From Startup to Global Leader: The Epic Story of Flix | Productivity Mastery #221 with Daniel Krauss

Good. Good indeed. So far so good. Hoping you as well.

It actually also didn't really happen like that. Andre Yan and myself, we were talking a while, bouncing ideas. What drove us is that we were annoyed of the golden hamster wheel with Microsoft for myself and the Boston Consulting Group for the others. We really wanted to do things better and thought we have to prove it ourselves that we can do. But eventually there were so many challenges and problems, and we kept discussing how to build a business model around them. Back in the days in Germany, it was not allowed to have long-distance buses, so there was nothing similar to Greyhound. Then the EU dropped a deregulation on that bus market in the entire European Union, and Germany was among the first adopters. We read about that, Andre did, and he called us and said, 'How about building a bus company?' So it was a bit of an accident driven by a market. I still believe that the addressable market of any new company or startup is very meaningful, potentially together with a team even more than the pure idea itself, because the idea can pivot. If the market size is not large enough, you have a challenge. That was the main driver for us to do buses because we thought it's a super large market and we could figure something out. I remember very clearly when I got the call, I was not giving standing ovations. I was rather like, 'Okay, a bus company? Are you serious? What exactly do I as the techie do in a bus company?' That was my reaction. But at the end, Andre and I know each other forever, and he could have come up with anything and I would have agreed to start up with him.

With the other two guys working at BCG, they were on leave working on their PhDs. That's a good model that many strategy consultancies have. At Microsoft, I just asked my boss to have something in parallel so I could work in parallel. You obviously eat up your personal time. Rather than playing computer games, you started playing Flix. Then sometime I went back to my former boss at Microsoft and asked to do part-time. I moved down and reduced it by about half. I did that for half a year, and then I quit. I was jobless for some months until I finally got employed at Flix. So it was a gradual process. But it was very clear that we had to take that step at one time because I believe you need to have skin in the game once you really start through with your own company.

We greeted it. It departed from Nuremberg to Munich. It was mid of February 2013. We were there to celebrate and greet it, but I don't think we rode it fully. At least not the first one. But over time, we've been riding quite a lot our buses.

I would be lying if I said yes, that exactly was what we had in mind. I believe if you start something up, you have a certain dream and wish for, and you build your mental castle and can imagine how it looks like. Obviously you want to become successful, but the order of magnitude I would not even have dreamed of. It was not in the set of possibilities. That's the reason I didn't really think that size Flix currently has. But indeed, for us it was crystal clear in the beginning that we had to build something meaningful. We never only focused on a certain line or a certain region. We were always crystal clear that if we start, it has to be a fully-fledged inventory at least serving entire Germany as an alternative to the railway or your personal car. Then a little bit into the startup in Germany, we discovered that if it works in Germany and the regulatory is suitable, it could work also in other countries. So we relatively early thought about other countries, but it was more about a bit of France here and a bit of Italy there. At the end, it became 44 countries. That was just over time, we kept on collecting and firing up new countries.

Andre is older than I even though we know each other forever. We went to school together where we really got to know each other good. That was our first company. But the important message is we played volleyball together. Team sports in particular tells you that you better win together, but each position has to make an impact. And it's all about competitiveness. When we played volleyball, independent of how strong our opponent was, we always wanted to win. That was the only mission. So I believe compared to the incumbents, our competitiveness, our persistence, paired with a certain level of aggressiveness — you really want to push it to the edge, push the boundaries. That mixture of ingredients is something which made Flix special, and that worked very well against all the incumbents and the large players.

Speed and if you talk about speed, eventually the speed of deciding things is not only a big factor but it remains a big factor. I believe in competition, many of the corporates you see as a newcomer, their challenge is that they think forever and they take forever to decide, and that slows down even the execution. So the speed in my experience starts with how fast you can decide.

Yeah. Being entrepreneurial means willing and able to take accountability, willing to take decisions very fast. That would be beneficial as we talked about already. And taking risks, not pointless but essentially calculated risk. Taking risk is an essential part and still in the Flix culture. You learn on the way. You take calculated risk. If it goes wrong, you fix it quickly. You take decisions quickly. And then you re-iterate day and day.

