"The future of transport looks very unequal"
RideTandem co-founders Alex Shapland-Howes and Tatseng Chiam on building a transport startup for people other than affluent urban millennials
This week I’m excited to be running a really excellent conversation with Alex Shapland-Howes and Tatseng Chiam, co-founders of U.K.-based mobility startup RideTandem.
Founded in 2019, RideTandem works with local transport providers like taxis or shuttle buses to provide flexible transit options in small towns and cities in the U.K. that are underserved by public transport. It’s raised £2.3 million ($2.8 million) in seed funding to tackle transport poverty, most recently closing a £1.75 million seed round in early May at a £7.8 million valuation ($9.6 million).
RideTandem’s clients are typically employers looking to offer their employees an affordable and easy way to get to work, including Primark, Royal Mail, and Banham Poultry. RideTandem doesn’t own any vehicles or employ any drivers, but provides the technology, matching, dispatch, and service management. Shapland-Howes and Chiam say clients see RideTandem’s service as a competitive advantage, a way to recruit and retain talent in parts of the country where getting to your job can be a very real barrier to having one.
We talk a lot about the ‘future of transportation,’ but an unspoken assumption in those visions is often that they’re situated in dense urban environments. That overlooks the many, many people don’t live in cities and haven’t been able to benefit from the billions of venture-capital dollars poured into ride-hail, micromobility, and other transit tech. I chatted with Shapland-Howes and Chiam about how they got interested in transport poverty, what it’s like running and raising money for a startup that serves the poorest segment of society rather than affluent urban millennials, and what the future of transportation looks like to them.
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This interview has been condensed and edited for clarity.
Oversharing: What got you interested in transport poverty originally and helped you to come up with the idea for RideTandem?
Alex Shapland-Howes: The initial spark was meeting a group of dads who lived just outside Rochdale in the northwest of England. To cut a long story short, they wanted to go get a job, and I talked them about what was holding them back. They didn’t drive, they couldn’t afford to anyway, and the bus route that would have got them from where they lived to where the jobs were was cut three years beforehand. As somebody who lived in North London for 15 years at the time, I had my mind blown by the fact that transport could be a barrier to getting to work. But as we started to read the transport poverty literature in more depth, it turned out this is a problem across huge swathes of the country, particularly in smaller towns and more rural areas. And it’s not just about getting to work. It’s also about getting to education, to healthcare, to affordable supermarkets on the edge of town. And then just to get round and see your friends and family.
What is the definition of transport poverty?
Shapland-Howes: Transport poverty is the confluence of a lack of affordable transport options and poverty ultimately, which then has that impact on people’s ability to do those things that those of us who aren’t in transport poverty, take for granted. Again, getting to work, school, education, hospitals, and then literally just getting around to see your friends. The literature shows that transport also has an impact on social isolation.
Are there any good statistics on what share of the U.K. lives in transport poverty?
Tatseng Chiam: I’ll list a couple. I think in some of the sort of seminal reviews of transport poverty, typically at least 10 to 15% of the working-age population can be classified as having experienced transport poverty. But if you look at the wider population outside big cities, in the U.K. more than 55% of people have what’s considered low public transport access to employment. And especially over the last couple of months, with the rising cost of living especially felt at places like the fuel station, even if you previously weren’t classified as experiencing transport poverty, the cost of car ownership is increasingly going through the roof as well. Interestingly, on one or two of our routes, what we’re seeing is that even some workers who previously had access to a car are starting to make the switch to a service being offered by our clients because they literally can’t afford to go to work.
It’s interesting that you bring that up. I recently was at several micromobility conferences and there was a lot of talk of high fuel prices pushing people to abandon cars in favor of e-bikes and e-scooters. But I have to imagine far more people either don’t have a car to begin with, or aren’t turning to micromobility as a commuting solution.
Shapland-Howes: Yeah. One of the one of the stats that always sticks in my mind is that half of the poorest quintile [in the U.K.] don’t have a car.
Chiam: And as you say, even if people might be interested in exploring other options, I think within places like say central London or central Manchester, e-bikes, e-scooters are reasonably viable given the density of urban structures. Once you move outside into less dense areas, journey times for things like commutes to work do start to significantly increase. And the nature of the paths that you might have to drive—it’s very unlikely that someone is going to be able to take a bike or scooter down a motorway during rush hour.
