Israeli shared multimodal mobility operator GoTo Global Mobility has acquired German shared electric scooter company emmy. The strategic deal will help GoTo Global, which offers customers access to shared cars, vans, mopeds, scooters and bikes, reach its goal of expanding to every major European city by 2025. GoTo Global would not share the financial terms of the deal.
Acquiring emmy, which has a fleet of over 3,000 shared electric step-through scooters (not kick scooters) across Berlin, Hamburg and Munich, gives GoTo a direct path to the German market. The company's current footprint includes Spain, Malta and Israel.
"In Germany for us is a huge opportunity because emmy is a great company with five years under its belt, but they have only mopeds, and you cannot create user loyalty without creating mobility confidence, and this is what we try to do," said Gil Laser, CEO of GoTo Global. "We try to give you with our app the same feeling that you have a solution to move, anytime, anywhere. We can take [emmy's] user base of more than 300,000 people, and using GoTo technology, convert this company from a mono-vertical to a multimodal, and immediately start to offer them cars and other micromobility options, short trips and long trips."
As part of the acquisition, GoTo also takes on emmy's debts. In April, shared mobility software company Wunder Mobility launched a lending service and announced plans to help emmy finance 1,500 retrofitted Yadea scooters, which will now be GoTo's responsibility to pay back. Laser said GoTo intends to maintain the relationship with Wunder in the future.
Emmy users won't immediately notice a difference in branding until next year, when GoTo intends to fully integrate the service under its own brand umbrella and connect users to other forms of mobility. Laser said GoTo will bring other forms of mobility, like cars and e-bikes, to Germany starting Q1 of next year. The company also recently raised rounds totaling $22.5 million and is currently raising more to help it expand into Italy, Netherlands and Portugal in the next year, according to Laser.
"Our goal is to be the Netflix of mobility," Laser told TechCrunch. "In the end users will pay us X amount of dollars and you get free rides on whichever vehicle you want."
Until such a point, the company has to establish a presence and brand loyalty. Laser says multimodality that includes car rentals is the company's secret sauce for success, part of a strategy that has led GoTo to be profitable and cashflow positive in its most mature market of Israel. The company hopes the strategy will also translate to an annual revenue that exceeds $116 million by the end of 2023.
It's a balancing act between the cost of user acquisition and how much money you can generate from a user, says Laser. Shared micromobility companies have a low cost of acquisition because they just put their assets all over the streets, people see them, download the app and then they're a customer. The problem is that the revenue per each user (RPU) is usually low, in large part because there's no difference in service between companies, and therefore no loyalty, according to Laser.
Car rental companies have a different problem. They have a higher RPU because you can charge $20 to $30 per ride, but the marketing costs to acquire a user is really high.
"How we solve this problem is the multimodality philosophy," said Laser. "We convert the user to use more and more services. Like you came to the supermarket to buy veggies but then you also end up buying meat and milk."
One way the company does this is through a variety of promotion-type schemes. For example, Laser says GoTo charges €3 for the first 15 minutes of any ride on any vehicle. If a new user comes on to book a ride on a scooter and adds €3 to their wallet, they might automatically see €9 in the wallet that can be used toward the purchase of a car ride. This alerts the user to other use cases and, hopefully, creates brand loyalty in a way that's cheaper than spending hundreds of millions of dollars on advertising with Google and Facebook, says Laser.
The result so far has been 90% of B2C revenue comes from return users, and 41% of all customers are multimodal users. Part of this might also be due to the fact that GoTo also charges a membership, which can range from around $2 to $7, to use its service.
In order to achieve healthy unit economics, the company also combines owning and leasing assets.
"In the end our product is more efficient," said Laser. "By not owning the assets, we enjoy the arbitrage from taking a car or moped and renting it for two years and renting it back to our users for two minutes, and by doing that we can gain a lot of profit."
GoTo has MoUs with Renault, Toyota, Nio and Segway. It currently leases its cars and mopeds and owns its own smaller micromobility vehicles, but hopes to lease those, too, in the future. However, one of the main problems micromobility operators have faced has been the way shared assets depreciate very quickly, so it's hard to imagine a scooter manufacturer wanting to own the asset and not generate rental revenue from it.
One way to make that scheme work would be to have really high utilization rates, which requires different types of demand that peaks at different hours. Aside from its main customer base of commuters, GoTo is actively targeting business customers through three different models. The first and second is to get companies to offer employees benefits in the form of either subscriptions or mobility wallets. The third is for companies to reserve dedicated fleets for their employees, usually between specific work hours like from 8am to 6pm. After 6pm, the fleets would go back to being available for communities, says Laser. Business customers currently make up 13% of GoTo's revenue, but the goal is to boost that up to 50% by 2025.
"We are today on course to register 100% year on year growth in 2021 and we know that GoTo’s multimodal mobility experience means we can hit right at the heart of the urban mobility problem," said Laser. "Today we assume to be at least 30-36 months ahead of other platforms and offerings in the market."