#72 Cornelius Kiermasch, Head of Shared Mobility, Deutsche Bahn Connect

00:00:00: Welcome back to the Wunder Mobility Podcast.

00:00:02: Today I'm here with Cornelius Kirmasch, hi Cornelias!

00:00:04: Hi Gunnar thanks for having me here.

00:00:06: it's so good to see you again.

00:00:07: your last year at The Wunder Meetup earlier this year on bike sharing and You really brought some interesting opinions to the table Some provocative new Opinions And that is why we wanted To have you Back based On Your big background in the industry and on being such a straight talker.

00:00:27: Maybe let me get right into it.

00:00:29: so you are leading shared mobility at Deutsche Bahn, that's Flinkster call-a-bike.

00:00:36: And earlier this year your CEO said she will only keep doing first or last mile if he makes money.

00:00:45: How did that land for you?

00:00:47: Well actually nothing is new because I was hired position to really kind of restructure and repositioning both products.

00:00:56: And we are on a very good track, um... At the end of day every business that you run should be profitable or at least break even!

00:01:07: We worked hard in the last actually seven years since I took over the position with their whole team.

00:01:15: A bit later, the transformation that you made because it seems like from outside.

00:01:23: That's really a headline topic for you.

00:01:25: on your LinkedIn profile You are basically talking profitability.

00:01:30: It is in your title.

00:01:32: So what came to do already and you've achieved?

00:01:35: And there were some radical transformation steps along the way, but before we get into that can you give us a feeling for The scale of their operation at your running?

00:01:45: like approximately how many cars so many bikes I guess managing.

00:01:49: So let's start with Flinkstar first.

00:01:51: So car sharing Flinkster is a product With a clear focus Car sharing at the train station and rerun a fleet off around Three hundred vehicles.

00:02:01: it's quite small fleet But we have reached an over eighty train stations in Germany And they are the most relevant train stations that we see from a DB perspective.

00:02:13: Just to a side note, when you look at top-thirty train stations with the highest people who get in and leave their trains... We're at twenty nine of them!

00:02:26: The only car rental company and also car sharing company runs these locations.

00:02:32: One is missing.

00:02:33: It's actually the airport in Frankfurt, but you have high cost for parking and it is not like our main use case.

00:02:44: So that why we now provide seamless experience at over eighty train stations in Germany with Flinkster.

00:02:52: And apart from this three hundred we have another.

00:02:55: up to one thousand vehicles can be booked via the Flinkstair app of some caching partners like Yatsmobi, Sheepersharing or Ford Cachering.

00:03:03: So everyone that is also using the same software can be booked through this.

00:03:08: and so it was talking about caching.

00:03:12: And now let's come to bike sharing.

00:03:14: So we run with Callerbike, which is the main brand.

00:03:17: also and here in Hamburg it's also Stadtrat Hamburg We operate the bike-sharing fleet.

00:03:24: so we have around sixteen thousand bikes in a fleet In over forty cities.

00:03:31: for us With these cities that are running mainly like the big cities like Hamburg Berlin, Cologne Frankfurt, Zürich and Munich we have a reach of like around eighty percent of the long-distance customers that either enter or leave their train with these cities.

00:03:49: And maybe before we get into this turnaround, how you... kind of found things and where they are today, in what the important steps were along the way.

00:03:57: Can you also just share a few sentences about your background before you arrived at Deutsche Bahn?

00:04:02: Because I think it's super interesting and also relevant for this whole shared mobility.

00:04:06: You're part of another really industry-defining product Before that.

00:04:12: Yeah maybe i started my mobility career let say like that At Mercedes Like Daimler back in the days.

00:04:21: And my focus was like a car to go, like in the car sharing is free-floating car sharing and they're focused on one hand first product management but then I'm focused on business customers.

00:04:36: Then had another position that's in let say the EQ team of Mercedes which also liked their new electric brand at Mercedes launch and I worked in this field.

00:04:52: And yeah, then actually i was hired from Deutsche Bahn for this position because Flinkster and Caller Bike.

00:05:00: they were a little bit kind of outdated not performing that well anymore.

00:05:07: so my task was to do like a turnaround on both products Renew software wise, technology-wise the hardware and yeah just maybe some background.

00:05:24: Yeah I

00:05:24: would love to come back in a few minutes also too kind of have the car go.

00:05:28: I'm experienced on what can still be learned from that.

00:05:32: but now let's dive little bit into your current role and this turnaround at Flinkster and Callerbike because You've been talking about this before, and you shared some data publicly.

00:05:46: One of the things I was reading is how customer service cost was reduced by ninety percent apparently?

00:05:53: How's that even possible?

00:05:56: like what were their main drivers behind it?

00:06:00: First and how does it look like today?

00:06:02: Maybe when I started with Callerbike, looked into the numbers we had one customer service call or email.

00:06:10: Like a customer service contact out of ten rentals.

00:06:14: So that was quite a lot because if you have a couple million rentals everyone can do their math How expensive.

00:06:20: this is not really sustainable for my business model.

00:06:24: And main reason was that many, on the one hand kind of technology was a little bit outdated and also many processes were built on manual process in their background.

