INSEAD Emerging Markets Podcast

Mass transit as a last mile logistics solution for SE Asian cities - Onno Pfeiffer, co-founder of Diolko

February 28, 2023 INSEAD Emerging Markets Podcast by Nick Lall Season 2 Episode 6
Mass transit as a last mile logistics solution for SE Asian cities - Onno Pfeiffer, co-founder of Diolko
INSEAD Emerging Markets Podcast
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INSEAD Emerging Markets Podcast
Mass transit as a last mile logistics solution for SE Asian cities - Onno Pfeiffer, co-founder of Diolko
Feb 28, 2023 Season 2 Episode 6
INSEAD Emerging Markets Podcast by Nick Lall

Onno Pfeiffer is an INSEAD GEMBA 19 and is the co-founder of Diolko.

Diolko's sustainable last mile delivery solution leverages underutilized city infrastructure to improve quality of life for everyone by reducing both greenhouse gas emissions and traffic congestion.

Subscribe and follow the INSEAD Emerging Markets Podcast on SpotifyApple, or Google.

Show Notes Transcript

Onno Pfeiffer is an INSEAD GEMBA 19 and is the co-founder of Diolko.

Diolko's sustainable last mile delivery solution leverages underutilized city infrastructure to improve quality of life for everyone by reducing both greenhouse gas emissions and traffic congestion.

Subscribe and follow the INSEAD Emerging Markets Podcast on SpotifyApple, or Google.

00:00:00             NICK LALL

welcome to the INSEAD Emerging Markets podcast. Our guest today is Onno Pfeiffer from Diolko. Diolko is a last mile logistics company that makes use of existing infrastructure in Southeast Asian cities.

 

00:00:14             NICK LALL

Really exciting start up. They have been stealth mode until just the last couple of weeks I believe and they're finally live. Really happy and feel very lucky to get Anno in here now. Maybe we can start out with you just telling us a little bit more about what your solution is at Diolko and what you're going to be offering 

 

00:00:34             ONNO PFEIFFER

Thank you Nick. I really appreciate it and thank you for having me on the podcast. So yes, with Diolko we aim to be a pioneer in sustainable last mile delivery where we leverage both underutilized city infrastructure and green vehicle technologies, electrical vehicles and then each other technologies in the future.

 

00:00:49             ONNO PFEIFFER

What we're trying to do is create a shortcut into the city so that we can transport goods from outside of city where it's typically the distribution centers or the warehouses of our customers and bring those goods into the city in a green way. So traditionally what you already see today is for a grab or a food panda delivery services that have someone with a backpack inside of a metro or a train bringing a single food order. But what we're trying to do is doing this at an industrial scale so transporting thousands of parcels in each

 

00:01:16             ONNO PFEIFFER

train into the city so creating a capacity for these kind of delivery service but in a green

 

00:01:21             NICK LALL

That's really interesting and I love to see these sort of ideas that make use of existing infrastructure or are green in that way. So how exactly does it work is it just like in off-beak hours there are businesses coming and loading their package into some compartment of the train that isn't being used or how exactly does the solution work in

 

00:01:28             ONNO PFEIFFER

in that

 

00:01:39             ONNO PFEIFFER

Yeah, so the key thing is that if you look at what we do we're not adding new trains or like a cargo train to the network. We're really planning to create a hybrid model where we both have commuters and cargo onboard of the train or a metro for example. So what we do is during off-beak hours we use the last coach of a train, use that for cargo purposes and make sure that no commuters can enter the area so we keep that separate because obviously it's important to keep the commuters safe and make sure that

 

00:02:06             ONNO PFEIFFER

their journey is not impact. But what we effectively do is if you look at today's business models a lot of them rely on a hub and spoke model. So if you look at traditional businesses you have the warehouse, outside of the city I have these trucks, vehicles, fans, cars going to the warehouse, empty, pick you come in the goods and going back into the city and doing their delivery routes.

