Kevin May
Go. Hi, this is how I got here. Very warm. Welcome to everybody for tuning in to another episode. These are mozia focus wires, in depth weekly interviews with innovators and entrepreneurs in travel and transportation. We’re absolutely delighted this week to be joined by yuchen anger is the co founder and CEO of flicks bus he’s based in the company is based in Germany, the former consultant at Boston Consulting Group created the company in 2011. with Daniel Kraus and Andre schwimmen, beginning what has been a steady growth trajectory, including a string of acquisitions, mergers and an expansion around the globe ever since the company has raised in excess of half a billion dollars to date, a very warm welcome to you, you can thank you very much for joining us on how I got here.
Jochen Engert
Yeah, first, thanks for having me. Great to have you on the podcast. Okay. And obviously happy to give you a bit of background on our story on my story on on how I got here.
Kevin May
Okay. And you’ve led me very nicely into the first question, which is we always ask our guests to answer the question, how did you get here
Jochen Engert:
we’ve launched the business on a, let’s say, what we feel is a once in a lifetime opportunity. So when we were still in consulting, that was Andre, myself and Daniela author, co founder, another job towards Texas with Microsoft back then, we looked at what’s happening out there and politics in the markets, and we’re discussing different business ideas. And I’m at one point came across the deregulation of the German intercity coach market. And that was actually something that the former coalition government had put down in the agreement in 2009. And then nothing happened for about two years. And the whole thing came back to media attention in 2011. And that was when I was actually doing a PhD back then, which this is a spoiler I never finished, because I had to decide at one point, whether to go for flixbus, or finish my PhD. So I ended up Never finishing up. And then the whole discussion started again. And we felt, hey, this is a massive opportunity to build a business. And it’s, it’s that unique situation where you can win an old school market, old fashioned industry, and bring in a new approach to it on the brand marketing, and especially technology side. And then this once in a lifetime opportunity, where you can disrupt the market that didn’t really exist before. And that’s where we felt, hey, this is the opportunity that we need to jump on. And let’s just try it out and see what happens. And this is how we eventually launched flicks was in 2013. And then quite a lot has happened over the years. And so today, we’re in 35 countries, we’ve got intermodal trains to our portfolio on expanding all across Europe launched in the US about two years ago. And then from entered into Turkey. And we’re continuing to grow the business massively, and want to make sure everybody in the world has sustainable and affordable mobility and really want to change the way people travel.
Kevin May:
I’ve always been struck by the flixbus story, because whenever it is mentioned, and I’m going to pass over to someone who’s much more kind of an expert in the world of transportation, David, my co host here, but I’ve whenever I read anything about the history of Flexbox, it always references that deregulation of the German bus market. And I mean, you can talk us through how that worked. But I’ve The one thing I’ve always wondered because it is referenced so much is could you have launched? Or had the idea for flicks bus if that deregulation hadn’t happened is was that the only trigger really behind the idea?
Jochen Engert:
That’s actually a very good question, because it was the initial trigger behind the idea. So we said, Hey, if there’s a deregulation, this creates opportunity, and we’ve seen it in, in other sort of state and regulated industries, like telecommunications, for example, that massive businesses can be built based on deregulation. So we found this exciting the first place. And then our initial business case, our plan or strategy was built in a deregulated market, we have free access and could connect cities. I mean, this wasn’t possible for about for over 80 years. So they built the law to protect trains from competition and then ultimately decided to change it. But when we were between 2011 and when we launched 2013, we spent a lot of time talking to the industry, you’re trying to sort of persuade us partners to work with us. And until very late, it wasn’t clear when it was actually going to happen. So that meant they finally made the decision to really deregulate in August 2012. And we were like, getting increasingly nervous around that time when we felt Okay, what if this doesn’t happen, like we’ve spent so much time in preparation and what if it doesn’t happen? Is there any other way around it? So we looked into other regulatory angles on starting lines On an EU level, there’s always been an opportunity or possibility to run lines between countries. And we looked into that, could you build a German network through cross border lines somehow? And could you start launching something and then wait for the actual deregulation? And so we try to find entrepreneurial ways around it. Fortunately, on then they did deregulate. And ultimately, we could sort of execute our initial plans. I guess lucky after.
Kevin May:
Yeah, date.
David Litwak:
So you playing a little bit off that deregulation? You weren’t the only ones to see that opportunity? Right. I know, I think the most infamous merger you’ve had was with mine Fern bus. But I remember around six, seven years ago, when I was traveling around Germany, there were a bunch of different bus lines that popped up. And I took a few of them. And a few years later, I inquired as to if they existed anymore, and was informed that you had bought them to you guys seem to have gone on quite the acquisition spree and bought out a lot of different competitors. And how did you like think about that, both from a business strategic standpoint, but I’m also fascinated, it reminded me of the kind of the PayPal story of like the merger of I think it was called x and PayPal, I forget the two names of the companies of like, you know, it takes a lot of checking one’s ego at the door to execute some of these these types of mergers where you have to give up more power. So I’d love to just get a little background about that.
