27 October, 2020
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This third episode titled ”Technology Shaping Mobility” that aired on October 22, 2020, we had Santosh Sankar (Founding Partner of Dynamo Ventures) in a live conversation with Mihai Rotaru (CEO & Founder of Neobility).
Santosh Sankar co-founded Dynamo Ventures – a venture capital firm that focuses on early stage tech businesses specialized in “logistics technology”. He is responsible for the strategic vision, planning, and investing of this global seed fund.
The live discussion was moderated by Mihai Rotaru, serial entrepreneur behind CleverTaxi that exited to MyTaxi (currently Free Now). Mihai is the founder of Neobility, a startup that aims to build the future of urban mobility. He recently launched UrbanAir, a platform of shared mobility solutions.
Here is a short excerpt from the live discussion.
Watch the full discussion on our YouTube channel here.
Listen to the full discussion on Spotify and on Apple Podcasts too.
3 takeaways from Santosh and Mihai’s live discussion:
► ”We think micro mobility is real, it’s here to set stay, anybody who says otherwise I’m sceptical of. And, for us, the way we invest into the space is usually around offerings that can help the ecosystem or help the networks operate better.”
► ”We have the two fastest companies in the history of startups to go unicorn – were both micromobility. Right? It was Lime and Bird. Fourteen months or something; just crazy. So it was seen as a very disruptive move.”
► ”I think, like most seed investors, we’ll tell you that the team is 80% of the decision. And we break that down and distil that into what we call founder market fit. Why does this team have that advantage insight and the intangible qualities to go knock down that opportunity, and be the winner in this space?”
Watch and Listen to the full episode to get your own takeaways!
Are you more into Reading? The Full Transcript is below!
Mihai: This theme is micromobility, which is actually a theme very close to my heart personally, and also a current pursuit in my current company. Micromobility has made an impact on cities and communities around the world. But it is also impacted by COVID, lately.
Santosh: Great to be here. Thanks very much.
Mihai: Thank you for coming. So first of all, just like to say for everybody who’s joining us that we are taking live questions, and you can ask anything at any point in time. And we will just forward the question to Santosh. It’s a great honour to have you here. Can you tell us a bit more about you and what Dynamo ventures is about?
Santosh: Sure, sure. So we’re an early stage fund, specifically a seed fund focused on supply chain and mobility. And along with that, we focus specifically on enterprise businesses. So we don’t focus on business models that might be oriented specifically or solely towards B to C. With that we invest around the world, so about a third of our funds are invested abroad, and predominantly in Europe at that. And in order to kind of reinforce that we have one of our four partners based in London, actually, and he tends to oversee that that entire group.
Mihai: I mean, having a VC fund based in the US, but also active in Europe is a great opportunity for everybody. Looking at us right now to see a piece of your mind on how you view business on a global spread. So I’d like to ask you, you know, on the theme today, what is your relationship with micromobility? Do you love to do here, it’s it’s a complicated business, right?
Santosh: It is, it is. So, as a consumer and as a user, I love micromobility. I bike to work, whenever I can. It’s a great form of recreation, if I need to get somewhere in a, that’s a short distance, I tend to default, especially when I’m travelling to a bike share, or scooter share or all of in walk. But as an investor, we won’t focus on the traditional micro mobility networks. It’s not within scope for us. But we do believe that it’s a very important part of the broader mobility offering. We think micro mobility is real, it’s here to set stay, anybody who says otherwise I’m sceptical of. And, for us, the way we invest into the space is usually around offerings that can help the ecosystem or help the networks operate better. So about a year ago, we did an investment in a company called token transit. And what token transit is looking to do is provide the payment infrastructure for a multimodal experience, and specifically with public transit, as well as the micro mobility providers. So that was our key investment in the space, we continue to be really intrigued by opportunities that help you load balance assets across the city, understand vehicle health, and also charging as well, since it’s an important part of operations.
Mihai: Right? So I love that. So public transit and micro mobility, basically multimodal solution, then you probably also have a very good outlook on how the COVID impacted public transit and maybe also micro mobility, maybe people’s habits or even infrastructure in cities. What’s your take?
Santosh: Yeah. So, here in the US, and we’ve seen this also in Europe, a lot of the public transit was grinding to a halt. There’s a lot of scepticism around how things are being maintained, how they’re being disinfected. If you’re following the news, I think it was around June, July timeframe. There was an article on how New York City was cleaning the transit system, the subway system, and I remember somebody asked me: but shouldn’t they be doing that anyways? So it showed you that there’s an effort that cities have to take to say: we’re going to keep you safe. Equally, ride hailing also solved plummet. We saw earlier this week, Uber said that they don’t expect a full recovery there in the near future. And they’re going to go multimodal, they’re going to go wide in order to maintain their business and their operations. But interestingly, micromobility thrived. There’s less risk of contact, these assets tend to sit out in the sun, right? So UV rays can also kill any virus that has not been necessarily disinfected. But also, there’s been a stronger push for owned micromobility. So I’m going to buy my own bike, I’m gonna buy my own scooter, and maintain it and use it for myself.