Interesting.

Yeah. And I remember it was 150 krona from Mous to Copenhagen. It was like, 'Oh, that's a cheap ride.' So I was in a post-student kind of environment. But then I got into the bus and I'm like, this bus is clean. It's nice. To me it was like the IKEA of buses. It was just efficient to the core. The features that I wanted — nice color, clean, nice online booking system — they were there, but they were not redundant. That was my first impression, and I've been using Flix for years after.

The no-frills attitude was something we knew from the early days of the low-cost carriers in the airline industry. I believe we've seen in the German market with Divan on the one hand but also other players on the other hand where you can really overdo it on the edges and have all the nice stuff, but at the end you forget about what it's actually about and what your customers want. In the early days when we had that competition you mentioned, we had so many discussions. People were talking about stewards on the buses, vending machines, and stuff like that. We were just imagining how to make it as simple as possible to book a ticket — really peace of mind — and how to create a system that allows us to operate at the lowest cost possible to also hand our customers the lowest prices possible. What really matters if you are on a bus? Of course reliability, safety, and price point. But also we believed back in the days it's easy things like a power outlet or Wi-Fi on the buses, something which is repeatable where you can rely on. Independent of where you run a Flix, it's always the same: you've got power, you've got Wi-Fi. That's what matters. It has to be affordable, in our sense also sustainable, plus a very reliable thing where you exactly know what you'll get.

It is exactly like you imagine. Meanwhile, I believe we had an idea how back in the day we came from the customer's perspective. We thought about what was not so good about taking a train or your personal car, what was annoying, and we tried to fix that. We took the opportunity that buses from that moment on were able to be handled in the modality, just as an additional mode of transportation. Then we literally drew it as we would have imagined it, but without particular knowledge. With those drawings, we went to the industry. We called thousands of bus partners and visited them to do two things: essentially to convince them to become part of the Flix family, but also to learn from their experience doing that business for almost 100 years already. You have to benchmark, learn, remain very open and self-reflected, not pretending you know anything because we didn't. Then we added up all the information we collected, and that compounded in the current business model. In theory, we developed it in the core, it's still the same as day one, but we groomed it together with the industry, which is important because they knew how the business goes.

There are many tough decisions. The good thing is most of them are not ultimately future decisive, and quite a lot of them are also reversible. If it was a tough but wrong decision, you can just recall it and take it differently if you're brave enough to acknowledge that you took a wrong decision. But of course there are some that were really tough and large, and therefore decisions that I believe shaped the company's future. Certainly one of these decisions was when we decided, some weeks in, I think it was when Bergamo happened with COVID in Italy, we decided relatively quickly to entirely shut down our network. Why it was a tough decision: obviously no network, no rides, no revenue. But we thought we do not want to be someone who is spreading around further, and we anyhow had to adjust because there were curfews. It was a pandemic, a massive crisis with exponential growth. Nobody had seen that before in our generation. We were like, 'Do we do salami tactics and try to adjust?' But we realized relatively quickly that adjusting on an exponential growth like a pandemic is hard. So we stopped that salami tactic relatively early and took the brave decision to cut it off for some time because then we had at least some calmness to focus on the savings, to really work with our bus partners to make sure we fit for survival, and not day in day out moving around and trying to adapt to something nobody had seen before. That was a tough decision because if you cut proactively the stream of your air, it's like I stopped eating today and I believe I'll figure it out in the meantime and then I can recover quick enough so I'm not passing out.

These are also two experiences I made. A grain of optimism mixed with a grain of naivety is something which is not too bad being an entrepreneur. Because if you know everything which can happen in a bad sense on the journey, you might not even start. And if you start at one point believing that it's pointless, we will anyhow die now from a company point of view, then it's also becoming pointless. So you have to believe we get over it. Back in the days, that was not only from a personal and company point of view, but from a society point of view. For some things, you have to be a bit naive in order to just take the action and realize later, 'Okay, that was a very complicated ride. I'm not sure if I would have started it when known in advance.' So these are two patterns that are somehow helpful.

