Startup Date mit Daniel Krauss - Flix Mobility

Hello. Very gladly. And thank you very much for the invitation.

From our office in Berlin.

Well, what's characteristic and has always been for me is that I had a challenge with conventions. I couldn't always verbalize it, but it was clear that if something was done just because it had always been done, that never convinced me. My school career was multifaceted and adventurous, not very linear. In companies before Flix, it worked well when people were willing to answer the 'why' questions. Basically, I'm someone who tries to find out what's good for me, what I enjoy, and how to solve a problem without just doing what everyone does. That has always defined me.

The problem then and now in the German school system is that becoming an entrepreneur is not in the set of possibilities. People with a high school diploma consider vocational training or university. If they have a good Abitur, medicine comes to mind. Rarely does anyone think of entrepreneurship. That's why I engage with startup teams to change that. I firmly believe we need entrepreneurship and education to drive innovation, otherwise our country and humanity will suffer. To answer your question specifically: during my studies, it was rather coincidental. I always worked, knew how companies function. I built websites, repaired computers on the side. In 2005, my co-founder Andrej and I were commuting to the Swabian Alb for internships. I was answering computer questions for small businesses for pocket money. Andrej said, 'That ends now, we'll start a company. You do what you're good at, we'll charge 75 euros per hour net, I'll handle the rest.' So we started KS, for Kraus Schwimmlein IT Consulting. We made business cards from a machine at the train station. That gave us real exposure to what it means to build a company beyond just technology: bookkeeping, accounting, customer acquisition. I learned in unconventional ways. For a long time at Flix, I had a company credit card because Andrej said I couldn't be trusted with it. I used the company card for personal things and transferred the money back, which drove him crazy. Now I understand why.

Yes, if you look at it in black and white, scientifically, it's a process and service innovation enabled by technology endogenously, and exogenously the liberalization of the market. That's the core. When you present it like that, it sounds a bit dry, but it's digestible and understandable.

A question that was often asked: Jochen and Andre were at Boston Consulting Group, I was at Microsoft. We had good jobs, and people were shocked at what we were doing. But where is the courage? At that time I was in my late 20s, had no obligations except to myself, and I had a good job. It was always important to me not to burn bridges. If it had failed, I could have gone back to Microsoft. We were all well-educated. So the courage aspect – it felt right, but we didn't see ourselves as particularly brave. There are people who have to show much more courage in extreme situations. Founding a company is not an extreme situation. What comes after, when it's founded, can be a small extreme situation. But it's not that bad. My son always says, 'You just have to do it.'

Yes, when we started, the hypothesis was that the bus could be a good alternative to the car and especially to the train, as seen in the US with Greyhound. So it should work in Germany. Our plan was to at least cover Germany. We weren't the only ones; about eight companies entered the market after liberalization. We fought hard, burning a lot of money. Eventually, the two largest startups, meinFernbus and Flixbus, decided to merge to avoid a third party benefiting, possibly the state railway. At that time, meinFernbus was larger than Flixbus. We decided to structure it so that formally Flixbus bought meinFernbus, but organizationally we took the best of both. That was a big step. Andre and I said, 'Let's go for it,' and offered a large sum under the hypothesis that together we could become profitable and successful. It was a hypothesis; integration could have failed. That was a moment where we showed courage. There were subsequent smaller courageous decisions. For example, we had to integrate two systems onto one platform. I said we could do it in six weeks, but we had no time for a rollback plan. I told investors professionally that we had a rollback, but we didn't. When the switch didn't work on the scheduled day, I kept saying let's try another hour, because there was no rollback. If it hadn't worked, we might not be talking now. That was courageous because you have to accept the 'courage of the gap' – as a young company you can't cover everything. That's everyday courage, which I find more beautiful. I just don't like it when people say founding a company is very brave. In Germany, not much can go wrong.

It has grown with us. When I founded, I was 28, average age was mid-20s. Now, after almost 13 years, the average age has risen to around mid-30s. We are very happy about the great loyalty. I congratulated a colleague on her 12-year anniversary today. That makes me proud. The only downside is that we all get older together. But it's also nice to experience that together. It shows trust and loyalty.

First, Andre and I have known each other for almost 30 years. We went to school together, commuted to internships, played volleyball. So we largely knew what we were getting into. Nevertheless, the relationship has changed. The boundless trust and depth of the relationship have never changed; they were always excellent and remain so. But at the beginning, we did more private things together, like going to the sauna with our wives. Now, I see Andre more often than my family in terms of face time. We all have families now, so we need to invest time there. So spontaneous leisure activities don't happen as much. We've been trying to have a dinner with all six of us for a while. It's harder to plan than a papal visit. But we still make time for each other, like going for a drink or skiing. It's become more special. The key is to maintain the core: boundless trust, same goal, and regularly work on the relationship below the waterline, like an iceberg. That requires courage because it's not ordinary. I'm closer to our business environment than to Andre's children, but they are just as important to him. It's similar to a marriage: after 14-15 years, you don't have butterflies all day, but you need moments to appreciate each other. The core is what matters.

That's hard to say because we are all three very complementary and different, but with the same goal and boundless trust. Discussions often start from different points, which is good. But we never had to use democracy; we always found a solution. I can't remember a single time we had to override one of us. That's a great stroke of luck, but it's also work. You can't just say it's luck; it requires effort.

Yes, exactly. We're having a couples therapy session here today. It's true that all involved must want to work on the relationship. Otherwise it becomes one-sided. Today the students learn not only about founding but also about relationships.