Jochen Engert:
Sure, sure. And also very fair point, I think, when we launched, we knew that we were the outsiders in the industry, we had no clue about it in general, like no travel transportation background, but held on with it, like fresh mindset to it, you can build something new and something cool and something big ultimately. And then everybody came into the market. So there was the state rail guys, there was the UK transportation companies international Express stagecoach, and launched into the market with their brands. We’ve heard even torture pasta, the Postal Service together with the automotive club launched a brand. So everybody was there, and everybody was usually bigger, supposedly stronger financially, and like having more experience in the business. And we always said, there needs to be a like national player that is like large and connects all the relevant cities. Yeah, very good inventory to your customers, ultimately. And, and it was awesome, I’m firmer. So the two startups that were growing more aggressively than everybody else, because we both have that strong hypothesis. And we also were aware that this will only work on a unit economic level to make the roads profitable on every trip. And ultimately, like the whole network and portfolio profitable if you have a more consolidated situation. So it doesn’t make sense if you end up with four or five, six players that kind of split up the market equally, and continue to put pressure on everything, marketing, pricing, etc. So we knew that there needs to be consolidation somehow. And then at some point, we felt, okay, we were rather good to go and be an active consolidator instead of kind of waiting it out or being consolidated at some point. And that’s where we were we started talking to different players. And we, and ultimately, the whole industry is rather small. Everybody knows everybody. There’s continuous talks on all sorts of stuff, regulatory issues, how do you deal with the city’s national regulators, etc. So it’s a it’s a rather small community. And so we’ve had discussions, the only company that we didn’t talk to was my family’s back then because we felt this is the enemy. If someone’s beating us, then it’s going to be them. And then at some point, we said, Look, we need to talk and there needs to be at least a discussion where there’s a joint way forward. And then we actually we’ve sent our, our investor from the venture capital side we sent him so go talk to the founders, if they’re open for discussion. And if they’re not, we can just say it was your crazy idea. And it wasn’t our idea strategy. So that’s how we started. And then when we met, like the two Founders Fund, it meant we felt, hey, this is closer than we thought. And we have a very similar idea about the business and the strategy and the direction. And we were like, totally surprised, because the base hypothesis is these guys must be idiots, because they are our enemies. And we figured, hey, they actually kind of nice and, and that’s ultimately how we get the discussion going. And this is also coming back to your ego point where we, of course, we had these concerns around, okay, what’s going to happen? How do you make this work? How do you also build ultimately, the joint company shareholdings? What’s the equity story for each and everybody? How do you make economics work, etc, etc. So there’s a whole lot of complexity around it. And but this is what we felt is actually on a on a personal level, it works on a vision level and strategy level, it works. And actually the two companies are pretty complimentary in terms of who’s good at once. And they’ve been very strong under let’s say, classical transportation optimization piece, network planning, etc. And we’ve been the aggressive ecommerce type of company and that actually was a very, very strong match and that translates also into team capabilities, etc. And we felt There’s so much value to be captured, if you put this together, that we ultimately kind of got our act together and made it work. And
David Litwak:
that’s, you know, it’s, it’s fascinating. And you mentioned Deutsche Post. And you’re having launching their own, I remember being around at the time those those yellow and black buses. And if I’m not mistaken, much of you guys wants to buy them. I think they’re out of business now. But they like I remember thinking, it’s like, it’s so weird. It would be like if our DHL or FedEx decided to launch a bus company, and I was just like, there, I’d recognize the kind of like, you know, oddness of that entire endeavor, he came with a history of, Hey, we were riding horse carriages, why shouldn’t we do coach services? That’s pretty much the same. Okay, that’s a long shot. But yeah, well, so you, you mentioned your, like your guys model. And so I actually curious, you kind of maybe this might contribute to why you guys are able to just get on fast, right? Like, I know, correct me if I’m wrong part of your model is almost kind of like Uber for buses, and that you don’t own the buses, you work with charter buses locally. And I remember when someone first explained your model to me, I was like, yeah, you can’t do Uber for buses, their buses, like, you know, like, how many buses are laying around, it’s not like priuses, or something like that. And, you know, then, you know, someone mentioned to me, I think, in the US, or something like 5000 independent charter bus companies. And that’s where, you know, like you guys might draw from and so I, you know, I’d love to hear you elaborate a little bit more on what that model was, and if it differed from the Deutsche Post, and these other guys that are not being as successful.
