Driving Change: Inside the Success of OXDrive with Entrepreneur Juhan Kaarma

OX Drive is a pioneering car-sharing enterprise based in Latvia, that was started by Juhan Kaarma and his 3 co-founders . With an all-electric vehicle fleet and impressive growth trajectory over the past two years, OXDrive stands as a testament to Juhan's entrepreneurial prowess. His journey into the world of business commenced immediately after university, opting for the dynamic realm of tech startups over conventional employment. Despite encountering initial hurdles, including ventures focused on chatbot-driven website builders and customer support solutions, Juhan's tenacity and adaptability have remained unwavering. Now, at OXDrive, he and his team are revolutionizing urban mobility. This interview offers insights into Juhan's entrepreneurial journey and the driving forces propelling OXDrive's remarkable success.

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Setting up OXDrive

‍Gunnar Froh , CEO & Founder , Wunder Mobility

Could you elaborate on how your early experiences, from military service to reading TechCrunch, influenced your journey into entrepreneurship and your current focus on electric cars, including Tesla, Audis, and Porsches? 

‍Given your extensive experience in raising funds and launching startups, particularly with international investors and accelerators such as Axel Springer's Plug and Play Accelerator in Berlin, as well as involvement with agents from San Francisco and former Pipedrive co-founders, how did this journey prepare you for the launch of a car-sharing venture?

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Juhan Kaarma, CEO & Co-Founder, OXDrive

One thing I'd mention is that with experience, you become familiar with the necessary steps to launch a venture efficiently. For instance, the initial process of securing funding and setting up legal and operational structures might take longer, but subsequent endeavors benefit from this knowledge. Experience teaches you to prioritize tasks effectively and recognize when an idea isn't worth pursuing.

Navigating the fundraising process involves various steps like building tech, financials, and pitching to investors. Early-stage founders often receive positive feedback from investors, but it's essential to distinguish validation from genuine interest. Experience enables you to discern early signs of success or failure and adjust accordingly.

Regarding software development in car-sharing, prior experience in building software services proves invaluable. Integrating backend software with external systems and automating internal processes enhances operational efficiency. Despite not being a developer, my background compelled me to build the initial website, illustrating the practical application of IT knowledge in launching ventures.

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Development & Independence 

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Gunnar Froh , CEO & Founder , Wunder Mobility

After launching OXDrive fueled by your passion for EVs and recognizing Latvia's interest in electric vehicles, what was your go-to-market strategy for introducing cool EVs into the car-sharing landscape, and how did you initially attract customers?

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Juhan Kaarma, CEO & Co-Founder, OXDrive

We weren't worried about finding the first customers. We knew it would be popular and have high adoption. The challenge in the beginning was securing debt financing for the cars, as equity was easier to raise. Four of us approached a bank for a loan to buy Teslas, but it was difficult. Equity investors don't fund car purchases, making asset acquisition tough.

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Tesla's absence in the Baltic markets added another challenge. Lenders were unfamiliar with financing Teslas and lacked experience in car maintenance. Despite these challenges, once we launched, it took off quickly, of course it helped that my co-founder, Egija, is very, very good when it comes to marketing.

We had a crazy launch event where we spent very little money on, but basically had all of the Latvian media and all of the influencers at that event, and everybody was talking about it. And I think we were like number one news kind of, with this story for a week after we launched. So we got something like 12 or 15,000 users in the first few days and then it just kind of kept going from there.

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Gunnar Froh , CEO & Founder , Wunder Mobility

Initially, you highlighted that the primary challenges were securing debt financing for asset purchases and sourcing cars due to Tesla's absence and lack of buyback guarantee. Given the perceived ease of equity financing, do you attribute your success in this area to your prior startup experience and established connections, and do you believe it's universally applicable?

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Juhan Kaarma, CEO & Co-Founder, OXDrive

We weren't raising much in equity, around 500k, which isn't a huge sum even in the Baltics. We had a network of investors, mainly angels investing 10k to 75k, which made it easier to gather the funds. It took about one and a half years to raise the equity. We aimed for 500k but managed to accumulate that amount three times.

However, we lacked the debt to buy the cars, causing some investors to withdraw. After three attempts, we finally succeeded in securing both equity and debt financing.

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Gunnar Froh , CEO & Founder , Wunder Mobility

Very interesting. As for the equity financing part, at first, the numbers are like in reach. If you bring several people together and you mentioned before we started recording that there were, for example, at least one person that they were interested in investing in your earlier startup, but that was already coming to an end. So you brought them with you. So I assume many of them were basically investing in you and your co-founders and not necessarily in the people?

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Juhan Kaarma, CEO & Co-Founder, OXDrive

Yeah, especially when it comes to the angels. We have about seven angel investors on board, along with a non-bank lender who acts as both an equity investor and a debt provider. The angels believe in the vision and invest more in the founders and the story rather than just the excel model.

