MaaS is here to stay as an integral part of multimodal urban mobility but will require a rethink on business model, financial and operational strategies.
Finnish mobility startup, Maas Global, and creator of the pioneering travel app Whim, has filed for bankruptcy one year short of its 10th anniversary. Founded in 2015, the groundbreaking commercial Mobility as a Service (MaaS) operator launched Whim two years later in 2017. Whim was touted as “the first all-inclusive MaaS solution commercially available on the market that gives its users all urban transport services in one step, letting them journey where and when they want with public transport, taxis, bikes, cars, and other options, all under a single subscription.”
On paper, the idea of an integrated, multimodal solution for urban transport covering planning, booking, and payments on a single platform seemed ideal. At one point, Whim had around 10,000 active monthly users in Helsinki alone, attracted over €149 million in investments from Toyota, Mitsubishi and BP Ventures, had an active presence in Tokyo, Vienna, Birmingham, Antwerp, and Helsinki, among other cities, and employed more than 100+ people. By 2022, the company was battling for survival – with severe attrition bringing the workforce to under 30 people and losses amounting to €9.3 million.
So, what went wrong?
To learn more, please access our research report, European and North American Mobility-as-a-Service Growth Opportunities, Growth Opportunities in the Evolving Public Transport Landscape, 2030, and Evolution of Shared Mobility Infrastructure in Top 20 Smart Cities, or contact sathyanarayanak@frost.com for information on a private briefing.
Our Perspective
In theory, MaaS is a sound concept and one that echoes evolving customer demands for streamlined, easily accessible urban mobility. In practice, it comes with a raft of operational and financial challenges with the central dilemma of how to design, develop and deliver a sustainable business model.
In the case of MaaS Global’s bankruptcy, the finger of blame is pointed at the lack of funding and its cash intensive business model, aggravated by the Covid pandemic which magnified both internal and external challenges. For instance, MaaS Global focused on B2C subscription packages that, in the aftermath of the pandemic, did not seem lucrative enough. In addition, steep falls in public transportation usage because of the pandemic, significantly affected revenues. What was initially considered a game changer – its subscription packages – led to financial troubles because it required pre-payment for the transport packages. If the subscription packages were not used, then Whim incurred a loss. Moreover, various acquisitions, including Wondo in Spain and Quicko in Brazil, while offering revenue opportunities, nevertheless accelerated cash burn.
A B2C strategy without adequate investor backing is a difficult strategy to crack. Therefore, in a bid to resurrect its fortunes, MaaS Global pivoted towards a B2B strategy, entering into an agreement with Unipol Group in Italy to license its technology and know-how. Ultimately, it may have been a case of trying to go too fast and do too much too soon. As MaaS Global’s CTO said, “we were probably guilty of going from zero to one in one step – the transport market is fragmented and moves slower than an agile start up.”
Does the end of MaaS Global and Whim, an app that held tremendous promise of transforming urban travel and was one of the only models that offered an all-mobility subscription, signify the death knell for such models? Does the ongoing flux in the mobility sector, particularly among startups, replete with restructuring, consolidation, and downsizing in the quest for profitability highlight the need to reexamine current business models?
While there is bound to be some soul searching over the untimely demise of MaaS Global and Whim, what is beyond doubt is that MaaS is here to stay as an integral part of multimodal urban mobility that promotes affordable and accessible, smart and sustainable, effective and end-user responsive transport options.
Indeed, Frost & Sullivan research projects MaaS in Europe to record a 35.9% CAGR to rise from $1.34 billion in 2022 to $15.66 billion by 2030, while North America is estimated to register a blistering 109% CAGR to grow from a modest base of $10.98 million in 2022 to $3.95 billion by 2030. While there will be a plethora of legal, regulatory, market, and competitive challenges on the road ahead, the only way is forward.
So, what next?
For a start, MaaS needs to move away from a one-size-fits-all model to a niche of hyper customized or hyper localized model.
We also believe that a highly fragmented MaaS market will hurt growth prospects. Therefore, the consolidation, reorganization, and winnowing out of shaky mobility start-ups that we are seeing today is a positive development. It will leave in place a more robust foundation for growth.
In terms of future revenues, prospects of B2G (licensing platforms) will be limited by the fact that there can only be one MaaS solution per city. Therefore, we are likely to see MaaS pursuing a B2C business model. For this to succeed, identifying and targeting the right customer segment with a view to realizing high average revenue per user (ARPU) will be crucial. In addition, weaning customers away from private car ownership wherein money used for car purchase/operations is turned instead towards MaaS, will be key to sustaining growth.
Another growth opportunity lies in corporate MaaS solutions. Now that companies are mandating employees return to office at least 2-3 times a week, these flexible solutions will see an uptake. MaaS supports organizations in this regard with its ability to integrate preferred transport options for employees, including corporate shuttle buses. Integrating MaaS into an organization’s expense solution means employee journeys can be directly submitted to accounts, along with electronic VAT receipts making the whole process as near real time as possible.
A new and, as yet, very advanced concept that will still take time to mature is Mobility as a Feature (MaaF). In this paradigm, there will be no separate apps for mobility. Instead, mobility services will be integrated into commercial applications like apps of malls. This kind of business model, we believe, has a higher chance of getting monetized.
Finally, a vital element for MaaS to be able to become a successful revenue generating model is public-private stakeholder collaboration. In particular, the support of governments and city authorities will be decisive. For example, city driven legislations, like the recent UK: Mobility Code of Practice require not just ideation but effective implementation and back up enforcement as well.
With inputs from Amrita Shetty, Senior Manager, Communications & Content – Mobility