00:06:36: So like give an example when you canceled your contract You said like you quit, there was still someone that had to do the cancellation in this system.

00:06:48: And also when we have some issues with rental process because they lock didn't open or didn't close... ...you were then calling our customer service and maybe it's a history of the brand name call-a-bike.

00:07:05: This is actually how Call A Bike started back in days In nineteen ninety nine, it was founded by some student entrepreneurs in Munich and there was no iPhone.

00:07:17: There were no smartphone so even mobile phone was not everywhere.

00:07:21: So you really had to call actually opened a bike And then they have entered your code Your pin in the DNA of, uh...of-of the product which resulted in high customer service costs.

00:07:38: And what were like their solutions to get away from it?

00:07:42: I think first you need to find, like maybe bring a lot into the self-service that customers can do it in app itself when you want change your customer data or and then also renew their IOT log.

00:07:58: That we had which is quite more solid product.

00:08:02: this also helped but then Also It helps To kind of also an action.

00:08:10: in the last two years We also use a lot off.

00:08:12: now AI We are using, like a chatbot was back in the days before Chai GPT came.

00:08:19: It wasn't so good but with the language model now it improved significantly.

00:08:25: So we launched on their websites and have also started to use mailboxes.

00:08:31: So to optimize the customer service and now we are working with a voice bot.

00:08:38: So even like that when you call, AI will answer in the course because what from... When you think of a customer's perspective?

00:08:46: You have an issue And it can be either with AI or as human.

00:08:51: It doesn't really matter at end of day It works.

00:08:55: If someone helps you and so on, we are kind of now focusing that.

00:09:00: maybe the remaining processes that we have... ...that can use AI for it.

00:09:05: You mentioned in a beginning contact rate was approximately one-in-ten rentals would result in a ticket.

00:09:12: Can you share all of magnitude?

00:09:14: what is today?

00:09:15: What do you consider good to

00:09:16: be?

00:09:16: We're right now at one out of hundred.

00:09:20: So its like one percent not ten percent before We believe that we can even reduce this further.

00:09:26: And

00:09:28: what do you think is like a best practice in bike sharing or vehicle-sharing at the moment, maybe?

00:09:33: I think when you can be lower than one out of two hundred... Okay!

00:09:40: This could be ... Maybe it will go there where always processes which you cannot fully optimize and they also have to think how much money to maybe solve the remaining ones, or do you focus with your tech team in different directions?

00:09:57: But this is like my personal goal.

00:10:00: When I started it actually thought that two-to three percent would be the goal but now AI can be below one per cent.

00:10:10: Alright whatever gets responded by an AI does not get counted on your contact rate.

00:10:16: basically

00:10:19: Because I calculate more like the customer service always when it costs us some cost at the end of our customers.

00:10:27: That's what i also wanted to ask about if that is possible, because on one hand the contact rate went down dramatically.

00:10:36: did your cost to serve decrease over time?

00:10:40: The cost for

00:10:43: team

00:10:43: solving a ticket?

00:10:44: No actually they increased as we have minimum wage.

00:10:48: So in Germany with like, so actually customer service when you run it within German team.

00:10:55: Like we have a... We use the DB team behind that also runs all the issues and they're trains?

00:11:02: So meaning at cost per contacts are increasing.

00:11:08: So that's why in everyone, in our micro mobility industry and the sharing industry you have to lower their customer service costs.

00:11:15: You really have to focus on this because especially with bike-sharing where your revenue per bike rental is quite low

00:11:23: What would he say?

00:11:24: Is like an average approximately revenue per bicycle rental.

00:11:28: Let's say if we say like with two to Euro, but then we have also terrorists where it's including very flat rate terrorist.

00:11:34: Then you have a pair of single rental even zero income on the drive.

00:11:42: so especially meaning in this feed-off by sharing or scooter sharing customer service can really kill every business.

00:11:49: Because If We Do The Cost Of A Contact Point It could be about like five euros or...

00:11:57: Well, it always depends on the process.

00:11:59: On a time you need to solve it but maybe we can do with ten euro for

00:12:03: example.

00:12:04: So then if its one in hundred gets a contact point Its basically ten cents per ride of five percent of total revenue Exactly.

00:12:14: and thats now after tonne optimization.

00:12:16: that's good already But started out being more than actual revenue right?

00:12:21: Absolutely That's

00:12:22: super nice.

00:12:23: You also talked publicly before about what that meant in terms of team changes, so apparently a team or maybe about seventy people out-of magnitude had to be wound around down?

00:12:36: How did you go on about?

00:12:39: was it sort of big bang and stages?

00:12:42: Or how did you manage to implement without losing productivity for the rest of the team.

00:12:49: Yeah, there was like a face.

00:12:51: we did it actually over I would say twelve months from the starting point because We were running our own customer service department with roughly seventy people.

00:13:03: Even in summer.

00:13:04: It was little bit bigger Because With bike showing you need more people In Summer than Winter times.

00:13:13: But this also servicing Our car sharing business and also some caching partners that they use our customer service for it.

00:13:20: And one thing, well we started very early to digitalize many processes.

00:13:26: so already like the contract rate went down plus on the other hand.