Mihai: And that’s a great point, right? Micromobility is, well, anything for the last mile, I guess, but it can be shared or owned. We have the two fastest companies in the history of startups to go unicorn – were both micromobility. Right? It was Lime and Bird. Fourteen months or something; just crazy. So it was seen as a very disruptive move. Has this amplified with the COVID? And how was the shift towards owned versus shared that you’re addressing? And how do you see going in the future? Is this a catalyst? Or is this just, you know, people moving to owning it? And back to the old economy, but now it’s micromobility instead of cars?
Santosh: Yeah. So that’s, that’s a broad question. So let me unpack it a little bit. I think that mobility is impacted heavily by the culture of a particular region or a particular country. So, here in the US, you tend to see in the Southeast, even in the Midwest, you have super large automobiles. So trucks, pickup vehicles that might traditionally be used for commercial purposes, but are also used for personal purposes. And there’s like a, there’s a strong, kind of a proud, feeling of having a nice truck and keeping it well, well maintained. So, depending on the region you’re at, there has not necessarily been as much of a departure from traditional cars and vehicles. As you get into urban environments, there has been. It’s generally very difficult to find parking, simply put for a car. When you find that it’s likely expensive. So in a lot of tier one cities, New York, San Francisco, Chicago, Washington, DC, you see people kind of weaning off of an owned automobile. But what they’re then doing is they’re saying: ‘Is there public transit? Or is there micro mobility that I can use?’ And this year, what you’ve seen is, a lot of these individuals have said: ‘Well, because of the COVID issue, should I own my own vehicle? And should I not worry about being a part of the network.’ And it’s those cities that tend to be the trendsetters, and then tier two, tier three cities follow. But at that level, and you’re starting to see it seep into other smaller cities, is there is a push for, should you own your own bike? Should there be bike parking? Should we have police walk around to make sure there’s not any theft, or vandalism, of vehicles? I do believe that this is more short term in nature. I don’t believe that this is long term in nature.
Mihai: So then a catalyst in the end for shared mobility, right?
Santosh: Yeah, I think at the end of the day, shared mobility wins. And shared mobility wins because – I try to dumb it down a little bit, but this framework actually tends to prove itself out. But over rolling periods of time, people will default to the lowest friction and the easiest option. So it’s laziness to some degree, as humans. And I think that’s what micromobility networks offer, provided that they have enough density of vehicles, and that these vehicles are maintained, well charged, and well priced. But I don’t think pricing is necessarily an issue here.
Mihai: Right. I mean, this is not necessarily on the subject, but I’m just a fan of this, as the US is a very broad country has very different series. Is there a chance that you know, Elon Musk’s robot taxis will make, you know, make Americans give up their own car just having shared even, even for cars. Can it be a shared economy 100% in the future in the US? Would you see that, in like 20 years?
Santosh: I don’t think in 20 years, you’ll see the majority of Americans give up their vehicle. Americans are very proud of owning cars. If you think about the American dream, owning a vehicle and owning your home are the tangible fixtures of the American dream. So I don’t necessarily think you’ll you’ll see that in 20 years. Now, maybe in 60 years, 80 years: it’s generational, right? So if my son sees that we do with one car, or we do with, you know, having a Zipcar or car share membership, he’ll be more likely to also approach it that way as he establishes his household. And then his kids, his sons and daughters equally, he or she might also go about it that way. But I think we’re a long ways from that. I do believe that something like a Tesla solution to full autonomy, which we’re far away from that still, a full level five experience, that does set the groundwork for the ability to just have vehicles that are constantly available. So no matter what time of day where you are, you’re able to still have that convenience of access, and the ability to be mobile and move.
Mihai: Right. So you’ll still own some cars. I’m an avid driver, to be fair, but I would like a future where, you know, people are banned for drunk driving on public roads with restraints. That would help a lot with a lot.
Santosh: Yeah, I mean, New York is, has been playing with you open up 14th Street, or do you close it off entirely. And they’ve run experiments where they’ve made it bike and pedestrian only for for a certain section of that. I know, in Europe, a lot of the large cities, Paris, London, have tried to turn certain sections that are micromobility and pedestrian friendly. And I do think that that’s something that you’re going to see in larger cities more and more. Because if you think about the age of these cities, they were not originally built in order to withstand all this traffic. So you’ll either see a full ban on traffic or certain times of day, you’re able to operate a traditional automobile. I’m not sure if you saw though, I think earlier this week, France said that they’re going to start taxing vehicles over I think 1800 kg, and it’s like 10 euro a kilogram over. So that’s, that’s meaningful. Electric vehicles are not in that legislation. But they’re showing you we’re going to push you towards vehicles and modes that make more sense, in our urban environments. If you need a car, you should be doing city to city drives.
