Today's guest on Behind the Sea is Daniel Krauss. Daniel is co-founder of Flix and today Chief Organizational Plumber. What exactly that means and how he lives this role, he told us in the podcast. We also took a look at the very early phase of Flix, how it all started with buying a CD-ROM, contacts in the industry that they contacted with a mass letter, and later all three basically worked in customer support with one phone that rang around the clock. All that is in the podcast. One quote about the level specifically that stuck with me is the measure of resilience. When the storm blows in your face, not everyone has that. What that exactly means and why he mentioned it in our conversation, that's also in the third part later in the podcast. So definitely listen until the end. And now it starts with Daniel Krauss, co-founder of Flix. Every week I speak in the Behind the Sea podcast with top-level managers. All have a problem. They don't get the right people at the right time for their business challenges. Whether for permanent roles or interim tasks such as M&A projects, system implementations, rebuilding and restructuring departments, or entire organizational transformations. Often there is a lack of the right resource or competence. If that is currently bothering you too, feel free to contact me. We can have an informal conversation about the topic. More information can be found at atreus.de. I look forward to your message on LinkedIn or via email. And now back to the podcast.
Daniel, welcome to the podcast.
Franz, thank you for the invitation. Glad to be here. Nice that I can be a guest with you.
Introduce yourself to our listeners if they haven't already recognized from the podcast title and know you anyway. How do you introduce yourself?
I'm Daniel. I am one of the three founders of Flix, known primarily for Flixbus, now also for Flixtrain. I am responsible for technology and personnel, and if you look at it with a wink, I always like to call myself the Chief Organizational Plumber.
Yes, exactly. I read that on LinkedIn too. People will see that when they go to your profile in the show notes. Plumber is actually, if you look at current trends, a future-oriented job, I would say.
Absolutely. A plumber is always needed.
Very cool. Flix is something people already know. I always ask, how does one get in contact with you? That means maybe you've been on one of your buses or trains. Can you still tell us a bit: what is the business model? How do you make money? Where is it going?
Basically, we've been around for over 10 years and we came into existence because Germany turned an EU deregulation into national law first, ironically the first country, you wouldn't believe it, a deregulation, reducing bureaucracy, the first country. Let that sink in. That was the last black-yellow federal government, it was about the PBefG, the so-called Passenger Transportation Act, and with that, long-distance buses were allowed in Germany. Before that, they were forbidden more or less for investment protection for rail, and the EU said that's not allowed. At that time, we had nothing to do with buses. The impulse came through a third, who read some weekly newspaper, was politically active, and then knocked on Jochen's and my door and said, the market is huge, look at it. Greyhound as an example, or in other countries like South America as a region, everywhere people take buses. In Germany, there are only cars and trains and planes, so why shouldn't there be buses? That market potential and the impulse of deregulation got us started. At the beginning, we thought about how to best do it, and that led to the business model. This partner model is basically due to the fact that we couldn't simply buy hundreds or thousands of buses. A bus costs between 300,000 and 500,000 euros, and putting that on the balance sheet and depreciating it, no one would finance that. But we also didn't just want subcontractors, because in the industry they are called 'wage drivers', and you don't have that entrepreneurial aspect. So we devised this partner model that basically shares the revenue, depending on the size of the revenue. Normally it's 70-30. 70% stays with the bus companies and 30% with us. At the beginning, it could be that the partner companies get significantly more, due to the ramp-up risk, revenue is not yet full. That also gives them an incentive. At the same time, when it comes to quality, customer feedback and such, there can be a small bonus or malus. So we try to deliver a good performance together on the road. Actually, from the start, it was important to us to build a complete network. That's why we were, I think, the only startup that directly targeted all of Germany and also had ideas beyond the borders, not just individual connections like, I don't know, Munich and Nuremberg, because individual connections don't work well enough in traffic; you don't get enough demand and visibility to fill your buses or later trains. And if you want to cover all of Germany or now the whole world, you need an inventory, the collection of all destinations you serve, that is really large and comprehensive, a bit like looking at big e-commerce players like Amazon. And to do that, we had to build a network. The bus companies are very local, super solid and strong, but their strength decreases when they have to operate far away remotely. So you have to connect them sensibly, and that led to the platform idea and essentially the core of what Flix still is today.
Wow, very exciting. We'll look a bit into the founding history later. How do you currently divide the roles? You said you are the plumber, then who else? A plumber or something?
Well, you'll have to ask the other two how they label themselves. I founded with Jochen and Andre. Jochen is, in my opinion, the visionary. In Jochen's world of thought, since we've known each other, I haven't been able to find any limits. He is now our deputy chairman of the supervisory board, because he essentially looks after our investments and giving back to the community, and over time a lot has accumulated. He also looks after our biggest common investment, Flix, from the supervisory board. Operationally, Andrej and I remain on the board. Andrej is our CEO, in my opinion one of the best CEOs I know. It's really about execution and business and how to run a company. And the technology part I've done from the start, and I am someone who, besides the tech aspect, particularly cares about culture, organization, and people, so I do that on the side. Beyond that, we have three colleagues at the C-level who deal with supply, the partner landscape and network building, or demand, everything facing customers. Additionally, the world is divided into regions: Europe as the core market, but also Rest of World and the United States. And then we have our CFO. The five of us try to steer the operations of the company, and Jochen usually looks benevolently, sometimes suspiciously, to make sure everything is running smoothly.