00:13:34: then we start at first with one system to transform from our customer services to their DB customer service.

00:13:42: It's called DB Dialogue.

00:13:44: And so after we, because it's also the new customizations that first need to learn your system.

00:13:51: They need to know how their product is going what are like main issues and how do solve them?

00:13:56: So you have this phase of... The learning phase on other side First then transformed one our color bike cities And then step-by-step the other ones.

00:14:09: The last thing was, we transferred the cashering content volume to our customer service

00:14:17: colleagues.".

00:14:19: So basically that's like a phased approach learning for another team and then fading out on their old team?

00:14:28: We talked about support side of things because it is so staggering how you can kill your whole business but especially the immense transition You guys made.

00:14:37: over what time frame actually, by the way?

00:14:38: Because you've been there seven years but probably didn't start on the first day.

00:14:41: No like when I started there.

00:14:44: well... There were many things to do.

00:14:47: On the one hand, you had maybe like an outdated technology.

00:14:52: Hardware-wise then software wise we were already in a process of getting rid off their old legacy IT system building new ones and this was launched.

00:15:05: Then also on the team set up for the organization.

00:15:08: so there are many things to focus.

00:15:10: but customer service thing.

00:15:13: in the second or third year, then I was focusing on customer service to reduce costs and close our customers business.

00:15:25: Meanwhile why you reduced cost so dramatically?

00:15:29: I was reading that your number of rides were actually going up over these years.

00:15:34: how quickly are growing at the moment?

00:15:40: or maybe that's geographically very different, I guess.

00:15:43: How does like a revenue side of the business look?

00:15:47: So let me start to talk about Collabike.

00:15:52: like Backsharing We have double digit growth since actually last three-four years every year which is quite nice.

00:16:00: The amount of rentals we clearly see in MicroMobile there are high demand and with car sharing it I would say it's more stable.

00:16:10: The caching business is a little bit different because we provide the week has mainly as one of their main customer groups is DB itself, so the employees off DB uses our product maybe out of two rentals its done or used by a DB employee And because they need it, like in whole Germany.

00:16:34: We run a rail network of over thirty-three thousand kilometers and then when you have construction which we now every train customer is experiencing.

00:16:44: so there's a lot of construction going on and engineers mainly from Infrago arrive by the train to get a flinkster early morning before any opening hours for car rental companies get the car and then go to the construction site in evening, drop the cars back at a train station.

00:17:03: And leave again.

00:17:04: so meaning like flinxer main customer group is business customers internal than we have also btb customers and a lot of bond card users like the train customers itself.

00:17:19: right now We see higher demand internally because a lot of construction, so we are also opening some uh train stations and especially for our colleagues.

00:17:28: And then when we have low utilization it's mainly landed the weekends from Friday to even Monday.

00:17:34: this is where the focus is on B-to-B customers'.

00:17:37: and you were asking about how is it developing actually?

00:17:40: It's running quite well but we don't have like now double digit growth.

00:17:44: its very stable profitable and just fulfills.

00:17:51: turnaround phase is over in your part of the business.

00:17:58: and what's your focus now then?

00:18:01: Maybe starting to talk about Flinkster.

00:18:03: Flinkstern turnaround phase, it's over.

00:18:05: yes because one of maybe the key things we did was actually... It was won in first six months when I started.

00:18:15: I closed two-thirds all our Flinksters stations.

00:18:18: its quite a lot.

00:18:21: But the thing was, because Flinkster wasn't only focused on train stations.

00:18:26: There's also a strategy back in the days even to get closer where people live more in residential areas.

00:18:36: so there were many stations.

00:18:39: but reality is that these stations which weren't closed at a train station they're not profitable.

00:18:47: Why?

00:18:47: one of the things was really like to close their businesses at stations and then focus on train stations.

00:18:56: And apart from it, Flingser used to be also a platform or network.

00:19:04: so we as Deutsche Bahn were providing caching software back in days because when he found that twenty five years ago We will celebrate our twenty fifth year in December this year.

00:19:16: So there was no Wunder Mobility software or one of the competitors in the market.

00:19:23: We developed this software by ourselves and then actually we're offering it to these small caching partners around Germany, even Italy where we had Kassimuth also in Austria using the software.

00:19:41: Actually like, let's say the same thing you were doing.

00:19:45: Like providing us a product to market but this itself was not profitable to really run it.

00:19:53: That's why we also decided not build it any longer, and then we decided like actually was in two thousand twenty-four where we launched or migrated from our own software towards a third party software with this thing that everyone knew that we were providing software to third-party cashiering operators and taking care of the customer service, taking care off key account management.

00:20:24: And even like every card it was booked through a platform... We also did invoicing in billing.

00:20:35: so we kind have stopped this business.

00:20:40: There wasn't even a third business as what you're doing with car sharing but corporate car share.

00:20:45: Okay, so we even offered for companies a dedicated fleet not even for companies also.

00:20:50: For some cities like in the region of Hanover and fleets.

00:20:54: but when you looked about their utilization it was very low.

00:21:00: And during Corona It Was Even Like When There Was No Demand.

00:21:04: We Still Had The Costs Of The Cars.