The truth is, none of us had that thought in the first minute. In the first minute, we thought, oh, a market is opening up that is big enough to build a business. Then we thought we could do something similar to MyTaxi or Uber, same but different. That was the most important thing. Then we realized that modern diesel buses use only slightly more fuel than big SUVs, and per capita it's much better. A study from the Federal Environment Agency in 2013 showed that with assumed occupancy of over 60-70%, it's even better than train travel per capita. So we said, great, we can not only do business but also make a difference. So we have two core pillars: affordable mobility for people who were previously immobile, and sustainable mobility. Then you have to walk the talk. That's why green is the better color than blue. When people ask when we'll have Flix Air, I say I couldn't justify that to our team. Most Flixis are there because they know we do good: we bring people together socially and don't harm the environment; we substitute individual traffic.

Yes, but image is secondary for me. First my organization, my people, then our customers. Image develops from that. I would never do something just for image; that's nonsense.

It varies in weighting, but you can safely say it plays a role everywhere. Even in newer countries like India, where from a Western European perspective there is still chaos and CO2 emissions. Historically, the West has contributed most to damaging the planet. But Indians have a different stringency regarding e-mobility. We have competitors in India with 100% electric bus fleets. So it's a topic everywhere, but not equally important. There is no market where it's irrelevant.

The bus market in India is much larger than the segment we address. In Indian terms, it's a higher class, the Volvo category. There are still buses like you remember, without windshields. But you have to start somewhere. I believe we can help move this luxury segment more into the middle segment by making it affordable and sustainable. There are still many people who have to travel without windshields. But one step at a time. India is a huge country with incredible dynamism. I love that Indians always assume tomorrow will be better than today. I miss that mindset in Germany lately. But there is still work to do.

There is no balance. The standards for Flix are very important, especially safety. Then service aspects like WiFi and power. The product is the same whether you board a Flixbus in Brazil, North America, India, or Australia. No compromises.

You're absolutely right. At the beginning, I still had the company car from Microsoft for a few months. We did a Germany tour, door-knocking. We had a database of bus companies from the Yellow Pages and sent out form letters. Thousands of companies. In the end, we convinced seven to start with us in 2013. In between, we spent months on the road, knocking on doors, and were sometimes politely or impolitely asked to leave the premises. That's how it is. It's important to say that because the pretty startup bubble often creates legends of brilliance. The partner aspect was hard groundwork. Now we have more applications than we need in some countries. The standard rejection was: 'It won't work. We've tried it before. It doesn't work. We have the train. Who are you anyway? Some BCG snobs and a Microsoft dude. We're a hundred-year-old industry, we know how it's done.' They accepted our business numbers but then asked, 'How exactly are you going to empty the toilets?' We said we had thought about it but didn't have the slide with us. So it was colorful; there wasn't one standard rejection, but many rejections.

They thought, 'Yes, I'm in a midlife crisis, go for it. It's a people business.' That may have been the case for some. But for many, it was simply that entrepreneurial spark. You mustn't forget that the challenge for many bus companies was and still is that they are regionally organized. That means you have vacation business, school business, public sector business, which is tender business for public transport. You drive around in sticks and then it's sorted out. So you have no way to grow or generate new revenue. It was very challenging. You only compete on costs. It's as if, I've never actually run a bus company, you're only half an entrepreneur. And I think some saw an opportunity to finally get a bit of that entrepreneurial spirit back. Maybe some were in a midlife crisis. Others thought, 'These three kids are bursting with energy, it'll work out.' Exactly. And I'm now recapping who was all involved. Some had developed it themselves and could be convinced that as a partner network it would be more promising. Maybe one or two didn't even know exactly what they were signing and were caught up in it.

Our former Southern Europe head, Andrea, came to Munich because his wife wanted to work at Stylight, and he was basically leftover, did an internship with us, and we sent him to Milan. That wasn't planned. Italy was our first country outside Germany, then France. In 2018, we had always thought about the USA because we believed in a platform model, we had to establish a foothold early to prevent someone from copying our idea and scaling to dominate Europe. But how and when was unclear. Then serendipity: our former France head, Pierre, his wife got an offer from Apple as a designer, so he said let's go over, reluctantly put aside his Flix scepter, developed the idea on his own, came to Munich and said this is how I would start the US. We said let's go. It happened to be 2018, could have been 2017 or 2019. For trains, it was always on our mind. The Fernbus market has limits, then you automatically think of long-distance trains. But we had enough to do. Then in 2018, another startup called Lokomore filed for insolvency, and we said now there's a company similar to us, we can jointly test the hypothesis that a train is just a big bus. That opportunity arose and we seized it.

Yes, it affects us too. But a large part of the reasons why our trains are delayed, whether white or green, is not due to the infrastructure. The infrastructure needs work, it's old, we haven't invested enough. But currently, most delays are operational, which every operator has, including Flix. We try to have fewer than our competitors, but they have a lot. Looking forward, I'm optimistic about the new Bahn leadership. Every day we work to minimize operational impacts. Punctuality is largely an operational issue, not dependent on the tracks.

Crisis is different. We handle it professionally as you'd expect from a passenger transport company, with standards similar to airlines. For feedback, it's like for individuals: some people defend themselves, others thank and reflect. Our approach is to be curious, understand the problem, and solve it. Sometimes we get creative publicly. Every Flixi has ridden with competitors or Deutsche Bahn, and many of us, including me, have gained appreciation for how complicated it all is. So I can still get annoyed and give feedback, but I remember there's no ill will. That mindset helps us turn negative experiences into positive ones, and sometimes that's good PR.

Fire away.