Northzone’s Paul Murphy and Tier Mobility’s Lawrence Leuschner discuss tackling the transportation market, changing it to be more sustainable, and doing it successfully at an almost supersonic pace.
Paul Murphy: Lawrence, where did the idea for Tier come from, and do you have any takeaways from that journey from idea to VC-funded startup?
Lawrence Leuschner: During my sabbatical after exiting reBuy, I was travelling around the world, looking at the main factors of climate change, which are transportation and animal farming. I was pretty sure when I started the 1.5-year journey that I would find my new mission along the way, but it took me 17 and a half months to actually come across the idea that I was going to found a company to change mobility for good. Coming back from that trip and talking to different people made me more and more confident that now is the time to disrupt the car industry, which has been dominating our streets for over 100 years.
I remember when you did our first pitch session, you said you wanted to raise 30 million dollars. I think it was just three of you at the time and the beginnings of a product. I looked at Chris and thought ‘he must be joking, he’s not actually serious.’ We realised quickly that you were very serious. So we made a seed-stage bet for our largest ever Series A ticket — we’re still glad we did.
We rapidly understood that we had to execute faster than expected. Two months after we secured the seed financing, we were reaching out to a few funds. I remember you guys came to Berlin, and you really got the idea we were envisioning. It’s not just about putting scooters on the ground; it’s way more than that. I also remember your due diligence process, which was based on a two-month-old company. The three people were just the beginning of your diligence. You made sure that because you couldn’t bet on the numbers, you could bet on the team.
Tier was founded in the summer of 2018. Two years later, you’re over 500 employees across Europe, and you’re active in over 70 cities. What would you say is the most challenging part of scaling a company and team that fast?
I think the toughest challenge when you’re going that fast is not to make bigger mistakes than you normally would. Between having a pretty intricate business model, building hardware and operations in 70 cities and 10 different countries with vehicles on the ground, developing complex software both front- and back-end, you just can’t oversee everything at that speed. Our quick growth shows something really big was happening, and for me, the best choice I made was to hire great people from day one to oversee a team of 500 — even if at that point we only had an MVP.
I remember thinking as you started scaling that every function you brought on board was, in my quick assessment, one of the best people for that function. It wasn’t just mobility – it was design, product, marketing, ops. Everyone was top of their game, which I think many companies don’t do. A lot of startups just focus on their core product and sort of settle for an ops person here or there.
Yeah, we made big hires in the beginning. I knew I couldn’t build a pyramid and make every decision. I mean, yes, there needs to be a lot of top-down at the beginning of building a company at that speed, but the responsibility and decision-making quickly shifted to the teams. Without an awesome team, there’s no way that would have been possible.
Moving on to the product experience: a customer is somewhere in Europe, they want to hop on a scooter. They see Tier and two other bikes or scooters right in front of them. Why do they pick Tier?
I think it’s a combination of having the scooter at the right spot where the main traffic is, and offering a scooter that’s well maintained and gives you the confidence that you’re riding a safe vehicle. Add to that having flawless software that ensures you arrive at the right time. This is our current differentiation. To be honest, if we’re sharing the market with several players, the consumer view is something we have to work on and it’s why we’re constantly innovating both hardware and software experiences. Pretty soon, we’ll be announcing something that really differentiates us completely from every provider in the market, which locks in customers, builds a great partnership with the city, and really showcases our vision.
Let’s talk about Paris for a second. They’ve been trying to tackle mobility issues for a while. In your mind, how is winning the Paris tender going to help you with other regions?
Paris is not only the most prestigious but also the most important tender we’ve won overall in the industry. And it was a competitive tender, with over 20 players applying. Everyone put a lot of energy and work into it. For us, the whole C-Level was involved. On the first two days of my vacation, I was reading the Paris tender, and my girlfriend was thinking “you better win this tender because it’s the only vacation we’ll have this year.” This tender prepared us to build a very professional document that authorities are happy to read. The Paris panel’s decision to choose us as one of the players really helps put us at the forefront of the French market for micro-mobility. Before this, we were probably ranked fifth among the existing players. Having won Paris, Grenoble and Lyon means we probably have the highest number of scooters within France. With our application, we actually have to deliver what we proposed and that’s going to be really important in building our relationship over time. We can work on making not only Paris, but all French cities more livable and more sustainable.