00:21:07: So To Sum It Up Flinkster is now today's, we're only focusing on car sharing at AD cities or AT train stations.

00:21:18: But we are not a platform anymore to flinkster platform.

00:21:21: so we don't provide our software external car sharing partners and we aren't doing corporate car sharing any more.

00:21:29: So we have the clear focus only Flinkstar car share at the train station.

00:21:34: Do you see that sort of as the mission for next few years?

00:21:39: as well, or do you see that growing in a certain direction again?

00:21:45: I think...I don't see it.

00:21:46: It's like double-digit growth here while we grow slightly every year and when we see there is demand to open up further train stations with Flinkster then we will do it.

00:21:59: but right now our focus of my team that still DB has every year, because it can be very easy subsidized with the Flinkster offering.

00:22:15: And when you look on the bike side I think its quite different story.

00:22:19: as said already in a beginning double digit growth last several years.

00:22:23: how does that looks like overall?

00:22:24: is there other big regional differences or are any sort of shifts from entirely station based model coming?

00:22:36: What direction is this part developing?

00:22:38: So

00:22:38: what I see?

00:22:39: that bike sharing, the demand is there for customers.

00:22:42: But bike sharing it's also regulated in some cities and then by showing business back in the days they were... It was usually subsidized.

00:22:53: so there was a public tender.

00:22:54: you could apply to win the tender And everyone who was doing like bike-sharing businesses was applying.

00:23:01: Then we are appointed.

00:23:02: We were appointed also for Stuttgart.

00:23:07: So you have then like a contract between five to ten years and this year, the contract in Stuttgard will end And we are not operating it anymore so we'll close it.

00:23:21: regarding growth.

00:23:23: You see like that there's no growth, so actually you have then on your portfolio...you're losing some revenue but also saving some costs.

00:23:33: Why is Stuttgart ending as somebody else taking this over?

00:23:36: The citys no longer providing it.

00:23:37: So in Stuttgard was also a subsidized system.

00:23:41: we run pedal eggs and mechanical bikes Not only in Stuttgart itself, but around thirty cities around municipalities.

00:23:51: The city due to the well we all know it situation and automotive industry.

00:23:55: so I'm originally come from Stuttgard And are you also used to work for Mercedes back in days?

00:24:01: So actually there's not enough money anymore In a City To spend it for bike sharing.

00:24:09: They had an public tender And we're more like looking for someone that can run a petalic fleet in this region without any subsidies.

00:24:21: But as a call-a-bike, we didn't apply it because you have very low demand for bike sharing.

00:24:28: so it's never positive business case.

00:24:31: You're skeptical if it could be anybody or mostly your setup?

00:24:35: For us but also... All the traditional bike-sharing companies, even like Donkey in my next bike fifteen and you name it.

00:24:42: So but there was one scooter company that was appointed?

00:24:47: It wasn't The only ones.

00:24:48: they were looking for two different on its line.

00:24:51: so and lime.

00:24:52: I wish them a good luck in it.

00:24:55: let's see if they can make it down.

00:24:57: But so David got appointed so they will then offer it.

00:25:02: i think one or two thousand pedaling sin beginning of January next year.

00:25:08: I

00:25:09: would like to also talk a little bit, few more minutes about City Tenders and what you maybe changed there.

00:25:14: but before we go they will close this chapter with an outlook for your business because We talked about the turnaround in some numbers and examples like radicals successful kind of.

00:25:27: What's Next?

00:25:28: So where do see You guys taking The bike sharing part over the next years potentially

00:25:34: so what we are right now with?

00:25:37: We have focusing on and a big cities where you're with Callerbike.

00:25:41: And as I mentioned, we have the double-digit growth and recently also integrated in DB Navigator just on first of September.

00:25:50: so finally we are digitally deeply integrated which is like a big success for train customers or for us but it provides seamless customer experience for the train customers.

00:26:04: May i ask directly what did you see?

00:26:08: It's too early to tell after you

00:26:11: talk.

00:26:12: Well, we have some expectations but let us say like that for example Lime in the US I think they had one out of six or seven rentals come through the Uber as a sales channel.

00:26:26: and if this would happen also here in Germany with the DB Navigator then it will be very happy.

00:26:33: But lets see so its too early.

00:26:36: I read that the DB Navigator had also another micromobility provider integrated.

00:26:43: Already before, what's this strategy?

00:26:45: So apparently it is becoming a platform across different options in the city.

00:26:50: It not an only like DB ecosystem play.

00:26:54: Does it matter from your perspective then who owns and operates the bikes if basically The idea is last mile connectivity.

00:27:05: Does it still make a difference from a Deutsche Bahn perspective as long as some option can be integrated whether its their own product?

00:27:13: So with Callerbike, we are not only integrating the Dibi Navigator We also provide Some benefits for let's say our heavy users of Deutsche Bahn.

00:27:25: so we're part of the loyalty program.

00:27:27: one bonus when you have silver gold or platinum status.

00:27:31: Then you get a free kind of like flat rate for color bike.

00:27:35: For year, in every city you have thirty minutes for free and what we see there it's actually right now even one out six rentals is being done by a Banbono status customer by the heavy users, and so it helps us at Deutsche Bahn to keep them kind of a happy DB customer.

