Flix: Gründer Daniel Krauss über Innovation & globale Expansion

You don't go onto the field to lose, you always want to win, right? According to the rules and in the team, but you always want to win. People don't care, they want to travel reliably, safely, and environmentally friendly from A to B. That means the topic of improving long-distance buses and expanding worldwide remains one of our strategic priorities.

Thank you very much for having me. First, let me take a breath and process all the information you just read out. A warm welcome from my side as well. You brought two objects with you today that you associate with your founding story. What did you bring us and what do these objects mean to you?

I thought in a conversation with two moderators, it makes sense to bring two objects so that each of you has something to remember. So, first, I have a pretzel here, a Bavarian pretzel that I imported directly from Munich. It's very pretty, it's a few days old, so it looks a bit worn. But when we were starting out at the Gesellschaftstraße at the LMU in the Gershwin Center, or the incubator, or whatever you call it nowadays, at the Ludwig Maximilian University, my co-founder Andrej was seriously worried about me because I was working so much that I actually only had three food items: coffee, which wasn't as good as the one here in your office, cigarettes, I used to smoke a lot back then, and pretzels, because there was a bakery in front and the only thing the baker was really good at—I don't really like sandwiches or cheese, I'm a bit picky—so I always just ate pretzels. And Andrej was seriously, or at least pretended to be, worried that I would eventually die of scurvy before the first buses even hit the streets. And the scurvy issue wasn't really the problem, obviously. Fortunately, I'm doing great. But what later became a problem, or almost, has to do with the second object: my driver's license. Because in Germany, if you want to become an entrepreneur, there are fitness tests, you can't have a criminal record, etc. There are objective criteria like the certificate of good conduct, and in some industries, there are also subjective criteria. In the transport or transport-related industry, the central register in Flensburg is a subjective criterion. And we laughed a lot back then because when we applied for the extracts for the three of us, Jochen, Andrej, and me, two empty sheets of paper came back, and for me, it was almost like a binder, so to speak. That caused a lot of laughter at first, but then shortly after, the letter came from the district administrative office in Munich that I was not fit to be the managing director of Flix. Oh God, exactly, oh God. But now, as everyone who is in this VC game knows, at the beginning, the team is extremely important, and that's why it's usually ensured in the contracts that the team stays together. So saying, 'No, I'm out for a while because I have too many points,' wasn't a good story. And then I really had to beg. I wrote to them and told all the stories about all the good things I had done: visiting my grandparents in the nursing home, leading the Catholic youth camp in my home village, being a volleyball coach, all sorts of things. And what ultimately made the difference, that I was then granted the fitness, was that Andrej and I already had our first company in 2005, which we then sold, the customer base, when we went abroad, and we wound it down properly. And then the then government director said, 'Yes, you have properly concluded this as we would expect from a good German managing director.' And after I had held a one-hour begging monologue, he gave me the absolution, so to speak. And thus, I am allowed to this day to influence the fortunes of Flix, and since then, I haven't collected any more points. Or about that, I can unfortunately give no answer. Just kidding. I was in technical sales consulting, so I was always on the road at Microsoft, where I had already collected a lot. I also thought it was like in Formula 1, more points is good. No, afterwards, it's like this: we have a van at home, a family carriage, I have an electric car to commute to the train station, but I was either in Munich or Berlin, you don't need a car there. So, factually, I no longer have this professional pressure, I don't drive a car professionally anymore, and at home, when you drive the kids around, you're always delayed because everyone has their shoes and jackets on, so basically less stress, basically fewer points. Before we talk a bit more about you and Flix, a short disclaimer: we also refer here to the book 'Founder Story' by Axel Täuber, where you are with other founders who tell their founding stories. It's super cool, very exciting, I can recommend it, and it's also a bit of the basis for one or the other question we have for you, hopefully also for one or the other founding we will see in Germany in the future.