Mihai: That makes sense. And we’ve seen an aggressive shift towards improvised bike lanes to support a Covid situation from administrations. And, following on this on this subject, we actually have a question from Alan Clayton, referring to local administrations, I guess. How easy do you think it will ever be to integrate public offerings like bike shares or buses with private, which is many cars?
Santosh: Hmm, that’s a really good question. So, through our investment, Token Transit, the one thing that we observed, as we were working on making that investment, is that when Uber and Lyft came through here in the US, especially, so I’ll keep this US centric, is that cities and municipalities were caught flat footed, right? They maintain huge budgets to expand, as well as maintain roads, bridges, providing equal access for all socio-economic groups to to travel options. And Uber and Lyft kind of came in and completely messed that up. So now they’re trying to be proactive, and they’re not necessarily trying to be proactive in the way that they want heavy regulation. They want to be thoughtful and say: how do we partner with you in order to make sure that it’s not a nuisance. And that’s where I think scooter companies benefited because, early on, a lot of them brought in a legal consultant, or an investor, or a partner that was full time on the management team to help with city relations. And, our thesis is that if you’re able to give the city the ability to manage the payment infrastructure for public transit, they can then very easily go to the micromobility providers that are coming in, who want to work with them, right? They don’t want to be banned. We saw what happened when we don’t work with a city, but to say: ‘Okay, why don’t you integrate into our payment network?’ So it’s a better experience for the citizens, but they can now very easily use all the options around them because there’s not the friction of pulling out your phone or your wallet, pulling out your card, in order to go from bus to bike, to scooter, to your vehicle, perhaps. So, it’ll take some work, but in our minds here, it starts with owning the cash payment, or not cash, but just the payment, straight.
Mihai: Right, right. And that was a very good question, and we are still waiting for questions from from the audience, by the way. But, on this subject that you are talking about – so, basically it looks like we are going towards more or less unifying different modes of transportation. You know, having a multimodal experience. So, basically, how do you see mass players in this game? If we are looking at having unified experiences, we’ve seen recently that Lime opened up their platform to other players, because it’s easier for them, as they said publicly, to work with other providers rather than kill them or acquire them. Uber is building on mass, FreeNow as well. And then we have applications startups that actually started as a mass from day one, like Citymapper, and even my own Urban Air; and also Google Maps, right? Because that has a mass section to it. So where do you see the mass platforms in this in this whole scenario? Everything is is a bit of a mess right now, right?
Santosh: Yeah. So, I think you’re going to see a lot of these platforms turn into the integrator. And actually, they don’t care necessarily what asset you need, they want to best match the asset to your trip need, and getting you somewhere in either the fastest period of time, or in the least expensive way. Right, depending on who you are the situation you’re in, you have different sensitivities to that. With that, I think, in the case of Lime, I think it’s very smart that they’re they opened up and they’re willing to embrace some of the local players that might be in the the markets that they overlap in. You saw here in the US through last year, a lot of the major cities, because there were scooters littered everywhere, right, there was vandalism, there was that just general misbehaviour, they started capping the scooter companies: ‘Hey, you can only use X hundreds of scooters in my city. And we will think about whether we increase that cap, but show to us that you could be responsible with what we give you.’ So, I think it was Bird who actually came out and said: ‘We will white label and like to be a franchise.’ Because what Byrd realised was – we won’t have asset availability, we need to have density of assets around the the key populations in the key routes – which I thought was very clever, because they’re actually inviting independent operators to come in. And what you get as an independent operators is that your asset will show up in Bird. So they’re doing lead generation, if you would, on your behalf. But for Bird, they don’t have to be necessarily as responsible for the upkeep and maintenance of the assets, which is one of the biggest costs when you look at their unit margins. So, I think in a similar way, what Lime is doing is super interesting, and my personal belief is that in areas that involve last mile, you tend to see that there will be players that might own a certain region. But it’s very hard to have that national or international presence that’s consistent, and that’s economically viable. So I think Lime can tap into the best operators in the cities, they operate and augment their asset base. Equally, you mentioned Citymapper, Google has ambitions here, Apple has ambitions here to supercharge their mapping platforms. I think equally, you’ll either see them plug right into the networks themselves, or facilitate some kind of a partnership with more local providers. I would assume though, that in going down that route, they might not necessarily have the full density of assets, because we still shouldn’t underestimate the fact that there are so many hundreds of Birds, so many hundreds of Limes out there in the wild.
Mihai: Right. So then to summarise, you see this as two steps if I got it right: tree planning and then integration for payments, right? To have this final solution for city.
Santosh: Yeah, or you could go the other way. Because in my head, it depends on where you’re trying to sell into and who you’re selling into. But in the US most cities and small local government, they don’t have a way to manage the finances or the payment stream coming through. Oftentimes you’re using an old vendor and a spreadsheet. So that’s where we’ve found a variable to come in, help them own the payments and open up this multimodal capability, they feel like they’re starting to own the mobility experience around them a lot sooner, and you can integrate micromobility who is very willing and open to engage your city authorities.