00:28:00: So maybe this is one thing that we are right now pushing also... That's why with the service team you always provide enough bikes in train stations or where demand is.

00:28:12: And apart from that We're providing services for companies in the cities where we run or for universities, which is helping us to kind of let's say on one hand increase revenue and then to run it profitable.

00:28:34: So not just about being discovered in the same booking flow but its actually a bundling product sometimes maybe even like part program, what can you give away to bar and bonus clients?

00:28:47: Kind of a discounted bike sharing rate.

00:28:50: And upselling at that moment would also benefit them.

00:28:54: That's the whole distribution and DB navigator thing.

00:28:57: You were talking about this earlier before we started recording.

00:29:00: it was Yeah kind of big milestone along projects.

00:29:04: are there similar other ones?

00:29:07: so I mean It's like immediately when this is done thinking about what could be the next thing.

00:29:11: Are there other parts of the Deutsche Bahn kind of ecosystem that you think it would make a tonne sense to be more integrated with or collaborate more closely?

00:29:20: Yeah,

00:29:20: so one thing we are also looking at is in general like the Deutschlandticket

00:29:27: How can this work?

00:29:28: to think that you do provide like an integrated offering, having also some budget in it or even getting the membership and flat rate.

00:29:41: Do

00:29:42: you think this is likely possible?

00:29:46: It's from a regulation point of view maybe not clear yet.

00:29:52: so what we right now are part a month, like that when you select your Doshan ticket via DB.

00:30:05: You can every month also select some... like mobility options, you get a voucher for Callerbike.

00:30:13: You got.

00:30:14: also can get a Voucher for coffee.

00:30:17: so we kind of trying to combine it actually.

00:30:21: but still as a customer you need to select.

00:30:23: It

00:30:24: didn't realize that there are multiple distribution channels For this Deutschland ticket and if you buy two Deutsche Bahn again like bundling this with yes And for example I'm a call bike credit

00:30:38: Yes, and what we also see when we look at some BtoB customers that for example they have this so-called fulmin ticket.

00:30:47: And there are also some where you provide the color bike like a flat rate as a benefit.

00:30:54: They then having like as a base, they have the public transportation to use.

00:30:59: But for their last or first mile... ...they also had the benefit of call-a-bike.

00:31:04: To use it.

00:31:05: we recently also won DKB Deutsche Kreditbank which is quite big bank in Germany and there are located in Berlin.

00:31:15: And they recently built their new DKB campus For three thousand employees.

00:31:22: But they're right now, so you arrive at a train station and it's still one point three kilometers to walk there.

00:31:28: And the S-Bahn like the train stop is not ready yet?

00:31:33: So it will come in the next years!

00:31:36: We are kind of providing out solutions between the campus... ...and the train stations.... The employees have their flat rate to use when call a bike.

00:31:48: This was an example how you can combine public transportations with a bike sharing.

00:31:54: And that's for you.

00:31:55: basically, B to B contract?

00:31:58: It

00:31:58: is a B-to-B contract so we are paid by the company.

00:32:02: they provide nice benefit from employees and it's win-win situation.

00:32:06: I

00:32:07: would like talk about tenders because there was lots of experience as well.

00:32:10: i wanted ask if you think German cities are buying bike sharing wrong what will be biggest change You would ride into these if you were riding for a big city, a bike sharing tent.

00:32:25: So maybe right now we are in the situation from the economy and Germany seven years of no growth.

00:32:32: Right Now We Have A Little Bit Of Growth But Meaning Like The Cities They Don't Have The Money Anymore To Spend It For Bike Sharing Especially When We're Talking About The Bigger Cities.

00:32:42: Even Like Hamburg Like Stuttgart Berlin We were talking about like, they don't give any budget anymore for bike sharing.

00:32:50: Berlin decided the same.

00:32:53: Hamburg there will be maybe a tender in one or two years.

00:32:59: but so meaning it is not the answer more to subsidize bike sharing fully in bigger cities because today when you leave your train stations here at Hamburg, there are plenty of options.

00:33:14: You have Stadtrat like us and Kollerbike so many different scooter providers... And if they take a bus or taxi it's like everything is their kind.

00:33:24: So then its really the question do we still need to subsidize?

00:33:29: Or not?

00:33:30: One example that I can give maybe this even for next year.

00:33:36: how could work is what I see in Frankfurt for example.

00:33:40: Frankfurt, for us it's a lighthouse system.

00:33:43: It was never subsidized by the city itself.

00:33:46: and as it wasn't subsidized but the City itself so we had to find other sources To make it profitable.

00:33:55: And What We Found Was On The One Hand The Universities Play one big role Because they can, in the interpretation fee.

00:34:06: I think it's called like a semester by-truck.

00:34:10: So they can integrate the bike sharing because anyway divided to ticket for public transportation.

00:34:17: and so we have all the universities in Frankfurt All students can use collarbike And this helps us to run the system.

00:34:27: apart from BtoC revenue that we have plus then from university on an annual basis what do you get?

00:34:33: plus from some B-to-B customers, ECB like the European Central Bank.

00:34:38: We have Commerzbank KFW and you name it?