So have you seen a big increase in usership because of the cost of having a car recently?
Chiam: I think on one or two routes there’s definitely been some sort of initial switch. What we wouldn’t be surprised to see is if in a couple of months, some prospective clients who previously might have had most of their workforce be able to drive might then come back to us saying, actually, with the changing economic circumstances, that’s quite different.
Shapland-Howes: We’ve actually already seen that. So historically, particularly over the last three years, given covid, and specifically in the U.K. given Brexit as well and a lot of former roles that would historically have been filled by European migrant workers not being here, a big proportion of our business has been from employers who basically can’t fill roles unless they work with someone like us to put a transport solution in place, because they literally have no way of getting workers to site otherwise. What we’re starting to see is actually employers where people have recruited people, but again, those are people with cars who are now struggling to afford those cars and as part of trying to attract new talent but also retain their existing talent, then yeah, putting that transport in places is adding value.
Tell me more about RideTandem’s model.
Chiam: One of the neat things about the model is that we leave the discretion to the employer in terms of what sort of pricing range they’re interested in. We can provide benchmarks, but what we find is that roughly half the clients actually provide the transport completely for free because they find it a really competitive advantage in that recruitment set of challenges that Alex referenced. And for the other half, typically, it’s anywhere between, say, £2.50 to at the upper limit £6 or £7 for a daily return trip, so comparable to what someone might expect to pay for public transport, so that it’s still actually affordable.
For the clients who provide it for free, how does that work?
Shapland-Howes: So in that case, the employer would cover the entire cost of running the service. We get the price from our network of local operators, we put a margin on top for ourselves, and the employer would then cover the entire cost.
And in the other scenario, the fares go toward covering the cost and then whatever is not covered the employer chips in?
Chiam: Exactly, but it means it leads to some nice effects and incentives as the employer, of course, is then incentivized to try to get as many people on board as possible to reduce the net cost, and that helps a lot with the environmental impact. And in a lot of cases, over time, employers find so much value that they start to increase the size of the vehicle that they use. So for example, with Primark, they started off with a 16-seater as a trial, then it became a 30-seater, then it became a 50-seater, and in peak period there’s sometimes a 70-seater. Because they genuinely do find that it’s a real differentiator and a way to demonstrate to their employees that they care about their wellbeing, and not just the convenience factor but also the financial costs for the employees.
Tatseng, you wrote a piece recently about what it’s like to raise venture funding for a startup that is “doing things differently”—as you say in this case, building a company whose main customer base is the “poorest section of society” rather than “thirty-something millennials with significant disposable income who live and work in relative comfort in London.” Can you talk a bit more about that?
Chiam: So as you noted, I think one of the interesting dynamics is that in the last couple of years, often a lot of the companies that have received the most funding are precisely those sort of urban, affluent, 30-something millennials. And in many ways, that segment is very much a segment that venture capitalists and other sources of capital often either are part of or have a high degree of familiarity with. When you’re a direct user of a product or service, I think often it’s a lot easier to develop empathy. I do think one of the reasons why, for example, FemTech hasn’t received as much funding as it should is that most VCs are male, and therefore have less immediate ability to empathize and in the worst cases, don’t care to try to bridge that empathy gap in a meaningful way.
The parallel for RideTandem is because our clientele on the passenger side are very much not people who would be within venture capitalists’ social network, there’s less of the immediate, ‘Oh, can I relate or do I know friends and family who experienced this problem?’ That definitely leads to some challenges in that the burden of proof of answering the question, ‘Is this a genuine pain point?’ is something that we always have to be reinforcing much more strongly. In some cases, we show that through revenue growth that we’ve had. The last two years, we did 10x year-on-year revenue growth, for example. In other cases, we’re having to show genuine customer video testimonials talking about what a difference it makes in their life. And overall, we’re always having to think about is there evidence that this venture capitalist cares about impact beyond just themselves as reflected by the portfolio investments that they’ve made.
