Tomas Martins On Building The Largest Micromobility Company In South America With Over 2 Million Rides Per Month

Tomas Martins is the co-founder and CEO of tembici which is a Brazilian bike-sharing company. The company has raised over $60 million from investors such as International Finance Corporation, Redpoint eventures, Valor Capital Group, and Joa Investimentos to name a few.

In this episode you will learn:

• Growing yourself as a leader at the helm of a fast-growing business
• How to buy a company that is much larger than yours
• The future of mobility and infrastructure
• Tomas’ top advice for other founders
• How Brazil’s VC ecosystem is growing

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About Tomas Martins:

Connect with Tomas Martins:

• Linkedin
• Crunchbase

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FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a founder from Brazil. There is an exciting market there, an explosion of growth, also in startups, and I think that we’re going to be learning quite a bit about building and scaling a company there and the journey of this founder, as well. So, without further ado, I’d like to welcome our guest today, Tomás Petti Martins. Welcome to the show.

Tomás Petti Martins: Hello, Alejandro. It’s a pleasure to be here.

Alejandro: Originally born in São Paulo. So, how was life growing up in São Paulo?

Tomás Petti Martins: It was nice. It’s a big city, a huge metropolis, so it was nice. I grew up here, and I’ve spent all my life in São Paulo, and I’ve seen all the difficulties of commuting in the city every day. I’ve learned a lot, and that’s the problem I’m trying to address here.

Alejandro: Absolutely. Was anyone in your family also an entrepreneur or anyone involved with business that you saw directly or indirectly?

Tomás Petti Martins: My grandpa is an entrepreneur. My dad is a doctor. My mom is a biologist, so a little bit different backgrounds.

Alejandro: A little bit of influence from everyone. That’s good stuff. I know that at 16, you did an exchange that implanted the seed of what you guys are doing today with Tembici and definitely something that changed everything for you. So, tell us about this experience in Holland.

Tomás Petti Martins: When I was 16, I had an opportunity to do an exchange program, and I did it in Holland, mostly in Holland. In that opportunity, I used a bike every day to commute. That was something that was really nice and changed my life because it was something related to freedom. I could take my bike and go to the school, to a metro station, to another city. It was something really nice, and I said, “Okay. That’s amazing. I just have one small device here, and I can wherever I went. That was something I was thinking all the time when I returned to São Paulo and said, “Guys, why can’t we use bikes here to commute? That’s something really nice, and for me, it’s related to freedom.”

Alejandro: Absolutely, and as they say, ideas take time to incubate. So, before you actually did anything, you went back to Brazil, and then you decided to study International Relations. What got you into International Relations?

Tomás Petti Martins: At the university, something funny, how I decided that. 

Alejandro: I hear you. Absolutely. 

Tomás Petti Martins: For me, it was something because I like to travel, actually. That’s the truth. I love what’s happened all over the world and see how the countries have been developing, the difference between futures and everything. That was something I was always excited about, so I decided to study International Relations. When I finished at the university, I started to do sustainable projects. Like, how can you use best practices or benchmarks in sustainable projects all over the world and bring to the region, to South America?

Alejandro: And that got you to connect with your co-founder today, Maurício, and at the time, he was studying, and one of his last projects was doing something around bike-sharing like what was happening in Paris and London, where also this bike-sharing was already booming. What happened there?

Tomás Petti Martins: Yeah, Maurício, my co-founder, had a double degree in French, and he saw the first bike-sharing schemes being launched at that time, and he loved it. He said, “That’s amazing. You don’t have to own the equipment; you don’t have to own the bike. You just take a bike for a while and go wherever you want.” When he came back to Brazil, he decided to do his final work at the university. He was trying to simulate a bike-sharing station, like his final job in the university. I met him at that time. I was doing sustainable projects. I saw that solution. I say, “That’s amazing.” He was also looking for a co-founder, and then we decided to go together, and that was 2011.

Alejandro: What led you to believe – obviously something that was working in Paris and London. Why did you think something like that could be interesting to implement in South America?

Tomás Petti Martins: Certainly, I was always curious about this. Why do you have to take two trains to commute up to five miles? It makes no sense. It’s not efficient for you, for the cities, for the society. After the experience that I had in Holland, that was something I was always thinking about. Do we have to have a car? In Brazil, when you’re 18 years old, everyone was dreaming of having a car, and that was something to say, “Hey, it’s good you can commute, but you don’t have to have two tons of [7:05] with you to commute. You can think in better ways to do that.” When I saw the solutions and the bikes and everything that had happened, that was something I was dreaming about, how we could offer for the cities and for other societies. So, it’s the solution to commute in the short miles. I think that’s why I decided to jump into this venture.