00:34:43: Some banks helps us all together to run on a profitable basis.

00:34:48: And then once we start doing that in one city Well now since I think about twenty years so there was lot of time for development Then other cities around Frankfurt, they were interested in the bike-sharing system.

00:35:04: But you as an operator when doing it on your own money or risk?

00:35:10: you will never go there apart from if it's subsidized by the cities around.

00:35:15: So, and then for example of Offenbach Eschborn Langen Darmstadt so we also get some revenues.

00:35:24: that is how...

00:35:25: You think this model could translate to other cities?

00:35:27: That operator doesn't get any subsidies but do its own sales.

00:35:33: basically find employers our institutions universities who buy volume for their communities.

00:35:46: And then maybe cities around it also want to be part and they might end up subsidizing in some cases?

00:35:53: Yeah,

00:35:53: yeah so but from the bigger cities I don't see anymore.

00:35:58: we will see long-term very big public tennis.

00:36:02: Like hypothetically speaking of one of the biggest cities.

00:36:07: You mentioned the example of Stuttgart before, they are no longer subsidizing it.

00:36:10: But then in that case you also didn't stay and try to win corporate or other institutions as partners because their density before utilization was not high enough?

00:36:25: Yes so

00:36:27: let's say if we develop a bike sharing city... Not one year but couple years.

00:36:36: There was low demand even from B to C. And so we didn't see it like that for a month.

00:36:43: and also from companies, there were... But it

00:36:46: sounds like?

00:36:47: It's interesting coming from you because I think people could expect that would advocate the most subsidies possible can benefit if they win the tender.

00:36:56: but are you basically encouraging bigger cities in future?

00:37:02: try not offer subsidies or only...?

00:37:06: Minimum subsidies for certain, maybe areas that they want covered or so.

00:37:10: And you would potentially step in and try to find your own partners instead of offering them?

00:37:18: It's always easy.

00:37:19: when are already running it since some years at the city then as an operator will see if there is potential or not.

00:37:29: If its kind of completely a new City It's kind of high risk to enter it and then you have to close at the end today.

00:37:39: But, but also really depends on what this city wants.

00:37:43: for example if is a strategy For City To Have Like Access On A Very Low Entry Barrier Regarding Moneywise So That Is Cheap To Use Everyone like In Hamburg.

00:37:55: First thirty

00:37:57: minutes for free, right?

00:37:58: First

00:37:58: thirty-minutes for free.

00:37:59: For only like eight euro ninety a year.

00:38:02: So when this is what the city wants then it can make sense.

00:38:06: But because on the other hand in the cities where we run it by our own risk Like Berlin and Cologne Munich or Frankfurt We charge customers for the flat with eight Euro a month.

00:38:17: so It's actually ten times more expensive When its not subsidized.

00:38:22: And but also like a city can also say, okay well then I just want to have for bike sharing system.

00:38:29: I just do give the guidelines or regulation what is allowed in my city regarding number of vehicles that can be run and amount of operators that are allowed to run business if it's completely free-floating station based.

00:38:49: And then when you want to kind of make me get like a cheap offering, users or like people that have a Dorschach ticket maybe get some subsidy, or some discounts for using the bike sharing.

00:39:05: Or even as I said university institutions want specific target group so students can use it for free but then it is subsidized by the University.

00:39:20: I would have many more questions about bike sharing in also cities, but i think we're running a little bit out of time and do want to spend few minutes if you don't mind.

00:39:29: Also hear your opinion on Cartogo or whatever share now free-to-move and so forth because they are at an interesting timing.

00:39:42: it was really expanding also internationally, and I think you built CardoGo for Business in Cardo go black or so.

00:39:49: And we've seen this sort of international free-floating car sharing the biggest experiment at least if you could call that In our industry kind of being merged and then wrapped up now This year sold to financial investors after I'm free to move.

00:40:14: What do you see, if anything that could have been done differently at certain inflection points?

00:40:20: Is it clear for somebody like who's been there and probably close to a bunch of people in hindsight what could've been the important transition point that would be different?

00:40:32: or is they just no market?

00:40:34: Like

00:40:37: you're talking about a free-floating car sharing.

00:40:39: We always have to... Totally

00:40:41: different now from what we've talked before, yeah?

00:40:43: Free-float in car sharing and station based car sharing because at station based cars you can run profitable.

00:40:47: Yes thank your doing!

00:40:48: It's exactly all like book & drive is doing tile auto leg.

00:40:51: they are coming below there some examples of companies that do it very well.

00:40:58: but free floating is really a difference story.

00:41:00: on the one hand its from a cask so point or few more let say sexy product because you can go from A to B, just leave it and you don't care anymore after your rental.

00:41:10: You just need to find a parking.

00:41:12: but this business model comes as I said like parking in the cities.

00:41:16: they have a parking permit or the flat rate.

00:41:20: It's high cost then also from their vehicle itself plus the risk of damages.

00:41:27: with station-based car sharing.

00:41:29: for us, it's more car rental even the fifteen hours.

00:41:32: every rental is so its more current product.

00:41:36: but with free floating car sharing you need like four five six seven eight rentals a day.

