#42 Timo Buetefisch: Co-founder & CEO of Cooltra (sustainable mobility, >€60m sales,>3m users, 30k vehicles)
Learning from building a hardware based operationally complex success story, present and future of mobility, challenging views on the European and Spanish ecosystems
Hi, I’m Pol. I’m a startup operator, investor and teacher. This is a newsletter based on interviewing exceptional people in tech, investment, and social impact worlds. It was created to share interesting views with everyone for free because we lacked meaningful access when we started our careers.
Time Buetefisch is the Co-founder and CEO of Cooltra, one of the European leaders in sustainable mobility solutions on two wheels. Cooltra is a scooter and e-bike rental company with >€60m sales, positive EBITDA, >3 million users, 30k vehicles, 8.7 million rides and a >40% market share in his target geographies.
Before Cooltra, Timo was Assistant to Board of Directors at Bertelsmann, and also worked as an Associate at Booz Allen Hamilton.
Timo holds an MBA from IESE Business School and Northwestern University - Kellogg School of Management.
Link to audio interview
Index
How did Cooltra started
What preconceived ideas needed change in order to scale
Major inflection points to win in such an operationally complex market
Challenges of working with atoms instead of just bits
Blueprint to open a new city
Biggest fails in Cooltra history
Guidance to a younger version of yourself
Present and future views of the mobility market
Navigating challenging regulations and politics
State of the European and Spanish startup ecosystems
Biggest bullshit in the ecosystem
Are you financially sustainable
What is the endgame for Cooltra
Advice for entrepreneurs tackling operationally complex endeavors
1. How did Cooltra started?
Well, first of all, thank you so much for having me as a guest in Views! I hope I can inspire some entrepreneurs to build adventures such as Cooltra.
I started Cooltra 19 years ago in Barcelona. Everything begun with a personal experience, I wanted to rent a motorbike to move around Barcelona because my personal one was being repaired in a garage. The experience was a mess.
In relatively quick fasion we bought 20 motorbikes from China, and we started selling them from a really small workshop close to Sagrada Familia. The company was originally bootstrapped with only €30k and from there on we have grown a lot and changed a bunch of stuff - but the beginning was as simple as this.
Our first business model was purely B2C and the main target were tourists. We did some SEO and SEM and had a very basic website to channel our sales. Not even Facebook nor instagram existed back then. Google was our main go to market, although we also used strategies such as distributing physical promotional brochures in hotels, language schools / academies and so on. All from our small workshop.
You have to keep in mind that back then, technology was not as advanced as now. It really wasn’t a very technological business. Much more retail type of thing. Easy to understand. You are a customer, you have a simple need, we provide a clear solution that was already happening with other type of vehicles such as cars. Communication was easy.
After a year or so, we hit €100k annual sales and decided to go for en external fundraising round. We ended up getting 3 Business Angels and 1 small fund (IESE’s angel fund). If I’m not wrong I thing we raised €700k.
2. What preconceived ideas needed change in order to scale?
Well the initial vision was to copy companies doing the same with cars like Europcar or Sixt. We wanted to play this exact game but for gasoline motorbikes and with a strong B2C focus.
What have we changed from that moment? A lot. From the business model per se (exploring also B2B and B2G), to using technology as main distribution tool (renting with our own app), and the vehicle per se (going full electric and connected with our motorbikes and e-bikes).
Precisely, your question is relevant, because I believe one of the main catalysts of our success is our ability to change in order to adapt to new trends in such a competitive industry.
3. What would you highlight as major inflection points, key to win in such an operationally complex market?
First, my personal resilience. We had some extremely tough moments were the temptation of just giving up was there - but we didn’t.
Second, building a team with a long term focus and being able to retain them while growing together for a long time. Curating that especialized expertise and thick skin in house, has been major for us.
Third, as you already mentioned, from an operational point of view this can be a tricky business. Among other things, being able to have a strong financial position is important. So the management of this angle, from raising equity of angels, VCs, and family offices, to keeping a healthy balance through debt instruments from public institutions, banks, and debt funds, helped us secure the necessary resources to grow aggressively while remaining healthy.