Jochen Engert:
Sure, um, and then it ultimately comes down to our initial hypothesis on what do you need to win in that market? And how can we as a team, and then when we have made a difference, and we when we first looked at the market and the opportunity, we went through different business models, and everything from you go out by a boss, employer driver saw the first route and then hope it works. And then scale over time to let’s only build an aggregating layer, where you redistribute traffic to existing providers and make a margin on that. And we felt you need more than that, because in the market, what’s what’s really key is that you ultimately control the customer experience and build a branded, curated, high quality, safe environment. And for the customers, that’s what they’re looking for. And if you’d like for me to long distance travel, even more than in urban and shortest mobility, there’s a big element of planning, and I want to be safe that it works. And it needs to be reliable. And we felt we need to control this. And then we said, if we look at the industry and the structure that you’ve described about, yes, it’s pretty much true for any given market across the world. So you have a vast, and like a big landscape of fragmented suppliers, like usually small mid sized companies, family on businesses in Germany is over three and a half 4000 individual companies. And we’ve seen these guys, and we felt, okay, they know how to operate bosses, they’ve done this for decades and generations. And then we won’t add too much value here, we need to focus on the platform piece, the brand, building the marketing, the product experience, and really build the tech around it to control it. And we need to partner with these guys, because then they know what they’re doing. And we can actually use also their existing infrastructure, piggyback on depots, maintenance facilities, etc, what they already have in place. And and they would add the fleet to the whole game and the drivers and do operations and we do everything else. And that was our initial hypothesis. And that’s still the model until today. So if you compare it to ride hailing, the difference for us is we’re not working with individual drivers, but we’re working with companies that were ultimately dedicate a certain share of their fleet of operations to business with us. So we usually make up 10 to 30% of the entire business from them. And the rest, they’re active in other parts of the industry, they may run public transportation, so operate services facilities, do their own charter services around events, travel, etc, have own travel offerings, where they kind of shift on people over week or weekend trips to the Alps, or whatever they do. And then a certain show their feet, they will dedicate to us. And then we overtime, we figured it’s actually quite strong for them, because their core industry doesn’t really grow. So it’s more about competition, competing on price winning market share from someone else. And it’s very local and regional. So that we were their access to the market, we were their ticket to a stronger growth story to build something on top of what they had, in many cases inherited from their fathers or grandfathers. So they had a growth story for themselves. And that’s why we could ultimately excite our partners to join us and to also take and that’s the second part of the model and take entrepreneurial risk with us. So we are Indian, we work on a revenue sharing scheme with them. And over time, we’ve developed it into a revenue share on the one hand, but also minimum guarantee on the other hand, so we’re guaranteeing them a certain sort of income from operating buses with us because we don’t want them to run empty buses and take all that risk, and we have a better understanding of which routes are going to work which markets will work? How are we going to get unit economics to profitable levels, etc. So we give him that safety net, so they can actually take us to the investment into the fleet, building up driver pools, operations, etc. And we usually have a longer term commitment and relationship with them. So that’s, I guess, a bit of a difference to the classical gig economy that you may see.
David Litwak:
Yeah, well, it’s it’s it reminds me actually of how we were tried to, at one point launch a marketplace for leasing cars to kind of like, maybe bring people in and that failed miserably for them. But it sounds like you’re having a lot more success. But you mentioned in equal it really interesting tidbit of information, though, controlling the brand experience, and this is something I’ve nerded out on, because I remember, six, seven years ago, I was living in San Francisco. And if you opened up Uber, you’d see two to three cars around if you opened up I was at the time called flywheel I think you’d see like 100 cabs around and there was a real, you know, like, I think not, you know, not bullshit question out there about like, would Uber win and the Andrew would supply really the thing that matters. And in the end, my kind of armchair analysis of why over one is because in the end, they recognize that going at one level deeper and controlling the user experience was better, even if it meant their scaling was slower, and getting 1000 cabs on the system was useless if you didn’t weren’t able to kick a bad cab driver off because you were going through some other company. And this is something I’ve continually thought was interesting in the transportation market, in general, because in Silicon Valley, you get pushed to do the quote unquote, scalable thing that can sometimes be deceiving. On the surface level. And I’m curious how you guys thought about how deep do you go? Is it branded flicks bus seats? Is it make sure you have Wi Fi? Is it or is it just kind of like, Hey, you know, you didn’t bust and break down? What Where’s your level of you know, of brand, you know, guarantee? Yeah.