It's always an exciting ride. Sometimes fun, sometimes sexy.

Being an entrepreneur is not just a job, it is an occupation. What does that mean? It means you cannot predict what will happen tomorrow. You have to always be eager to deal with the uncertain. You have to almost love the uncertain. And you have to blend your life in your company. I keep on telling my wife Flix was our first kid. She says, 'No, it was your first kid. The other two we had together.' That set means it becomes part of your body, part of your being. The tragedy about that is if the company suffers, you suffer. If the company is celebrating and performing, you also have lots of joy. You have to be able and willing and capable to deal with that. It's kind of like a little bit psycho in a good way, I believe. That takes quite some generalness and a high level of resilience. It is certainly a roller coaster. As people know, sometimes these roller coaster rides, at the end you're always brave and you somehow enjoyed it and you've got lots of adrenaline, but there are some corners and edges and loops where it's like 'Oh my god,' and you get over it.

One of my working ethics and something that really drives me for years now is just work hard and be nice to people. If you know you did everything you could do, it's always easy to watch yourself in the mirror and there is no reason to have bad mood and not being nice to people. Being in a bad mood never solved any damn problem. It just doesn't. If you're in a bad mood, you maybe feel even worse and you have bad hormones and stuff. It really does something bad to your body, but it doesn't help you to solve any problem. So you can always, independent of how hard it is, stay good. That means work hard and be nice to people. There's a saying that the British are kind of touched with: 'Keep calm and carry on.' Being very nervous and running around like a headless chicken also never solved any problem. If you just stop moving, you also don't solve any problem. So keep calm and carry on. These two things — work hard and be nice to people, and keep calm and carry on — have helped me a lot to get along over the last 12 years of entrepreneurship.

I think the family style and very friends-oriented leadership became a bit more professional. Even though you remain nice to people, the level of professionalism due to the size of the company is a little bit higher. I think I'm still easy to be approached, but it might be different than when we were only 20 people. More importantly, core principles of my leadership style remained the same. I know myself: I'm not a very structured person. I can barely follow my own tasks. So if I would start to become a micromanager and give you tasks and follow them up, I would terribly fail. That's not authentic because I would even forget following up the tasks I gave you. That said, you really need to know yourself and then surround yourself with good leaders, good people who are way better in the jobs and tasks you bring them on board for. Once you have these people who are better in what they're doing than you, it is very obvious that you delegate. If you would not delegate, that's not a logical decision. If the people you delegate to are eventually better — as you hired them as better for the job — you have to delegate. That's the only logical thing. Last but not least, that is what made me call myself Chief Organizational Plumber over time. You remain doing two things: being always ready to support, asking lots of questions, and making sure that people call you in time if they're blocked, not being able to do what they're better at. Then you come and plumb it free so it can flow. You certainly must not shy away and always take one for the team and move ahead as a leader, especially if it's the hard choices. As a role model, you can also then expect that towards your first line. These things always stayed the same. Maybe because we had the pleasure of having worked in our former jobs for some years — I think it was eight with me — maybe it was because I was a volleyball coach for some time and you had to develop skills to motivate people without being the line manager, just bringing them to come to training two times a week in their free time. All these things together mixed something that worked for me, and that didn't change. That's my core leadership principle which remains very functional and true.

But if you ask my assistant, probably sitting next to me, she's like, 'Oh damn, no, he's chaotic.' Knowing that if you know yourself, you can work on that, but you can also rely on your strengths and have good people making sure I'm whole on myself and on top of things. I have Claudia, my chief of staff, she's also currently at the coast of pretty Bulgaria. And I have my personal assistant. They really make sure this works. On top of that, you try to find your first line, your leaders, your managers to be much better in the things you hire them for than yourself. That is how it works. Then I can kind of accept that a bit of a chaotic personality in my case.