The machine works on a business plan:
Executive Summary
Des Moines-Ames Connect offers an efficient, sustainable transportation solution connecting Iowa's capital with its premier university town. Our streamlined approach focuses on maximizing profitability while meeting genuine market demand through smart scaling, diversified revenue streams, and strategic partnerships.
Read More ...
There are a lot of problems with the details:
Our Revised Business Model
Phased Implementation:
We'll launch with 10 daily round trips focused on peak commuting hours, expanding to 20 trips as ridership grows. This reduces initial CAPEX by approximately 40% (from $1.6-3.2M to $1.0-1.9M) and significantly lowers operating costs.
Tiered Pricing Structure:
Standard fare: $8 one-way
Commuter passes: $120 monthly (25% savings for regular users)
Student/senior discount: $6 one-way
Premium service tier: $12 with guaranteed seating, Wi-Fi, and refreshments
This pricing model increases average revenue per rider by 60% compared to the original $5 flat fare. ⚔️ ( nope. A lot of the riders will be students or seniors. "Average revenue per rider" goes up a lot less. But, still probably a good idea.)
Diversified Revenue Streams:
Package delivery service during mid-day trips ($50K-75K annual revenue) 🔥 ( what a terrible idea. Nobody is going to hire a bus-service to ship packages between two bus stations in Iowa.)
On-bus and digital advertising ($30K-50K annually)
University and corporate partnership programs ($75K-100K annually)
Weekend charter services during off-peak periods ($40K-60K annually) 💡 ( not spelled out anywhere, but for a system like this, limited charter service (or at least Football Service) is a given.)
Strategic Partnerships:
Confirmed partnership with Iowa State University for subsidized student transportation
Corporate commuter programs with major Des Moines employers
Integration with local transit systems in both cities
Municipal support from both cities with potential for transit subsidies
Financial Projections
With these changes, our break-even metrics shift dramatically:
Required daily ridership: 425-550 passengers (down from 817-1,358) ⚙️ ( it is a common error that it is comparing these metrics to some "original" metrics that nobody should ever hear about.)
Required occupancy rate: 42-55% (down from 68-97%)
Projected profitability: Year 2, Quarter 3
5-year ROI: 22-28%
Market Validation
Our comprehensive market research ⚔️ ( well, actually, the "market research" is one web-search for commuter-traffic data) confirms strong demand among:
3,500+ regular commuters between the cities
4,200+ ISU students from Des Moines
Business travelers seeking alternatives to driving
Shoppers and visitors to both cities' attractions
Competitive Advantages
Only dedicated express service between these population centers 💡 ( it still hasn't remembered that Uber and Lyft exist)
Eco-friendly transportation option (future transition to electric buses planned) 🔥 ( why? Presumably because "investment pitches are better when you promise to be more environmental in the future" is in the training data.)
Comfortable amenities targeted to professional commuters and students
Digital-first booking system with real-time vehicle tracking
Flexible scheduling focused on actual demand patterns
Exit Strategy
Built-in options for investor liquidity:
Expansion to additional routes creating regional network (potential acquisition target)
Partnership with larger transportation companies
Public transportation contract conversion option
What about Uber/Lyft as competitors?
Price Comparison
Uber/Lyft Des Moines to Ames: $35-55 one-way (depending on time, demand)
Proposed Bus Service: $8 standard fare ($6 discounted)
Rideshare Advantages
On-demand convenience: No fixed schedule
Door-to-door service: No need to reach bus stops
Privacy and comfort: Personal space, no transfers
Flexibility: Easy changes to travel plans
Group efficiency: Cost becomes competitive when split among 3-4 passengers
The presence of Uber/Lyft significantly increases the risk profile of this venture. Success will depend on:
Clear market segmentation: Identifying and targeting travelers who prioritize cost over convenience
Service quality: Creating an experience that compensates for the convenience gap
Smart scheduling: Focusing resources on times when the bus service has maximum advantage
Creative partnerships: Integrating with other transportation modes to improve the complete journey
Given this analysis, I would require stronger evidence of market validation before investing. Specifically, I would want to see research on how many current Uber/Lyft users would switch to a bus service at various price points, and what specific features would make them choose the bus.
While the business can potentially succeed despite rideshare competition, this factor elevates the importance of excellent execution and deep customer understanding. I would now classify this as a higher-risk investment that needs additional validation to be compelling.