Why we invested in Mob-ion
At OSS Ventures, we build and invest in world-changing companies specialized in operations. We think that in the next 10 years, a complete overhaul of our production model will be done.
About 96% of the economy falls under a simple model : market instant needs / design / build / sell / trash. This model environmental externalities are not priced in the product, which makes it financially viable, but it is killing our planet. This model also pushes for mass production and low usage life of goods, which in turn pushes for lower and lower production costs, which naturally pushes for low wages in countries where the social contract is as inhumane as possible. Over the last three decades, extreme tension on supply chain, offshoring to countries with very low standard of living became the norm, and entire empires have been built over that paradigm.
However, over the last three years, things started to change :
- Covid wrecked long and complex supply chains, which have still not recovered, and laid bare the dependence of entire parts of the economy to very unresilient production models ;
- Uproar of the lower class of developed countries where blue collar jobs got wrecked led to populist uprisings, and public sentiment towards reshoring ;
- Environmental pressure is rising and while legislation has lagged and environmental externalities are still not priced in the economy, companies feel the pressure to pivot their production model.
Part of our thesis at OSS Ventures is simple — that entire parts of the productive economy will be replaced by circular, regenerative models over the next decade. Schematically, it means pivoting from market instant needs / design / build / sell / trash to market intemporal needs / design / build / rent / repair / redesign / rent / repair (…).
This model is mighty hard to pull off for numerous reasons, and early attempts in some categories (fair phone, …) have been less than stellar. Ultimately, the hardships we saw time and time again in this category can fall under a limited (but sadly, not exhaustive) number of pitfalls :
- Adding repairability on top of designs for planned obsolescence products is (mostly) a dead end : While Backmarket (repair & sell phones, dishwashers, computers, …) thrives, other models are struggling. The economics of this model are hard to find because products have fundamentally been designed for planned obsolescence, so trying to find an economical model for repairing, accounting for inverse logistics and repair costs and acquisition is mighty hard ;
- Designing for timeless style is hard : marketers and product builders all around the world work hard on constantly creating needs for “the new thing”, trying to trick entire generations in time-boxed trends. Designing for timeless use is hard — but possible, take a hint from luxury companies ;
- Designing for durability is hard : that last 20% of durability is mighty hard to achieve from a product development standpoint. It requires loops around the product usage, innovation in materials, innovation in production capabilities ;
- Financing a higher upfront cost for the product is hard : more durable goods are more costly. Period. So there is always a question of how to finance this — would a client be ok with bearing a higher upfront cost ? Is renting a more sound option, but then would a bank, or any other financial institution, be OK with bearing the delayed reward profile ? Would that reduced gross margin still be coherent with venture backable business ?
With our investment and builder team, we were always on the lookout for companies proposing innovative ways of circling around those issues, and incredible founders putting the energy and the vision necessary to pull this off.
That’s when we met Christian.
Christian is an old-timer from the early web days. He created and sold an online booking company years before booking.com. He was then a founding investor in alloresto.fr sold to Just Eat Takeaway. He had been through hell and back during recessions and already made a fair bit of money in his time.
So why bother creating another company and not just chill on a boat ?
That was, funnily, because he chilled on a boat that he came about the idea of creating a company. He bought a boat that he put on the Seine for party and leisure purposes. That got him to repair the boat. It was an ancient boat. And he realized that this boat, which had been created a while ago, was almost entirely repairable. Very unlike modern boats. Which are not repairable.
Concerned, as we are, with the current environmental and social crisis, he began to dig up the issues of repairability and came to, basically, the same conclusions as OSS Ventures. Six years ago.
So he went on a mission : creating a circular, eco-designed and remanufacturable e-scooter.
Why a scooter ? Because, if you think trains are going to be a large part of the heavy duty of the future of transportation, the last mile is always going to be an issue. Last mile transportation is responsible for 60% of all kilometers that are not decarbonated right now. It’s also a major social barrier to getting a job in rural areas, because cars are expensive and so are scooters. It’s also what delivery workers use (or should be using) for food, last mile delivery, etc …
Instead of just buying a company full of industrial designers and industry specialists, Christian hired a bunch of like minded nerds and called his former buddies from Just Eat to cut a deal with them to serve as a territory of experimentation. Christian decided to transform domestic scooters into delivery vehicles thanks to a box support system at the rear. But these scooters accumulated technical and sealing problems and it was when Christian decided to find a way to extend the life of these vehicles that the notion of #PlannedSustainability emerged. In order to better understand the market and deploy a sustainable solution, Christian and his team have launched a whole series of studies. A total of 240 scooters have been studied over more than 5 million kilometers.
For two years, the team worked on sourcing Chinese suppliers to do the new parts, and then in-sourcing those parts, and re-engineering parts, until they got the scooter “right”. “Right” as in 73% fully reusable. “Right” as in 11x total life of components. “Right” as in 11 times lower impact on the environment. “Right” as in leveraging electronics (reusable also) to have software/hardware deep integration, a level of technology only known in Tesla cars (we know, we’ve been there). “Right” as in replacing about 40% of the total cost from materials to reshored, skilled, good jobs near consumption point.
Today, Christian’s model is based on several levers: the constant search for renewable and reusable materials, maximizing the “repairability” of parts, as well as reducing industrial waste and effluent discharges. Thanks to the design for disassembly, all the parts that make up the scooter can be disassembled, recovered and reassembled afterwards. We are at the heart of the remanufacturing which makes it possible to put a used part in a state of performance and warranty conditions identical or superior to its original condition.
Christian being Christian, he also found an abandoned factory in Northern France to start a production ramp and started getting contracts.
When we met Christian in his factory, the model got clearer and clearer.
- Long term rental of the scooters was the right solution. By renting it, one could have “repair mobile fleet” of repairmen on the road with almost-instant repairing of the scooters ;
- There was a clear and strong market appetite for the model, with a lot of backlog already signed ;
- The financial equation, while not quite there yet, can be solved by leveraging a smart mix of bank help, economics of scale, and small upfront, to get an offer that is just better than the alternative (renting a trash scooter, or buying one).
But what struck the team was more than that :
- The vision of Christian and deep care for the environmental and social impact of the model ;
- The grit with which, alone in some small town, he got heads down for years on perfecting a model and how advanced he was in product development ;
- The potential scale of the company.
The perfect mix of vision, grit, huge market, impact on the world was too good to pass on.
We wired the check after two weeks.
Here’s to building another type of productive model.
Here’s to founders working tirelessly on a vision.
Here’s to Mob-ion.
If you enjoyed this story, maybe you’re a founder, an industrial company, or a mix of the two. We are always on the lookout for like minded people. Drop us a line at firstname.lastname@example.org, or come by our Paris offices !