Jochen Engert:
And that’s, that’s certainly something that also evolved over time for us. So I said earlier, we’re big believers in you need to control the customer experience, and you need to control it as deep as you can. And in the end, we’re always trying to make this work through technology. So we’re building technology, also, to control how easy it is to check, check in and our bosses help drivers navigate through their day with all their routines around, I’m on like slotting my bus in the morning, I’m arriving at the station, checking in the passengers can sell tickets, etc. And then we go down into the central part, we’re already centrally controlling, what’s the welcome speech that the customers here when they enter the bus. And this then also translates into and this is, I guess, why Silicon Valley is struggling a bit into the hardware. So we’re also defining and pre specifying, this is the equipment we want to have IE, we have pre specified buses with the large OEMs. And so if one of our partners goes through timeline, mayenne, etc, and says I want to flex person, they get a pre specified vehicle, it’s all detailed, and they even get pre agreed on purchase prices, and maybe even financing agreements. And we want to make sure that the whole experience is as harmonized as possible. So it shouldn’t matter whether you bought a bus in Berlin, Paris, Stockholm, on Bucharest, Vienna, Rome, wherever it should always be that same inconsistent experience. And we’ve certainly been, I guess, a bit more pragmatic at the beginning, we just took the buses that from our partners happened over time really moved into a more consistent experience. And this goes then down into, we’re training the drivers. And this is also a food safety concept. This is how we want you to convey our brand messages how we want the service for customers to be, we’re defining the snack list that you have on the bus. And then really make sure that that we really have control over that experience. And also, as you said, we have, we don’t have sort of full control in terms of you need to fire that driver. But if we get complaints about someone on a continuous basis, we can exclude him from operating on one of our buses, and they need to shift the driver to other parts of their business, for example. So that whole customer feedback, continuous improvement, and ultimate control over customer experience is really, really key to us. And we’re really again managing on a very, very granular level.
Kevin May:
And just a quick kind of follow up on that one, if I made joking before my next kind of series of questions, and that’s, you know, you said, if the the experience with the driver is not very good, then you have the ability to kind of take things to the next level. Did you find or have you found over time that you’ve had to do that less frequently? In other words, did you have teething problems in that particular area are around consistency of the experience of the driver and then over time of people who have kind of the subsidiaries have understood your kind of you know, brand values that you had fewer problems.
Jochen Engert:
I mean, I guess first of all, as we’re revenue sharing with our partners, they have a very strong incentive in delivering a good service. So if not, the individual driver is incentivized to do his job properly, it’s ultimately is also the owner of the bus company, because he would, I mean, he obviously understands the correlation between customer satisfaction, repeat customers and economic success of his business and his lines that he runs with us. So there’s a strong incentive inherently in the model. And then also, over time, there’s a certain effect of the companies and the partners that we work with, get more used to this is the way we operate. This is the way we run schedules, operations, quality training, etc, etc. So there’s that routine that comes in that helps us also kind of manage out all the small things and little challenges that you have when you onboard and partners. And that, in the end translates also for us into much reduced complexity. So we’ve, we’ve come to a point where we usually don’t have a very stable partner base, and if we grow in a market, we first go to them and say, Look, we would need more capacity from this region, you’d be on well suited also geography wise to to run these services, would you take them over and only if they don’t want to take them over, we would go and try to acquire additional partners. And without, again, build for more consistency, easier handling of our partner base. And ultimately, I’m frictionless operations.
Kevin May:
Now, change. tack, if I may, I’m always regularly listeners to how I got here, we’ll notice that it’s often David, who gets into the the mechanics of business models and the more kind of cerebral intelligent type questions, and I’m often interested in the dynamics within the actual startup and the companies themselves. I mean, you’ve got two co founders in Andre and Daniel, I mean, in those early days, how did you decide how to divide the roles? That’s the first part of the question? And, and, and more recently, as you’ve, you know, become more established and grown to the levels that you have? How do you, you know, I’m guessing your three very close friends. So how do you kind of overcome issues or how is the dynamic between the three of you now,
Jochen Engert:
in the early days, it was more of a who likes to do what because we basically both have, all three of us have done pretty much everything, with the exception of Daniel’s always been our tech guy. So he was he has a tech background. So he’s running the whole platform engineering, architecture tech piece, and I was clear, because nobody, like none of us had any clue in that anyways. So that was easy. And then under myself, like in the very early days, both of us we were busy basically trying to acquire boss partners who would work with us. And we’ve usually done these trips and meetings together, and then over time moved into a split, where I was looking after marketing, sales, in the early days, and a lot around fundraising, Investor Relations, and building up that side of the business plus HR. So building the organization, recruiting people building out the team, etc. and Andre was over time, developing that strong relationship into the industry to the boss partners, which was much more operational. And then in the end, also translated into, I guess, what we have today, which is, again, Daniel continues to run the tech piece. And that’s, that’s again, an obvious one. Andre is very much focused on the p&l management of our countries of our regions plus the commercial functions, we also move over marketing into that you have just a full control over country responsibility and all the commercial functions around marketing, sales, pricing, and network planning. And I’ve come to the point where I felt I add most value in looking after the, what we call corporate development. It’s all the m&a activities that we are that we were doing over the past few years, plus international