Mihai: So then, I would ask you, how do you see in the future? Is it even more fragmented than today in terms of operators and brands? Not necessarily the experience, because we have unifiers for experience? But, in terms of actual businesses doing it on the ground? Is it going to be more fragmented? Is it going to be a few big players around the world? Or maybe just two players per city? And, also a curiosity of mine, you think that the, you know, state run operations have a chance in this? Or should we ever see scooters ran by the city’s?
Santosh: Yeah, I think in in the medium term, I would be shocked if there are a handful of players actually servicing the assets, right? I think you will see a world where you have the experience layer that’s owned by a few key players, probably broken out by region. So you might have two to three that own Europe, two to three that own the US. Asia tends to have their own players their own ecosystem. But I think similarly, two to three across Latin America. But underneath that, drawing from our supply chain side of things, we tend to have assets and asset maintenance. Everything that is involved with that, especially in this hyperlocal dynamic, you’ll likely see a lot of these vehicles practically owned and maintained by more local or regional players. So there will be a fragmentation in that part of the stack. Now, what that opens the door for is, this could be great for private equity, right? If you’re practically operating the assets, maintaining the assets, if you’re able to get a platform and start rolling up players and getting operational benefits on the back. That’s where I think you really stick capital play, not traditional VC, but our friends in private equity. Get a question around cities.
Mihai: Yeah. So what’s up, it’s almost vehicles and smart cities for the future mobility.
Santosh: Hmm. So, cities are undergoing a massive change this year, right? You’re seeing entire street blocks that don’t have shops any longer, restaurants are closing right and left. So, I think in the near term, cities are going to be focused on stimulating those businesses. Main street back, trying to get economic activity. And that’s going to put a pause on any efforts there were around the re-creation of cities, or building the smart city of the future. And the smart city of the future goes hand in hand with being ready for autonomy. Now, the good thing I think, is they still probably have about seven to 10 years till you see in the near term, level five, autonomous vehicles, going through city centres. You’re talking about one of the hardest, most difficult environments. A lot of unknown unknowns, as we call it, for an autonomous system to be able to handle. Might be even longer. And I’m saying that as an investor, right. But it is coming. So I do think it’ll happen. But right now, for the next three to five years, I think cities are just trying to stimulate activity, and then they’ll turn their sights to: ‘Okay, how do we refocus in or out smart city?’
Mihai: Yeah. We’re still waiting for more questions from the public. In the meantime, I’m curious, as well, from an investor perspective. There’s a lot of disruption happening, and how are you as an investor looking to profit from from the trends? And also, what are you looking at, when you’re investing, in terms of company or founders?
Santosh: Yeah. So for us, we look at the world through B2B. And we can break it down in a few different levels. So we’ve been talking about the payments stack, but you have an operational stack, you also have an information stack. The information and data coming off of our mobility habits should not be taken for granted. And, in fact, that can actually help you iterate and improve the system faster. The difficult part, and we’ve discussed this for the last five to 10 minutes, is where did cities come in? Right? How do you work with the city? How do you sell into a city? The sales cycles tend to be very different. They are more political because of election cycles. Budgets can be established one year and removed the next year. So, it tends to be a place that we have to spend a lot of time evaluating and understanding the dynamics. Given we come in very early as an investor, I think, like most seed investors, we’ll tell you that the team is 80% of the decision. And we break that down and distil that into what we call founder market fit. Why does this team have that advantage insight and the intangible qualities to go knock down that opportunity, and be the winner in this space? Now, we have the benefit that when we talk about things like mobility, there can be several winners, right? These markets are just so large, it’s unbelievable. And I think other VCs who are coming into the space, or who might be more generalist, are realising that there’s not necessarily a winner take all dynamic across the board here. But the next part is the market. Right? Understanding not just the size, but the structure. If I need to sell the solution in, I need to get the blessing of these three individuals at a city level? Or do I need to go integrate with somebody like in Urban Air in order to really make this work economically, and for my business model to work? And then the last thing is, what have you done so far? Are you, you know, you might not be generating revenue, which is okay for us at Dynamo. But walk me through how you’ve used real customer feedback to build what you have in front of you. You’re not building just in a bubble. And if you have revenue, that’s great. Talk to us about it. How did you get it? How did you work through the sales process?
Mihai: Yeah, I think mobility is a very, very broad space. It’s for me, personally, is very attractive, because I think urban mobility just impacts so much of human life, like even health, real estate, you know – job opportunities, social layers. Everything is impacted by access to mobility. So I think it’s a good catalyst. From an investor point of view, I think it’s also very highly capitalised. So you’re always facing the big guys, which are getting even bigger by the day. So I think it’s tricky to be an investor in that space, just because of this high pressure in all areas. But in any case, we’ll just take a very short ad break, and we’ll be back in like, less than one minute.
