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How the digitalization of transport is transforming emerging markets
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00:00Bonjour à tous, c'est mon plaisir d'être ici et de parler à vous sur des choses que nous
00:04avons travaillé avec Babila Car.
00:07First, je ne comprends pas ce que Babila Car signifie. Le terme est « talk in a car ».
00:11C'est plus que le transporte des gens, mais c'est une expérience que nous avons aussi puissé ensemble socialement.
00:18Nous sommes donc prêts à annoncer que nous avons investi 15 millions d'euros en Babila Car.
00:24Et le principal objectif est d'investir en Babila. Babila est un pays, comme vous le savez, qui a des
00:31régions qui sont pauvres, mais aussi des régions qui sont plus avancées.
00:35Et, unfortunately, les railways ne sont pas très développées.
00:39Donc, ce sont des solutions, des solutions que Babila est face.
00:44Donc, tell us un petit peu plus de ce que vous avez fait.
00:47Merci, Maktar. Hi, everyone.
00:49So, maybe taking a step back, I think maybe a few people know Babila Car, but our mission, our renewed
00:56mission since 2018 is really to become the go-to marketplace for shared travel.
01:02Now, what people know us for, and especially in Europe and in France, is actually carpooling.
01:08So, essentially, what we do is we enable drivers, when they drive around the country, to share their car and
01:13take passengers going the same way.
01:15And we've built that in France, we've built that in Europe, and we've expanded into new markets.
01:21What people actually don't realize or know less about Babila Car is that over the last, really, three, four years,
01:29even during COVID, that I think we'll talk about as well, we really expanded outside of Europe.
01:34And today, 60% of the Babila Car activity is actually outside of Europe, in markets like Brazil, like Mexico,
01:42like India, like Ukraine, and several others.
01:44So, we've become a European startup with a very strong activity in emerging markets.
01:51And what we found is that our product, essentially, has an even bigger purpose, as Maktar was saying, in those
01:58markets where the transport infrastructure is actually deficient.
02:02And when, if you think of the culturally, those are countries that are more prone to sharing.
02:09So, we essentially scaled faster in those markets.
02:12And today, you post, let's call that post-COVID, or during that sort of COVID recovery, we have more than
02:19two times, two times more usage in Brazil, in Mexico, in India, that we had pre-COVID.
02:25So, we've seen, like, not just a rebound, but a massive acceleration in those markets.
02:31And one of the challenges, I guess, for startups like us is to find investors that, essentially, can help you
02:39in emerging markets.
02:41And if you think of, you know, most startups in Europe or even in the U.S., they tend to
02:46be focused on Europe, tend to be focused on the U.S.
02:48Maybe if they go from Europe to the U.S., but very few have actually, you know, essentially knowledge or
02:55have expanded into emerging markets.
02:57So, one of the challenges we faced over the last two or three years was finding partners locally or globally
03:03that can actually help us on those markets, specifically Brazil, but India and Mexico and so on.
03:10And we came to realize that the World Bank, through IFC, actually was doing that.
03:16And maybe, you know, passing the mic back to you, I mean, I didn't know, like, a year and a
03:22half ago, I didn't know what IFC was.
03:25I didn't know that World Bank was investing in startups.
03:27And I think it would be helpful for, you know, everyone or any entrepreneur, essentially, like, pushing startups outside of
03:34Europe and specifically that want to have, like, a positive impact, social, environmental, as we do in those markets.
03:40How can you help and how can you, sort of, maybe promote IFC a bit better?
03:44No, thank you very much, Nicolas.
03:45I mean, we've been putting $1.9 billion in the last six years in startup.
03:49Why did we decide to invest in startup?
03:52It's because we want to solve problems.
03:54It's not the purpose of IFC is not to make profit solely.
03:58It's to bring the private sector to solve developmental issues.
04:02And those issues, often we can solve them much faster by using technology developed by startup.
04:08Let me give you a couple of examples.
04:10A country like Kenya, on fintech, as a leapfrog, is now considered as one of the leading countries in the
04:16world.
04:16And the question for us was, how can we increase financial inclusion?