I was just counting, I didn't learn that, but I can calculate reasonably well. I think there are two different things. I think one is a very personal and a mindset question, a question that ultimately comes together as your personality structure. There are naturally different things that can lead to a disposition or how you were socialized. I grew up with a lot of entrepreneurial context. My stepfather has a company, my uncle had a company, my father was self-employed, and that was quite normal for me, regardless of the school career. As for school, in retrospect, the topic of authority was a problem for me very early on. It's not that I can't follow orders at all, but if it's just stupidly following orders just because that's the rule, why do I have to do it like that? That's what has always caused me real difficulties. If someone wasn't inspiring, if I didn't say that's a great boss, a great teacher, then I really buy into that, that was never an issue. But there was also a lot, especially as a young person, a lot of authorities who supposedly just because of their uniform, in a figurative sense, thought they could make announcements. That always caused me big problems, and it still does today. And I think that, combined, led to the fact that the school career as it is normally lived in Germany and what is expected there didn't work so well. But it was already clear earlier, without me being aware of it, that the entrepreneurial career is something that would give me a lot of pleasure and where I really thrive. Nevertheless, you were still quite successful in the normal business world for the first few years.

Or yes, two things. The university is a better example than school, I think. Things that made sense to me, that were practically applicable, where I noticed I could create value, I have some kind of impact, those gave me joy. That was also the point where I got back on track regarding school and then got my secondary school diploma, then the technical college, and then started studying because I had the luck to start working at Siemens relatively early at 15 or 16. And it was quickly shown to me that the things that really fascinated me were almost all activities that people with a university degree did, and things that were interesting for a short time but then quickly became repetitive were always things where I thought, okay, those are trained specialists, also important, but that didn't excite me. And then it was already relatively easy to understand: okay, if you do this, then turn left, and if you do that, you have the opportunity to turn right. And that was an aspiration for me, to turn right, and then you can break it down: okay, what do you have to do to be able to turn there at all? So, the fact that you really see what your daily activity achieves and then really observe what are the prerequisites to be able to take certain steps, that led to the fact that I then studied, but worked much more on the side because that was more fun for me. And you have to make sure that you put it together and choose it so that it's not too theoretical in my case. That's why I studied business informatics at a university of applied sciences. If I had studied pure computer science at a university, I don't know if I would have made it through.

Andrej and I were in school together, played volleyball together, went to the internship together on the Swabian Alb. He was at Porsche back then, I was at Marwart, where I got stuck for a while. And so, I've known him for almost 30 years, I would say. But when you grow up in a small town, it's a city, I know it's a city, you know each other, it's like born in RAC, you know each other. And that means we have a very, very, very old and trusting basis. And then it was like this: Andrej started at the Boston Consulting Group after his studies, and there he started together with Jochen, who ironically never had a project together but met through football. That's also something that unites all three of us: Jochen and Andrej, football, Andrej and I, volleyball, but sports, and team sports on the one hand, but always this competitiveness. You don't go onto the field to lose, you always want to win, right? According to the rules and in the team, but you always want to win. That wasn't so explicit back then, but that's a bit of a common sense. Jochen and I met for the first time at Andrej's wedding. Next to me, Jochen also met his current wife, which is probably both very good. Yes, and when I then had the Siemens story, we were just at the end of my studies, shortly after my diploma at Siemens, I went to the USA to Marwart, where I had gotten stuck in the internship. And when I came back from Marwart in the USA, shortly after, I started in Munich at Microsoft, and that was a bit of a reunion. And then we three were regularly behind the BCG office, at the news bar in the evening, and just chatted. That means we first discussed privately, then you always start to gossip a bit, high horse, both golden hamster wheels, both Microsoft and BCG, and then the gossip starts, and then it took on a dynamic. And on the one hand, we also started to think about what we could do better, where are the challenges, do we want to stay in the golden hamster wheel forever, where the projects are a bit clear or somehow exogenously predetermined, or do we want to do something else, something of our own? It wasn't clear what we wanted to do, and it was also a bit on the edge. But I remember that several times, at least my current wife, and I think it's the same for the other two, said, 'Men, if you just complain all the time and think you know better, you have to show what you can do, otherwise it's nonsense.' And then we discussed some ideas, most of them died within half an hour. There were two that we went further with. What kind of ideas were those? One was about geriatric aids, the other was actually about early childhood education, so kindergartens and such stories. Then it was also a bit of consulting because we were in that game at that moment, very different things. And one day, Jochen and Andrej were skiing with their ladies, I think, if I remember correctly, and Andrej had read in the weekly newspaper that the then black-yellow government was taking up this EU regulation and wanted to adapt and open up this long-distance bus market in Germany, the PBFG, the Passenger Transport Act. And then they called me and said, 'Come now, tomorrow, come to the BCG office.' I was always there as an intern, so I kind of slipped in, and then we discussed: is it something? There's Greyhound in the USA, there were buses in many other countries, it's a huge market. If it opens now, don't buses... I'm the techy, right? At the beginning, I was like, 'Yeah, sure, let's make buses, I'll discuss everything with you.' Until then, over time, it became very clear: okay, the technology aspect will play a role on the one hand, and then two or three steps further, it also became clear: okay, we're not going to buy and operate buses, but there was already myTaxi back then, there was already Uber in the early phase, Airbnb not at all, not so present, but it was already these, as we say nowadays, platform models that were growing. And then we took a bit of inspiration from that and used this market opportunity and combined it, and obviously, a very appetizing dish came out of it.

