Daniel Krauss avoids flying whenever possible for environmental reasons, preferring to travel by bus or train. It should be no surprise, given that he’s the chief information officer of FlixMobility, a startup that has become Europe’s leading provider of long-distance bus travel.
Going green isn’t just figurative: the company’s electric lime green buses have been serving routes across Europe since 2013. What started as FlixBus and now goes by FlixMobility is going worldwide.
In July, FlixMobility raised €500m on a reported €2bn valuation, making it one of just 10 unicorn startups in Germany. That funding is fuel for the company’s plans to expand internationally into South America and Asia, to beef up its rail services across Europe and to enter the carpooling market.
Long-distance bus travel isn’t necessarily a sexy service, but Flix has tried to jazz it up with free Wi-Fi and all-digital booking via app, web or voice assistant. FlixMobility now serves more than 2,000 cities in 29 countries, with headquarters in Munich and Berlin.
FlixMobility operates a bit like Uber: it’s a mobility service that keeps the vehicles themselves at arm’s length. Flix works with “partner companies” – traditional charter bus services – that hire drivers and pilot the buses. Flix supplies the branding, booking services, routing and marketing power.
Buses were just one idea on a list of many back in 2010 when founders (and childhood friends) Krauss, Jochen Engert and André Schwämmlein were trying to come up with a business.
“We wanted to do something that moves people and society,” Krauss remembers. “Now that’s literally moving people, but we didn’t know it when we started.”
Thanks to the three founders’ complementary skills – Krauss the tech side, Engert the business acumen and Schwämmlein the vision – the company accelerated quite quickly.
Germany liberalized its market for long-distance bus services in 2013, and price competition was fierce. The Economist reported that Germany alone had 13 long-distance bus operators. But that number dwindled as FlixBus snapped up competitors Postbus, owned by Deutsche Post, and the continental European operations of Megabus in the summer of 2016, the same year the company became profitable. It now holds 90% of the German long-distance bus market.
But that wasn’t enough: Flix wanted to go multimodal.
The first two FlixTrain lines started operating between Stuttgart-Berlin and Hamburg-Cologne in 2018, offering prices starting at €9.99 and 100% renewable energy-powered engines. (Though customers have made complaints about sometimes hours-long delays and outdated train cars.)
Krauss says FlixMobility hopes to expand its routes to perhaps six in Germany, and it’s looking across borders. France and Sweden are set to open up their national rail systems in short order, and Flix is in discussions to get in on those networks.
“Long-distance ground transportation is what matters,” Krauss says. “Whether it’s a bus or a train doesn’t matter as much.” As long as it can help reduce the number of people flying, they’re in.
European startups sometimes have a hard time finding their footing in the U.S. But FlixMobility had its eye on the United States from the get-go.
In the U.S., long-distance coach services already had a primed customer base. “The model is very known to the US, so we didn’t have to explain ground transportation,” Krauss says. “We’re attracting people who went by bus before or maybe would have taken a car or a low-cost airline.”
The stalwart Greyhound and discounter Bolt Bus, owned (for now) by First Group, and Coach USA and Megabus, owned by Variant Equity, are well-known brands in the U.S. intercity bus market. FlixBus started its American operations in the Southwest, including Las Vegas, Phoenix and Los Angeles, and have since expanded to Northern California, Texas, Louisiana, New York City and Washington, DC.
Flix’s strategy of entering a market by working with local transportation providers is evolving as needed. FlixMobility recently acquired the No. 1 long-distance bus company in Turkey, Kamil Koc.
FlixMobility is still surveying its options for South American and Asian operations. China’s out because of the tough regulatory environment, but they've got options they aren’t yet ready to share. “Independent of which country you’re talking about, or the mode of transportation, it has to reflect our values and ambition,” Krauss says.
Sharing is caring
The next step is ridesharing. The company’s concept for FlixCar will match drivers and passengers who are heading the same way, enabling carpooling at no cost to the users. The details are still being worked out with launch planned for 2020, but Krauss says while drivers can ask their passengers to chip in for part of the trip cost, FlixMobility doesn’t plan to take any portion of that money.
That’s a departure from its main competitor, BlaBlaCar, a marketplace that connects drivers with people looking to carpool. After its acquisition of French coach company Ouibus late last year, BlaBlaCar has been serving five European countries with BlaBlaBus since the summer. The Paris-based unicorn has raised nearly $450 million over six rounds of funding.
But overall, Krauss doesn’t consider other startups as FlixMobility’s main competition. The No. 1 target is people driving cars by themselves. FlixBus signed an agreement with Uber last year in Germany to help bring people from door to door, and is working on partnerships with public transit agencies.
For the global climate demos on Sept. 20 and 27, FlixBus has offered free rides to protesters for their next trips. Electric buses are used on just a few select routes, but most of its buses still run on diesel, so riders are encouraged to purchase carbon offsets, calculated by distance and duration of the ride, via Atmosfair during checkout.
Schwämmlein, the chief executive, said: “What the world needs is climate-friendly travel options, not more cheap flights and half-empty cars on the road.”