04:22If we wanted to do it in a traditional way, to use all the instruments, the network of banks, we
04:28have never been able to bring people to have financial services.
04:32So we worked with the Kenyan, and we had what today everybody knows, M-Pesa.
04:38The same on transport.
04:40We know that urban transport is a main challenge in a lot of countries.
04:44Intercity transport is hurting the poor.
04:46When the poor has to travel from one place to another, they're struggling.
04:51So what we wanted to do is to say, how can we work on these, in spite of the deficit
04:58on infrastructure, we can accelerate the mobility of people to help them reach markets.
05:04And those type of innovations, that's what make us very, you know, looking at what you are doing.
05:10But that, for us, there is something very important, which is climate change.
05:14We know that, you know, the one-person car model is not sustainable for road safety, it's not sustainable for
05:22cost, it's not sustainable for a certain number of things.
05:25And therefore, for us, it was very important to team up with you to be able to take your model.
05:30And the idea is to replicate it and to help you work on other markets to be able to provide
05:37those type of services.
05:38So at the end of the day, IFC is here to make some profit, but mainly is here to solve
05:43developmental issues and bring the private sector as a solution to it.
05:47And maybe to rebound on that and give some examples of the impact we have in emerging markets, I mean,
05:54if you take a place like Brazil or, again, Mexico, India, again, the transport infrastructure is pretty poor.
06:01So traveling, and those are pretty large countries.
06:03So it's the opposite of Europe.
06:05So it's large countries where the transport infrastructure has not been developed, not as much, as you said, no trains
06:11in Brazil.
06:12And some places are just very hard to reach, and car ownership is actually not that high.
06:17So if you look at the car ownership of these countries, it's much lower than essentially what we see in
06:23Europe.
06:23So clearly, like, the use of the car, the mindset around the use of the car is completely different.
06:28But what we are unable to do is actually to connect villages and places and suburbs that are not connected
06:34today by public transport.
06:36So if you look at a place like Brazil, 60% of the routes on black-backed car, so what
06:41drivers offer and what passengers book, essentially, do not have a substitute.
06:45So what that means is they do not have, like, a direct bus or direct train or direct whatever connection.
06:51So what you end up doing is you end up, on the passenger side, essentially enabling transport, enabling direct transport
06:58in a very affordable way because it's purely based on sharing of the driver.
07:03Also, surprisingly, actually, in a much safer way, safer way in two ways.
07:08I mean, one is we created, like, a very trusted community where, essentially, like, we track users in a positive
07:14sense.
07:14So, essentially, we create profile, unicity of profile.
07:17We create ratings.
07:18So, essentially, you create safer travel.
07:20And what we found, you mentioned road safety.
07:22What we found doing some studies in Europe, which we need to do in emerging markets as well,
07:27is that, actually, when you take passengers in a car and you have more people in a car, your likelihood
07:32to actually drive faster, have accidents, or fall asleep actually goes down.
07:37So, actually, safety, when you carpool, is actually higher, which is sort of natural.
07:41Like, you're not going to go and text and do calls, essentially, if you carry some passenger.
07:46So we have all these positive externalities.
07:50I'll give two examples of, like, how the power of a people-powered network around cars.
07:57One was COVID.
07:58So COVID was a bit of a disaster for us, right?
08:02So if you think of, like, shared travel, it's pretty difficult in March or April 2020 to say, like, it's
08:08a good idea to share your car with a stranger, right?
08:10So we've seen the activity go down overnight, which was, like, a frightening moment of, like, all the business you've
08:17built for more than 10 years is collapsing overnight because of something that no one predicted.
08:21But what was very interesting after that was to see that during all the rebound and lockdown and deconfinement and
08:30all of that,
08:30essentially, we've seen the activity by itself essentially going up and down and so on,
08:35when other means of transport could not do that because if you're a bus company or a train company or
08:41an airline,
08:41it was impossible to provision supply because you would not know that a month or two months down the road,
08:48you would have demand.
08:48Demand became totally unpredictable.
08:51And in a world of unpredictable demand, essentially, if you have a distributed network using human intelligence or collective intelligence
08:57to build the network,
08:58it becomes very powerful.
