Show 113 – Unicorn Interviews – Avinash Rugoobur – Arrival
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In the seventh of our special series of interviews that we’re recording in partnership with the European PR agency Tyto and their own ‘Without Borders’ podcast, Russell Goldsmith and Brendon Craigie were joined online by Avinash Rugoobur, President & Chief Strategy Officer of Arrival.
One of Europe’s most valuable unicorns, Arrival is focussed on reimagining the entire electric vehicle production process and reached Unicorn status at the start of 2020.
Avinash explained that Arrival was founded in 2015 and their aim is to reimagine the whole process of how you make electric vehicles from the ground up. So, not using any legacy, taking the best of technologies for multiple industries and adding their own. What they have essentially been able to do is vertically integrate all of the key technologies and components of the vehicle and then allow their products to be designed and built from the ground up using micro factories, which are low footprint, low capex production facilities that can be placed anywhere around the world. They are decentralising what is been a very centralized process. They are five years old; they have over twelve hundred employees and they have made huge strides in their goal of bringing a host of sustainable solutions to commercial fleets and cities. That’s also been demonstrated by a few key investments from their key partners. They had €100 million investment from Hyundai and Kia earlier this year. It was one of the largest investments in Britain’s car industry since Brexit. They have had a strategic partnership with UPS, which is an order of ten thousand vehicles with the option to order more. Avinash said that they believe that the bus and van that Arrival have unveiled really help capture a clear market opportunity. So, electric vans, they believe, will capture a two million addressable market by 2025 and the bus over 100,000 units by 2025 as well.
Avinash also explained that the investments from Hyundai and Kia have opened a lot of doors in terms of Arrival as being a stealth company, a company that’s predominantly very quiet. They like to talk about what they’ve done and show what they have done and so they have pretty much stayed out of the limelight. But obviously with that investment, it’s really brought them to the fore. He said that whist reaching unicorn is a great milestone, it’s only a step in a journey. The journey is about getting products out there, helping improve cities and communities, it’s something that the whole team can feel really proud of. That is the validation of a step in the journey. So, the valuation itself is an outcome and it’s not really the goal of their success. Avinash added that it’s great because it shows that a lot of people are excited about the company and what they are doing, it shows, with the partnerships that they have got, that both their technology is mature from the Hyundai and Kia side and the actual product itself is impressive enough and best in class for a company like UPS to purchase. But ultimately, within Arrival, they focus on keeping that bigger picture in mind of what they want to achieve and realise and spend the day to day on the engineering, the design, the development and the culture. He explained that if they do that, then the rest will come naturally.
Avinash said that because they have been founded since 2015, they have had time to really develop the technology into a mature point. Their initial discussions have been with key strategic partners because that has helped them set the foundation, a grounding for the growth and the go to market that they will be going through over the next 12 to 24 months. And so, all of the partners that Arrival have announced, have all announced very similar goals to develop mobility solutions and sustainable services and also electrify their fleet. So, the ambitions are shared and so those investments are strategic partnerships and a lot of that is about how do they work together to accelerate this goal of bringing commercial vehicles into mass adoption around the world. Arrival benefit from Hyundai and Kia’s global footprint and expertise, they benefit from Arrival’s novel technology and micro factory approach. With UPS, in terms of what they bring to the table, is the product itself undergoes continuous development with them as partners. Which is actually really unique to the industry. Avinash explained that they don’t just create a product and say, ‘hey, this is the product, everyone has to get it’, with UPS they come in and they work with Arrival. That partnership goes back years and they’re helping to develop their own vehicle, that is something that these partnerships have really brought to them.
Avinash told us that Arrival takes a vertically integrated approach, which means they design all of the electric drive train in-house. He explained that they design the materials, which isn’t metal, it’s a proprietary material that they use that is sustainable and recyclable. The way they use the micro factories allows them to deploy the production facility in local communities. While they initially announced the electric delivery van, what they were doing and what they have done is create all the building blocks to allow them to create multiple different product types. The aim isn’t just for electric delivery vehicles, but it’s about creating a transportation ecosystem that can serve all needs of the community. He said that they are focused initially on the commercial segment. So, because of that ability to create multiple products and the transportation eco system and bring local manufacturing to local cities, one of the first conversations Arrival have with cities and governments is, ‘what are your biggest pain points?’ A lot of focus is on public transportation. With this flexible production model and this modular technology, Arrival can combine that to create a bus. So, the electric bus market stood out as one that’s just critically underserved, similar to the auto industry. It’s dominated by a lot of legacy and manufacturers that really have to shift over to electric. That was a unique opportunity for them to really step in, the long-term cost benefit of EVs is becoming common knowledge with governments and the public transport
agencies. The shift to sustainable transport is really important to governments, it’s important to the communities and it’s important to the transport authorities. But it’s also a good business. So that’s a win win. A lot of studies have shown that that market will be worth and save up to 70 trillion by 2050. People want more sustainable public transportation; they want more from what a bus can bring. In terms of Arrival, they have got unique features, screens that provide passengers with real time information, all the vehicles are connected, information about their route, touch screens, contactless payments. But also, on the other side, for the operators, it’s a connected vehicle that can help them with their fleet optimisation, predictive maintenance on their vehicles, making sure that they can meet, and track demand based on data. So, they are really trying to look at this as a whole.