expansion. So whenever we go to a new country, we would do a lot of analysis, first, build up the launch team, and then try to get this rolling into more operational setup and business. And then I can throw it over to Andre to take care of the ongoing business. And that’s been a split that has worked really well for us. And that has developed over time, and rather naturally. And as you said, we’ve we’ve always been close friends and all along the way and process always been very critical to have super open communication and also take our regular and we call them founder of science to take at least a day off for some in another location and really get down to okay what what do we want to do the next 12 1824 months and then beyond and is it still? Does it still fit to our long term vision strategy, what we’re doing what we’re spending our time on. Are we doing the right things. what’s the what’s the current situation of the organization of the team? Is there anything that we need to resolve any sort of problem challenge that we see me that may come up anytime soon? So really discussing high level vision direction strategy, organization, and then also always our own very personal, okay, what’s on your mind at this point? Are you feeling okay? And then like, everybody kind of talks about, okay, this is what’s going on. This is how I feel about things. This is difficult for me, this is, this is easy. For me, this is where I have a lot of optimism. This is where I’m a bit more skeptical, etc, and really have these open open discussions on a regular basis. And that’s, that’s always been super critical for us. And, sorry, I guess. And in the end, I guess, all of this is based on a very, very high level of trust to each other, we just trust really each and everyone does, everybody’s doing their jobs properly. So that we can communicate very openly, if something doesn’t go the way we want it to go.
Kevin May:
They’ve been moments where it’s where it’s really kind of tested that dynamic, whether it’s been a particular challenge during the year or an acquisition or anything that’s gone on in the, in the kind of the corporate development of the business over the last, you know, nine or 10 years, have there been moments where, you know, that kind of relationship has been tested? Because it’s been difficult, or is it? Or is it always been almost kind of like a wonderful piece in the valley between the three of you?
Jochen Engert:
I guess, whoever has been on a phone or a team and founded a company and says, everything has gone well, along the years. It’s probably a liar. No, no, I think I mean, of course, we went through hard times. And this also has an impact on on the relationship that the three of us had. And then you had points where, where we were questioning, are we going into the right direction? Is every one of us taking the right decisions? And we continue? And I guess that’s the that’s sort of the big, the big asset for us, we have always challenged ourselves but in a, in a constructive way. So it was never the big issue. When when someone asked, Have you really thought this through? And this is the right thing that you’re doing here? And can we do this faster? Or should we do this differently? Or why is this so expensive? Or like that? Like? Whatever difficult question you now we’ve always, I think, been very open amongst us to have these discussions. And that made it easier if things didn’t work out. And we wish we had certainly tough times where I mean, we will few times almost running out of money along the way. So the question was, are we going to get that fundraising done? Are we going to muddle through somehow? And what are we going to do here? On the it pod, we’ve had times where we had so much demand, our system broke down, and we’re like, christ’s sake, just fix it so we can sell tickets. All that stuff happened a long way. And I think in the end, so it’s been super critical for us to have an open discussion. And in the end, nobody’s pissed if he gets a challenge from the rest of the group. And that’s been key to us.
Kevin May:
I just lost one from me for a moment. And it kind of references. The very first question that I asked you, which was around deregulation. I mean, as you said, yourself, the opportunity was seized upon because of what was going on in the German market. What are the conditions that you’ve used when you’ve expanded overseas? I mean, if you moved into markets that are already deregulated, or are on the verge of being deregulated, or if you’re taking a different approach with lodging in other countries.
Jochen Engert:
Yeah. I mean, the German case for us was deregulation. And then, interestingly, in our business internationalization happens organically, in a sense that very soon we connected cities outside of Germany to the corner. So we were going to Amsterdam, Prague, Vienna, Budapest, Zurich, etc, etc. So you, you have an international aspect aspect relatively early anyways. And then we looked into, and what’s like interesting markets that we could take the business over whether whether we feel that the model will work. And then the second big market that we launched domestically was Italy. And also the middle, a little bit of out of a coincidence where the guy who still runs our Italian business actually approached us and said, Hey, I want to be part of the team. I believe Italy is a fantastic opportunity. Like in his job interview, he pitched the expansion to Italy to us. And we were like, Okay, first, this is a great guy. Second, this is a massive opportunity. So let’s go and hire him. And everybody thought we’re crazy back then, because we were like, so fighting in Germany didn’t have any clear path towards market leadership or anything that looks like profitability. And then we’re looking at to launching another country. So but we felt we needed to take that investment back then and then this is then how it And sort of went along. And we also launched them into France, which, by the way, got deregulated in 2015. Two. So that was the other big European market that was regulated. So the and then the European expansion was pretty organic out of you just connect cities in that market first, then you got domestic and then you continue to build out the network. The bigger move for us was really to go to the US from out of the European situation and that work? Well, we felt, we have to do that move for a few reasons. First is we share the model is going to work. Also, without the synergies that you have to your core network, it can also work in just any market if you if you build it properly. And then the other part was, we felt if there’s a global competitor emerging that could be dangerous for us, then it’s likely to come out of yours with all the innovation that happens there all the funding. So we said we need to be first to make sure that nobody else can actually do it. And that’s why we eventually decided to go to the US. And then launch once in California, um, to make sure that we’re very visible to where usually these businesses are coming from. I love it.
