The coming scooter crash
The coming scooter crash
This article is drawn from the Transport Weekly newsletter from GreenBiz, running Tuesdays.
The mobility arms race (both scooter and bike sharing) is already starting to see some fallout. You could call it the natural adjustment that happens after an influx of money is pumped into a new and rapidly growing market.
And you can expect to see a lot more of this in the coming months as cities make choices about which companies to give permits to, acquirers snap up the most valuable players and investors make decisions about which companies to continue to fund (or not fund).
It was reported recently that Ofo, a big Chinese bike sharing player, is scaling back dramatically in North America and going into "sleep mode." The company sent out emails this weekend to some riders in Seattle and San Diego and said it plans to exit those markets, but then quickly said those emails were a mistake.
It’s probably not a coincidence that Ofo started scaling back within weeks of one competitor, Lime, closing on hundreds of millions of dollars of new funding from big investors such as Alphabet’s tech investment group GV, Uber and the venture firm Andreessen Horowitz. Meanwhile another competitor, Bird, raised its own hundreds of millions in new funding recently.
A third scooter-sharing competitor, Spin, reportedly raising $125 million through a security token offering, has been making its own adjustments. The company sent out letters a of couple weeks ago to some college partners letting them know that they are retiring their bike-sharing programs as the company is focusing on lower cost and higher used scooters, instead of bikes. Spin didn't respond to requests for comment, but a couple of articles (Wired, TechCrunch) previously have reported that Spin is phasing out bikes in favor of scooters.
In a new market where big funding, major scale and lightning speed really matter, there probably won't be room for three or more big scooter-sharing players for long. You can look back at the early days of ride-hailing for an indicator on how it might all shake out.
Back in 2012 there was a company called SideCar, which launched around the same time as Uber and Lyft, created by entrepreneur and investor Sunil Paul. Just three years after SideCar launched, Paul shut down the service as a result of "being at a significant capital disadvantage."
This time around the scooter-sharing arms race also will be shaped by cities' regulatory decisions. San Francisco was supposed to hand out permits to five scooter-sharing companies (out of 12 vying) by the end of June, but none has been announced yet to the public.
Regardless, at some point, the scooter-sharing market inevitably will coalesce around just the biggest and most successful. My dear friend and former colleague Om Malik wrote about the three phases of new markets in the New Yorker, back when SideCar shut down:
The first is when there is a new idea, product, service or technology dreamed up by a clever person or group of people. For a brief while, that idea becomes popular, which leads to the emergence of dozens of imitators, funded in part by the venture community. Most of these companies die. When the dust settles, there are one or two or three players left standing. Rarely do you end up with true competition.
Malik notes that search engines, social media, cloud computing, ride hailing and more have gone through this evolution. And now it's headed to the world of last-mile mobility. So keep an eye out for it.
And now, here are my picks for 10 articles you should read on transportationand mobility from the past week:
- There's also a war brewing over electric buses and city contracts. Hint, you're going to need a lobbyist to enter this game (via Miami Herald).
- "If you're stuck in your car it's not Uber and Lyft's fault," says Robin Chase in CityLab. She pushes back on the underlying thesis of recent research that found that Uber and Lyft are adding congestion to cities, despite increased carpooling options.
- Big automakers are breaking themselves apart to compete with Silicon Valley. GM has really led in this area (via The Verge).
- Interesting scoop from Dan Primack of Axios: Former Uber employees are forming a group to invest in former colleagues. It's like the PayPal mafia but for mobility.
- Design tips from Lyft's new UI, from a 17-year-old design maven on Medium. App design is super important.
- A smart wheelchair system can help cities monitor and maintain sidewalks (via WABE).
- Scooter haters: There's an entire Instagram account devoted to destroying rideshare scooters (via Vice).
- Add autonomous tech to the scooter-sharing ideas and you get Scootbee. Anyone tried this out?
- Uber has completed over 10 billion trips. Just wow! (via Uber blog).
- "America's Jersey-sized parking opportunity," from Bloomberg's excellent Nat Bullard.
Finally, if you want to attend VERGE and you're a young emerging leader, you could be eligible for a scholarship, sponsored by United Airlines.