Exactly, we all really had no idea about transport or buses, it was just that we somehow, and we didn't even know exactly how it would be at that time, or that we are now in 40 countries, that wasn't it, it was just like, let's do buses. And although I was a bit skeptical at the beginning because I had no access, it just felt right. Yeah, sure, then sure, somehow, why not, let's do buses.

There's a disclaimer: that's true for the core in Europe. In other parts of the world, it's not exactly the same. In Greyhound, we naturally took over, and that will now also be structured to match our model. In Turkey, the same. That means it's basically asset-light in some areas, but asset-heavy, so to speak, can also be the case, sometimes it's regulatorily necessary. The one bus you're referring to, that's also a regulatory question. In Europe, there are regions, in Germany, for example, it's also the case, you need a bus, so to speak, that is registered. It can also be a low-floor bus, it doesn't have to be, so that you can officially operate as a transport company. And that's all, it's partly the same in Italy. Then we pass it back to the partners, but that's really just playing by the rules, because our model is actually that we do it with medium-sized partner companies, and that works very successfully because everyone can focus on their strengths and do what they do best.

That wasn't from the very, very beginning. We calculated it, two BCG colleagues, they are fit with Excel or Sheets and PowerPoint. And then you look at it and say, okay, a bus costs between 300,000 and 500,000 euros, and if you buy them all and put them on your balance sheet and then depreciate them, I'm not sure if anyone will invest because that's somehow not a cool deal from an investor's perspective. And then we also calculated, okay, if you lease them, you have the problem that you can hardly breathe because you just have obligations and you have no skin in the game, so to speak. In the industry, they talk about a coachman, you don't want that either. And then we looked at how some platform providers do it, how other partnerships do it, took a few things from franchise structures, and simply built up such a network company, such a partnership network. And that sounds obvious now, but back then it was a process to get there. And when we said, okay, I think that's the approach, we should do it, we got a database, there were about 4,500 bus companies, a CD-ROM, yellow pages more or less, and we wrote to all of them, by email, letter, call, a bit like a series mailer. And then we did tours in Germany, I was still part-time at Microsoft with the company car from Microsoft, and visited them and tried to convince them.

Yes, it was a process. In the end, only seven were left. If you look at conversion rate logic, if you have an e-commerce company and have 5,000 people and seven, I would close the e-commerce shop because that's nonsense. But they had a business, and we were just three guys who came along and had no idea. And then we explained things, and they asked us questions, and then we said, 'Yeah, no, we've already thought about that, we just don't have it with us, we'll bring it next time.' And when we drove home, we prepared it again. And we were always very open and tried to understand the industry because we simply admitted that we knew little about the topic. What they knew little about was this whole digital customer access and the possibility to build such a network, because until then, bus companies always had the problem of proximity, meaning they were always strong in their region. But if you look at what our product is, it's the number and the combinatorics of origins and destinations, so where can I travel to, and putting that together, that you really just, if you have a normal e-commerce shop, that you have all the products, a bit like Amazon always got bigger. That was what you needed, a meta-layer, someone who binds it together and then makes this product out of the individual strengths of the local bus entrepreneurs. And that was, I think, what we had to explain and what then worked over time. And as I said, now it's easy, but back then it was a process. It took us over a year, and of the initial almost 5,000, only seven fell out at the beginning.