Going back to your passion for sustainability, we know that not every mobility company is as sustainable is Tier. I think this gave the industry a bit of a bad reputation, particularly for scooters. How do you approach counteracting that bad karma so it doesn’t negatively impact Tier?
The only way to change mobility for good is to take responsibility and be the industry leader, because leadership creates followership. We hope we can inspire other players to follow this path of sustainability and use the things we end up innovating, from swappable batteries to how we repair our scooters, as well as ensuring the offset of emissions is fully carbon neutral. We’ve reimagined many things and we’re trying to be very collaborative, not only with the cities but also with our competitors.
We struggle to explain to authorities that we don’t throw scooters away after they come off the street, because we repair them. And when we replace them with new vehicles, we sell them. That’s why we built the European Scooter Coalition for Sustainability, which several European players have joined, and which we encourage American competitors to join, too. If we see that things are not going in the right direction, it’s also in our DNA to call people out and highlight that we all have to take care of our environment so that it doesn’t backfire against all of us in the industry.
You’ve recently shared that you’re going to pledge 100% of your shares to fight climate change, which is something I’ve never seen before. What’s your rationale for doing that?
Running the business these last two years, and getting approached by Founders Pledge, I was already thinking about why I was doing this, and it’s always been for something other than the money. It was for the passion, for the product, for consumers, and most of the time, the number one reason was the mission. With my old company, rebuy.com, the mission was to give products a new life, and we did this with over 100 million products. This motivated me to run the company for over 10 years. Then I thought of giving a small percentage of my shares to Founders Pledge, to do something good. I quickly felt compelled to give 20%, 30% and later on 50%. At home, we realised that money doesn’t drive us. I don’t believe that having more money will make you happier. It was the most fulfilling thing to pledge all of my Tier shares. Even though it’s in the future, I communicated it so that others can be inspired to do it as well. I think it’s good timing; the business is doing well and we’re still far from an exit. It’s good to make that statement now.
When you told the board, I saw numerous heads explode through Zoom. For the VCs, this shakes everything up and challenges the incentivisation process. You’ve already answered this for us, but generally speaking, do you think founders can successfully do this and maintain full alignment with their VCs and board members?
I think it’s the best alignment you can have. If the investors see the passion, the mission, and all the hard work that goes into the company, that creates even more powerful action and commitment from the team itself, from top to bottom. Employees have a stronger belief in the leadership team, too. All of this creates better outcomes, better numbers, and therefore better value. If I create more value for the company, I can make a bigger impact later.
I think everyone is excited; it just took a second to put their heads back on! So alright, serious question. You could have done 90% or 99%. You did 100%. Surely there’s something you were thinking, maybe you should just earmark a little bit to do this or buy that. What would that thing be?
I always thought about a nice beach house where I can go surf and keep all my boards. Then I realised that it takes a lot of work, and I think everything I’ve owned which had some value ended up costing me more in the end. And therefore what you own, owns you. Not only is sharing vehicles and shared mobility the new standard of moving around, but it’s also sharing apartments and sharing houses, so I don’t have to own a beach house. I can just rent the beach house and make it comfortable. That was maybe the one thing I thought about, but even if this dream doesn’t come true, in the end, I can go to more places in good locations.
Would you ever do something like Bill Gates’ Giving Pledge or Gates Foundation, where he takes capital from other successful entrepreneurs and invests it responsibly towards his causes? Perhaps it’s something your Blue Impact organisation could do, where others can also contribute to it?
I set up Blue Impact in such a way that I could later transform it into a real fund that invests in companies from Seed to Series A, etc. Right now, I don’t have the time to really think beyond that. I just use it to make angel investments a couple of times a year. Personally, I can’t give any payouts, so it would be all me investing as an evergreen fund. There would need to be some interesting discussions to make sure everyone is comfortable with that. For the future, I don’t know if I can be a good investor, but it’s a nice thought.
Thank you for sharing your story with us, and being such an inspiration to us as investors, and to our other portfolio companies.