00:41:41: So we have high amount of rentals different customers and driving behaviors different parking risk that can happen.

00:41:50: also higher insurance or damages cost there.

00:41:55: And there are actually only minor cities where you can run it really profitable.

00:42:00: Usually in the beginning when you launched a city, also Maes was launching in Belgium and a few cities... ...and then had to close it because you have that vandalism issues!

00:42:08: You may not have.

00:42:11: the utilization is lower than expected….

00:42:14: …you don't know beforehand so you learn by heart?

00:42:18: I think Hamburg's doing quite well as Berlin is quite mature.

00:42:23: But then there's always the question if you can run a provider because also, your overhead costs to really run the organization.

00:42:30: They have an IT team behind it or maybe they could use Wundermobile as software which kind of helps from their IT course.

00:42:38: but so I see is very critical this business model and you'll have a lot of capex that you will have.

00:42:48: Your capex are high because you need to clean it.

00:42:51: You kind of always work on the product itself, so from both sides... It's not easy!

00:43:01: So far worldwide I haven't seen any free-floating caching provider that is really doing profitable.

00:43:07: and i'm talking about EBITDA or not adjusted EBITTA.

00:43:13: I'm talking about EBET that even after capital costs, it is successful.

00:43:20: So... ...I hope and fingers crossed to the one still in market that you survived because this product was also used by some cities like Frankfurt where i am mainly based.

00:43:35: I use these products apart from my own product called Back of Linkster.

00:43:40: You are not basically thinking We did some wrong turns at certain parts of the journey, but it's a structural question.

00:43:49: And that's why we can almost find very few examples and they're not maybe so public.

00:43:55: also about where that works profitably.

00:43:59: I think to first emerging one is entirely public.

00:44:05: now.

00:44:05: for example this would be green mobility Where you have look up their numbers because there are listed Consistently been profitable now and then also growing BtoB, also plays a role.

00:44:14: But it's super rare and apparently super difficult.

00:44:18: And yeah I feel like its gonna be interesting on the outlook when they begin to fulfill operations providers basically for autonomous ride-hailing, which is now no longer such a future topic.

00:44:32: But next year the first operators will have autonomous cars there and then they can basically leverage their sort of intensely optimized operations networks to also become a backbone off this much larger ride-healing market.

00:44:47: that's still much larger than Cushing but it's more theory at this moment in actual use case.

00:44:53: so I think interesting to hear from you, because I think probably thought about it a lot along the way and also in hindsight sometimes like how could this have been possible?

00:45:03: Because as a consumer we would love to have this.

00:45:07: But i guess we are not somehow then willing to pay the price that they will just take to provide us service.

00:45:12: That's at end of today.

00:45:13: if say can't make profitable operations were already optimized so much We're simply not paying enough.

00:45:19: It is probably beacause all these alternatives in cities

00:45:26: kind of to pay because you always have different options.

00:45:29: When your price, free-floating car sharing when you go up with the price then you can also take a cap like

00:45:34: almost

00:45:36: and in the future maybe even like a robot taxi like Waymo that is going to launch in Munich.

00:45:43: but they also have to prove this can be run on a profitable basis long term.

00:45:50: So it's quite fascinating what is happening in mobility.

00:45:55: Maybe that leads us to kind of final questions and an outlook.

00:45:59: if you would start a clean slate today so no legacy, maybe not your barn context?

00:46:09: What would you probably build today based on what do know now?

00:46:14: In terms

00:46:15: of

00:46:16: the mobility product I think there's still space for different mobility moods.

00:46:27: And I would build a bike sharing with mechanical bikes to have like low entry from price wise, then you can... Then you'll have scooters or parallax in the higher-price range and instill.

00:46:44: I would also still see the station-based cashing.

00:46:48: If it can survive long term, a free floating cashing and then of course underlying is always... The backbone is always public transportation in the city.

00:46:57: so everything which you could run profitable will be seen for the next couple years.

00:47:06: And i'm convinced we'll still see bike sharing.

00:47:12: Let's see, maybe in every city different operators with scooter sharing.

00:47:18: Station-based car sharing for sure because they are actually even the regional car sharing provider, station based car sharing providers dealing really like monopolists and its cities because then they have the space, even like public tenders for parking.

00:47:36: They get it for eight years and one that is holding their parking has very low parking costs can provide it to people or customers.

00:47:52: And still I see more changing when the autonomous cars will come that there will be a transition from maybe a taxi driver.

00:48:04: Maybe two words would be digitalized, it'll more towards going to Robocars but still some time until then and I doubt the long term free-floating car sharing will survive.

00:48:22: in most of cities

00:48:26: SAVs come into free-floating car sharing fleets.

00:48:30: They might in a first step, Come to you instead of your walking them and then there might be different price for like today's price or a bit higher if the car would drive you?

00:48:39: And that is essentially an AV ride hailing.

00:48:42: so it's like merging with right hailing industry You know.

00:48:45: but probably these companies Today may not always go to the front Like have a right hailling product consumers.

00:48:51: But they might become also like an operations backbone or supplier for these others, because I think there are operations companies emerging in the wake of Waymo and so on.

00:49:09: And maybe

00:49:10: U.S.,

00:49:10: that these guys... That they're doing similar things to what the free-flowing cashiers have practiced?