 

00:02:26             ONNO PFEIFFER

So what we're doing is we go to the same warehouse but with an electrical vehicle we pick up the goods, bring it to the closest train station, we put it on the proprietary trolley that we have developed and move that onto the train or the metro for example and then move that as close as possible to the final recipients and from there distributed further we're using again electrical vehicles like a bike or a van or a car. Effectively what we're creating is kind of a more distributed warehouse throughout the city, something what we call a

 

00:02:54             ONNO PFEIFFER

virtual hub. So instead of having one big distribution center we create this kind of multiple entry and exit points throughout the city and effectively reducing the time that you need to spend on the road. So that will avoid that way you can avoid traffic congestion, you can do it in a green away if you look at trains versus vehicles so in terms of CO2 emissions they also reduce the range of anxiety that comes with electrical vehicles because we only need to deliver or use those vehicles in smaller clusters instead of going back and forth from

 

00:03:25             ONNO PFEIFFER

outside the city

 

00:03:27             NICK LALL

That's really really interesting, it makes a lot of sense in terms of trying to be green and then also dealing with the range anxiety issue and I know a lot of these Southeast Asian cities have huge traffic problems so it might actually be beneficial for businesses to get their goods from what point A to point B in a faster time hopefully. What sort of businesses are your clients, either ones that you may have signed already or who you think would be the ones that you would you would aim for would make the best client the

 

00:03:52             ONNO PFEIFFER

Yep. So as you can imagine using a train the way one of do it doesn't work for one parcel. So really talking about thousands of thousands of parts to make it, let's say a viable from a cost structure point of view.

 

00:04:06             ONNO PFEIFFER

So we initially focusing on P2P segments so customers that have I will use and do the last model of resources for them. At the beginning we didn't know what to expect because green last model of delivery sounds great. A lot of people want to do that but when you have to pay for it it becomes a bit more difficult right people are a bit more reluctant.

 

00:04:27             ONNO PFEIFFER

So we didn't know how the market responded so we first talked with several segments. Think of obvious segment as e-commerce where we have a warehouse as a city and they need to deliver packages to their customers throughout city. There is also let's say retail and wholesale so it's restocking of the stores inside the city but also logistics firms so companies that have subcontractors but they want to do things in a green way as well but they might not have the interest to do the themselves that are very specializing in real. business, but they're not

 

00:05:01             ONNO PFEIFFER

in the green business. So we target all those segments. And the interesting thing is that even before we start our pilot, which is being planned for beginning this year, we already sign on five customers, five paying customers that are willing to work with us simply because there are no green alternatives in the market today.

 

00:05:23             ONNO PFEIFFER

So obviously there are a lot of firms that that are experimenting with green and they offer some kind of green solution, but a fully green dedicated service doesn't exist yet to add to the needs that they are looking for. So these five customers, they're on board, they're very excited and they're willing to to partner with us even before we start our pilot. So we're quite excited to get this response from the market.

 

00:05:49             ONNO PFEIFFER

And I think the interesting thing, especially here in Asia and this region, there are a lot of people kind of challenges. Is there really, are people willing to pay for green delivery? I think from a consumer point of view, there are still a bit of reluctance because it's just costly.

 

00:06:08             ONNO PFEIFFER

And especially in Malaysia, if you can save one ring, people will easily switch over for delivery. But interesting enough, the interest really came from top. So we have companies, our customers, they have shareholders that are pushing for green alternatives, so it has a one customer, e-commerce sector, HQ has given them mandate, given all the countries to reduce their emissions by a certain target.

 

00:06:33             ONNO PFEIFFER

So and then they just sell, fix it, find a way to do it. So that's really company that's now looking at these kind of green alternatives to reduce their emissions. Similarly, the ESG reporting standards becoming stricter stricter.

 

00:06:45             ONNO PFEIFFER

So I think there is definitely a drive from the corporate side to bring this to the market as to show it offering this kind of green delivery. So for us, it's key to be able to offer a green delivery service, but at an affordable price. And so for by using the public transport, we can actually minimize our cost because we spend a lot less time on the road, which is the most expensive part if you look at the value chain in the last month of

 

00:07:13             NICK LALL

amazing to get that amount of progress pre-launch. I was a little bit curious about something you mentioned there in terms of the e-commerce delivering to their customers with a model be any different or more of a beta, see business like that versus a beta-b business or one that would be just moving its own like stock from a warehouse into the city or is it essentially the

 

00:07:36             ONNO PFEIFFER

It's very similar and it definitely e-commerce it blends together. And if you would look at, for example, Lazada, one of the big e-commerce giants here in the region, they have their own logistics arm, but they also work with local partners like NinjaVan and things like that. So effectively, they are doing their own logistics and using partners as well, but they, they, let's say, they manage the customers.

 

00:08:01             ONNO PFEIFFER

So if you talk about lost model delivery, you could either do directly with a customer that has its own website, for example, or go through players like Lazada or Shopee that's effectively called to control the

 

00:08:16             ONNO PFEIFFER

And then, yeah, we should not underestimate how big some of these players are and it's really the economies of skill, right? So it's just big volumes to make the logistics costs as slow

 

00:08:27             NICK LALL

Sure. It makes sense and definitely a huge business in Southeast Asia, particularly Malaysia. My next question would be that starting something like this is making use of government infrastructure would require buy-in from the Malaysian government there.

