Podcast „Alles neu Aus dem Maschinenraum“ | Folge #4: Konstantin Sixt von Sixt

Hello, I'm very pleased too.

Um, I think, I would definitely introduce myself, let's say, as Konstantin, a rental car, yes, and I hope he would understand me, yes. But I think what we would talk about with Waymo would be what drives us all. The only question is, when will the autonomous car come? I think it's now clear to all of us. I think if we had talked about autonomous vehicles a few years ago, there would have been many who saw it as futuristic nonsense, but I think we all know it will come at some point. And the fascinating thing is the when. And I am firmly convinced that, like many other innovations and technical advances, they always come much faster than our minds can imagine. In the spirit of Moore's Law, where technology and processor speeds always double and develop exponentially, and I think we will always be surprised by technical developments, and I think we will eventually be overwhelmed by autonomous vehicles, and that's exactly what I would like to discuss with him, how he sees it.

I think, at the end of the day, what is written there is not so important. I think what is more important is that we manage to answer the customer's question, namely how to get from A to B. And to answer this question optimally, not only to answer it, but also to deliver the means, in our case everything on wheels. That means, I also think that in a few years we might not necessarily have such tabs in our app anymore, but rather we will manage to answer the question of how to get from A to B more intelligently, right?

The big difference is that many try to answer the question of A to B, but they don't deliver a product to the customer. Our essential difference is that everything you see on the Sixt app can be booked and paid seamlessly. That means, on our app, from taxi to rental car to e-scooter, you can book everything from one source with one login and one payment method, and actually get the mobility, and it's not just a display of different options. And I think that is the essential difference of our Sixt platform to many, many providers, that we don't just tell a mobility story, but are perhaps one of the few that can actually offer mobility as a product to tens of thousands of customers every day.

I think the most important thing, as in all industries, is to focus on your core competencies. Of course, not every company is the same, and it's not a universal remedy for success. We try to focus on our core competencies, and that is to offer mobility services. And a service is often something different from an industrial product. My brother and I once said, to put it bluntly, we are not a car manufacturer, we are a car placer. And this difference is significant, although it seems obvious that you can do it, because you have to keep your feet on the ground. At the end of the day, car sharing is nothing other than car rental, just in a different guise. Car sharing is essentially car rental, only you open the car with an app and bill by the minute. But the metrics and the business model behind it, from utilization management, damage management, insurance, customer management, complaint management, billing management, are exactly the same complexities that a car rental company offers, and I think not everyone saw that, and that's why you always have to look at what mobility is, what car rental is, these are all terms that blend into each other, and we focus very strongly on our core competencies, which is to offer services and try to be the best at it for customers, right?

So, I think the point you make is absolutely right. Many people, when they start or operate business models, or customers, maybe only see an app and a nice map with many cars, and think it's a very simple business model. But the business model of mobility services like car sharing, car rental, ride-hailing, does not take place in that colorful Google Maps world; in reality, it is a hardcore hardware business with tens of thousands of cars that need to be managed, cleaned, repaired. So at first glance, it has very little to do with the nice colorful tech world. In reality, of course, it is also very software-driven and requires a lot of artificial intelligence to operate such fleets. But I think many who start mobility business models often realize this too late and then perhaps disappear again. But that is exactly where we see our core competency. At the end of the day, it's about managing fleets, and many business models are based on that.

Exactly. We started a core transformation in February 2019. We took a very big step by adding an abstraction layer on top of the pure operation of rental car fleets and we see ourselves as a platform. We went live with a years-long project internally, where we can not only display but also offer mobility services from a single source that are not operated by us. For example, via the Sixt app, you can book the entire Lyft fleet in North America. That means, as a Sixt customer, without having to register with Lyft, you can book a Lyft ride in New York from the airport to the city. Similarly, you can book the entire taxi fleet with all taxi centers in Germany without having to register there, and pay through the Sixt app. A third example is the Tier e-scooters, where we can offer all Tier scooters across Europe via our Sixt app, without operating the fleet or managing utilization. These are three wonderful examples that show the transformation Sixt is undergoing, because this business model is completely different from operating rental car fleets; it is very much a technological innovation process. And we are very proud of the software platform we have created.