How important is it for you to find the right fit with your investors? One thing I’ve seen covering on-demand companies is that you often have a situation where the incentives get skewed by investors who want big growth numbers and pump so much money into a company or sector that it starts to drive the product-market fit out of proportion, makes the market irrational, and ultimately can cause it to crash.
Chiam: There’s definitely something around wanting investors who are very much mission aligned. As a founding team, we care a lot about impact. We recruit people who are also excited about the mission. And so we would feel inconsistent to not think about mission alignment in the context of our investor base, especially given that I think I read a stat once that the average investor’s presence at the cap table can be roughly equivalent to the average duration of a marriage.
You actually really do need to find an excellent fit for a couple of reasons. One is that growing a venture-sized business can be a decade’s long plus endeavor, but also, we really care a lot about the impact that we make on our passengers’ lives. The fact that our average passenger uses the service 25 to 30 times a month compared to the average Uber passenger who uses that service two to three times a month. This isn’t just nice to have. This is a daily, essential, and core part of our passengers’ routines.
When you have that responsibility to serve your customers in that way, you want investors who understand that, yes, we have a great commercial fast-growing model, but also, we create a huge amount of social impact and really matter to our passengers. So let’s not cut corners in search of a quick profit. Let’s actually really make sure that we’re building something that is sustainable and can really go the distance.
Shapland-Howes: I think we’re both lucky to not have the financial constraints that a lot of our passengers do, so we’ve had to really immerse ourselves in that world. We spent a large amount of time in the kind of communities we’re aiming to serve. We went and lived in Skelmersdale for a while, which is a small town in the northwest of England, where the bus services are fine if you want to get to Asda in the middle of town, but if you want to get to any of the big industrial estates on the edge of town where a huge proportion of the local employment is, then, well, good luck to you, because they don’t go there.
This was where we ended up running our first pilot. We were arriving at these industrial estates at 5:15am, because that’s when people start to arrive for shifts at six. We were there late into the evening. We were talking to everyone who was walking in the front door about how they got to work. You meet a really interesting mix of people who have walked 55 minutes in the dark because they had no way of getting there. People who took a £7 taxi, so they’re using almost their first hour’s wage just to get to work and then their last hour’s wage to get home again at the end. You met people whose partners were getting up with them at 4am and giving them a lift. So a real mix. We sat in community centers and chatted again about their experience of public transport more widely. I think there was a huge kind of immersion that we needed to do.
There are so many insights that we picked up over the years. But just one of them, for example, that’s impacted how we build the product, is that a lot of people if they are going into work—particularly in that kind of precarious working world, if they’re going back for the first time in a while—they may not have the cash, day one, to pay for their first week of Tandem tickets. So we enable a passenger to still ride for that first week, but pay us for the first week’s transport afterwards. You would find very, very few of our competitors putting things like that in place. But that’s crucial for us because again, that’s where the business started. We wanted those dads in Rochdale to be able to get to work, and again, the chances are they wouldn’t have been able to without product developments like that.
So much money has gone into mobility tech over the past decade, from the Ubers of the world, to e-bikes and e-scooters, to many other tech-based transit solutions. It’s a very hot space. Where do you see RideTandem fitting into that broader mobility tech scene?
Shapland-Howes: Yeah! But interestingly, I don’t really experience that in the places that we’re serving. So if you go to Skelmersdale, Wellingborough, or Rochdale, I don’t see any e-bikes. I don’t see any scooters. There’s no ride-hail. It may as well be a different country in a lot of ways.
Now interestingly the space where there is more capital and innovation starting to emerge in the same kind of geographies that we’re serving is the demand-responsive transport (DRT). So the modern Via, Padam, Spare Labs, Liftango—all of those kinds of guys—which are running flexibly routed bus services. And we think that’s a really interesting model. Obviously there are still some big challenges to prove that that model is going to be commercially sustainable. A lot of the pilots of those services haven’t lasted. It will be interesting to see whether they can get some of those to a point of commercial sustainability. But ultimately, if they do, then we see our services sitting really nicely alongside both those services and, where they do exist, fixed-route bus services.