 

00:08:45             NICK LALL

So I was curious what the process was convincing them to allow you to do this, since this is a fresh startup without any, you know, any other experience doing this in the past and it's relatively new ideas. Just curious, how did you first bring the idea to them? How did you get them on board? How did you get their approval to use the transport and how are they partnering with you in this

 

00:08:35             ONNO PFEIFFER

 

 

00:09:10             ONNO PFEIFFER

it's, as you mentioned, this hasn't been done before, right? It's something new. There's no precedent that we can rely on even if we're talking about outside our company.

 

00:09:19             ONNO PFEIFFER

Now, because some of similar concepts, they typically tend to modify existing assets and it's just a separate train or a separate coach or something separate from the commuters, but this hybrid model is new. And it's been a long journey quite frankly. So we started, so as part of the introduction, I did the global executive MBA with my co-founder and I graduated in 2019, and shortly after we decided to embark on this journey.

 

00:09:48             ONNO PFEIFFER

And obviously, COVID started at that time as well. So on the one hand, that was, you know, with all the things that came with COVID, there's a lot of negative What helped us at that moment is that the world changed.

 

00:10:04             ONNO PFEIFFER

course, but... So if you look at working from home, the e-commerce business booming and unfortunately for the train operators, their ridership went down drastically. So there was no one using a train during the lockdowns, which you've seen across the world.

 

00:10:17             ONNO PFEIFFER

So we have all these train operators suddenly struggling with getting revenue. And we showed up, not up on the door and essentially told them like, okay, the only thing you need to do moving forward is open the doors during the off-peak hours and one coach. You don't need to do anything.

 

00:10:31             ONNO PFEIFFER

There's no cost for mirrors. I just keep operating as you do today. And we're going to bring you revenue.

 

00:10:36             ONNO PFEIFFER

So this kind of triggers this open door at the beginning to actually for them to entertain the thought. So this would not have worked five years ago or 10 years ago. So this is really from a timing point of view made a big difference.

 

00:10:49             ONNO PFEIFFER

So once we got first discussions going, it was really about building a trust because in the end one thing is revenue, right, but it shouldn't come at the cost of the commuters. So some of our key principles is the safety of the commuters and that we don't want to impact their journey. So we don't want to cause any delays.

 

00:11:08             ONNO PFEIFFER

So as you can imagine, the door opens closes within 30 seconds, right? So we have a very short time window to load and unload. Similarly, you're moving a lot of parcels around on the station.

 

00:11:19             ONNO PFEIFFER

So it impacts the public, the commuters, many fronts. So then obviously the regulation plays a big role there. So when we spoke to the train operator, we worked together to essentially do several life tests to showcase to the regulator that can be done safely.

 

00:11:37             ONNO PFEIFFER

I think I already mentioned at the beginning this is proprietary trolley. So this is a trolley that we design ourselves for a specific, specific purpose of using it on a moving vehicle. So we design a breaking mechanism that makes sure that the trolley doesn't move during transit.

 

00:11:51             ONNO PFEIFFER

So we had to show that we had to get in a third party independent certification body to do so to have a kind of external view that the need to trolley didn't move and essentially build a case towards the regulator that this can be done in a safe and an efficient manner. So that journey, like mentioned, we started in the beginning 2020. We convinced the train operator later that year and it took another nine months to convince the regulator.

 

00:12:20             ONNO PFEIFFER

But they're now convinced and they will change the operating license, the regulations for a train operator to allow us to operate. But again, according to certain safety standards, it's not just to make sure that the computers are saved at all times. But yeah, so that was a very interesting part of the journey to really convince them.

 

00:12:41             ONNO PFEIFFER

And part of that as well is this kind of pilot. This year we'll have a proof concept to do everything in a safe manner as we scale up. So lower volumes to again show them meet certain KPI and based on that, we can deploy it completely and then the whole kind of the greater QL and Oomper area.

 

00:13:00             ONNO PFEIFFER

And I have the full support from the operator. So that just Malaysia, but as you can imagine, if we convince one regulator and we can show that this proof concept is successful, it will be easier to invite other regulators that's for them to come over and see how it works, see what changes were made to regulations and our processes that will be easier to convince each regulator as we grow and expand to other countries. So at this moment, we already talked to other countries to see how we can deploy it there as well.