Fourth, cost efficiency. Understanding the deep meaning frugality has for our business has been major. I believe in always keeping costs under control. And I truly thinks it is important that all our team understand we have to be able to exploit great opportunities with limited resources. Based on my experience as well as those from comparable companies, in this market when you have lots of money it can seem that growth is easier to achieve but you are significantly more open to vulnerabilities and loss of efficiency. Plus pursuing great objectives with less resources, forces you to boost your creativity and grit.
And finally, as mentioned in the previous question, identifying paradigm shifts and being fast and flexible to adapt. We detected that traditional renting in physical shops was coming to an end while digital channels were booming - we adapted. We saw how customers were increasingly becoming more driven by fast and easy access to mobility, we started to get motorbikes closer to the customer in the same exact street where they live if possible and accessible through our app. We had some issue in terms of maintenance we quickly started building IoT technology so we are able to keep our bikes always in perfect shape as much as possible, etc.
4. Challenges of working with atoms instead of just bits?
Cooltra is a very complex business from an operational point of view. Executing this type of vision efficiently is quite an endeavor.
Some of the main challenges for us are:
Screening and selecting the best providers for our fleet
Monitoring our vehicles to make sure we have the best state-of-the art for our customer
Taking extremely good care of our fleet in terms of maintance
Building the best in-house tech solutions we can with a wide range of aspects in mind (connected vehicles, apps, internal tools to improve efficiency, AI implementation, etc
5. What is your playbook to open a new city?
We always have top of mind the profitability potential of any given target geo. So that is our north star, being able to obtain sustainable growth.
To reach that, we need to validate if there is critical mass aligned with each of our go to market strategies. It is okay if one is more relevant than the others, but the ideal target city should have potential for complete growth in B2B, B2C, and B2G. Are there delivery companies such as Globo, Just Eat or Domino’s active in the area that need fleets? Are there citizens or tourists already using or open to use similar solutions? Are there public institutions such as police in need of a high quality, trustworthy, and cost efficient mobility answer?
If we are able to ensure this, another important ingredient is to always keep costs under control. We need to make sure we can exploit the potential of a city with great frugality. Based on my experience, in this market, the more you spend the more vulnerable you are to inefficiencies. We have always been extremely oriented on cost efficiency.
From these facts onwards, then we keep in mind aspects such as regulation or market saturation, among others.
Based on this playbook, we have Milano and Rome as two examples of top performers, and Madrid as an examples of a complex city because market saturation (public bike sharing that works really well, a bunch of car sharing companies active in the urban area).
6. What have been the biggest fails in Cooltra history?
Our biggest fails always were related to HR.
Hiring the wrong person, keeping in the team someone who really isn’t a good fit for whatever reason, or not being able to take proper care of great in house talent and losing them.
It can be tough to get the best talent for your company at all different stages while being able to help them grow and evolve in a way this talent and the company itself are fully aligned.
But at the end of the day, we learnt from all these situations and it helped us improve how we detect, select, and nurture, the best people for Cooltra.
7. What guidance would you provide to a young Timo?
Things that come to my mind are:
Patience. Be patient in geographical expansion. It is better to grow in a target city with a robust footprint, rather than bite off more than you can chew while stretching resources too thin and not being as focused and dominant in the geos that respond best to your business goals.
Management of providers. It is extremely important to have a great process for selection of providers from the very beginning. Both software and hardware. Make sure the product is tested, has lots of users, holds strong reputation. Also understand what degree of customization you will need and what effort will it imply, so you can mitigate risk as much as possible. For instance, we changed our CRM in 3 or 4 occasions and it has been a waste of time.
Inhouse developments. Understand what degree of customization you will need in our Cooltra product offering and tech stack, with a analytical view of the return - effort equation that will imply to build something in-house. Some times it is valuable to do it but it can also be a pain in the ass because too much time, money, and overall risk involved in this.
