’t say this is a detour because we already had it in our very first pitch two eggs in the precede round if you will we always said.
[40:29] This this space has been is being driven by Bus and Train so you ultimately need to also connect these two means of transportation and there’s a pig.Sort of synergy between them you can interconnect and you can use a bus with its most efficient you can use a train where this is more efficient.So this has been always an agenda it took us a while actually to get into this business because it’s,it’s very complicated it’s even more sort of capital intensity you need to pull up the Rolling Stock you need to find Partners to ultimately operate it’s a business model wise we operate in a very similar way.Um and I said I’m have launched this,I’m gradually over time and and they’ve started in Germany with a few partners that were operating private train connections and long-distance Connections in competition to the state Monopoly so the German.I’m State Ready folks they still own 99 percent of the markets but we feel it’s is ripe for private competition is ripe for adding a new product to the market,this is a bit again coming back to deregulation and analogies is a bit like what happened in the airline space 20 25 years ago where low-cost carriers were disrupting this Market completely initially.I think the flagship carrier is what I am not sure how big this Mark is ever going to be today locals carrier.They run more passengers than the flagship carrier is usually and its massive businesses most of them are run very efficiently and part 2.
[41:54] Too many other airlines actually turn a profit so we think it’s actually the Better Business and said with a combination with our bus Network our brand reach that we have our existing customer base,there’s a very logical step for us to move into this and continue to build out our Network our inventory and provide asset and additional product that’s very attractive to our customerswe already recording for more than 40 minutes we cut the last part a little bit short because I only booked one hour with you and we talked before but let us go a little bit into the Outlook,I was imagining what the next step for Flix could be and I was thinking Hmm you already you did buses he bought a lot of bus operators now you do Railways is your next step to buy a few Railway operatorswell.
[42:45] To be to be fair there’s not so many private long-distance rail operators out there that you could possibly buy there’s a few but not so many,so there may be an opportunity here and there at some point but we feel.This is going to be an organic growth strategy primarily for us so we’re building this out of our existing capabilities built this organically over time and this is a I mean we feel a decade-long growth story ahead of us.Um it’s on top of I think what we’re adding on the with the fixed rate product.We will just continue what we’ve been doing over the past 10 years for the next 20 30 40 years which is expand our Network at more cities and destinations at more countries.Thumb and ultimately I said provide great service to our customers and we’ve started.I’m out of set in Germany we’ve expended pretty much all across Europe and today we’re effectively win 40 countries globally so adding North America Canada u.s. Mexico I’m launching to Brazil.There’s many places in the world where we’re not present yet Brazil is the first place in South America most of these markets.Bigger bust markets than any single European country because it’s the backbone of their transportation system where people are very used to using it at the same time we feel it’s not.Create products in many in many cases so there’s a lot of innovation that you can bring there’s a lot of also better prices that you can bring.
[44:08] And the same is true for Asia just sake.Take the bigger countries in India in Thailand and Vietnam you name it I mean Indonesia I personally like Indonesia lat.So there’s a lot of places where we feel and we have a right to win and there’s no reason why our product and business model shouldn’t work in these places too,there’s a long way for us to go in terms of expanding our business further and when you talked about Indonesia I had a mind like the the Sicilians of little island so you may want to think about also operating ships there,we may have Flix farrier Flix boat or something to the make some pretty good pretty good and you are also,act assassin business Angel for example you have invested in the Unicorn sender Carla met kit talk or cleverly how do you make decisions,chin vest and wicked people pitch a deck to you now.
[45:08] I mean over time and where it went maybe this is as a note before we always invest and together so the three of us then it on Ray myself.That we’ve launched and flick together and build Flix but Flix together were also missing together so.We kind of overtime at inbound from other startups and Founders that felt we may add value to.They’re kept able to what they’re building with the stuff that we’ve seen the experience that we’re bringing and possibly also the network that we’re bringing and that’s usually the situations that we like when we have the feeling of,we can add something to the table and how these teams and Founders built their business and maybe avoid a few mistakes that we’ve done in the early days,and it’s just a sad usually the situation that we like the most and I think the sort of investment hypothesis is pretty simple you think you need to address a big Market.An actual real problem and have very strong found routines and that’s usually what it comes down to for us as we’re investing very early stages as usually,proceed seed rounds and some cases we invest in series a maybe Series be together with funds that we know well that is usually as a very early.
[46:14] Um and we get excited when Wendy’s Founders really have the drive to change something in a big Market in a Big Industry that’s what excites us I mean the examples that you mentioned,are these cases so very real problems for customers very big Industries and that’s what we get excited.And then I said we usually get in bounds through all the different channels through the network via email cold emails calls LinkedIn whatever,and as usually also how he reaches best I see your son I’ve been nowinterviewing you for almost 50 minutes that should set a new record even longer than Finn Hansel or look at gutowski they are always welcome to come back and do a longer interview with me it was nonetheless,thank you very much pleasure to have you as a guest and congratulations again to winning your award.Thanks a lot my pleasure was great talking to you and hope where the listens to this enjoyed our conversation thank you have a good day bye bye YouTube.
[47:19] Music.
Comments