09:00The second example on that, which is very new, was obviously the invasion of Ukraine and the war in Ukraine.
09:07And essentially, like, the entire transport network was, A, not usable.
09:13I mean, trains were not running anymore.
09:14Buses, most buses were actually shutting down.
09:17And you had, like, a population wanting to go west and wanting, essentially, to leave the country.
09:20And what we've seen is, like, the BlaBlaCar network organically reorganized itself within a week or two,
09:27with lots of drivers actually offering for free, actually, offering seats for passengers going west.
09:33And we moved half a million Ukrainians within, essentially, two or three weeks at the beginning of the conflict from
09:40Ukraine to Poland or to West Ukraine.
09:42And that would be impossible with an existing infrastructure.
09:46So that's sort of this collective intelligence, essentially, built in a distributed network,
09:52which is what, like, most of these emerging markets actually need,
09:55because we're not going to be able to build, I guess, rail all over Africa, all over Latin America, in
10:01a sensible way.
10:02And people have cars, and they're willing to share them.
10:05So that's why we see such right adoption.
10:09And maybe you're transitioning to maybe a broader topic for you to conclude.
10:15What do you see as opportunities for startups that tend to be very European and U.S.-centric in those emerging
10:22markets?
10:23Like, today, if you're a French or a European entrepreneur, why would you go there?
10:27And what do you see, I guess, from your vantage point as interesting opportunities beyond transport, I guess?
10:32I just came back from Abidjan, where we had a CEO forum, which was a gathering of 1,800 people,
10:38to many businessmen in Africa.
10:42And one of the messages that I gave there was to ask African billionaires to invest in the startup ecosystem.
10:50Because what we are seeing so far is still a company fund from the U.S., fund from Europe,
10:56investing in startups in emerging economies.
10:59So try to bring, also, the big investors, the billionaires in those countries to understand
11:05that this ecosystem is very important to develop, and to invest in it is something that we'll be doing.
11:12Secondly, a theme that has been coming out very strongly is shared infrastructure in all areas.
11:18When you take connectivity, sharing base, the old models were very integrated,
11:24by the telco owns the base station, owns the other license, et cetera.
11:29So right now, we are moving in a different direction,
11:34where we are unbundling it and having much more shared infrastructure.
11:38So what we are seeing in transport, we are seeing it also in connectivity,
11:41we are seeing it in other sectors.
11:44So now we have, for instance, some of our clients,
11:47who are electricity distributors, who have dark fiber,
11:54because they have a lot of fiber installed that they are using to monitor their network.
11:58We want now to monetize it and are bringing it to the market.
12:02So we see a lot of interaction and a lot of innovation in that area.
12:07What we have seen also is there is a lot of creativity in emerging economies.
12:15And it's not something that is not noticed by the largest fund,
12:19because now you have more and more funds for Silicon Valley,
12:22who are scanning what is happening in emerging countries,
12:25and who are investing in it and increase the valuation.
12:29Recently, a Nigerian-born bread study, who studied in Nigeria,
12:36had his startup bought $200 million by a company in Silicon Valley.
12:42And we're seeing more and more of this.
12:44So my message to you, guys, is let's make sure that we can link those ecosystems
12:50which are being developed in emerging economies and what is happening here.
12:56So that's the reason why we are, at IFC, developing a partnership,
13:02if you are tech, but also with Station F,
13:04and we will be creating a small hub here in Paris
13:07to be able to connect the Parisian scene with this emerging market.
13:13And we are seeing a lot of interest of people connecting.
13:17And lastly, I have to talk about it,
13:19we are giving, later on today, Africa Tech Award.
13:23So with Maurice Levy, we will be giving an award,
13:29and there are nine finalists.
13:30But when you see the type of talking and problems they're trying to solve,
13:34it's quite exciting,
13:36and I think that will be helping a lot of countries in emerging space
13:40to leapfrog and provide solutions which are much cheaper and more interesting.
13:44Lastly, is that the regulatory framework.
13:47As we are bringing all these solutions,
13:50you have incumbent who sometimes are not very comfortable
13:54with having some solutions which are disruptive,
13:57but you are lowering significantly the cost of some services.
