Much of the focus in mobility over the last 10 years has been centered around the car. Rideshare, autonomous, electrification, and shared vehicles have all led the conversation; and rightfully so. A BCG report estimates that by 2035, these emerging new mobility technologies will capture 40% of the roughly $400B profits available to the automotive industry. That’s no chump change!
While companies such as Uber and Tesla have long dominated the mobility headlines, this year conversation has shifted to a new trend. Walk or drive down any street in Santa Monica, California, and you’ll find the sidewalks blanketed with a sea of black, green, red, pink, and white two-wheelers -- all available through a few clicks in an app.
Pioneered by Ofo and a handful of other Chinese start-ups, the free-floating bicycle was introduced in 2016. Uniquely addressing the last-mile problem, dockless bikes are leading a resurgence in cities like Beijing, where car use had driven 30 years of declines in bike use. The bike-sharing companies are also cashing in, with Ofo’s most recent valuation pegged at $3B.
Building on the success of the free-floating bicycles in China, enter Bird, the Los Angeles-based startup that brought the shared electric kick-scooter to prominence. Commanding an electric premium over pedal bikes, the e-scooter's business case is staggering: daily revenues upward of $15-20 per unit more than offset the scooter’s cost within just a few weeks. Investors have taken note -- Bird and its competitor, Lime, are already valued at $2B and $1B, respectively.
With such lofty valuations, you might think the war is won. But with the phenomenon developing in earnest over the last year, scooter-share is still in its infancy. Here’s how we see companies joining the fight and winning the scooter war:
Bird and Lime have gained traction in the handful of cities in which they operate, but the market is far from saturated. Bird has so far launched operations in just two cities outside of the US (Tel Aviv and Paris) and has faced a host of regulatory hurdles within the U.S. Municipal authorities are cautious around the deployment of free-floating scooters, citing public safety concerns and community backlash. San Francisco went as far as denying Bird, Lime, Uber, and Lyft permits to operate based solely on their history of asking for forgiveness, rather than permission. Working effectively with local regulators is key to gaining access to markets (both in the US and internationally), and there are still untapped opportunities within large, closed networks such as universities and corporate campuses.
No company has been able to follow a cookie-cutter approach in growing their scooter footprint. Many municipalities have put in place or are enacting a pilot program to temporarily allow for limited scooter rollouts -- and each has its own flavor. Denver and Detroit mandated that scooters be deployed in underserved economic zones, Long Beach requires its local operators to drop scooters in designated scooter parking nightly, and Washington DC is considering fines on operators who don’t incentivize users to properly operate and park scooters. The rules vary from city to city, and almost none of these regulations are set to stay in perpetuity. Companies will need to continue to act fast to adjust their technology and operations to meet these varying needs.
Win on Operations
Almost all of the scooter-share companies are using the similar hardware (made by Xiaomi or Segway) and every app looks largely the same. With very little differentiation between the physical products, availability and service quality will drive the customer experience. Repairs and maintenance will need to be efficient and cost-effective to ensure quality -- rewarding companies who minimize downtime and deliver on availability. Load-balancing and re-distribution become imperative activities to optimize the fleet and reliably meet demand. Behind the scenes, having reliable backend systems, advanced fleet management tools and processes, and quality customer support will further ensure a high-quality customer experience and drive success.
Rising needs to combat congestion in our cities are forcing companies to innovate using the existing infrastructure. Gone are the days when we could simply build more lanes and highways and subways to get where we’re going faster. Shared scooters and bikes uniquely solve some pressing last-mile problems with sustainability and scale -- and while players like Ofo and Bird have emerged as pioneers and leaders, the war is only beginning.