Okay. We'll look a bit into your career and when Flix sort of came into your life. But how did you know each other back then or what was it like?
Andrej and I come from the same small town in Middle Franconia and we were at school together. Andre is probably two years older than me. So we really got to know each other when we played volleyball together. In school, I was just looking at the five glasses with my butt at best, and maybe dating girls from your year. But Andre and I had something to do with each other. His wife also comes from the same school, no further comment on that. We got to know each other better through volleyball, and then we commuted together to an internship, started exchanging more professionally, and then founded a joint company in 2005, a small IT consulting firm, where he took care of the business side and I the tech side. After studying, Andrej started working at Boston Consulting Group, and that's where he and Jochen met, so they knew each other from day one. At that time, I was in the USA, and when I came back and all three of us were regularly in Munich during the week, we spent Thursday and Friday at the News Bar behind the BCG office, debating whether the golden hamster wheel is fulfilling or not. And at some point, that turned into rolling ideas, and finally Flix came out of it.
Wow, amazing. From the time that law came out, you reconnected, how do you start? Probably you first evaluate: okay, we can't buy buses. That probably didn't take long. How do you start in a room with a phone and call partner companies?
Actually, you're funny, you're the first. Either you prepared very well or you're the first to realistically assess it, because some people always ask: 'Wow, but what's the magic?' And the answer is, there is no magic, it's exactly as you said. You start engaging with the industry. One step was that we got a kind of industry database, like a yellow pages for the bus industry, on CD-ROM. Then we contacted them all with a kind of mass letter, sent emails, real letters, and also called. Within the process, together with some of the companies, we developed the core of the current concept. One part was that we, for a month, I think it was ten, we drove around the republic in my Microsoft company car and talked to them non-stop, simply because we wanted to convince them to be part of Flix and the idea, and at the same time we could learn a lot about how the bus business really works, because as I said, before that we had limited knowledge. Jochen once organized bus trips as a student, but that was the extent of it.
Okay. And when did you realize that it could work? Was it the first partner who said yes, I'll do a trip if you book one?
Well, we initially contacted thousands of companies, and in the end there were, I think, seven that provided us with a few 30 buses. So it wasn't an overwhelming conversion rate. But when the contracts were signed, when the law actually passed through parliament after the summer break and the Federal Gazette appeared, and the first vehicles were on the road. There was a legendary meeting, with the district administrator, I think it was Mrs. Pauli at the time, and the chairman of the transport committee was Anton Hofreiter, when we opened the first route in Nuremberg. It was terrible in February to Munich. Those are moments when you realize, okay, now it's getting real. That really brought us down to the ground of entrepreneurial reality, because before it was a lot of conceptual work, and from that point on, the phone rang daily because people were asking: where is the bus, where do I need to go, I forgot my suitcase, etc. And there were the three of us, we had a tech product, but customer service was funny. We had an office first on Giselstraße, then on Theresienstraße in Munich, with a Fritzbox. We forwarded the hotline number to one of our mobile phones in round-robin, 24/7. It was important that when you called back, you suppressed your number, which didn't always work, and then people actually had our mobile numbers. And if you wanted to annoy one of the other two, you would activate the forwarding on the Fritz a bit earlier, because then the phone never stopped ringing. We really thought at the beginning that customer service wasn't needed. We hired our first customer service colleague, I think, only when buses were already running, and then it was just too much. There's a nice anecdote: we had our first company event, maybe 20 people. My wife, who was still my girlfriend at the time, offered to take the service phone. I remember she said, when I forwarded the call, she thought she could still make breakfast, but honestly, she was sitting on the floor until I came back because she couldn't move anymore, the phone just kept ringing. That was on the Blomberg, I remember that very well. That's when reality really took hold of us, and we had to deal with all sorts of things that hadn't been on the slides before, like proper customer service.
Yes, totally. Had you already quit your jobs by then or were you still doing something parallel? Were you still in a permanent position?
Jochen and Andrej were at BCG at the time, they were basically doing their doctorates. Andre gave up earlier, Jochen was brave until the end, I'd say. Neither got the doctorate. I reduced to part-time for a while. And I have to say, Microsoft and especially my boss at the time handled it brilliantly. He looked at me a bit, I had already announced it as a side gig, and when I said now it's part-time and probably end soon, he said, what, because of the bus company? But I can't wish for anything better as a young founder than how my boss and Microsoft handled it. I think the first bus ran in February, and I was officially employed from March. I think Jochen and Andre were employed from January or so. Cool. I always find it very impressive when you don't just quit everything and look for investors and try everything, but... Yes and no. My personal experience, also from an outside perspective as an investor, is that you have to have skin in the game and be fully committed. Part-time foundations don't work very well in my experience unless it's temporary. I had, I think in late summer, told my boss at Microsoft: look, we're going part-time now, and it will end, to make it clear so you don't have to worry about how I pay the rent, because as a young entrepreneur you don't get paid anything at the beginning. So it's okay as a temporary bridge, but if it's not clear that it will end and that you will fully end up in your new venture, if you are half-pregnant, then there's not enough skin in the game. It has to be all in.