Mihai: And we’re back, and Santosh, we’re going to start with a question from the audience, which, which I love. And we will take this answer you will be having and translating it into Romanian and submitting it to the local mayor’s office. Because we need solutions. And we also have a new mayor who is very open to stuff. So, Marga is actually asking what are the first actual steps of city can make in order to have more shared mobility than owner mobility?
Santosh: Yeah, wow. That’s a loaded question. So, I think the first thing it sounds like you might have is somebody who’s open and receptive to it. And what we’ve seen is having that that openness, that willingness to entertain micromobility is key, if somebody is just not willing to make investments or pull together a partner in order to change the mobility landscape, that’s going to be difficult to do. And oftentimes it has to do with: ‘Hey, in my prior year, I funded the bus service. So that was, you know, that’s what I did under my my watcher.’ We don’t have budget to go around. So I think that the second thing also is being clever about it. I think there are ways here that you can get the capital, it doesn’t necessarily have to fully come from the city. The city needs to create the appropriate environment. Around the environment, we’ve had the benefit here. We’re in a small city here in the US, and they’ve put concrete barriers and have built bike lanes and they have clear markings and it’s a rather bike friendly city. And when we’ve found city leaders waffle or be hesitant on micromobility, it’s because of safety. They think that it’s not as safe. Well, you know what, people have been driving about 20% less this year or through the front half, but a kind of incident rates have actually gone up a little bit, they have steadily gone down in vehicles, and understanding that micromobility actually helps the broader stack. So having the data. If you’re able to collect the data, gather the incident data, go to an open minded administration, who is willing to be creative and bring the stakeholders around, I think you can get something done. And how you practically do that is that you walk them through that this is going to be a pilot, let’s do it in a small part of the city, let’s make sure that we’re responsible about it. Within the success criteria, we make sure that scooters are kept clean off of the roads, they’re off the sidewalks, they’re available in the areas we say they will be, they’re fully charged, and see how it goes. And then pull the citizens, pull them before, pull them at the start, in the middle, and at the end. And I think what will prove out is that in urban environments, people will use it and will find it valuable.
Mihai: Right, so it’s about just the administration should give support. And companies should be proactive about it. Right. And I think Bucharest, of all cities in Europe actually, is the one that can benefit the most, even if people don’t really understand it, because we kind of have that same paradigm that we love owning stuff. We love owning cars. And then Bucharest is the first in terms of traffic congestion in Europe, of all big cities. Number one in Europe, that means that the time it takes from point A to point B can be very different in low times and high times. That just makes it unpredictable. Yeah. And we love owning stuff. And everybody owns cars. And we are the second in the world in terms of homeownership. So we just love it.
Mihai: Yeah. But I think it’s a big problem that we’re facing. And people will see that this solution for me it changed my life, just travelling multimodal shared mobility, and not actually driving by car. It just saves so much time. It’s, it’s incredible. And to be fair, I think ride sharing has contributed to this. Currently, there isn’t any capping on that. And of all options you have from going to point A to point B, actually, ride sharing is the worst. It’s even worse than your own car. Because there will still be that segment that the dropper is picking you up from, which can be 20 to 50%. And then if it’s, also if it’s affordable, then people actually give up public transit in favour of ride sharing. So, and that just adds up so much to traffic. So, mobility and multimodal solutions can actually be a big chance for European cities, for the US cities. In each situation can be a different mix, but it’s all about shared, right.
Santosh: And I would assume over there similar to the US, like the vast majority of trips are under five kilometres, which is about three miles or so here, if I remember doing the math right. And it’s in those areas where you see the congestion being created. If you have a micro mobility or a multimodal substitute, you can reduce congestion, free up everybody’s time. And it’s also a lot less expensive at the end of the day. So there’s a total cost equation also that, that’s worth exploring.
Mihai: Yeah, there was a study saying that central London memberships can be disrupted by 75% by micromobility. So we can just switch rooms. And it just because you touched upon the point of costs. It can be less expensive. Well in Bucharest, it’s actually not, because taxis are so cheap. So how do you see the economics of the industry? Will it ever be profitable? And what do you see as the biggest factors in a cost structure that can be optimised? Where can we add the cost going down to maybe insure mobility?
