tectonic changes: mobility players are starting to form their alliances. Finally!
Boy, oh boy! So much is happening in the mobility industry right now.
All players are on the field. Kicking the ball: traditional automotives (well, most of them; some sleepy fellows are still dreaming), major suppliers (which are holding a big chunk of the mobility value chain) and internet & software giants. All are looking out for new alliances. The deal-making is on. Finally! It has taken some time until this rocket ignited. Now it’s on fire and flying at full speed…
What we can witness these days is nothing less than the start of a major tectonic shift in the mobility industry. And believe me, it’s happening while you read this. It’s fascinating. New networks are being formed. Everyone is preparing for the battle. Which battle you may ask? The one on shaping the future of mobility, on planet mother earth. Nothing less.
And the question remains: which constellation (=alliance or network) will have the best chances to win? Very rapidly, all players are talking with each others about their strategies, their tactics and of course their bets on the future. And obviously: all of them are looking for successful mobility startups. The match-making is happening. It’s like a huge dating ceremony: “Hey, you like italian food, too? Wanna have three kids eventually? And live in the countryside? Or rather in the city?” If the match is there: boom. Marriage. Or they move into one apartment, together. Hope you get the metaphores :)
In 2012, when I started door2door with my co-founder Tom Kirschbaum, and we pitched to investors about the sphere we’re operating in (mobility service industry), 99% of investors gave us a bored sigh while looking very excitedly at their brand new purchased iPhone 4s. Yes, a beautiful phone, indeed. I loved it, too. 2012 was the time when companies like Groupon, Zalando or Soundcloud where the spaces that (european) investors loved. Making them not sigh, but activating their appetite to invest. Well, we weren’t in that area of appetite, yet. Imagine: Although Uber had been already three years in the market in 2012 (founded in March 2009!), they had just begun to start their global trail. Uber’s first step towards “attempt-for-world-domination” started in Paris, and London followed around that time we spoke to investors. No one, honestly, no one believed too much in the mobility sector. No one cared about ride sharing, autonomous vehicles or mobility-as-a-service platforms. No one imagined that in 2017 Uber will have a valuation around 70-billion US-dollars (2017), being more valuable than Ford (48 billion USD), GM (50 billion USD), almost hitting Volkswagen (70.5 billion USD), or Daimler (71 billion USD). And by the way: no one took Tesla seriously in 2012, with today’s (over-?)valuation of 51 billion USD.
Five years later, our company door2door is in one of the sweetest spots one can imagine. And when today an investor asks about door2door’s activities, it’s not a bored sigh any longer, but an extremely excited “wow — we must meet quickly and do business!”
How did this happen?
In my observation, there are three major catalysts that ignited today’s earthquake.
Catalyst #1 is clearly GM’s substantial investment of 500 million USD into Lyft, early 2015. That was a game-changer. Until then, all (!) traditional automotives were pretty much absent in building significant alliances with internet companies. Yes, some minor bucks here and there, but nothing with real weight. Suddenly, GM-CEO Mary Barra was the first to take this seriously: backed by Wall Street, GM started to go on a shopping-tour, with somewhat 2–3 billion USD in their pockets. Soon, Ford followed with substantial startup-acquisitions, such as Chariot or Argo with 1 billion USD.
Catalyst #2 is what I call the “awaking up of the european automotive industry”. Obviously, many heavy-weights in automotive are based in Europe. Daimler, BMW, Volkwagen, PSA, Renault — just to name a few. Once they saw the their US-competitors moving forward aggressively, they finally followed. With different strategies. (In a next article, I’ll write more about that). And not only them: especially the powerful automotive suppliers have entered the arena. Suppliers like ZF or Continental, as an example, have very exciting scenarios and see huge opportunities for them. Eventually, all european automotive players are now “active”!
Catalyst #3 is something I love to call overcoming the myth of “we can simply do it ourselves!” This section I will dedicate a bit more of our attention. Especially european OEMs, the players mentioned above, have finally understood they cannot win this battle alone. By themselves. This myth, build in some parts on arrogance, and to be honest: on the huge financial successes of the last decade, is coming to an end. Adios amigos.
Just three years ago, major OEM-CEOs were not too shy to tell me in private: “Ah, all this internet stuff won’t really affect us. The world still needs cars in 20 years.” Well, yes. We still need vehicles. The question is: Will one make substantial business building a vehicle? Or won’t the value chain develop towards providing mobility services? The business model in mobility will change fundamentally. Away from buying a car to buying mobility services.
Well, that’s where it becomes delicate. Particularly europeans (and very much: my fellow germans) have a huge problem here: we think in products, not in business models. We are engineers. Perfectionists. Always on the hunt to improve and optimize. That’s why europeans build the best cars. We optimize our product with excellent engineering. And we have a core belief: With better engineering, we get better products. Now the big problem is: with better engineering, you don’t get to better business models. No investment into your own R&D-department will innovate your business model. Your products get better and more competitive with own R&D. Yet, all within your existing business model. Now, what happens though when your business model is coming to an end? When it’s not about selling a car and making money with repairing it (after-sales)? When you don’t need product innovation, but business model innovation? When the future won’t be about better cars (better product), but new mobility services (different business)?
Today, european OEMs more and more understand this challenge. Or at least: many of them. And they know: if we want business model innovations, we cannot build them inside our companies. (Academical smart-ass side note: you can ask any system-theory scientist why this is the case— he’ll explain that phenomenon to you: systems — for instance a company with an established business model — always stabilize themselves to create a stable identity. If you want to find out more, you can read about Self-Reference or Autopoiesis). Based on this knowledge, all OEMs are now on the hunt. Goal: finding successful mobility startups that can leverage their activities, helping to introduce new business models and building a network of strong alliances to win the battle.
The tectonic plates are moving. A new world of mobility players and alliances is about to evolve.