We wrote this article for Straight Up, a monthly startup resource that tackles common sticking points of early stage startups. Get yourself on the list for the next Straight Up edition here.
Mevo is a startup leveraging Exponential Technologies and scalable organisational practices, building what is known internationally as a car share. The passionate team behind Mevo recognise that privately owned cars, which tend to be the second largest purchases people make, are used about 4% of the time. Mevo operates a shared fleet of cars, parked in public space in the city, and gives members who live nearby a smartphone app that allows them to unlock and access the cars. This can replace the need to own a very poorly utilised asset, and give them a better experience in a nicer vehicle while saving thousands of dollars a year.
The team have been working part-time on Mevo for about two years now, mostly on nights and weekends. Up until this point, they’ve been focussed on the public policy they needed in order to launch. (The policy recognises car sharing alongside taxi ranks and bus stops as something that receives access to public space). Once the council gave the ok, Mevo hit the go button, shifted into higher gear, and are now putting the final pieces in place to launch in Wellington later this year.
We spoke with Finn Lawrence, one of the founding directors and tech backbone of Mevo about what it means to leverage exponential technologies in order to scale your company 10x instead of 10%, right here in Wellington, New Zealand.
How does Mevo work and what’s the ultimate vision for your business?
For people who live in cities, we can remove the need to own a private car. Members use their smartphones to book and unlock our fleet of Audi Electric Vehicles and use them as if they were their own.
For the next three years, we’re focussed on the New Zealand market and building up our fleet to serve the densest parts of New Zealand’s major centres. From here we have much bigger ambitions, and our business is structured to enable these – but we’re focussed on executing locally for now.
What impact does being an Exponential Organisation (ExO) have for Mevo in the NZ tech space?
So – I’ve only realised recently that we fit into this “ExO” bucket even though we’ve been building the company for two years. It’s quite cutting edge in terms of language and concepts in this space right now.
For me, being a software guy and co-founding a hardware business – when we started I thought “how can I make this into a company that can scale up like a software business, but relies on these expensive bits of hardware?”. You can see some of this thinking going on at Tesla right now, with Elon Musk’s comments on Tesla’s real job being not to design this mass-market electric car (the Model 3), but actually, design the factory that builds them.
I think he phrases it as “building the machine that builds the machine”. If you think about it, this changes a lot of things – suddenly if you want to up your production all you need is the plans and fit-out for another factory documented really well, and the ability to prove market demand. Then you can bring in some capital, hire the contractors, and put another Model 3 factory anywhere. Then this automated factory with minimal staff spits out a bunch of cars into the local market and you have a really clear idea of the return on investment (ROI).
For us, being an ExO means that we have the potential to build something that can be a national utility quite quickly, and then, in theory, be picked up and dropped anywhere in the world that we can see a demand in the market. It makes exporting very easy.
What is ExO in a nutshell and what does being an Exponential Organisation mean for businesses in NZ?
Exponential Organisations are those that leverage exponential technologies and scalable organisational practices to be able to scale 10x where a competitor may only be able to scale 10%.
I think in the context of New Zealand, if you can build an exponentially scalable company, why wouldn’t you? I think if your industry and market allow for these kinds of approaches (and I’d wager most do, or will very shortly) then it just means you’re opening yourself up to someone coming and eating your lunch if you don’t set it up right from the start.
I think it also lets you compete in super-niche markets where you may have a huge competitive advantage, and easily export your product or service. The lifestyle in NZ has got to be the biggest drawcard, so if you can build an ExO anywhere, why wouldn’t it be NZ?!
What do you see for the future of Exponential tech and why should we think about becoming an ExO?
I’m a bit of a mad futurist with this stuff – honestly. When you look at the trend lines of things that are on exponential price/performance curves and have been for a while – processing power, solar panels, batteries, nanotech, biotech, access to space, etc – it becomes pretty clear that we are living in exciting times in 2016. These trends, combined with the leaps that are being made in the 3rd world – for example, you have parts of Africa going from no phone lines straight to 4G without stopping for dial-up – all of this is painting the picture of a pretty crazy future!
I would say the world is becoming more exponential, and so I think the businesses of the future will need to think about where they fit into that picture. This doesn’t mean that every company needs to be some big monolithic ExO – I think there will always be a market for local, high-quality stuff – but if you run a company and aren’t thinking about how these technologies are going to impact your industry, I’d say you’re in danger.
One of the biggest things I think is that people find it quite hard to think exponentially – it doesn’t make much sense to humans because we haven’t evolved in an environment where it was possible… until now.
The basic example that you’ll hear quite often is that if you think about taking 30 one-meter steps – that gets you across a big room, right? That would be linear and it’s easy to judge where the halfway mark is and measure progress.
What if I take 30 steps and double the length of my step every time? Do I get to Australia? Maybe Europe? Well, it turns out that actually 30 doubling steps is over a billion metres, or 26 times around the Earth, or over 2.5 times the distance to the moon. On top of this, I’m not halfway there until the 29th step, it’s hard to predict how these things will grow over time, intuitively.