The micro factory really sets a whole different path forward for the industry, with the traditional approach where you put a large factory somewhere remote and then you take that vehicle and ship it around the world, you’re really isolating that skill set to one area. And so, when you’re going down this approach of micro factories, for example, they can put a factory near London, but they can also put one in Johannesburg or in Tokyo. They can put these anywhere and can bring these technologies and the products to local communities. But the nuance there is you’re using the local talent to build a product; you’re paying the local taxes. You’re also able to put local engineering teams and support teams there, you can actually produce vehicles for that local community and because the CapEx and the OpEx of the micro factories are significantly lower. So, it’s about, for an equivalent volume, 11 times smaller footprint, about half the cost and about six times shorter commissioning time. So, you can deploy these rapidly. You can get local teams going. With the modular tech that Arrival have created, they can configure them for local products. So now they are not building your vehicle, you’re building your vehicle. And that is a really different approach to what’s been done before.
Avinash believes that when we talk about electrification, we often make the mistake or limit ourselves to markets like the US and Europe and China. The reality is we don’t achieve the goal of sustainable transportation unless the whole world is able to shift to electric. So, first and foremost, he explained that we have to bring the costs down and we have to make them price parity with the diesel or fossil fuel equivalents. Then there isn’t a burden on the balance sheet, whether it’s a government or local business or local large company to shift to electric. So that’s the first step and a lot of that vertical integration is about getting to that cost competitiveness. Then you get the benefits of the TCO, the total cost of ownership, and that could be in reduced servicing and a longer life of the vehicle, because you can, especially with Arrival vehicles, actually swap in and out the components so the same asset can last longer. So now you’re bringing an even greater TCO savings. That also doesn’t solve the full problem of going worldwide, to solve that Arrival want to bring the manufacturing local as well. So, that’s a critical part of it, but the infrastructure is a key part. He explained that they have to also remove the barrier for how do you either upgrade the grid or if you’re talking to cities which have unstable electricity, how do you also provide solutions around that? So now they are covering this as a whole. They are saying in Europe and countries that are established in that way already, that’s an easy shift. But they have got to make it easy for the whole world to shift. Arrival is bigger than just the products that they have announced. Avinash said that there’s a lot of work going on in-house about how do they bring that whole infrastructure and the whole ecosystem along with them?
Avinash said Arrival exists to the amazing talent that they have managed to bring on and these brilliant people are all driven by that same common goal and mission. That’s a unifying factor regardless of investment or anything around unicorn. He reiterated that it’s a nice validation, but it’s just part of the journey. He believes that the investors really care that they have that mission, so it does factor in. But you still need to have the technology and you still need to have the product, that’s a unifying factor. But ultimately, the partnerships and the investment that Arrival have got based on the fact that, not only are they aiming to do that, they are doing it in a sustainable way with the right unit economics, with the right product and a maturity level of the technology that actually makes it possible. It’s a balance between those things.
Impact of COVID-19
In terms of the impact of covid-19 to the business, Avinash said that on the customer side and on the demand side, he thinks it’s only increased. They have seen that delivery has been the only way a lot of us have been able to get goods and services recently. So, from that side, it has driven more need for adoption of sustainable delivery vehicles and electrification of those. In terms of the business, he noted that the sad part of this is we’ve seen a lot of people that have had to go through hard times and businesses that have had to either close or really change. Avinash added that Arrival have been lucky in that they haven’t had to lay off any staff or anything like that. They have been able to grow, thanks in part to their partners and investors. He explained that they have become very resilient. When he looks at what COVID means to how communities have changed and even viewing the need for, back to the micro factories, the local production of goods and being able to serve the community just within the community, it’s actually doubled down on the need for something like Arrival and what they are doing to really get out there and support communities. So, it’s a very difficult time. It has been difficult to navigate, one day all the teams are in the office and the next day everybody’s at home. That’s not unique to Arrival, everyone has had to deal with that. In terms of the need for the product, Avinash thinks it’s grown in terms of what they have had to do, be really creative and agile. They have had to change the way the business works overnight. He believes that Arrival have come out of that
exceptionally well, given how difficult it is for many.