 

00:13:32             ONNO PFEIFFER

And it will definitely be easier. So they're all looking at this quality proof concept as a kind of precedent to move

 

00:12:00             NICK LALL

 

 

00:12:36             NICK LALL

 

 

00:12:43             NICK LALL

 

 

00:13:40             NICK LALL

exciting. It's all interesting to learn more about these sort of startups that have physically based solutions. So there's got to be that it's not just a software or something, there's got to be the test runs and all that, making sure things work the way you're promising them to.

 

00:13:58             NICK LALL

So very cool. And it's really interesting also that Malaysia's where you start and then you're planning it seems to spread into other Southeast Asian countries and this is your proof of concept much like I guess grab originally to start in Malaysia that we've got the Singaporeans better around Southeast Asia. So dude, was there anything about the entrepreneurial climate in Malaysia that made that the place that you wanted to start or what was it about Malaysia that drew you to that

 

00:14:08             ONNO PFEIFFER

 

 

00:14:25             ONNO PFEIFFER

So it's definitely the entrepreneurial side. So things have changed a bit. I mean, you already mentioned grab, right?

 

00:14:32             ONNO PFEIFFER

So a lot of people don't realize started off things like my taxi in Malaysia. And back then they didn't really get the support that they needed so they moved to Singapore. And here the government has definitely realized like we made a mistake concerning that grab is a unicorn and quite successful at that as well, right?

 

00:14:51             ONNO PFEIFFER

So things have changed. So there's definitely an appetite from less if in the government. So there's certain programs and centers. So, especially as a foreigner, it's not always as easy in strontal countries where you have some local shareholder requirements and things like that or getting a kind of a work permit. But there's definitely as certain programs like MD status for company that helps you to apply for work permits. It's very helpful. So as there's the government side of things, there's also just appetite from the market. If I compare it to Europe where I'm originally from, so here, the

 

00:15:26             ONNO PFEIFFER

of new technology services, it's it's it's it's a lot stronger here. So the willingness to really expand to do something to do things differently is definitely here. And of course, the growth here. So

 

00:15:39             ONNO PFEIFFER

definitely a market that if you look at e-commerce, it's it's not a trend anymore right? It's just part of the daily life. So there there was definitely kind of a market that was open to what we're offering.

 

00:15:50             ONNO PFEIFFER

other than that from our business specifically, if you look at Guadalupe or also the infrastructure, everybody here loves to complain about how bad public transport is, but in reality, it's actually quite good. If you look at the coverage, if you look at the frequency, things like that. And it's actually perfect for what we want to do.

 

00:16:09             ONNO PFEIFFER

as was a combination of terms of product fit, market acceptance, and the kind of this willingness to change, like convincing a regulator, it's not easy. And I don't think we would have been able to do that in a lot of countries. For example, Europe or North America, for example, to do to change that easily, while not easily, but to do it in a kind of a reasonable time frame without getting support.

 

00:16:36             ONNO PFEIFFER

yeah, and also, a personal note, I mean, it's amazing people, fantastic food and a great weather here. So it's also nice to be in a place where you can also enjoy what you're

 

00:16:49             NICK LALL

And definitely agree on those last few points. So you mentioned that you met your co-founder at Genva when you were both E NBA students at NC ad. I was curious, first of all, how did you decide that this is the person that you want to start a business with?

 

00:17:04             NICK LALL

Was there any feeling out of each other? And then secondly, how did you decide that this was the solution for you to implement and do it in Malaysia? And I guess I'm not sure if both of you were working outside of Malaysia during co-order. One of you were there, but just kind of curious how that whole process worked and what led you to starting the company

 

00:17:24             ONNO PFEIFFER

Yeah, so yeah, looking back. So you know, again, he's originally French, but he's been living in Asia for for long, well, and we both did the global executive MBAs. Same time, you as part of the Asian cohort, and I was part of the European cohort.

 

00:17:39             ONNO PFEIFFER

we only met each other in person halfway during program and Dubai of all places. This very met, we participated in several classes together. So we were fortunate enough to actually get to know each other a little bit.

 

00:17:52             ONNO PFEIFFER

to work together to understand, you know, we are personality wise. And it just fit. And I think also, let's say this discussion that we had about a respective industries and frustrations in terms of okay, now why are we doing, you know, shipping box from A to B the same way we've been doing for the last 50 years and getting the same kind of response that really triggered the idea to okay, let's just kind of work out this idea and see what comes out of it.

 

00:18:19             ONNO PFEIFFER

I think ultimately, if you look at two co-founders, it's a big decision, right? I spend more time with you and then I spend sometimes with my wife, just because we're working on the startup. So it's a big commitment.