14:00So part of our job of IFC is to engage with government
14:04and convince them that this disruption is very good for the country,
14:10is very good for the poorest of the country,
14:12because it provides services at a much cheaper price.
14:15But it's not an easy task,
14:16because we need to disrupt the existing consensus,
14:21and that's always a bit challenging, as you all know.
14:24Thanks, Mkhitaryan.
14:25And maybe I'll conclude with a couple of thoughts.
14:28And first of all, thank you for this inspiring speech.
14:32I mean, the first one is, you know,
14:34I've been going on stage saying that startups should go global
14:37for the last, you know, almost 10 years,
14:39and that's what we've done with BlaBlaCar.
14:41And I think, you know, maybe a message to all entrepreneurs,
14:43I mean, it's really worth it,
14:45and it's really needed for European startup,
14:47but it's not a straight road.
14:49So you're going to go up and down.
14:50And as Mkhitaryan was saying,
14:52I mean, when you start launching your service,
14:54you're within a few years.
14:55We've done that in many countries,
14:57like, you know, four or five different countries.
14:58India and Mexico and Turkey.
15:02It is a long road, so it takes time.
15:05Even if you have very fast adoption,
15:07you're going to face regulatory headwind,
15:09and you need to find good partners,
15:10and hiring is more complicated,
15:12and, you know, all of that essentially adds complexity.
15:15So it takes more time.
15:16The road is not going to be a straight road,
15:18at least for us it's not been.
15:19It's been a bumpy road, but it's worth it.
15:22So clearly it's worth it.
15:23And maybe, you know,
15:24other thing to mention is thinking about, like,
15:28the humility that we had to have, essentially,
15:33during COVID and during, like,
15:35all these external factors that can affect your business.
15:38And as early entrepreneur,
15:40I think I never thought that our business could depend so much
15:43on complete externalities and macro factors.
15:46So when COVID came, essentially,
15:49all, as I said,
15:50all the business we've built disappeared overnight.
15:53And we don't have infrastructure,
15:54so we had to essentially hope and bet
15:57on drivers coming back,
15:59offering their rights on the back of the activity to pick up.
16:02And it did.
16:03And it did because we have a good brand,
16:04and it did because we have positive externalities,
16:06socially and for the environment.
16:11And today, the world has changed again,
16:14and we have high petrol prices,
16:16we're talking about recession,
16:17we're talking about inflation,
16:18and we have, like, better numbers than ever.
16:21So if we look, essentially,
16:22at, like, drivers coming back,
16:24you know, the last couple of months,
16:25we've had the record numbers.
16:26And again, is it because we are very smart
16:28and we've done something magical in between?
16:31No.
16:31I mean, I wish I would say yes,
16:33but no.
16:33Actually, it's the environment that has changed again.
16:36So, actually, as you grow,
16:37you become a lot more dependent on macro factors
16:39than we think.
16:41And having people beside you,
16:42essentially, that understand
16:43and can help you navigate
16:44those macro factors actually become useful.
16:47Thank you very much.
16:48Something that I really would like to leave you with
16:51is money is important,
16:53but regulation is as important.
16:56And sandbox regulation,
16:57and you explained to me how you had to explain
17:00that the regulation that was existing in the country
17:04was not adapted to what you were doing.
17:05and you are basically to help the country
17:08rewrite their regulations.
17:10Those sandbox regulations are essential.
17:13And I think exchanging around those sandbox regulations
17:16and be able to point to a country
17:19and say, you know, they tried this.
17:20It's not a disaster.
17:22It's working.
17:23The services are improving.
17:25You will give confidence to policymakers
17:29to start shifting
17:30because it's not always easy for a regulator
17:33who used to have things put in a very rigid way
17:38to be able to shift and adopt new technology
17:42and new way of regulating those technologies.
17:44So, the last point I wanted to make
17:47is not only about money,
17:49but it's also about a regulation
17:51and regulatory framework
17:52that will allow all of you
17:54to implement these innovations
17:56in emerging countries.
17:59Thank you so much.
18:00Thank you.
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