Santosh: Yeah. So probably the biggest knock everybody who was not an investor in micromobility networks had was the unit economics still makes sense. And I think what you’ve seen is, over the last 18 months or so, of the large players have actually pulled back from the small midsize cities, that there was not a path to unit profits. And what that’s actually ultimately identified, roughly speaking, is that you need about six months of temperate weather, a relatively warm weather. And I’ve said before, like you tend to be around the Equator, but that’s not necessarily so. Cuz there are other effects of weather: mountains, ocean currents. But, like here in the US, I would generally say the the bottom half is great for micro mobility, and scooters, specifically. In New York, you’ve seen this pocket wood city bike that people bundle up. The bikes get equipped for the winter, and people will use them in and through the cold months. But largely speaking in the scooter world, you need to have warm climates. Spain, Lisbon have been great. Brazil has been really great. There’ve been countries in Asia. And Asia has long embraced forms of micromobility, right? They might be gas powered, but the scooters, the tuck tops bike sivan. So Asia is arguably been maybe ahead of this trend. But when you break down the scooters, there’s a study I think McKinsey broke it down. And they think actually, from pre COVID, to post COVID, because city regulations are going to turn more favourable, because this is arguably a safer way of getting around. And that industry consolidation is going to lend itself to pricing power, you might see margins expand from 15 20% to 20 to 25%. Now, I don’t know how true that is, people make jokes about consultants all the time. But that actually makes a lot of sense if you’re able to reduce the regulatory burden. And you’re actually able to make the assets themselves a little more affordable. There’s something here that you will see these these providers find the right model. But, going back to my previous comment, they’re going to tend to own a city or a cluster of cities in a region. And that’s not necessarily the same thing as being this large company that owns everything across the country, or the world. So it might actually end up following a lot of things we’ve seen in supply chain with last mile delivery. And if you just think of this as last about delivery of people. There’s some parallels here, and we should pay attention.
Mihai: Right? So we’re actually, just for everybody watching us, you’re asking questions, sometimes we touch upon them without actually reading those. So that was a very good answer for Marius Zaharia’s question right before: ‘Which area of the globe is likely to be or already is, an aggressive, early adopter of micromobility.’ However, Ensar is asking us: ‘The market seems oversaturated with mobility startups, at least in Europe. Many of them shrank their business in the last few months? Will there be another mobility boom in the tech sector?’
Santosh: Hmm, that’s good question. I don’t think that it’s going to be either as an operator or an aggregator, aggregator integrator. I think you’re going to see those players kind of continue and see how that shakes out, before there might be another boom. But where there is opportunity is in all the picks and shovels, if you would. So I heard, I forget who it was. I think was Oliver Bruce, or say do a micromobility IO. But they drew the parallel that the electric motor is to the scooter and the bike, as compute and silicon is to smartphones and laptops. So there’s still a lot of opportunity. And this gets deep right into improving electric motors, and then thinking about the actual system on a scooter or a bike. So there’s certainly ample opportunity there. We looked at a couple of startups that help with autonomous repositioning of assets as well. And the one we spend quite a bit of time discussing here internally. So it’s all about enabling and equipping at this point. I think that’s where you’ll see some more activity. But I don’t think you’re going to see a meaningful amount of overnight venture backed startups showing up doing the the integration aggregation or the network, operations space.
Mihai: You’re maybe referring to Tortoise, was it? The autonomous e-scooters? That’s really something I mean, it’s and it’s actually happening right now. I’ve seen it in a few cities. Adriana was asking, well, it’s a question for both of us, I guess: ‘How are the rules and regulations of every country, or even city, impacting the balance between shared and own mobility?’ And I, just my take on this, is that I think, even more than ride sharing, this is a subject that the local administration has a lot of control over. And their approach will impact a lot the way the mobility in the city is shaped. And right now we’ve seen a lot of cities pass regulations, and even our own Cluj in Romania actually passed regulation for shared mobility, just recently. And we’ve seen that there’s different approaches in different cities. And you might see a capping of the number of companies that can operate in some cities, down to two or three. And some other cities, like, I think it was Copenhagen, would open up to 10 or 20, just to make sure that they have a lot of competition, as long as they can survive, I guess.
Mihai: There’s different approaches. And Helsinki, also a very good example. They actually made it mandatory for providers to be integrated in mass solutions. Because of course, if it is a public service, people need to have proper access to it. Even in Cluj we have a similar thing in the newly passed law. What is your take yet?
Santosh: So, I’ll pick up the back half of the question. For cities who are not willing to pilot and then institute micromobility networks, you’re going to start to see a subset of citizens. But I think like me, they will own their own scooter, or their own bike, and are more than happy to ride it. So, one way or the other, the citizen in most cities and countries will find a way to solve their problem, or so I think. And before it might become a nuisance, or you’ll have to think about policing regulation, it makes sense to come to the table and not just say: ‘No, we don’t want to do that.’ or ‘We want to go through all this process.’ Just have enough process to try it out and test it. That’s easier said than done, right? We’re startup people. Cities are not startup people. So they do have certain stakeholders and certain kind of protocol that we just have to be mindful of.
Mihai: But we definitely definitely saw after the ride sharing revolution, that they are much more attentive, at least, to tech companies trying to disrupt mobility. When Uber was starting up, I mean, nobody was actually looking at them, until they were too big to be able to be controlled. But now it’s quite the opposite. Right? You have the first e-scooter company, and then the mayor’s office already passes the law in Romania. They don’t usually move so fast. So it’s obvious there was an impact.