 

00:18:31             ONNO PFEIFFER

I think early on, we realized that we're actually quite complimentary, some terms of skills, settles, terms of personality, things like that, which was I think very important for us because then average to us, entrepreneurship is a very lonely road sometimes, especially at the beginning. So if you're exactly the same, can get quite boring, I think, we're able to to motivate each other, drive each other, amplify our strengths, kind of feel in the gaps and terms of weaknesses. So just clicked in from that point of view.

 

00:19:00             ONNO PFEIFFER

but in terms of the decision, it only happened after we graduated. So just at the time of COVID, where we realized, okay, we should, bad idea was great, we had a great response. We had done already some interviews with with my perspective customers, but there was definitely appetite. So

 

00:19:17             ONNO PFEIFFER

figured we'll just do this. But obviously, if COVID and me living in Europe at that time, it's seen maybe not like that's thing to do. So so someone was already living in a Kuala Lumpur, but two founders, the different times, all on different continents, everybody's told us it's you know, you shouldn't be doing that.

 

00:19:34             ONNO PFEIFFER

because of COVID, actually, all our customers, all our partners, they were doing their meetings well, everybody was working from home. So I was able to be part of all the meetings and everything while being in Europe without us or just, you know, just need to consider the time difference, right? But other than that, we were able to work together and at least build up the relationship with the customers with the train operate was to there's remotely.

 

00:20:01             ONNO PFEIFFER

there was a bit of luck there. And then the as a moment when things become more and more serious when we had to do the live tests with the operator, obviously, I needed to be on the ground. But even there like Malaysia with with quite strict, I was called the movement controller, the MCO, it's kind of locked down. I

 

00:20:18             ONNO PFEIFFER

even able to enter the country. So it's only earlier last year that I was able to move here and be in a country. And obviously now it's a lot easier face-to-face meetings and and build a relationship.

 

00:20:32             ONNO PFEIFFER

I think during this remote working, it is at 10 speed bit more difficult also with your co-founder to build that kind of relationship to really work together. But we realize, okay, if we're able to do this remotely, then we should also be able to do it in person. And so far it's going well.

 

00:20:49             ONNO PFEIFFER

still the two of us. We will be expanding our team, of course, but so far, it was I think a good choice. But indeed, it's not the easy choice to find the right partner to do something. It's especially remotely, but it's doable. It comes with challenges, but it's definitely doable.

 

00:21:06             NICK LALL

Sure. Have you noticed any changes in terms of work style, of progress? Have you since you've been together in person or has it basically continued about the same as it was when you were both in two different times?

 

00:21:17             ONNO PFEIFFER

And I think I mean, I think it's not necessarily in terms of our personality, but I think it's more in terms of the culture and the setting that we're in. So I'm part, that's part of Swiss. So as you can imagine in Switzerland and in other London, it's a bit more punctual.

 

00:21:35             ONNO PFEIFFER

do what you say. You have an agreement and then just move on. So Migos, to Malaysia, it was a bit of a difference, whereas, you know, he's French originally, but he's been here in region for, you know, 15 odd years.

 

00:21:50             ONNO PFEIFFER

for him, this was quite normal. So I definitely had to readjust, also, manage my, my expectations in terms of how things go. And it's from simple things in terms of meetings, you know, being on time, certain agreements, and things like that.

 

00:22:06             ONNO PFEIFFER

But that's part of the attraction why I want to do this, because I actually enjoy it. And it's part from the part of the, the whole journey. But it's definitely something that we had to kind of work together.

 

00:22:17             ONNO PFEIFFER

it did make it easier that Jo and I was already here. So understanding a bit, as understanding the culture and how to work with certain partners, because especially government-ending companies, it's something different if you have business to business kind of conversation where you have similar interests. But with government-ending companies, it's not just about ads, not just about just making profit, right?

 

00:22:38             ONNO PFEIFFER

It's also public perception, not perception, but the kind of public interest. I have, fortunately, if we are in a green sustainability space. So it really hits the green part.

 

00:22:49             ONNO PFEIFFER

also focusing on local, local, local labor, so really having a Malaysian company with Malaysian workers. So just creating jobs here as well. And also partnerships with, now with local universities in terms of that development that we do all the technology that we develop is being done in Malaysia itself.

