Flixbus aims ‘to make coach travelling cool again’
If there is one skill that separates the world’s most successful entrepreneurs from the rest, it is their ability to identify an opportunity and then act on it.
For Daniel Krauss, André Schwämmlein and Jochen Engert, founders of Flixmobility, that opportunity came in the form of the 2013 deregulation of Germany’s public transport sector. The new rules allowed intercity buses to compete with state-run subsidised railways.
The deregulation proved to be a catalyst for the Munich-based trio’s Flixbus, which has gone on to operate an intercity bus network across Europe and the US.
“[The deregulation] was the ignition point for what we do today. We felt that this was a huge opportunity — the market had been regulated for almost 80 years,” said Jochen Engert, co-managing director, speaking in Monaco at the EY World Entrepreneur of the Year awards where Flixmobility is a finalist.
“We knew there was a market out there — people wanted an alternative to cars and trains. We wanted to do something outside of regular jobs. We wanted to become entrepreneurs.”
Daniel Krauss, who worked at Microsoft before co-founding Flixbus, said: “We didn’t invent the coach but we made it sexy and dragged it into the 21st century. We wanted to make coach travelling cool again.”
The approach has helped the business’s operations expand to cover 2,000 destinations across 29 countries, with millions of passengers travelling each year on buses sporting distinctive lime green and orange livery.
In the same way that ride-hailing company Uber does not own the cars that its drivers operate, Flixbus holds no stake in the buses nor does it employ the drivers. Instead, it runs the operational side, controlling the scheduling, ticketing, customer service, network planning, branding, marketing and IT.
For the on-the-road side of the business, Flixbus partners with established regional bus networks that are responsible for the day-to-day running of routes. Such an arrangement freed Flixbus from the hefty start-up costs of establishing an expensive network and training drivers, and enabled the group to scale up quickly.
“We took Germany as a starting point and quickly felt that this could be an international product and service. This is the nice thing about Europe — you can internationalise really fast,” said Mr Engert.
The group last year expanded into German rail, with the launch of Flixtrain, and into the US intercity bus market — predominantly around West Coast cities such as Los Angeles and San Diego, but recently adding eastern hubs such as Washington DC and New York.
Flixmobility’s subsidiaries Flixbus and Flixtrain combined have more than 1,200 staff, while its 300-odd partner bus and train companies employ some 7,000 drivers. More than 45m passengers travelled with Flixbus and FlixTrain in 2018, up 40 per cent from 2017.
The group uses dynamic pricing to sell tickets through an online sales platform and a Flixbus app. Passengers have access to free Wi-Fi on board and GPS live tracking of buses.
“We have a revenue sharing model where we typically keep 25-30 per cent [of the ticket price], the rest goes to our partners,” said Mr Engert.
Flixbus also guarantees to pay a minimum level of income to its partners as it is confident that its algorithms can forecast passenger numbers. “We are basically telling them: ‘You are not going to run empty buses because we know [the market better] in terms of which routes are going to work and where you are going to have high demand’,” said Mr Engert.
The privately held company, which does not disclose financial details such as turnover and profitability, is backed by the likes of General Atlantic, Silver Lake Partners and Daimler, and said it had no immediate plans to go public.
“To make a good network and schedule based on the understanding of demand and how traffic works . . . leveraging machine learning to come up with what people are prepared to pay . . . that’s what differentiates us,” said Mr Krauss. The group employs 250 software engineers.
As for the future, Mr Krauss said the group was looking to expand into Russia in the coming year, and also harboured plans for Latin America and India.
“There are still more things for us to do in Europe, still more ground to cover. The US is a big market for us. Brazil is going to be very interesting for us, as is Mexico,” said Mr Engert.
“We really want to build this into a global consumer brand that anyone can turn to wherever they live.”
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