What's next on the horizon?

Gunnar Froh , CEO & Founder , Wunder Mobility

What's the fleet size that you think is realistic that you could be having roughly, like all of a sudden in two years? And where would they presumably be? What kind of locations?

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Juhan Kaarma, CEO & Co-Founder, OXDrive

Currently in Riga, we plan to expand to Tallinn and Vilnius in the next few months, covering the entire Baltic market. Our goal is to grow to approximately 850 cars within the next 12 months, which we believe is achievable. Initially, securing debt was challenging, but now it's becoming easier as more banks show interest in financing us. Now, our focus is on a significant equity round to support our expansion. Achieving 850 cars will result in substantial revenue, estimated at around 10 million annually. With the Baltic market fully covered, we can then consider expanding into larger markets.

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Gunnar Froh , CEO & Founder , Wunder Mobility

‍And on the way there, assuming the funding is now secured, path to 850 cars, 10 million revenue, what's the thing that you think maybe you still mostly have to figure out? Like some things are already super clear, you know now how they work, but what's like the most challenging part for you still at this point?

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Juhan Kaarma, CEO & Co-Founder, OXDrive

Besides acquiring cars, our main focus now is optimizing backend operations even further. While we're already highly efficient, there's still room for automation and improvement. For instance, we're currently utilizing ChatGPT to process speeding and parking fines from local road administrations, reducing the task time from six to seven hours per week to just one hour. Additionally, as we expand into new markets, fleet operations may vary, but we've mastered these processes in Riga.

Another exciting development is our ability to collaborate with dealerships and other car brands, leveraging our strong brand presence to expand our fleet without needing to finance all the cars ourselves. This approach not only enhances our fleet size but also acts as a valuable customer acquisition channel for our partners.

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Gunnar Froh , CEO & Founder , Wunder Mobility

Despite the excitement surrounding your brand and the fun factor in your car selection, you prioritize maintaining competitive pricing and operational efficiency. How do you plan to further enhance these aspects, particularly leveraging AI, to ensure customers consistently choose your service over competitors'?

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Juhan Kaarma, CEO & Co-Founder, OXDrive

Yeah, I mean in general, you want to encourage people to adopt electric and sustainable transportation and give up personal cars, it's crucial to make car-sharing a no-brainer option. This means ensuring convenience, cleanliness, reliability, and reasonable pricing. Achieving this requires continuously reducing operational costs and delivering excellent service. By prioritizing these factors, we can drive adoption and contribute to a sustainable future.

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Gunnar Froh , CEO & Founder , Wunder Mobility

Make it a no brainer if you want to take the consumers along on both convenience and pricing. I think we saw a lot of operators also exiting the market in the last years and you are kind of swimming in the opposite direction. One of like a smaller group of people who are doing that and successfully already breaking some records in a way despite the early stages after only a year and a half and with still a relatively small fleet. But that also allows you to learn and optimize things along the way and then not have to maybe kind of get out of the business so quickly again, like some bigger rental companies are now doing it. We have a huge step in, huge step out again. And you are really perfecting this along the way. Super impressive!

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Juhan Kaarma, CEO & Co-Founder, OXDrive

We're still in the early stages of this market. Currently, about 98% of vehicles worldwide are internal combustion engine (ICE) vehicles, with around 99% being privately owned and typically used by one person. Our goal is to shift towards one car being used by many people, offering the same experience as ownership. There's a long road ahead of us in achieving this transition.

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Gunnar Froh , CEO & Founder , Wunder Mobility

Totally.

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Juhan Kaarma, CEO & Co-Founder, OXDrive

We're just getting started.

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Gunnar Froh , CEO & Founder , Wunder Mobility

I would even say that the example you provided was a better experience, right? I currently have this issue with my car. Where can I find a replacement? I'm still within the same day and continuing. It's even better than before.

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Juhan Kaarma, CEO & Co-Founder, OXDrive

Another interesting aspect is our collaboration with local insurance companies. If one of their clients' cars needs repair, they take a Tesla from our fleet. This arrangement serves as a customer acquisition channel for us. We've observed that individuals who had their cars repaired return to use our car-sharing service or rent a vehicle from us. One person even expressed interest in purchasing or subscribing to a car from us. It's a pretty cool development.

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Gunnar Froh , CEO & Founder , Wunder Mobility

Very much a startup mode, kind of seeing opportunity everywhere and like quickly executing on them. Cool! Thanks a lot, Juhan, for all your transparency and openness today and for taking the time. It was fun to talk to you. Thank you!

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Juhan Kaarma, CEO & Co-Founder, OXDrive

Yeah, thank you. Happy to talk to you always.

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