Alejandro: This was in 2011 when you guys decided to jump in and start the business. But I assume that with a business of this nature, the logistics and the maintenance, it must be very difficult. What were some of the challenges that you guys were experiencing during the early days?

Tomás Petti Martins: The challenge was we had to do everything. Our first project was 40 bikes in a small city, here, on the beach in Brazil. We spent one year in the city trying to make it work. We were trying to make everything work. We had to produce assembling the bikes. Do the [8:16]? Do the financials. Do the marketing. So, it was a challenge. We had four partners at that time, and we had to do everything. But it was really nice because also, we could learn, by ourselves, what it is to operate a system like this. What the users need or your clients need was the challenge on the maintenance and the logistics, so it was something that we learned by doing ourselves.

Alejandro: Got it. For the people that are listening, what ended up being the business model of the business? How do you guys make money, and how did that business model evolve to what it is today?

Tomás Petti Martins: Something we learned from the beginning, we always had two main revenues in this business. One is sponsorship, so advertising and the other one is the user revenue. These two combined are our total revenue. 

Alejandro: For a company like this, I would assume, as well, that you would need a little bit of money to execute. How much capital have you guys raised to date for the business that is publicly disclosed?

Tomás Petti Martins: Until now, we had 65 million dollars in equity. We have more debt, but we don’t disclose this. But, also, our business is a little bit different because we have the sponsorship, so with the sponsorship revenue and this edit or not if you need to finally [10:10]. The total number is 65 million dollars in equity.

Alejandro: Talking about sponsorships, because I know that back in around 2014, 2015, you guys hit a wall. There was a time where almost everything fell apart, and you were very close to not making it. What happened there?

Tomás Petti Martins: Yeah. I think that’s so important when you are an entrepreneur. You always have to believe. I think that was the lesson at that time. At that time, we had a company with around 15 employees. We were cash-burning $50,000 reais per month, and we didn’t have more cash in the bank account. So, we had one more month to survive. By that time, we always believed that this company could do great things, but we always knew that it’s a capital-intensive company, so we knew that we had to have good contracts to survive. At that time, we were negotiating with a bank, one of our sponsors. They offered us $30,000 reais per month to do a new project. But we were cash-burning $50,000, so the $30,000 would not make it. Even with that, I say, “Okay. I want to do this project. Let’s see what will happen. We have 30 days; we have nothing to lose.” Then, we say, “Okay. Let’s go ahead.” Three days later, the bank called me and said, Tomás, we have something to do here with taxes because of our fiscal year, we’re going to pay everything upfront. So, they pay us $40,000 reais upfront. We say, “Okay, guys. Amazing because now, we have three or four months to survive.” So, we made it. We survived for three or four months. But more than that. At that time, in 2014, we did 2 million reais in revenue. After this contract, we made it 7 million reais in revenue in two or three months. One year later, we bought a company that was ten times our revenue, so it was a turning point in the company. We hit the wall, but I don’t know how we crossed it, and then one year later, we were the largest micromobility player here in the region.

Alejandro: And talking about going from breakdown to breakthrough, wow! At that point, even before that contract was signed, how many days did you guys have left of life, of revenue?

Tomás Petti Martins: Less than 30.

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Alejandro: Less than 30 days. What was going through your mind? How were you able to keep things together?

Tomás Petti Martins: I think I had two or three times in this venture that I didn’t sleep, and for sure, that was one of them.

Alejandro: Yeah, because when you go through these types of moments, it’s very easy to go into your own head and start planning out the what-ifs, and that could be very tricky. 

Tomás Petti Martins: Yeah. But again, I never thought that we were not going to make it. We fought hard for this company since the beginning. We are fighting against the cars in the streets, an industry that has more than 70 years, so you have to fight for this, I believe. I think that’s our history here. We always fight all the time. Even now, we’re still fighting because our streets are full of cars. We have found an efficient way to commute. That’s our history here.

Alejandro: Absolutely. Here, you guys were able to turn it around. You get those contracts; the revenue keeps growing. Then, literally, a company. At that point, you had about 70 employees, and you had a company with over 400 employees that apparently you are able to acquire them. How did you do that, Tomás?