That was important, but we didn't do it at all like we do today. We started by thinking about it backwards. Then we had one of our first interns who built a scraper and then checked where people are driving on which highways, so how are traffic flows, what does the competition offer, where is the railway strong, as many connections as possible, what else is there for alternatives, and then filled an Excel with it, because at that time we didn't know how strong the parallels between gravity and traffic are. That's basically, Newton didn't just define it, but in principle, you can also derive how traffic works. And in the Excel, we printed it out, and then Andrej or someone was at the wall and said, we're driving from here to there. That was good but not perfect. We also did things, we drove from Nuremberg to Regensburg at the beginning because we thought it was a great idea, quickly closed it again because we gave away tickets and didn't get them, that was very frustrating. So what we did back then wasn't bad, but it's no comparison to what we do today.

Looking back, everything is always like this: if something goes wrong, you know everything better, we Germans are very good at that, and if something went well, it seems as if everything was planned exactly like that. That's not quite the case. The example or the core of this example with the shame originally goes back to Jochen, although I was more ashamed than Jochen, I think. It was about the fact that our app wasn't ready. It always takes longer, it always gets more expensive, the guys say regularly. The app wasn't ready, and then it was also said, 'Doesn't matter, get it out.' I mean, it was Christmas, and we all know that's when phones are given away and downloads are made, and we could actually only find the bus stop at that time, but obviously, the ticket is a bit of the relevant feature, that didn't work yet, and that was actually embarrassing, but it still led to 100,000 downloads. And then if you're already on a phone, you can just push an update, that's easy. But especially at the beginning, with your colleagues in the Play Store, you first have to make sure it fits. So that was retrospectively the right decision, but back then, I don't know, I was just on a ski trip, and Jochen and Andrej were there, and Jochen and I discussed, and I was of a different opinion, and he insisted, and it was the right decision. And although I was ashamed, it doesn't matter, the benefit of getting real feedback, although the obvious was, 'Get it out, what kind of nonsense is that, you can't even book a ticket.' Ah, thank you, Captain Obvious. But that was still, then you have the discussion directly, and that helps much more than if you tinker with your brainchild, because often you are not necessarily the first main target group, but someone completely different, and then it would be better to involve that someone in the further development of the product or service.

Now, retrospectively, M&A has become a relevant building block for us and still is, which we also developed. We can do that, part of the symphony, so to speak. And it wasn't originally the core of the idea that we said we're going to make a roll-up out of it, it wasn't. We still always make our first choice to start organically, but sometimes when the structures and the market allow it, it just makes sense to look at it and then find someone who wants to be part of the group. Originally, it was like this: we were about eight or nine startups that then started to beat each other up in Germany, because the colleagues from MeinFernbus and we both, that was somehow head to head, and we didn't want that. We had, both the guys from MeinFernbus and we, this entrepreneurial will that this must be something new, you can't leave it to the legacy players. And then we said, okay, if we do it together, we can put a lid on it in Germany, so to speak, and also deal with Europe. And so it went on, and then we built it together, and that's why we are green and called FlixBus, best of both worlds. And that was the learning at the beginning, that was the moment that we learned this M&A path as an alternative and now apply it again and again where it's necessary and works well. But like now in India, our first approach is, we start there as Flix and see. That's always the first choice.

There were offers, but they were all very, very, very early. I remember that we spoke with the ADAC Postbus conglomerate, that was before we were live, but they were still in the study phase. OL Berger did the studies for them, then they invited us to Frankfurt, and the idea was, hey, can't we do it together? But we quickly realized that our perspective was very different. There's this funny anecdote that at that time they hadn't secured their domains yet, and Jochen came up with it. On the way back, Jochen said, 'Did they say they want to be called ADAC Postbus?' I was like, 'What?' We were on the ICE from Frankfurt to Munich, and they hadn't even secured it. My grandfather, the role model, had already passed away by then, God rest his soul, my grandfather then secured the ADAC Postbus domains. That was quite funny.

And that led to the grateful financing of the first big Flix event through ADC Post.