00:49:15: Yeah, may be something was happening when we launched Car To Go In The US.

00:49:21: So we were also in, I think over ten or fifteen cities running the services there.

00:49:27: But at the same time when Uber came and lived.

00:49:32: so they are providing like as we all is right-hailing but made it also depending on the time very cheap.

00:49:40: And actually sometimes It was cheaper to take an uber or a lift than our car to go business model, like from a price point.

00:49:51: it was completely attacked by right-hailing.

00:49:56: So we ended in that... We had to close then but I wasn't there anymore and have closed the North American business.

00:50:06: And when you see also the EV is coming here in the first of these bigger cities, that this can also happen to free-floating car sharing even here and in Germany.

00:50:19: So they have to find their role I think early on by being a supplier or partner for these guys?

00:50:26: Or definitely having their own EVs in there fleet probably be able do both either depending kind specific market dynamics either being able to just collaborate with one or always also having the possibility to launch their own and consumer service.

00:50:44: And I think at least that's allowing them to tap into a much larger market, right hailing our taxi business about ten times larger than kind of car sharing in Germany at the moment.

00:50:57: Yeah,

00:50:58: I think we have around one hundred thousand taxis in Germany.

00:51:02: half of them are there The traditional ones and the other half out a uber and to buy bolt Drivers.

00:51:09: And let's see how they volume first with the AVs when they enter.

00:51:13: maybe if their first city that will be only Maybe a couple of hundreds.

00:51:17: so it would take awhile and then you still have time as an operator To see how where your focus is business?

00:51:27: the very interesting part of shared mobility, that you need to adapt every year.

00:51:36: You cannot have a five-year plan and go towards this plan... ...you need be very agile every year and really slightly adopt your strategy because it's fast changing environment.

00:51:49: Yes I think so too!

00:51:50: I think Agnes Tjarksson Hamburg, Senator for Transportation has sort of directionally this vision of ten thousand AVs in Hamburg by twenty thirty.

00:52:00: Not sure if that's still updated, but nonetheless like a few thousands.

00:52:04: so they will do an huge number trips.

00:52:07: and I think um... That has to be driven by you know private companies making these investments And the kick scooter wave.

00:52:15: it was Bird first of all and then Alim and then European companies Way more on the one hand, but also I'm coming from China so tensor and we write in these companies trying to push as many vehicles quickly.

00:52:31: that's our next three years.

00:52:33: We'll go from a few hundred AVs in Europe two tens of thousands in Europe.

00:52:37: Yeah Well, but you said definitely it will be is very fascinating to see what's going to happen And right now nobody knows What isn't a critical amount?

00:52:45: You need to have your city because also there space in this city is very limited.

00:52:50: I think the assumption in the case of Hamburg was that ten thousand AVs could handle about a third of today's private car traffic.

00:52:58: So there would be really a notable decrease like traffic jams and volume of cars on this street?

00:53:04: Yeah, but still we have to consider whether people commute into Hamburg with an outside so you can never reduce it to zero individual car traffic.

00:53:18: Also learning from mobility, you don't have all the customers that are going in the same way.

00:53:24: So it's actually... We also see with our bikes at a train station.

00:53:29: I was thinking

00:53:30: about this in DKB example of three thousand people coming into the morning and then everybody wants to go on the same direction?

00:53:35: That doesn't

00:53:35: work.

00:53:36: so we always have multiple destinations but also multiple means or transportations which is needed too.

00:53:43: And when they leave your office Then we see it in the numbers more.

00:53:48: In the morning, It's actually more one direction for example our students from the university that arrive at a train stations and then go to University or now the companies but then in evening Or like when they leave the job there are plenty of destinations.

00:54:02: So did the bikes?

00:54:03: They don't come back today to the train stations Like in the morning.

00:54:07: you know one direction You have multiple directions And this is also with mobility.

00:54:13: The thing is when you put your assets into a city, You have to talk about utilization at the end of today.

00:54:20: But with AVs it's maybe your hope that then you can allocate more easily and cheaper for customers' demand.

00:54:30: but also imagine like the DKB example Can you imagine if there are three thousand Robocars?

00:54:36: Where do they wait for the employees to getting picked up.

00:54:40: I think these are questions that have not solved yet and when you analyze it on paper, It sounds very easy but reality is different And its kind of a trying error in your always doing immobility.

00:54:53: And then your headline is profitability.

00:54:55: So whatever you would build new...it should have low entry point.

00:54:59: You mentioned pedal bikes public transportation as a backbone, and whatever it is.

00:55:05: It needs to

00:55:05: be profitable right?

00:55:06: On the long term this is the ultimate goal that you need to reach.

00:55:11: because in order to survive then... Because when we put money into something..it has to be a profitable business case at end of day That you would like see an investor or owner of company.

00:55:23: I have more questions but definitely very over time.

00:55:27: so thanks for spending your time with us for coming out and sharing also really openly kind of different numbers along the way, fascinating story.

00:55:37: successful so far.

00:55:38: And I'm really curious how it will evolve?

00:55:40: So thanks a lot!

00:55:41: Thank you Gona.