The demise of Finnish innovator Kutsuplus

kutsuplusA few years ago I wrote about the innovative Finnish startup that was aiming to revolutionize bus transportation.  The project, called Kutsuplus aimed to offer an on-demand minibus service that sat somewhere between a bus and a taxi.

The scheme had big ambitions, but unfortunately ceased trading at the back end of last year.

“We proved the technology worked,” the team said. “[But] we didn’t have the money or courage to go big scale.”

Struggling to contain costs

The team suggest that their primary problem was in maintaining costs.  The vehicles were a significant cost, plus drivers were required to have a three year fixed contract.

They also attempted to make their way in the market as Uber was gaining significant momentum.  In the face of this competition, they struggled to really offer a product that could match up, with the Uber/driver contractual arrangement a significant advantage.

The public/private ownership model was also a complicating factor.  For instance, it shielded the venture from the issues that Uber faced (and continues to face).

It nonetheless posed a substantial burden on the public finances, with the city providing a subsidy of around 80% on each journey.  Given the parlous state of the economy, this was tough to justify.

Failure to scale

To really thrive the venture needed to scale considerably to reduce the cost per passenger.  Whilst this has certainly been achieved by Uber, Lyft et al, it proved impossible for Kutsuplus.

The public nature of the project meant political considerations were inevitable, and this ultimately resulted in their gradual demise, meaning the hoped for revolution in public transport hasn’t happened just yet.

“The experience in Helsinki is a success story because we got to do a pilot. Sometimes it’s just a research paper and no more,” the team bullishly say. The Helsinki experiment proved there was an audience out there for a new kind of public transit system, they add, citing a 2013 survey where less than 2 per cent of passengers who tried Kutsuplus said they would stick with other means of transport.

They hope to test the model out again sometime in the future, albeit this time with a smaller role for the state.


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