Obviously we eventually grasped these details by simply having skin on the game and just working in such problems for a while, but it could have been helpful to being familiar with it in advance.
8. Present and future views on the evolution of the mobility market?
Good question!
In the present time, as you know, 10 years ago the industry didn’t exist and it slowly gained some hype - specially with micromobility and sustainable transport as key drivers.
Lots of money went into the game with bikes and electric scooters leading the way, crazy valuations like 50x multiples, very inefficient plays from a financial standpoint, etc.
I’d say now this has changed in part, we are eyeing a market trend that maybe is still committed with micromobility in urban areas and sustainability, but the market punished financially unsustainable models and looks more driven towards consolidation, lower valuations, capital efficiency, healthy culture, high service quality and profitability.
To share some examples:
Some years ago maybe we were talking about a 100 companies in the market and nowadays we are around 10. Companies like Reby and Seat have disappeared from this sector, and we at Cooltra have acquired a few other companies that were struggling.
Customers are increasingly prioritizing service equality before price, with factors like availability, security, maintenance or reputation playing a gradually bigger role.
Nonetheless, size and scale are still important and it will be a lie to say they aren’t. Cooltra is getting close to €70m annual sales. Lime number goes beyond €600m and it’s still playing. So there are big logos that even though in the past maybe were burning a lot money, now there are doing a great work.
Additionally, some other competitors that we are encountering in this new period of the industry are Cycle in Northern Europe (e-bikes, B2B), Zoomo (sustainable mobility present in London, Berlin, and Paris), or Acciona Mobility (HQd in Spain, part of the giant Acciona).
If we are talking about the future, I find it fascinating.
There are 3 main trends to be aware of:
Timings. The industry expected rapid adoption of EVs is having a slower rhythm. Why? Demand behavior is not so open to change in a big part because lack of infrastructure and low degree of harmonization in the existing one. People still has some nervousness regarding the charging aspect of the electric vehicles, both in terms of cars and motorbikes.
Mobility as a service. Each year that goes by, the population of urban areas decreases their acquisition of vehicles. Same that is happening with real state or even music. People want cheaper and more flexible alternatives. And if we look at young individuals, this trend is even bigger. Income - Expense ratio has gotten so brutal that owning a vehicle is progressively seen as waste that can not be assumed (high vehicle prices, insurance, parking, maintenance). Consequently, there is ever more potential users open to subscription models and ride sharing.
Intermodal integration. Very important trend, interoperability across different mobility solutions. You use a train to get from outside Barcelona to the city itself, then you get an e-bike to go to work, but maybe after work you want to grab some beers and you’d rather get an Uber. Some time ago people used to think look I have a car for all these stuff. And now is changing.
9. How do you navigate the challenge of regulation and politics?
It was a big thing years ago, it still is. The cooperative work with the regulation bodies in urban areas is a must because local city halls play a pivotal role.
Paris and Singapore are nice illustrations of this being done efficiently. In Spain we are a bit slower and messier. I would love to see more car sharing solutions in Barcelona but what they’ve made with VTC is a bit of a fiasco. In contrast, Madrid is way more advanced.
Anyway, politicians are also learning on the go because everything is relatively new for them. Some are more aggressive, others are more friendly. Again, it’d be great to see more progress and more support because we clearly see the need that citizens have for bigger and better fleets.
Yet these type of processes are very sluggish, need a lot of evangelization, regulatory changes and that sort of things. Good thing though, each one of these city tends to have a team that it’s working on this specific set of problems and you have them as your contact point. So our work is trying to build a relationship and have a positive influence in the mobility development of each target city. Every city is a world in itself and it can have different regulations and visions, so you need to be aware of it and play your cards.
10. What is your opinion on the state of the European and Spanish ecosystems?
Perhaps a bit contrarian here, but I don’t feel like we have been suffering from a lack of access to capital in the ecosystem as some say. To be blunt, it’s just difficult to find good teams and good projects.