David Litwak:
Yeah, I was living in San Francisco up until a couple years ago. So I’m very, I forget when exactly you launch. But some time over the last couple years, if I went back and saw the fleet of buses going up and down the five from SF to me to Los Angeles, excuse me. So something I wanted to kind of bring up was the kind of cultural round buses. So in America, you know, I think this might be different than, than Europe, at least in degrees, you know, for us, buses. We’re greyhounds, really not fantastic brands, right. And we actually had one of our very first interviews with Polina from wanderu. And we talked to her about how one of the trends that she was seeing when she started it, I must have been nine years ago now, was the kind of upgrade of the bus experience and the rise of mega bus. And I thought that was funny, because from my standpoint, I was like, wait, a second mega bus was like the improvements was, was the my first gut, you know, reaction there. But you know, she had a point and that, you know, compared to grey Greyhound, it certainly was, I’m also an investor in cabin, which is the overnight, you know, bus company. And, you know, they talk a lot about kind of trying to de stigmatize, you know, buses, and they’re the most efficient, you know, way of actually getting from point A to point B, and I’m curious how you guys have thought about that, because it is still often considered a, quote, unquote, lower class way of traveling in the US at least. And how have you tried to change that that image?
Jochen Engert:
Yeah. It’s a very, very good question. I mean, if you look at what the situation was, before we launched in Europe, then it’s, it’s pretty much exactly the same like in the US, so that the image of traveling on a bus wasn’t very nice. So if you’re, if you’re friendly, you could see as a mean of transportation that seniors would used to do trips over the weekend on where people try to sell them weird stuff, like heating blankets, and these things. So it’s not like you had the nicest image of them that mean of transportation. And I think that was the exact case in Europe. So you had a business called your alliance all across Europe, but you already had those connections. Even in Germany, for the historic situation of Berlin, there’s always been bus service to and from Berlin. So for example, you had to put in 15 times a day, um, through a company that was called Berlin union was an old punch of and subsidiary that, ultimately also disappeared in the market changes. So that the product itself was there, and the image was not really good. And also the availability, the awareness with customers wasn’t there at all. And I think that’s, that’s probably apart from scaling the business to its current size, probably our biggest achievement to really get that mind shift going and really change the image of past travel. So I think we ultimately managed to to really make it cool again, and make it attractive to a much broader audience. Of course, people would initially come to us and say, okay, it’s a very, very good price. And for me to travel from A to B. But how we keep them is really the sort of surprise moment when they enter the buses, they booked me booked the ticket initially, and ultimately enter the bus and travel with us. And it’s really a nice and comforting and easy to use experience. And this is how you ultimately build a loyal customer base. And I think this is where most sort of incumbent brands have just missed out on and if you look at the end, that’s why we also felt the opportunity in the US so because the product experience is just crap, full stop. And then and that’s that’s what would you need to change and it’s not as a certain point around the hardware and the bus service needs to be modern and like a service approached it, but it’s a the entire How do you market it, how do you brand it? How do you sort of build that customer base over time and how easy is it to use and and what’s not to underestimate We brought so much efficiency to the industry, through the optimization that you have on the network planning pricing marketing side, that we can first produce the service with our partners together at a much lower cost base. So the kilometer that we operate is much cheaper if we do it with our partners versus the incumbents that have integrated models. And we’re much more efficient. On the marketing side, it’s much easier to use tech and convenience for our customers. So the impact of technology in the business. And that’s something that’s still striking to me until today, it’s completely underestimated. So if you look at the complexity that we’re operating with all the connections, all the possible combinations that you have in the network, if you’re on a bus, I’d like an air and they align with your flight from A to B, but we run ATG and all the connections in between and all that sort of possible combinations that you have, there creates a massive data problem that we solve through technology on the planning side, we build our own software that makes it on the 100 efficient to operate on at work, but also tries to perfectly match supply and demand at every given point in time, over the years with different schedules on a Tuesday was Friday, in a springtime versus summer versus winter, etc. All this optimization, and and all the incumbent guys, they just don’t have that transparency, they’re lacking the technology, the data, the analytics, tools, etc, to really drive this. And this is why we’ve been so disruptive. So and that whole thing, ultimately built a product and a service level that was really changing the image. And that made it so attractive to such a broad audience and target group. And first, and that’s what we felt, yes, is a good, good place to go to, because this is the same challenge that we have here versus what we had in Europe before we launched.