Mihai: I mean, you guys are actually specialised in supply chain as well. And you’ve touched the subject a bit, just before. Alan Clayton was actually asking, a second question from him, that he’s saying that : ‘We invested in upcycles in New York to try to introduce the micro container. Do you think micromobility as a local delivery or commercial solution is coming? For example, electric delivery bikes, including the post office use, or even micro equivalent of the shipping container? Which is very interesting for citywide logistics?’
Santosh: Yeah, no, I think cargo bikes like whenever I’m out in Europe visiting or have business travel, I’ll usually always stop at a post office to watch the the cargo bike operations. And it’s not, it’s not normal here in the US, and a lot of it has to do is that we’re we tend to be spread out. While we do have major cities and hubs, a lot of our population is in very rural remote areas or just less dense areas. But I absolutely think in high urban, high density, high package volume areas, cargo bikes should become a norm. You’re seeing UPS pilot versions of this in California. I think they also had a pilot up in Seattle, if I remember remembering correctly. So, it’s happening. To your credit in Europe, I think you’ve been ahead of it. It’s not novel, it’s a part of your last mile ecosystem. On containers. I don’t, I don’t know, I haven’t thought about it enough. I think of a cargo bike and your hold as a container of sorts. I don’t think you’re going to get anything that’s remotely the size of a sea container, going through a micromobility experience. But I do think because cities are putting in these protected lanes, you can see things that might be remote controlled, and over time becoming autonomous in terms of a cargo bike in that bike way.
Mihai: Right, right. So, I mean, we’ve just been through the first wave of COVID and that was just a rollercoaster ride. Looks like there’s a second one second one coming but I guess people are more chill about it right now. We kind of found our place in this lifestyle I guess. But Vladimir is asking, you know, in hindsight: ‘Was the logistics tech business as usual during those months, or have you seen some major changes in the industry?’
Santosh: So to make sure I understand the the question, has there been any change in kind of seasonality and habits in logistics?
Santosh: So we, we have, what? 10 months of data. So I can’t say definitively. But if you were to talk to all the large operators, be it ocean trucking, warehousing, or even the last mile, around micromobility. Everybody’s saying, like we’re operating like we would during the holidays during what they call peak season. They said, it doesn’t feel that different in most weeks, and a lot of it is driven by e-commerce. So you are seeing larger volumes. I do believe that those volumes are here to stay. So we have accelerated the growth of online purchasing, and then the requisite online fulfilment. I mean, it’s going to go away, necessarily. So for now, there, there has been a meaningful change. But I think we probably need two to three years once we’re through COVID, we have the vaccine distributed, populations have adopted it, to say: Okay, what have we gone back to? And only then can we truly tell.
Mihai: But during this time, I guess there are a lot of opportunities for for technology to help the logistics, since they’re just operating so differently than a few months ago price.
Santosh: Yes, there has been a strong change in sentiment as to how do we buy technology sooner? How do we implement it faster? How do we get value from it faster? Or else, you’re going to be saying no to revenue, or if you’re just not going to be making any unit margin, you won’t have gross margins.
Mihai: Right, right. So I mean, I’m just gonna ask you to give your opinion on this. You’ve just said that Uber also said that they are not expecting to get business back to normal. So how much do you expect that micromobility can actually disrupt ride sharing in the end? I mean, we’ve had, in my vision 2019 was the peak. And I always thought it would be the peak anyway. Because right, you know, micromobility just disrupts a lot of the central areas. But how much in the end, do you think it will be split between ride sharing and micromobility. Be it owned or shared, I guess.
Santosh: I think, if you think about that, the vast majority of trips by car are for short distances, and let’s say kind of three miles, five K or less, right? Even my home. I live in, in what you’d call suburb or outskirts of the city. And I think I’m maybe six, six miles away. You can ride micromobility there. And I forget the statistic, but a couple years ago that this was done, this math was done. And I think those short trips, because of the behaviour change this year, and people actually experiencing this is faster, this is easier, this is more affordable, it’ll be hard to get those trips back. When your ride hailing, or thinking about using ride hailing. It’s much more efficient to use micromobility. So I do think you’ll see some share there that micromobility will keep shared or owned. I’m not, I’m not distinguishing that. So I am a believer there. And in regards to where that is relative to 2019 levels – maybe we meet them, maybe that was not the peak. But these behaviour changes require shock, right? COVID shocked us as a world citizen base, as people. And now does that behaviour stay with us? It’ll be interesting to see. I’m saying it will it takes like 21 days to make a habit, if I remember right. So why should I think otherwise?
Mihai: I counted quite a few 21 days since this all started, so.. Based on the data we had from from ride sharing in Bucharest, the average trip was was roughly seven kilometres. And you know, on preliminary data that we have right now on micromobility mobility, is like three to five kilometres. So that’s kind of too close for comfort, I guess. So my point of view.