Launching in Europe as opposed to Silicon Valley
Avinash explained how he was based in Silicon Valley prior to joining Arrival. He said that in Silicon Valley, you do see the hype cycles, certain things are really hot for a certain amount of time and then the next things hot, you see sort of start-ups cluster around an area and then it changes and it’s a great working environment. You have a lot of support and help from other founders that will help you out and connect you and things like that, which is slightly different in Europe, you’re a little bit more isolated in that sense from that type of community. He said that he has seen that people are really focused, which he loves, they’re not affected by the hype cycle. They know what they’re doing and why they’re doing it. In terms of Arrival’s approach, they’re not a loud company, as mentioned earlier, Avinash describes it as being in stealth mode. Even though they had really cool things going on, they weren’t out there really talking about it. It’s only after the investment that they really emerged from stealth mode. And it’s only now that the technology and the products are reaching that level of maturity, that they are comfortable to really talk more about them, that they are speaking about it. So, Avinash moved on the strength of the company, the founder, the leadership team, the culture of the people. He has really enjoyed his time doing that.
Being aware of different cultures as they expand globally is something that’s critically important to Arrival, not just in how they operate the day to day business, but as they are distributing these micro factories around the world, it becomes a key part of their business. How do they make sure they understand the local needs and local communities? How do they communicate across offices? So, adaptability there is one of the key successes for Arrival. When they approach a new market, for example, their approach isn’t top down. Avinash explained that they take the time to really get involved and hire local people and really understand the nuance and the culture of what’s going to be needed in that environment. In a lot of ways, they let that environment design the product that’s needed for that environment. Part of the value of being able to understand that, is to have a really diverse team, they have really different thoughts, different beliefs and different approaches to solving problems. Their job at Arrival is to really listen and hear what’s being said and then translate that into, ‘OK, what parts of the toolkit do we need to build so that we can let others build on top of that in the technology, but also in the culture’. The ability to hear different insights and those nuances and considerations from different cultures and different people, that is really foundational to Arrival and then it becomes translating that into the micro factories that go around the world.
Avinash said that the inspiration behind this kind of outlook starts with their talent team, in terms of reaching out or people that are wanting to join Arrival and then making sure that the culture is at the forefront every day. A lot of it was on the common goal, many people believe in zero emission transportation and sustainable technologies and distributed assembly with local talent and products. That is probably the first level of the funnel to keep the company really focused around that. Once you have that group of brilliant people, Avinash said that his job is to essentially get out of the way and let them do their thing; surround yourself with people who are smarter than you. And then they just try to provide the tools and the structures. That could be the way they think about what a meeting is, the way they think about what communication tools they use, all of those things matter. You’ll find with Arrival and it shows up in their products, they are really focused on the details, the minute details. As long as they can keep improving them, they essentially make everybody else’s lives and jobs easier. So, that’s really important that that culture is set from the top. He added if they are not practicing what they preach, then the whole thing becomes irrelevant. So, it’s really important that they approach decision making in a certain way, that when they make decisions again, even as the leadership team, they have listened to a diverse range of opinions. People have access to approach anybody in the company without worrying about what their title is or what the title of the person you’re approaching is like, all of that falls away and that’s the type of environment that they try to create. When COVID hit, that culture stayed with it. So even though it’s a little trickier because you can’t meet the people in the office and you’re doing it over Zoom, it still means that you can approach anybody in a company. Arrival has set that as part of the culture and so that bond then continues to form. If you think of it as a network diagram, it’s not just one directional, it’s everybody can be connected to anybody and that’s important.
Avinash explained that having everyone working from home is probably one of the trickiest things to work around when missing those informal communications that often happen. So, they have our own internal messaging tool, but they also encourage people to jump on a phone call, it doesn’t have to be formal. He said they also have regular all hands meetings where people can ask the founder any questions they want, and he’ll respond. So, that’s really important to get the whole team to come together, say what’s important, what’s happening in the business, but also, keep that vision really as the fire behind what everybody is there for. However, those large systems aren’t always the most efficient way, so, that open-door policy is really important. You don’t have to check off with a manager before you talk to a leader, you could just talk to anybody. That’s a cultural thing. Avinash added that the one good thing COVID has shown is that there’s no barrier to geography for working in any location. You can now look at it as, we may miss something in terms of the informal types of communications, of which we can only gain some back with tools or calls, but the opportunity it’s opened is we can now view people who want to join Arrival anywhere around the world very differently. The reality is that they have shown that they have been able to run the business for six months and still hit goals. So why not, if somebody is applying from a really remote location that they never thought would join Arrival if they fit the team, then why not? So, it’s changed a little bit about how that level playing field across any geography is now. They have also installed some unique things, too. For example, with Avinash’s team, he runs a ‘tell it how it is’ session where they have a no rank, no foul, anybody on the team. They split things up into good and bad segments and WT* – they can put anything on there, no hold back, whether it’s good or bad or you’re just confused about it. They then work as a team to say, ‘OK, let’s define some solutions to solve the issues and let’s reinforce what’s going well and let’s see if we can take the things that are going well and implement them in other areas.’ They are having time in a way to get together as a whole team and still operate in terms of that continuous improvement and driving change. He added that it’s quite a fun process as you hear the good, you hear the bad, you hear the stuff that people are confused about. Anything goes and topics that are brought up can be anything from ‘hey, I miss the lunch at Arrival’ to deeper topics. Avinash explained how he encourages people to just say what they feel. Even on a one to one basis asking questions like how is Arrival aligned to your personal mission and objectives and what can they do to help increase that? So, it’s really a focus on the human side of this. He sees a lot of human-ness in running that session so, it’s a balance, because the all hands is more of a formal gathering and the tell it all session is more of an unstructured
communication tool where you can say whatever you need to say.