David Litwak:
Fascinating, it seems almost kind of like it wasn’t just one, you know, one of these innovations, it was business model plus brand Plus, you know, kind of control and, and I love that I think sometimes entrepreneurs mistake the advice to focus to being like literally do one extremely narrow, small thing. Whereas, you know, kind of trying to versus like focus on solving one problem for the customer that could potentially mean solving four or five smaller problems at the same time. So I wanted to segue, the conversation here before we wrap up into the future and or the very recent past when it comes to you launched a Flix train and like you’ve had several rebrands I actually don’t know what you guys are officially call these days. And it was flicks bus mine Fern bus at one point when you merged. And then I heard you know, various announcement, calling yourself flex mobility these days. And but specifically, I think the kind of your eyebrow raising announcement that I saw, especially being in the US where we have Amtrak and that’s it was the idea that you guys started flicks train. And I remember thinking like, what do they just like lay train tracks? How do you start a train company? Is that like a thing? And I realized there’s a bunch of smaller train companies, a lot of these these countries that operate, you know, similarly, obviously, they’re not the same to some of the charter bus companies. And you guys seem to adopt your model. And I’m curious, you know, how similar was the train model to the bus model? And who are these guys that guys that run, you know, trains that compete with Deutsche bond that you are disabled to kind of like, snatch up? Because that’s just insane to me?
Jochen Engert:
Yeah, I mean, first maybe to sort of get a little bit of clarity here, the the company’s name flexibility, our product is flicks by simple extreme. And we’ve actually come into the train business. If If we talk to sort of outsiders, they always like, how can you do trains. And this is surprising to me. Interestingly, we’ve actually had this in our investor pitch already in 2012, that we will do buses, and we will do trains on top of it at some point. So this was part of the long term strategy ambition. And for us, it’s really more of an extension of our corporate where we would say, if you enter into market, the bus actually be perfect mean to go in there, because it’s, it’s a decent size vehicles, they have enough seats and like capacity, but it’s not as big as you have all the risk of just not filling it up and losing a lot of money in the first place. So we started to market would open up initial network, maybe connect the cities three, four times a day, if it works, you add more frequency, if it works, even better, you go into bigger buses, or you double Deckers. And then over time, you penetrate as much of the market as possible. And then, and this was the situation for us. In Germany, we felt there’s so much demand out there. And there’s also some routes, where we can’t properly serve it through the buses and transportation, we should also add trades to the portfolio. So ultimately, it’s just a different meaning of supply for us. And it’s in the end is just a bigger bus, if you will. So we’re selling it through the same platform, same technology, same model overall. I mean, it’s a very similar customer group with I guess the nice add on that we attracting customer group that was difficult for us to tackle through boss because there’s still a certain awareness of, of preference. I’d rather travel on a train so We’re actually adding another layer and segment and to our possible customer group. And there’s a lot of synergy and spillover effects between the two. So you can feed in our services onto the trains, you can focus on that larger, longer distance trunk routes on the train services, where it’s actually even more efficient. Also, production cost per seat perspective to run trains. And then, of course, we also looked at the market. And if you look at the train markets in Europe, most of them are relatively heavily regulated. So there’s a lot of regulation around how do you get access to tracks where you’d like to run, what’s the sort of vehicles that you may or may be using, etc, etc, it’s quite complicated, much more complicated on the bus market. And at the same time, it’s 10 times the size of us, that’s a massive opportunity. And it’s still run in a vast majority by state owned companies. And mean, pretty easy to see that the efficiency, customer focus and product experience of state owned companies isn’t to the best of what you could possibly get in the market. So we felt there’s a huge opportunity. And there’s some actually something like you had in low cost airlines 20 years ago, when the flagship carriers thought, that’s never going to be a big business and never going to be a real model. If you now look at who’s making money in airlines, and it’s mostly the local guys that are doing this very efficiently on a on a strong cost base, and with a strong customer focus as well. And that’s, that’s why we felt this opportunity is so massive, and we need to go in there to attract an additional target group have another mean have to compete on longer routes, where the past is maybe not the perfect meaning on supply, and also a set on leverage on that opportunity to build that next massive market for us and do all of this with the existing sort of assets that we have in the organization, ie our team, our marketing machinery, the tech platform. And then we’ve The only sort of missing piece, and that was that we need to we had to get rolling stock going. And that was actually the most complicated part, to get these trains on that we’re not running. And that’s it’s actually interestingly, it’s old material from dodgeball that we refurbished. We bought it off from them through a third party, refurbished it, and also bring it to our product experience and understanding of this repeater service level, and then running it on multiple tracks across Germany, and continue to expand that business across Europe. So the next step is going to be Sweden. And and really feel this is a business that potentially in the market where it’s possible, maybe much bigger than our bus business at some point.