Santosh: Almost there. Yeah.
Mihai: Yeah. And right. And we didn’t have the support of the administrations.
Santosh: Yeah. And there’s also more people willing to walk, right. I think this year there’s been a more of a mindfulness instead of sitting in front of zoom all the time. Can I take 30 minutes and walk to get my lunch? So that, those two kilometres, people could just walk that.
Mihai: Yeah, yeah, exactly. So Monica is also asking: ‘Did you see some major changes in customer behaviour and mobility patterns during this two, three years? And if so, how these changes have accentuated in the last month?’
Santosh: Hmm. I don’t know whether..
Mihai: Three years and then Covid, right?
Santosh: Yeah, I don’t know whether I have the the cold hard data. But like, anecdotally, whenever.. I travel quite a lot, I spend half of the month, usually on the road. And I’ve noticed my habits changed. And when I was working in visiting other people, we would in San Francisco, not get an Uber, like we would have maybe four or five years ago, we would actually go say: ‘Pull up your Bird app, pull up your Lime app. Can we find a couple and we could take them to lunch, or to dinner, or to go have a drink?’ So it has been meaningful. But me, I might actually have better data than I did on that firsthand.
Mihai: Well, I mean, in terms of ride sharing, at least, the local market is just exploded. Taxi, the taxi industry, actually, I think we had one of the highest number of rights per person for taxi cab in Europe, just because there’s so cheap, and public transit was kind of shitty. That hasn’t changed a lot. And then with ride sharing became even more accessible. So the market I think, probably even tripled in the past few years with ride sharing, I mean. And I speak, I’m guessing it was nearing 1 billion euros a year, Romania alone, so that’s..
Mihai: Yeah. It’s because when the, you know, the state doesn’t work then privates try and solve issues. That’s why it’s good to be an entrepreneur in Romania. There’s lots of problems.
Santosh: Yeah. Yeah.
Mihai: And I was keeping the last question, because we have to wrap this up very soon. And I guess it’s a bit debatable, so it’s a good way to end this discussion from Ada. She’s saying that everybody is talking about advantages in tech, of tech in micromobility. What can you tell us about the security risk that tech is bringing?
Santosh: Yeah, oh, it’s high without doubt. If if you’re not properly securing your your endpoints, right, be it a scooter, be it a connected car. There are bad actors out there who can take control that and do unfortunate things. I think a car poses a huge safety risk because of its size and its weight. And also the ability that if you can control it, and if it does have an autonomous capability, or even a semi, or an aid as functionality, could you do something bad with it? I think naturally, it’ll be terrible if something like that happens with a biker scooter, right? Because they could still do harm and hurt people. But because they are more realistic for the environment; they operate in, right, in city environments, going small or short distances, they tend to be less weight. There’s less risk there. But I think going into the new year, at least for us, we’re spending more time thinking about what is the cybersecurity risk sitting here? And does that require a special solution, or somebody in the market is going to come and provide that security solution? I don’t know yet. But a lot of people are thinking about it. And it’s going to be more in the headlines, because as vaccines get distributed, how do you secure that? How do you monitor that? How do you make sure that there’s no bad behaviour going on?
Mihai: Right, right. I just have seen like a recent article on Tesla, the self driving feature that they have. There were some, I guess, they could be called hackers. They were hacking the behaviour of the car using outdoor banners. You know, just putting signs up. And you know, the car was basically malfunctioning in terms of autonomy. And that’s, that’s pretty scary, right? Then that can be an opportunity for investment, I guess. If like special solutions are required. But just having somebody take over? Well, now it’s almost three tonnes, right, of a car, with the electric ones, and, you know, driving habits. That’s a pretty grim scenario. But in general, it’s not good to end on a negative note. So I will just say this will never happen in the future because we trust tech and take cybersecurity solutions, right.
Santosh: Yeah, we’ll, we’ll get ahead of it. I have confidence that the founders on the line are queued in and you have a big company potentially there to be built.
Mihai: Yeah, so just to wrap it up, I would say that I don’t know if we answered a lot of questions, and it’s definitely some. There’s a lot of disruption happening right now. But I think it’s an exciting time to be alive, except for maybe the last few months. So, but in general, I’m positive about micromobility. Would you have like a closing word you’d like to address?
Santosh: Yeah, I think, you know, we’re super excited as a group here at Dynamo to see where micromobility goes, we think it actually makes the broader system of transit a lot more efficient, a lot more cost effective, and also available to more people, having that essential capability of going from point A to point B. And, you know, this year has, I think, been, as a global citizen here, has been very different. But I think we’ll all come together and end up better for it. So looking forward to that in 2021. Let’s see what happens.
Mihai: It’s also positive. Thank you Bogdan, and thank you everybody for joining us. So it was interesting for you guys. That’s it from us.7
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