We have had lots of VC money raised, but local VC funds, in my humble opinion, have not been able to find enough projects with top tier performance. So VC funds have not been able to show their LPs top tier performance themselves. And now, if you are not the latest hottest AI company, it’s tougher to get money. But again, not because a capital issue but because lack of exceptional opportunities (even taking into account the power law effect). Luckily, I don’t do VC investments for a living. It is not easy.
Also, I think we need a dose of realism. We can not pretend we will have in Barcelona a step up and become San Francisco. We live in a completely different world. What we have made in Europe and Spain is remarkable, extremely positive - but we are what we are. We have outstanding talent and some cool companies, but how many are really building from here organizations attacking hyper painful global problems that are directly impacting the course of history? There are 5 stars hotels and 3 stars hotels, and it’s okay.
However, it is also important to highlight that if I compare the current state of the ecosystem vs when we started 20 years ago, the massive positive evolution we have gone through its undeniable.
11. What is the biggest bullshit in the ecosystem?
Focusing on investment rounds as a priority beyond business sustainability in the long term.
At the end of the day funding rounds can be like a drug: build a business plan focused on raising money, get it, grow fast by any means, burn everything, raise again …
It can work for some type of companies, but in general I think its kind of BS to see major items like positive cash flows and healthy financial situations lost in between a game that acts as catalyst for risk and inefficiency.
12. Are you financially sustainable?
Yes. Qe needed time and capital to get here, but we did.
One of our main risks was to be able to finance our fleet growth while being sustainable, and we managed to do it in 2019. So more or less 6 years of a few millions of Euros in positive EBITDA.
13. What is the endgame for Cooltra?
When talking about this I like to reference great tier 1 athletes.
If you have some talent, train hard and win, eventually exceptional professionals will like to coach you and sponsors will give you money.
So my vision is not necessarily focused on selling Cooltra and exiting. But I truly believe it is more about focusing on building a solid sustainable business with healthy long term growth. Opportunities come when you do that. Or you can create them proactively if you want, and it will be easier.
If you have powerful KPIs and a strong performance, banks will give you money with better terms, investors want to invest in you, and potential buyers show interest. I can see lots of possibilities for this mentioned endgame, but we are just focused on building a profitable sustainable business - that is how you build options. I don’t work for the exit, it will come or it will not.
14. What advice would you share with entrepreneurs building complex operational businesses?
This type of company has some very specific set of ingredients for it to workout. Consequently, it is very hard to provide a generalist answer because what works for us it’s possible that doesn’t work for other companies, sectors, and stages (startup, scale up, and so on).
So my first advice could be to filter very well your learning sources in order to ensure that these external unrelated lessons can be translated to your own path in a meaningful way.
From that starting point, I’d share a couple of advices based on our story (in part already readable from what we have been talking about):
Comprehend the nature of what you are building. Do you want to build a global leading unicorn company in a hot sector? Get that it will be extremely hard, need lots of money, demand high speed, and require high risk tolerance from you. Do you want to build something more similar to what we are doing? Grasp the different details.
Own your company. It is my belief that if you are the entrepeneur you should own and control your company ina. meaningful way. From a high level point of view (e.g. having clarity of the path you want to follow) but also regarding details (e.g. management of investors, team …).
Sector-defined efficiency. As we have talked before and you already know this Pol, we are in a market that has a high operational complexity inherent to its nature. Although to be honest I think this can be applied in a range of markets. Trying to do a lot with self-imposed limitation of resources, thus focusing on efficiency, is a great advantage in the medium-long term.
Hire based on your stage. At the beginning, you’ll have to do a lot of different things for the rocket to launch, so in my opinion you should focus on a fewer number of generalist talent with high energy that like to fight and build something out of nothing. However when you scale up, the needs of the company change and I believe it is recommended to prioritize creating more defined roles and hiring professionals with a higher degree of specialization.
¡Thank you Timo for sharing your Views with us!
¡Thank you Lucas for the intro!
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