 

00:23:08             ONNO PFEIFFER

all those things really hit the right tones with when talking to public institutions. But yeah, there's definitely the cultural adaptation that you need. And it's good to have a partner that's the job that you have with you on the

 

00:23:25             NICK LALL

to be able to go into a country, create jobs there. Gotta be extremely rewarding. Did you have the plan to start a business when you went into gamble like was it the goal to be an entrepreneur or was or did this just seem like such of an option

 

00:23:41             ONNO PFEIFFER

like many people either are doing a full time MBA or like don't know exactly MBA, a lot of people tend to be on a cross-road. hadn't had existing things for a few years, and then they realized, okay, this is really what I want to do. And so in my case, I come from, I was before I was as a part of a consulting firm, then moved into the industry in a more on a corporate side and always within the religious industry.

 

00:24:08             ONNO PFEIFFER

But there's always something was bugging me and I always wanted to start a new business but I never had the idea and always had stopped myself, always made up excuses on why I shouldn't do it because, you know, reason XYZ. But the exact MBA program was for me at that moment, the right moment to kind of reflect on what I like, what I don't like, what I want to do. So already, at the very beginning I realized I want to move to Asia, go to a different region, expand my boundaries, get out of my comfort

 

00:24:44             ONNO PFEIFFER

zone, so some terms of industry being open to either to go to different industry, different functions, things like that. So I essentially to make three different moves at the same time. So the plan was there, on the way.

 

00:25:00             ONNO PFEIFFER

I got there kind of changed- at the beginning I was applying for jobs and so I knew I want to go into the startup scene still within the logistics because it helps to you know if you have a long history in certain industry to leverage that. So actually to come in as as more as a kind of not as an advisor, but kind of the expert and help startups like that. And so I build up my network in the region as Singapore primarily, but then obviously COVID hit and also realized like okay, you know, there's

 

00:25:31             ONNO PFEIFFER

not much going to happen. So in parallel, this whole idea of the Oco came along and then I realized actually why why not why just stop myself and put everything on hold because of COVID, let's just go for

 

00:24:55             NICK LALL

 

 

00:25:44             ONNO PFEIFFER

so let's say roughly the direction was clear that I wanted to go here, but the path to get here wasn't as as planned, but that's pretty much always been my life to have a kind of a rough idea, but not over planning things. So this opportunity came up and I went for it and I'm a glad I

 

00:26:04             NICK LALL

Yeah, I mean, I guess that's how how life is and so the best things come about that way. You know, you're planning them exactly good. It's aligned with your goal. Why did you choose to spend the first years in stealth mode and how is that experience running a stealth startup?

 

00:26:09             ONNO PFEIFFER

that way. You know, you're

 

00:26:21             ONNO PFEIFFER

just out mode. I mean, there's no, yeah, it's not an official kind of standard just like being under the radar. But for us, we're in a highly competitive market.

 

00:26:33             ONNO PFEIFFER

a red ocean, for sure. Logistics, there's many, many startups that the various entry are quite low. So we realized, okay, we need to have them first moveers advantage because a train operator, you don't want to have too many companies on your trains at the stations, things like that. So

 

00:26:50             ONNO PFEIFFER

was key for us. And we're also dealing with regulations. So we also realized okay, by time we get the regulators on board a lot of time will pass.

 

00:26:57             ONNO PFEIFFER

So the first mode of Android key for us. And we realize, okay, so let's first get the conversation going with the train operator, get the regulators on board, start talking to our customers. So that we have enough momentum.

 

00:27:11             ONNO PFEIFFER

it's more difficult for for someone else that has more resources than like an early stage startup as we do to actually get the share of foot in the door. In parallel as well is the redeeming with our own proprietary technology. So and we wanted to patent that as well.

 

00:27:28             ONNO PFEIFFER

there you'll always have to issue that if you put something in a public domain, you can't really patent anymore. So how do we deal with technology that takes time to develop? And you don't know which market you're going to go to. So

 

00:27:40             ONNO PFEIFFER

you can't just apply a bunch of patents in in random countries, right? So there needs to be some kind of strategy. But how do you do that when you haven't even started operating?

 

00:27:49             ONNO PFEIFFER

So it was always this kind of balancing game between initiating certain things. So how do we approach customers without having like a public website or like being able to share a lot of things in the news and things like that? So how do you attract those customers?

 

00:28:05             ONNO PFEIFFER

How do you attract people to support your business as similarly? So we have technology. How do you develop that without putting it on the train for everybody to see and then potentially causing issues from a patent point of view?

 

00:28:19             ONNO PFEIFFER

So so for us it was key. It is challenging because my instinct is due to shout everything from the top of the roof, right? Like, hey, this is what we're doing, especially the green sustainability, the use of only on the utilized city infrastructure, also in the e-commerce, it's just a very interesting space.