One example of this that really worries me is the reliance our economy has on the dairy sector – there are companies in the US working on how to synthesise milk from bioengineered bacteria etc. This seems like child’s play now – “nobody will drink that stuff”, say the farmers. It’s expensive, it’s not as good. But the issue is that we’ve pretty much maxed out our ability to generate milk using cows. The synthesised milk they’re working with is getting better exponentially. Even if it takes 20 years (hint: it won’t), it’s likely that there will be some way of scalably producing milk that costs 1/10th or 1/100th of what it would to get it from a cow – and even if it’s not as good, it’s way cheaper, and suddenly that’s in danger of sinking the industry that our country is built on.
Have you come across any limitations or challenges through working this way?
A friend of mine has a great line, which goes something like “everyone only talks about the successes, but these ExO’s can also have an exponential failure!”.
I think this is a symptom of not getting the basics right – unit economics, product-market fit, user retention. You can see big, venture capital funded future ExO’s crumbling all over the world. It’s very trendy to build a scalable company right now, but if the numbers don’t stack up you’ll always run out of money.
If you focus on the basics and validating all your assumptions in the early stages, then, in theory, you should be off to a good start. The danger comes if you get complacent and forget about the fact that the exponential change that’s driven your success is only getting more exponential, and that you need to be keeping up with that.
The other side, which can be frustrating, is that the nature of the game is that you spend a long time at the beginning not making much progress as you go through the steps of getting from 1 to 100 – the dream being that then, the flywheel is spun up so that you can then go from 100 to 10,000 in the same amount of time.
What advice would you give to a tech startup looking to 10x their company?
Look at the trends in exponential technologies – and imagine them applied to your market solving the same problem. For example, airlines need to be worried about VR. In a few years, we’ll no longer be travelling for business because we’ll have virtual meeting rooms that are just a headset away. Sure, maybe for some important meetings people will still trudge to the airport, but even if it ate only 50% of their market it would be devastating.
Think about your plan for scale – if I gave you 100x the customers and a theoretically infinite credit line, how quickly could you service those people? How about 10,000x? What are the rate limiters on your business?
If the above makes you worried, maybe you need to be working not on “the machine” (your product or service), but the “machine that builds your machine”…
How does ExO offer up new possibilities and perspectives to solve problems?
I like the idea of ExO because you kind of end up building the future. The whole thing is based on your bet of what the world will look like in many years time. I also think that if you’re thinking in an exponential way, there is so much knowledge and opportunity lying out in the open that nobody has seen yet, and it’s exciting to be able to have a go at a piece of that.
How does the ExO theory multiply knowledge, effort, creativity, capital, customers, efficiency for startups?
Some of the important tenets of the ExO theory are being super involved with your customers – up to the point of hiring them, or crowdsourcing from them – and that you have a flat organisational structure where people are empowered to do their best work.
I think when companies get these things right, they’re great to work for and buy from. Things are shared more – for example, a big trend right now is using content to upskill and engage your users. There tends to be a more holistic view of things – so if I put a bunch of time into producing an ebook on whatever is it my company does, the ROI on that isn’t initially clear, but there is a bet that by positioning my company as a thought leader in the space and structuring my product to be appealing to that target demographic it will deliver me more value than a bunch of Google Ads that cost the same amount, but be much more transactional.
I’ve also seen some great examples of ExOs being far more human-centric and recognising that partnerships and integrations can be a great value-add. E.g. in some places you can now book an Uber from Facebook Messenger. Two big companies recognising that there is a clear opportunity to drive more custom to both of their products in a very symbiotic way that delivers tonnes of value for the user.
It is interesting that in some ways as these technologies advance faster and faster we might start to see some of the basic principles of nature come back in here and there.
Can you offer us any ExO startup hacks that we could implement?
The classic Startup thinking goes – “Do things that don’t scale”. I fully agree with this, but some people take it to mean “Don’t worry about planning for scale”. This is wrong. Being Lean and only doing what you need for your next 10x keeps you very productive, but if this isn’t guided by a larger vision of where your company fits into the future then you will eventually run out of track unless you get very lucky.
I would think about your company and your product as two very distinct things. There is a great bit from Mark Zuckerberg where he talks about the fact that Facebook wasn’t a “company” for ages. They were just building a product until they got to a point where they realised this thing had massive potential to be a big, influential company – and then they switched to building that instead – the machine that builds the machine.
I think this also leads into – “know what success looks like” – all of the founders should have a shared understanding of what it looks like when you win. It’s unrealistic to think about working at this pace and on this stuff forever, so it needs to have success criteria. This doesn’t always mean “scale up, sell out” – maybe you want your company to be an ExO social enterprise guided by a company constitution to continue the mission, and maybe success looks like you hiring a CEO to replace yourself in 5 years time to run the company. Just have a plan around where you’re going.
To quote Alice in Wonderland:
“Would you tell me, please, which way I ought to go from here?”
“That depends on a good deal on where you want to get to.”
“I don’t much care where –”
“Then it doesn’t matter which way you go.”
How can I get involved with Mevo?
If owning a car sounds like a drag – then you can join our pre-sales waitlist at mevo.co.nz. We’ll be putting Audi EVs down in central Wellington and Auckland over the next 12 months and we’d love you to ditch your car and start car sharing with us.
Otherwise, if you’re interested in EVs, shared mobility, or the future in general – send me an email at email@example.com
For more insights from local mentors and startups, get yourself on the list for the next edition of Straight Up – Creative HQ’s monthly startup resource that focuses on a different topic startups struggle with each month.