David Litwak:
So I wanted to actually quickly follow up on that. So I actually was under the impression is we’re using chemical Leo Express as your main supplier. So you also just said that you took your own trains and refurbish them were like, Can you clarify that? Or is it both?
Jochen Engert:
We’ve sort of, um, used to initially launched into the market existing providers and also integrated them onto our platform, which was more of a breaching scenario until we had the sort of branded rolling stock available. And now what we’re doing is, we’re actually put on the rolling stock into a leasing company that we don’t really control. And we’re sort of involved on the equity side of it to ultimately get it going. But again, here, the business is opera, the trains operated by small and mid sized partners that would run certain routes for us or is or a set of routes. And then we on the commercial side have a similar agreement with them, as with our bus partners, so again, we very much believe in the potential of distributed some production and sort of set of suppliers that we can work with. And and again, here on the experience side, as we’ve kind of reached our way into the initial product wasn’t the ultimate idea of this should be our training and product and service level. That’s what we said, we need to use this to get our way into the market, but then over time, really move it into a brand new curated and fully refurbished product. And the next step will be to build and buy fully dedicated, specified fleet strings, some new material, but this is again, something that takes multiple years to really get it specified, get it built, and then ultimately get it done on the tracks.
Kevin May:
So last of all, well, final question you’ll come in it’s it’s much more of a about, again, the company really, I mean, you’ve made some acquisitions, there’s been merged as it’s been this tremendous kind of growth tear that you’ve been on. But it did just start out as the three of you, which would have had a culture of its own then and now you’ve got this large business, how have you maintained or did you maintain the culture that you think you had in the first place to where you are now or if you let it kind of evolve in different ways?
Jochen Engert:
Yeah. And it’s a, I think it’s a very, very important point forever. We young company, and especially every fast growing company, that the culture that you’re creating is super, super important and valuable. And we’ve had probably know that quote, and Peter Drucker said, culture eats strategy for breakfast. This is totally true. And this is what we’ve what we’ve seen all along the way, we obviously we did have a clear vision and strategy. And we had a certain culture that we had, from the early days that we didn’t, maybe unlike too few other companies, we didn’t really write it down, it was more like we lift this and this was how we also transfer this to the team. This is easy. If you’re like 50 to 100 people, maybe if you scale this to a few hundred or over 1000 people over time, that’s more difficult. And then I think what we try this to maintain, at least, at least, I mean, especially the critical parts of the culture, where we felt, we need to be very entrepreneurial, we want to be very fast in decision making, we want to act as a team, we want to put our customer first and like customer value first, and want to make sure that we we look for solutions rather than problems. So that whole solution oriented mindset and entrepreneurial idea, we want to maintain this over time, even as the company grows. And then we said, we need to write it down. And at some point me to continue to explain it, our teams, and make sure that we and our entire leadership team really lives these values and lives up to these values. And this isn’t a very continuous basis. And this is something where we’re investing a lot of our time into to make sure that we keep this because in every situation, every market and all our markets have been very competitive. This is this is really critical. And this is the differentiator that we have. So it’s really about the team finding better, more innovative, faster solutions to whatever challenge we may have. And that’s nothing that you can buy as a corporate ready. And that’s why we feel this is also going forward, a super, super valuable strategic asset for us. And that’s why we continue to invest there and invest is primarily around, I’m spending time thinking it through. I’m trying to make sure that everybody understands it, and taking all the small things that happen along the way and make sure that we’re moving into the right direction. And really everybody understands.
Kevin May:
That was terrific. So thank you so much for for joining us on this week’s podcast. I mean, it’s been a I think, as I said, it’s been a tremendous, tremendous journey over what nine fairly short years journey, no pun intended, really, I mean, we’re We are an audio podcast, but those that are with your virtual background behind you is this bright green train. So it just goes to show how important that part of the kind of the future for flex mobility will be. So again, your can anger. Thank you very much for joining us.
Jochen Engert:
Thanks a lot. Absolutely. My pleasure.
Kevin May:
Okay, so those tuning in. Thank you so much for joining us. This has been another episode of how I got here. These are focus while remote CEOs, weekly chats with entrepreneurs, and innovators in travel and transportation. If you’ve come across us randomly and you’re not a subscriber, you can do so by subscribing to us on a number of platforms, the usual ones, especially Amazon, Alexa, Spotify, and iTunes. So please do that you’ll get a regular update of our weekly new publications. So thanks so much again, to comment on David and I behalf thank you very much for joining us and we’ll see you next time.
Transcribed by https://otter.ai
