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Crowdfunded train service takes on German rail giant

Cai Yuedong is an artist. Now, he’s also a millionaire, having sold a majority share of Uncle Tongdao, the company he built by posting astrology cartoons on WeChat. After the US$31 million sale to media and entertainment company Meisheng Culture, Uncle Tongdao is now valued at US$43 million.

Yuedong’s exceptional rise from freelance illustrator to successful entrepreneur is partly explained by China’s fascination with star signs, as well Yuedong’s sarcastic sense of humor. Uncle Tongdao comics, which are posted daily, often play on the stereotypes associated with different astrological signs: fussy Virgos, emotional Cancers. These stereotypes have served Yuedong well – his menagerie of zodiac characters is now valuable IP.

‘WeChat drone’ ready for takeoff

But Uncle Tongdao’s extraordinary success also speaks to a larger trend of monetization through WeChat, one of China’s most popular apps. With over 800 million users, it’s no surprise that the app is an attractive platform for entrepreneurs and companies. However, its monetization potential goes beyond audience size.

PHOTO: UNCLE TOM

“What makes WeChat special is the social plus content plus payments mix,” Matthew Brennan, co-founder of WeChat consulting and research firm China Channel, tells Tech in Asia over WeChat. “No platform in the world can match it.”

With a single 1970s train in orange livery and a little crowdfunding help, a plucky Berlin start-up is challenging the might of Germany’s state rail operator, Deutsche Bahn.

At 6:20 am on Wednesday, the first Locomore train will leave Stuttgart in Germany’s southwest, pass through Frankfurt and Hanover and pull into Berlin, its final destination, some six and a half hours later.

With just one return service a day to start with, compared to the over 700 daily long-distance journeys run by Deutsche Bahn, Locomore founder and director Derek Ladewig knows he barely qualifies as a rival.

But he is hoping to win over Deutsche Bahn customers with budget ticket prices and lure environmentally-conscious travellers from more polluting forms of transport.

“We are offering a new service to compete with the car, the plane, the long-distance bus as well as Deutsche Bahn,” Ladewig told AFP.

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Locomore, which bills itself as the world’s first crowdfunded train line, owes its start-up capital entirely to online supporters who chipped in more than 600,000 euros ($640,000) in less than a year to get the project on the rails.

Many of the contributors bought vouchers that can now be traded for tickets, as well as souvenirs such as mugs and T-shirts in the firm’s distinctive orange hue — a nod to the vintage origins of Locomore’s renovated carriages from the 1970s.

The 600-kilometre (370-mile) trip from Stuttgart to Berlin takes slightly longer than with Deutsche Bahn, but Locomore hopes to make up for that by promising its ticket prices will always be cheaper than those of its competitor.

By comparison, Locomore charges 22 euros for a Stuttgart-Berlin ride in January, compared with 115.90 euros on Deutsche Bahn — although the latter’s journey is roughly an hour shorter, and it offers prices as low as 29 euros for travelers willing to change trains once or twice.

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Karl-Peter Naumann, a spokesperson for the passenger group Pro Bahn, welcomed the new player on the block and said the service should prove popular with families, who will be offered their own compartments, and with young people.

The country’s rail sector was liberalised in 1994 but remains dominated by Deutsche Bahn, which carries more than 5.5 million passengers a day in Germany alone and accounts for 99 per cent of all long-distance rail journeys.

The state firm has more competitors on the regional transport networks, where its market share falls to 72 per cent, according to Mathias Lahrmann of the BSL transportation consulting agency.

Locomore is not the first private company to try to go up against the rail operator, but those efforts have gained little traction.

Veolia Verkehr, a subsidiary of France’s Transdev, abandoned its loss-making Interconnex service in 2014, leaving just the Hamburg-Cologne express (HKX), launched in 2012, to offer an alternative.

“Locomore could invigorate the market with its innovative ideas,” said Lahrmann. But “like HKX, it only serves a niche market”, he added.

Lahrmann said it was difficult for new companies to get a foot in the door in the long-distance rail business.

There are no state subsidies available, and prospective operators are expected to reserve their slots years in advance as well as source their own trains.

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To give itself maximum flexibility, Locomore has opted to rent its trains and drivers from other companies while employing its own on-board personnel and handling ticket sales.

Ladewig has calculated that at least half of Locomore’s seats need to be filled to cover costs and be able to branch out to other lines in the future.

Achieving that will be no mean feat, as even Deutsche Bahn last year registered an occupancy rate of just 50.9 percent on its long-distance trains.

“It’s not easy to be profitable, but it’s possible,” said BSL consultancy’s Lahrmann.

With more than 10,000 tickets already sold and its trains promising to be “pretty full” over the coming weekends, Locomore’s Ladewig is banking on the upcoming Christmas holidays to keep his ambitious plans on track.

courtesy : express tribune

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