 

00:28:40             ONNO PFEIFFER

And we've already spoken to investors, both angel vests, but also to VC's. And everybody, immediately understands the concept and everybody's like, Hey, why has no one done this before, or had this skill? It seems to obvious what's what's going on?

 

00:28:55             ONNO PFEIFFER

So so so the also can be purely public as Chris can, but you can't really, so you have to redefine the balancing game there. So that also means again from Salesforce point of view Laughter targeted approach we measured your network so usually you have marketing, you're able to show where you are and then get some interest from customers. Right.

 

00:29:18             ONNO PFEIFFER

our case, we had to get the entry into a company that otherwise wouldn't speak to an unknown company. Right. So that's where our network really played a role in this region to at least get that first conversation going because once they understand what we're doing, they're quite excited.

 

00:29:34             ONNO PFEIFFER

how do you get across that bridge? So to say, and same thing with talent, like how do you convince people to work for you if they don't know what you're doing and what the purpose of the company is, right? So it's always a balancing game.

 

00:29:48             ONNO PFEIFFER

now with the proof of concept that we're going to launch soon, yeah, we have enough momentum to keep on going. So now we're kind of going out of stealth mode and makes it look like we're trying to get into a way. Right. easier and it's more fun to be able to talk about things that you're doing. So, but it wasn't a separate part for us for our company, but obviously it's not necessary for our company. So I think everybody will need to decide for own business doesn't make sense or not, because they're pros and

 

00:30:17             ONNO PFEIFFER

Right. to it and there's not one solution that fits

 

00:27:00             NICK LALL

 

 

00:30:21             NICK LALL

actually And just to clarify, have you raised money yet? I mean, you mentioned talking to VCs. Are you a pre-seater,

 

00:30:27             ONNO PFEIFFER

Yeah, so right now we've raised with the angel investors and we've spoken to VCs. So we have one micro VCs that's investing to us. I guess I mean, technically it's pre-seats where we're at right now.

 

00:30:40             ONNO PFEIFFER

So we raised 200,000 USD. We're still raising a bit more to finance the approval concept and especially in the current weather or the current climates. Now everybody's okay.

 

00:30:50             ONNO PFEIFFER

You know, 12 months, the runways, not now of 18, maybe 24, or even more runways. So we're still raising funds, but the key thing for us is this approval concept. All the VCs that we've spoken to, they all love the concept, but they're like, okay, we need to see some data show us attraction.

 

00:31:08             ONNO PFEIFFER

So this approval concept, which is about four to six months where we want to show all these customers that we've been talking about. They're with us and we can grow from zero to about million ARR with those customers and we can show them. So we're kind of track record we need to show because again, things have changed.

 

00:31:27             ONNO PFEIFFER

So just an idea is not enough anymore. So you need to have more proof to show what you're able to deliver. And especially in our case, we're dealing with hardware, we're dealing with government, we're dealing with a lot of staff, things like that.

 

00:31:40             ONNO PFEIFFER

So we're not the typical SaaS kind of company. So it makes it more difficult to raise funds for sure. But yeah, that's part of the challenge, right? Again, the sustainability green, using the public infrastructure, those are things that are definitely of interest to invest in at this moment. So I'm confident that we will find the way, but it's really about this approval concept. And as far as it's a good moment to show that I have to walk the talk, I mean, to really show what

 

00:32:11             NICK LALL

Really, really interesting. I think it could be the COVID in the current situation, it's been an interesting time. He started a business. And then you had in terms of timeline, did you have investment first in the government approval, or was it like one came

 

00:32:12             ONNO PFEIFFER

interesting. I think it could be

 

00:32:27             ONNO PFEIFFER

So initially we were bootstrapped because let's say the first year or so, that's more the kind of ideation phase or just kind of working out and setting up the business model, see how we can work, build up the relationship with the train operator. So we were able to do that ourselves and we didn't really want to sell something before having something more tangible, right? So then the regulator is a very clear example that if you don't have the approval, then you can't exist, right?

 

00:32:58             ONNO PFEIFFER

Or there's no purpose to exist. So we bootstrapped first, build enough relationship with the operator with the regulator, we convinced the regulators, and then afterwards we start raising niche funds with investors. And then another advantage of INSEAD, in terms of the network, there's a lot of investors inside the INSEAD network.

 

00:33:17             ONNO PFEIFFER

So we have actually most of our investors are from from our flu inSEADs one way or another. The people that just really believed the idea because we haven't started, we don't have to prove a concept. So you need investors that like the idea that believe the founders are the right people.