Because ultimately, we’re all serving slightly different needs. So if you’re doing blue-collar workers at an industrial estate that’s quite a way out of the middle of town, then it probably doesn’t make sense to run a fixed-route bus service there because most of the day there aren’t people needing to travel. And probably also doesn’t make sense to have a Via-style DRT service running because, again, you’re paying for those mini-buses to float around and most of the day there isn’t the demand there to cover the cost of running the service. So that’s one particular example of where our services are perfectly well-positioned.
We were talking earlier about how so much money goes into improving transportation for places like London, which already have amazing transportation.
Shapland-Howes: I think it just comes back to the stuff that Tatseng was talking about. You can see the logic. Those are often the biggest markets. London has around 9 million people. You can see why lots of people would think that’s the right place to go build their mobility startup. They also have the advantage of density—lots of people crammed into a relatively confined area. Uber’s model will work better in that kind of geography. So I can see the rationale, to some extent. But again, what we also need to do, as we’ve gone about doing for the last four years, is building models that are different, that borrow some of the ideas behind what’s happening in big cities, but build models that can thrive and are targeted to the needs of the people in these smaller geographies.
And from a commercial perspective, it’s just worth reiterating that this isn’t a charity thing. More than half the population lives in towns of 200,000 people or less in the U.K., and similar across Europe. Just because each individual market is smaller doesn’t mean this isn’t a huge commercial opportunity. It just means it’s a different commercial opportunity, which means you don’t need the Uber model of taking over city by city, you need a more asset-light model that can serve people remotely. You don’t need a rep in each town, effectively. We now have services running from the east of Scotland down to the south coast of England. And we’ve done that with our remote team across England.
How big is your team?
Chiam: Twenty-three. So quite small. But actually, I think one of the things that’s in our favor given the evolving macro-environment is that we are very capital efficient. As Alex said, we’re asset-light because we don’t own any of the vehicles, don’t employ any of the drivers. Because we get our B2B clients to help cover the costs either partially or fully, we can always know exactly how much revenue and profit we’ll make on each individual journey. We’re actually on course to be ebitda profitable by the first half of next year, which, as you know in this space, is often a rarity. Burn is fairly efficient. I think part of that has come with the fact that we’re not a model that lends itself to ‘Oh, yeah, let’s raise 100 million as a seed round.’ We have to be a lot more deliberate in how we allocate and deploy capital.
And is it right to assume that you’re also generally working on longer-term contracts?
Shapland-Howes: There’s a mix. Definitely longer term than any of those players that we’ve talked about where the demand could fall off tomorrow because they’re B2C. Because we’re in B2B arrangements. Sometimes though we are doing shorter-term things. For example, in the runup to Christmas we do work with Royal Mail, where there’s a lot of extra post that needs delivering. So sometimes they’re shorter, sometimes they’re longer, but again, because it’s B2B, there’s always a defined or longer-term engagement.
Just to wrap up, I think we hear a lot about the future of transportation. And it’s often quite futuristic visions involving driverless taxis or everyone riding e-scooters—something radically different from what we have now. But again, I think what’s unsaid in these visions is that they’re usually situated in major urban environments. And so I wonder from your perspective of where you work and your customer base, what the ‘future of transportation’ looks like to you?
Chiam: For me right now, the future of transport looks very unequal unless we take urgent action to try to close the gap. As you say, provision of transport is already right now very unequal. And when you think about where is most EV-charging infrastructure being installed, where are most autonomous vehicle trials being run—they’re not being run in places like Skelmersdale or Rochdale. They’re being run in places like London, Berlin, San Francisco. One of the things that we’ve always thought of in our mission is adopting those 21st-century technologies to make them viable in the smaller geographical contexts that we operate in. For example, we are starting to have interesting conversations around electric vehicles, because some of our clients are interested in thinking about that net-zero agenda. But in order for an electric vehicle arrangement to work, you need to be able to guarantee that long-term B2B contract to get the transport supplier the confidence to go out to market and buy their first ever electric vehicle.
I think there’s a lot of tweaks and adaptations like that we’re going to have to make. But we do think that one of the elements of our mission is very much around trying to close that gap between big cities and everyone else. It’s not right that more than 50% of people live outside of big cities but yet receive such terrible options and are completely sidelined in these conversations. So I think right now, the future of transport without any thoughtful, purposeful intention looks quite unequal, but we hope to make some sort of dent in closing that.