I think we probably don't have a recipe like that, but what we strongly try to do is never rest on our successes. I think that is the most essential part of our DNA and probably the most important cultural value, which is strongly set by my father in the company. It comes across in various expressions, like every employee at Sixt will understand, if you ask them about success, they will shoot back, 'The biggest enemy of success is success.' That's one of the famous quotes from Erich Sixt, my father. Or 'Good is not enough when the best is expected.' So we are very driven to constantly question ourselves, and in our culture, no one rests on their laurels. Not the family, but especially not our employees, who drive the innovation process. For us, it's a good thing to question the past, to question our products, or to say, 'Man, what we have right now is bad.' And not just walk around proudly; pride is a word that is used very rarely. We try to reinvent ourselves again and again. Do we succeed? No, but we at least try every day. We also have the Sixt DNA, our corporate values, six values. One of the values that appears on every employee's laptop background every morning is 'Quest Everything' – question everything you have done and are doing every day.

Sixt Plus is indeed a bit of a product of this crisis, born by chance. You can also see the speed of what employees can achieve when they are extremely motivated. We sat together in probably March or April, when we were still allowed to meet, in a fairly large group, and we didn't try to bury our heads in the sand. You can imagine that a car rental company was hit hard by travel restrictions. We thought, instead of complaining, we formed a small task force and asked, what could we offer customers that they urgently need? One idea from our team was that there are many customers who, in this uncertainty, are worried about buying a car. They say, I can't or don't want to commit for three years. I don't want to go to a car dealership. I don't want to deal with insurance or financing. I don't want to disclose my entire personal finances. I don't want to commit to a car because my life circumstances might change. So this long-term commitment is something that people have found very difficult, especially in the last year. With Sixt Plus, we think we found a solution for this zeitgeist: a monthly price, a car, all inclusive. The key innovation difference to all other ways of getting mobility and a car is that you can cancel it every month. At the announcement, I don't remember which medium called it 'Netflix for the road.' That was a great compliment. It's a bit high-flown, but it shows what inspired us. We were inspired by streaming services and the subscription trend that is going through all kinds of tech industries. And so we built this product, and its success has really taken off. It shows us that we hit a nerve. Everyone wants to be Netflix now, especially during lockdown.

Yes, absolutely. I think it's often the case in life that it's not always about invention, but about who delivers and builds a scalable product. One thing is to invent something, another is to build it. We are very driven not to tell stories and PowerPoints, but to actually implement scalable business models. The impressive thing was that we were able to complete a completely new business model, a new product, a new brand, a new website, and a TV campaign from idea to launch in about two and a half to three months. That was a team effort that we celebrated, and it probably came from the cohesion that existed in this severe crisis, that our employees felt that spirit and the light at the end of the tunnel, and had something to look forward to, programming day and night, building, setting up stations and processes. And does the business work? Absolutely. I think there are a few smaller providers, but we are already many times larger. We are well north of 10,000 subscribers in that model. It shows the speed and the claim. A car rental company per se can offer very high synergies and advantages that other providers in this business may not have, because the car they get in Sixt Plus comes from the regular Sixt fleet. That means we can provide it immediately at the push of a button at hundreds of stations nationwide. So we are immediately where the customer is, have a huge selection of vehicles, and can manage utilization much better than other players. So we have a competitive advantage per se.

We are not fans of, and we don't have, an innovation department or innovation team. We are convinced, at least for our company, that would be the end of innovation, because if you say someone is responsible for innovation, then logically everyone else is not responsible. Then you have a box where innovation goes, and the box is closed. Yes, exactly. I think there is a tendency for managers to say, okay, innovation is demanded by every medium, employees everywhere must be innovative, it's a self-fulfilling prophecy. Then you quickly found a department and you've said, we do innovation. We consciously don't want that. Instead, we try, with emphasis, to spread an innovative spirit to all employees and explain what innovation actually means. Simply put, it means doing new things. And doing new things doesn't necessarily mean doing the right thing. Not everything new is always right. I think innovation for the sake of innovation is often wrong, because it's not about just doing new things. That doesn't benefit us or our customers. It's about offering customer solutions. So we try to explain to our employees, from the station to the colleagues who wash our cars to top managers, that it's all about listening to customers, putting your ear to the ground, and really understanding what customers want, need, what problems they have, what challenges, what products our competitors don't have yet, and then building solutions, which for us usually have something to do with IT and software, but not always. And that is our innovation process, triggered by the customer and carried through the entire organization. So if you are looking for an innovation department at our company, you won't really find one.