 

00:33:35             ONNO PFEIFFER

So fortunately we have the industry experience, we have the better green for INSEAD, like all these kind of things really help to founders, to give them confidence, they were also able to live around what we promise. But then it's just raising enough to find us in the proven concept and then with that go to institutional investors. But this will be very difficult to ask for money if you don't have regulatory approval yet.

 

00:34:00             ONNO PFEIFFER

For the listeners, if you're going to a similar situation with the regulators, it's really You're mad at trying to bootstrap as long as you can get the conference. Because once you have the regularity of Regulate on board, it's an amazing selling point. Especially in

 

00:34:17             ONNO PFEIFFER

for you and myself, or one French, one Dutch, if we're not Malaysian. So a lot of people still don't believe that we actually convince the regulator to do this. So that's a huge selling point.

 

00:34:29             ONNO PFEIFFER

So although we're having a sell mode, we're not able to promote it as much, but these kinds of selling points are huge. And that makes a difference, similar to getting the customer some board before even starting in the pilot. So that's kind of what Trigg is and that's what we use for investors as well to really show that we're doing things differently and there's definitely something here that would be

 

00:34:55             NICK LALL

very interesting. And in terms partnerships or clients were those also through the network or how did you approach them

 

00:35:05             ONNO PFEIFFER

sales like your first business. So yeah, so yeah, it's mostly for the network. So and again, because the sellout mode we couldn't really promote or it's not the typical kind of sales funnel, but also because we're B2B focused. So we're not really targeting consumers. So it's really, as a give a contact. So for the pilot, we're trying to reach 4,000 parcels per day. So that's a lot actually. But we just need 5B2B customers to manage that. So it's really, it's this kind

 

00:35:34             ONNO PFEIFFER

that we have to go through. But how do you do that? If you're not able to show what you've done so far, if you're not able to promote yourself as much as you would like to.

 

00:35:44             ONNO PFEIFFER

So the network was key in there. And we had several people in the region that just really liked the idea. And they were also starting in their companies with the main points at the hat.

 

00:35:53             ONNO PFEIFFER

So that they wanted to go green, because either from the shareholders or it's a lifestyle that, you know, if you're selling healthy lifestyle products, and then you're using traditional vehicles that emit a lot of greenhouse gases, then it doesn't really fit that image as well. So there were people that generally believe like, hey, something needs to be done differently. And they helped us to, again, to open a door.

 

00:36:16             ONNO PFEIFFER

And then once the door is open, then it's really to the startup to convince them, okay, this product is worth for them. There is, there is a fits into what they're looking for. But getting that door opening that was the network was key in that also because, for example, for me, I didn't have the network Europe.

 

00:36:34             ONNO PFEIFFER

So outside of my network Europe, but not as much in the region, right? So we almost start from a clean slate there. So, so an appraisement, that network definitely helped.

 

00:36:45             ONNO PFEIFFER

But it doesn't have to be pressed for your school, right? There's always somebody that you know that knows someone else. And it's just getting this one discussion going. And if you, if there is a fit, then it will go from there. So the, the cycle itself, from once we were in, inside, it was pretty standard and it's followed the normal process. So it's really about getting a

 

00:37:07             NICK LALL

What would you say your ultimate goal is like it five to ten years, what would success be for

 

00:37:13             ONNO PFEIFFER

To actually show that the last model delivery can be done in a greener way. I do think the transportation industry has quite a bit of a negative vegetation if you talk about greenhouse gases and emissions. But yeah, I'm not going to try to defend it, but it's in the end, it's a necessity because everybody still needs food.

 

00:37:36             ONNO PFEIFFER

Everybody still needs to have clothes and other things. So it's part of the global economy. So I don't think we can do without, but I do think we can do things better and more efficiently.

 

00:37:49             ONNO PFEIFFER

So ever not just doing things green, but also changing the way of operating, so the operating model. So not having a big warehouse, but using the kind of empty space in the city, things like that. So if you can show that and not just have it in Malaysia, but deploy it in Southeast Asia and also other regions, I think pretty much every region and doesn't have to be just tram and train, right?

 

00:38:12             ONNO PFEIFFER

But anywhere there is, where there is under, yet under utilized city structures to just use that for different purposes, that will be great to show

 

00:37:28             NICK LALL

 

 

00:38:22             NICK LALL

Amazing, very interesting business, I think, has a ton of potential. I'm really excited to see how things go. I wish you the best, and thank you so much for joining me on the

 

00:38:34             ONNO PFEIFFER

you, Nick.