Tomás Petti Martins: There was an interesting story, but the truth is, we found an investment firm. They were looking to invest in this micromobility industry. Our sponsorship went to do something new with this bike-sharing system in Brazil. So, we did this because, with this sponsorship, the contracts in our hands could last more than three or five years. With the other company, they would end the contracts. So, that contract in my hand has a lot of value. Their hand has no value. Because of that, we’re able to buy the projects and acquire the company. 

Alejandro: Why did it have more value in your hands than the value it could have had in their hands? Was it maybe like the distribution or the way you were looking around logistics, or why?

Tomás Petti Martins: Because of operations and the equipment. We had a much better technology and much better operations and logistics and maintenance. Then, it was because our product was much better for the users and for the cities because of that.

Alejandro: Wow. Then, here you are 70 employees, acquiring a company that is 400 employees. How do you go about integration like in a scenario like that because it’s not about the acquisition, it’s about the integration to really make the deal successful?

Tomás Petti Martins: Yeah. All the negotiations took six months up to nine months. We knew that we would acquire that company, so I start to prepare the company, the management team before. I hired a good CFO, and I had a [16:32]. I started to hire these because I knew that in six months, we would have this company. So that was something we did. But, of course, you can plan everything, and then day one, everything is different. I think, at that time, you have to react fast and always be transparent because when you are acquiring a company, everyone is a bit afraid. I think that the lessons we took – you always have different transparency. You don’t know exactly what’s going to happen, but if you just show that you are transparent and you are open to change, you have to know how to learn with them, as well, not because you are acquiring that you know everything. I think those are important things to do when you’re acquiring a company. We also did this – one year later, we acquired a company in Chile, and I think it was the same thing.

Alejandro: So, obviously, transparency and communication. 

Tomás Petti Martins: Yeah.

Alejandro: I totally get that. Now, there’s a lot happening around micromobility. Where do you think the space is heading as a whole?

Tomás Petti Martins: That’s something that I think is the most interesting thing in this industry because it’s a new industry. We have to understand a little bit about this industry so we can understand it in the future. When you saw the numbers, you can notice that 70% of the commutes in the cities are less than five miles. So, the addressable market is huge. You have a huge space to provide with these micromobility solutions. So, that’s the first thing. The second thing is, what is the best way, the most efficient way to commute up to five miles? Is it with a car? No. Our streets will not support more cars in the streets. Our cities – we cannot support more cars in the cities. These new devices will appear all over the world every year, so that’s going to happen. But what is the challenge here? The challenge is, you are competing – people have to change their habits. They have to change their minds on how to commute in this distance. I think that’s one thing. The second thing is, the cities have to be more prepared to do this, the structure, the initiatives, everything. The third one, you have to understand that you are competing with a huge industry. The car industry has more than 60-70 years; they have invested in technology; they have the infrastructure that is made for them. I always like to say, [19:39], Alejandro. If you take São Paulo, 80% of our infrastructure is made for cars: streets, avenues, it doesn’t matter. 30% for the other mobility options like cycle lines, sidewalks, metro stations, bus stations. But 80% of her commutes are made by these other mobility options and 20% for cars. So, you have 80% of her infrastructures are serving 20% of her commutes. That makes no sense. But you have to understand this, and you have to understand that this is for the long-term? You’re not going to create a company in one or two years that’s going to make it really fast. It’s something for the long-term. It’s a big trend. It’s a huge market, but you have to have the right product, and you have to have the right business model. I think all these initiatives that have been created all over the world, they are amazing. It’s really nice. Everyone’s trying and doing their NVP, trying to do something new – a scooter, bike, moped, it doesn’t matter. Of course, you have two or three years to accommodate the right product, the right business model, and then you start to scale the solution. I think that’s something important to understand in our industry. It is not something that’s going to happen in six months. You launch a company, and then you have a huge business – no. You have to partnership with the municipality. You have to partnership with good companies, and you have to partnership with the society. The society has to understand that you are providing a better solution for the daily commuters. So, it’s something you have to build for the future while understanding that it’s a long-term future.

Alejandro: Absolutely, and the traffic in São Paulo is pretty insane, so I’m sure that people there will really appreciate what you guys are doing. Here, we’re talking about developing businesses. I want to ask you, how have you seen the venture world develop in Brazil over the past couple of years because you’ve been at it now since 2011 where South America has been very green when it comes to startups and building and scaling companies, and it has come a long way. So what can you tell us about this?