Avinash said that his role as an external spokesperson essentially just distils into communicating the ‘why’. Why are they doing what they do? Why do people get up every day and spend so many hours on something? He has learned along the way that the leading indicators are much more important than the lagging indicators. So, we can talk about profit and all of those things, but ultimately understanding how you get there and what are the behaviours and things that we should be doing. What should we be working on up front that leads to that outcome? He believes that something he has learned along the way is to also communicate why are they doing things? What are they doing and how are they doing them? That’s been something that has been a gradual journey and continuous improvement for his own self in terms of how to better communicate.
Avinash admits that he has made many mistakes, but all of those mistakes are good stepping-stones to improving. He said that he came from a large family, so naturally had to find a way to communicate. So, from that perspective, it was instilled early an ability to just be able to speak his mind. But still, communication is a skill. He said he has got a great support team that helped him. Being very up front is something that can be uncomfortable sometimes and you’ve got to work your way through it and you’ve got to learn and you’re going to make mistakes, you just keep trying to get better at it each time you do it. Even though he feels like he can talk on a one on one basis pretty well, Avinash said he is still learning, still going through. Everything’s a craft. If you don’t spend time on it, you’ll lose the skill and if you don’t spend time with it you can’t make it better. So, like anything you’ve got to work on it.
Biggest Communications Challenge
Avinash believes that the biggest communications challenge that he has faced in his career is simplicity. A lot of what he has done has been around technology and engineering, and sometimes these things are extremely complex. So, how do you distil that into the simplest message? Going through that process is the biggest communication challenge to him, because if you have got five hours it can be explained in detail. But if you’re having to say it and get people to understand what you’re doing in a short period of time, that means you’ve really got to take all of that and just really focus on ‘OK, what does this mean? Why does this matter?’ And that’s the challenge.
He said he was once told by a mentor that everything happens based on human emotions. So, while people may try to take emotion or the humanness out of things, ultimately, it still comes down to human emotion. If someone’s upset, they’ll make a certain type of decision, if someone’s happy to make a certain type of decision, etc. Avinash believes that was great advice, because it has helped him to not withhold from saying what he feels or what he really believes in. He added that we are seeing even today with a lot of the social unrest that the humanness has mattered, and people maybe haven’t been able to speak up or it’s been capped and now it’s like a bottle being shaken. What was really insightful about that piece of advice, was that it was from someone very experienced who’d been communicating and been a leader for a long time and ultimately said, ‘in all my experience, I’ve always found that no matter what, everything ended up being based on human emotions’.
When asked what he would tell his younger self, Avinash started by saying the first thing is in March 2020 go sit on an island somewhere before you get stuck in lockdown! He continued and explained that he came from a background where he had good mentors in his social circle, but not at work. It wasn’t something that was really encouraged when he was coming up through his career. He said he got lucky that someone reached out to him on their own accord because he didn’t even know that that concept existed. He said he would tell himself to go and get good mentors. You have to be humble because you have to be able to take criticism and feedback but it’s going to allow you to learn from people from a wide range of different experiences. So, it’s not just go and get good mentors, go and get mentors in areas you feel uncomfortable with. He added that it is important to take on the task that you hate, because once you learn about them, you may not like them still, but you’ll understand when someone from that world is telling you something, you’ll understand at least where they’re coming from and why they’re telling you that thing.
One of the good things about starting your own business, for example, is you have to touch so many different things, he explained. Whilst you may not understand something to the nth degree, you will be able understand why it needs discussing and communicating. Get out there, get the mentors, go get stuck into things that you don’t like, spend your time on those things because the stuff you like, you’ll get good at, you’ll do every day, but stuff you don’t like can be left in the corner too long. And then when you really need that skill, it’s not there.