Well, I hope not. A large part of our business is business travel. Not all, but a large part, and it's not completely gone. There are still, I talk to three or four corporate customers every day. There are still people who do a lot of business travel. And the car is currently a great substitute for other means of transport. If you have an appointment in Berlin, many people feel better driving from Munich to Berlin than sitting with hundreds of people on a train or plane. So we are already providing a substitute for business travel that we wouldn't have been considered for in the past. For example, routes like Munich-Frankfurt, maybe later Munich-Zurich, where people never thought of renting a car for a business trip. So I think that's also an opportunity. Do you see that in usage behavior? Sorry. Do you actually see that usage? Okay. Yes, absolutely. Our customer usage behavior has changed very significantly. We are thankfully not dead. Compared to many other companies in the travel industry, where revenue is down 99%, like hotels, that's bitter because a hotel stands there empty and you can't make it smaller or move it. We can shift our fleet, reduce it, enlarge it, move it to other places. We call that an accordion. What changes is that we have many more private customers renting cars, for the same reason that more business people rent cars: because a car is a transport medium where you are alone, and you can practice social distancing perfectly. How this will behave in the future, I don't know. Honestly, I think on one hand, home office and video conferencing have become established and won't disappear. They have had a renaissance and are probably just at the beginning. But at the end of the day, personal meetings will not die. So the answer is not as black and white as many say, that no one will travel anymore or everything will be via video. I don't think it's that black and white. Just imagine our meeting. We have never seen each other in person, never looked into each other's eyes. That is something different in business life, to look people in the eye, to experience people. We are not computers or Excel sheets; we are humans. What distinguishes us are emotions, the many small nuances that you don't see on a screen. That is something that I personally am starting to miss in my business life. I think when it is safe to travel again and people no longer have to be afraid of each other, and that time will come, it will come back strongly. So I am not pessimistic, but rather optimistic that business travel will pick up again strongly.

I think the most significant difference is that we would not describe ourselves as a classic family company. I don't know if that's a result of being listed, the business model, or the size. Specifically, my brother and I and my family try not to put the family in the focus of the business, which often happens. We don't make a show of it because we are firmly convinced that the success of Sixt is not the Sixt family, but our employees. We want to highlight the people who deserve the praise and attention. The Sixt board does not only consist of members of the Sixt family; we have thousands of employees around the world who stand for this success. That's why we always want to put that in the foreground and define ourselves not as a classic family company, but as a family-led company. Perhaps a small nuance. And being listed on the stock exchange naturally requires and expects certain things. Yes, almost half of our capital belongs to shareholders, to whom we are rightly accountable. So we may not be able to do some things that family companies do. On the other hand, a family-led, listed company, as we would be called, perhaps thinks a bit more long-term than other companies. I think that distinguishes us very strongly from other purely listed anonymous corporations, that we have the freedom to make decisions that are not just driven by quarter-to-quarter pressure, but we think very long-term and in generations. And that is one of the essential advantages of our German family companies in the Mittelstand and also in large family companies, and that probably makes the big difference: thinking long-term rather than short-term optimization. And we are grateful that we can manage that and give our employees security and the freedom to develop.

Two small feet.

I would definitely say by very attentive listening to customers and employees.

My parents.

Cooking. Oh, which direction? I am also a passionate cook, out of necessity, I would say. How do you describe what I try to make? Home-style cooking, Bavarian home-style cooking to survive in the home office. Exactly.

I think the essential thing is that I don't write the family history; if anyone writes history, it's our employees together with us. And the claim is clear: the history we want to write together with our employees is to become the largest and most successful mobility service provider on the planet.

Thank you. Thank you.