Tomás Petti Martins: I think it’s a more major market now. We had our record investment last year. Maybe we’re going to have again this year. Let’s see how it’s going to be beyond this pandemic period, but I think it’s more major. For us, it’s funny because in 2014, when you mentioned the story that we hit the wall, it’s funny because we were trying to fundraise at that time, and we received four or five noes because they said, “No, guys. You don’t have a business. You’re going to hit the wall in like two months.” And that was true. We almost hit the wall, but at that time, people didn’t understand so much what it is to be entrepreneurial, how to do this in the region. But now, I think it’s much more mature. I think more than money that’s coming to the business, I think there’s smart money; it’s something we’re seeing growing a lot here in the region. We have here, Trafalgar, RedPoint, much more than the money they bring to the company is the discussions that I have with them weekly. They know what’s the problems you are facing, and they know how to help. I think that’s something really important for the business. It’s not only the money, but it’s how they can help you to build and scale the business.

Alejandro: Absolutely. Talking about scaling and building the business, for the folks that are listening, could you give them a sense of how big your company is today, maybe anything around how many employees or anything interesting there?

Tomás Petti Martins: Yeah. We are now the largest micromobility company in Latin America. We do more than 2 million rides per month, with only 16,000 bikes. We have operations in Brazil, Argentina, Chile, in the bigger cities like Santiago, Buenos Aires, Rio, São Paulo. We have revenue – we don’t say exactly the number, but it’s more than 100 million reais per year, and we have more than 800 employees.

Alejandro: Wow. More than 800 employees, you said. Is it 800?

Tomás Petti Martins: Yes. 800. 

Alejandro: So, more than 800 employees. How would you say that you have also grown yourself at the same speed of the growth of the business because, in many instances, you see founders that are not able to grow at the same speed? In this case, how would you say that you were able to develop yourself at the same speed with the business? 

Tomás Petti Martins: I think that is the biggest challenge. That’s a good question, Alejandro. Five years ago, I was maintenancing the bike. And now, you have to run a company with two different founders with a lot of the way. No doubt, that’s the biggest challenge. Again, you always have to be transparent. You always have to say what your limit is and show your limit to everyone. “So, guys, I know these. I don’t know these. How can I learn that?” I don’t believe in this superhero history from everyone. I don’t think that works. I think that I’ve learned that they have their limits. People have their limits, and an entrepreneur is the same, so you have to know your limits, but you always have to challenge yourself and change these with people – with your neighbors, your partners, your family, and see how we can improve ourselves. I think that’s the lesson that we’re not perfect, but we try hard. I’m doing this here. I don’t know if it’s right or not, but it’s what I’m doing here.

Alejandro: Absolutely. Imagine if you go to sleep tonight, and you awaken five years later – an unbelievable snooze – so you wake up five years later, and you wake up in a world where the vision of the company is fully realized. What does that world look like?

Tomás Petti Martins: We have a big avenue here that’s called [26:55], and they have 80 streets and two-cycle lanes. So, I always say that it’s a bit reverse: 80 cycle lanes for two-way streets. I would say that’s my vision is to see how we could create that city that the mobility options would be much more efficient for everyone with no gas emissions and that people could spend much less to commute, but also be a fast solution.

Alejandro: Got it. Now, with everyone talking about climate change, it sounds like timing is definitely on your back. That’s good stuff. So, Tomás, you’ve been at it now since 2011. Talking about a tremendous amount of experience and an incredible journey full of ups and downs and full of lessons learned. One of the questions that I typically ask the guests that come on the show is if you had the opportunity to go back in time and have a chat with that younger Tomás, that younger Tomás that was thinking about launching a business like the one that you’ve built. What would be that one piece of business advice that you would give to yourself before launching a business, and why knowing what you know now?

Tomás Petti Martins: I think in the beginning, we are four partners, founders and co-founders, but we are all the same age, and I never have a soundboard neighbor of someone to exchange experiences, and that was really thankful because I think we asked for things that we could learn with someone that was already there. So, try to find someone that can give you advice or that can help you in your challenge. That would be that advice I would give to Tomás: you are not the hero. You have to ask for help from people and have good people around you. 

Alejandro: I love it. So, Tomás, for the folks that are listening, what is the best way for them to reach out and say hi?

Tomás Petti Martins: Just send me an email. It’s easy: to***********@*****ci.com

Alejandro: Amazing. And are you also active on social media?

Tomás Petti Martins: Yeah. Just add on the #tembici.

Alejandro: Okay. Fantastic. Tomás, thank you so much for being on the DealMakers show today.

Tomás Petti Martins: Thank you, Alejandro. It was really nice.

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If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at al*******@**************rs.com.

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