How a German drone taxi startup used crowdsourced ideas, an unexpected partner, and its outsider status to carve out a new multi-trillion-dollar opportunity in the transportation industry
- When Florian Reuter joined German drone taxi startup Volocopter in 2015 as CEO, co-founders Stephan Wolf and Alexander Zosel had impressive tech, but no clear path to market.
- "When we started out there was not even an idea of how these types of vehicles would ever be certified," Reuter told Business Insider. "Now we have a whole new category created for us."
- Volocopter now has equity funding of €122 million and the company continues to add corporate strategic partners to a list that includes Daimler, Intel, and Micron.
- Now, the team is focused on completing its certification with the European aviation authority to become the first commercial air taxi company.
- This article is part of a series on growing a small business, called "From 1 to 100."
If disruption is the path to a billion-dollar startup, then inventing a new industry could be the path to a trillion-dollar company.
For German drone taxi startup Volocopter, those ambitions began with a couple of enthusiastic entrepreneurs experimenting in a field in Bruchsal, about an hour south of Frankfurt, Germany.
Now the company boasts more than 150 employees in three cities, a recent Series C valuation of €250 million, and a roster of strategic corporate partners that includes Daimler, Intel, and Micron.
"What's become clear over the past five years is that the opportunity in front of us grew as we moved forward, and now it's obvious that this is a multi-trillion-dollar opportunity," said Florian Reuter, the company's CEO, who joined as Volocopter's sixth hire after a career with Siemens' strategic ventures unit.
Reuter spoke with Business Insider about how the company refined its business idea and created the conditions for success.
Crowdsourcing for initial financing and ideas
In 2013, a year before Reuter joined Volocopter, founders Stephan Wolf and Alexander Zosel broke a European record when they raised €1.2 million from a crowdfunding event that lasted just two and a half days.
And while the money was certainly welcome, Reuter says the increased visibility led legions of fans to pitch ideas for possible applications of the electric-powered multi-rotor vehicle.
"We weren't even capable of handling all of the ideas on what they wanted to use the Volocopter for, so we were confronted with this abundance of different options," Reuter said.
When Wolf and Zosel raised the idea of giving executive control of their startup to Reuter, he said he had one requirement: "I insisted on saying, 'Guys, if you take me on board, I'm only going to come if we are committed to making this as big as possible.'"
Partnering with an automaker instead of an aircraft manufacturer
To maximize Volocopter's potential social and economic impact, the team had to discard a lot of good ideas so it could focus on the one with the most promise: a drone-powered urban air taxi fleet serving congested megacities around the world.
Armed with this grand ambition, a few successful test-flights, and some slick artistic renderings, Reuter sought out a critical strategic partnership that not only had deep pockets but specific expertise that Volocopter would need as well.
Typical aviation manufacturers build one aircraft at a time, but in order to reach the scale Reuter has in mind, they needed a commercial partner with the capacity to produce fleets numbering in the tens and hundreds of thousands.
"That's how big the potential is," Reuter said.
After considering several automakers, Volocopter reached a deal with German auto giant Daimler for their Series B, and have gone on to partner with several other international car manufacturers for financing and production.
'It took outsiders to take on that dragon'
All the money and manufacturing capacity in the world won't get you very far in the highly regulated aviation sector, where a failure to obtain the proper licenses and certificates can turn your fleet of aircraft into a display of very expensive lawn ornaments.
"When we started out there was not even an idea of how these types of vehicles would ever be certified," Reuter said. "Now we have a whole new category created for us."
With much of the hard work of building the appropriate regulatory environment now behind them, Reuter said the prospect of building aircraft and landing sites seems like "the last, easiest step."
Reuter said he hears from more experienced aviation industry experts who tell him, "it took outsiders to take on that dragon."
Had he and the founders been aviation community insiders, it's likely they would have foreseen the complexity of the many challenges they faced and never even started the project.
'A whole new mode of transportation'
After a successful test flight over Singapore's Marina Bay last October, Reuter said Volocopter has fielded numerous requests from other world cities to conduct similar demos, which he has had to decline.
"We realized when talking to the mega cities, they're not interested in a new vehicle, they're interested in a whole new mode of transportation," he said.
For now, the team is focused on completing its certification with the European aviation authority, EASA, to become the first commercial air taxi company connecting airports to local networks of so-called Voloports.
Once Volocopter demonstrates three months of operation with a perfect safety record in a pilot city like Frankfurt, Paris, or Singapore, Reuter said "every megacity around the world is going to raise their hand and say, 'We want that as well.'"
"We have to be ready to brutally scale our activities," he added. "Everything that we do now is already anticipating that moment of worldwide scaling."
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