I wonder why bike sharing is still a thing in business world. Hasn't this business venture been proved to be a fiasco in China, where user base is larger in magnitude, operation cost is residual and virtually no regulation friction, compared to the u.s.? Why do lyft, uber and others think it is viable(profitable) in the u.s.?
Another thing beyond me is although the business model/development of this kind seems to be bound to fail, why they are still chased by enormous amount of capital.
My cynical suspicion is these so call tech start ups are just instrument of a grand new ponzi scheme in which a bunch of investors use borrowed money(from banks, insurance company and the likes) to set up a start up and increase the value of it(manufacture hype to justify the inflation along the way) and the sell to public, which is mainly pension funds, 401k, government backed institutions and so one, that is, ordinary folks.
I hope someone would correct me and shed some light on this matter.
Stepping back a sec, there's "classic" bikeshare (docked, manual), then there's (docked, electric) and (dockless, electric). Each of these has different pros and cons, though I agree docked, manual bikes aren't great.
Dockless, electric is a game-changer. JUMP bikes hit 20MPH in a few seconds, take less effort than will get you sweaty (critical for meetings/commuting) and you can take the bike lane. Then the vast majority of the time you just hook it up to whatever chunk of metal is nearby and you're done. It's the fastest way between almost any 2 points in SF and often the most convenient too.
At $2 for 30min + $0.07/min it was an absolute steal. At $3 I may have to think harder but if it makes the economics work, I'm still in. I basically stopped using Uber and pay $5-7/day for all the electric biking I need. Could I buy one for a years' fees? Yep. But I don't want to deal with the hassle of owning.
What I don't understand is that Lyft is suing the city of SF.
It literally should just take the Ford GoBike stations, and convert them into bike parking for only their brand of "dockless" bikes. Even if they don't have exclusivity over dockless bikes, having a monopoly over dedicated parking spots would make their brand of dockless bikes way more convenient.
Instead, scooters have taken over the city instead.
I struggle to justify the purchase as a whole, but I think one component of the value a company like uber or lyft gains from an acquisition like this is to have a stronger stake in my transportation mindshare.
If I'm opening their app regardless of which transportation method I end up using, I'm more likely to keep coming back and will frequently choose to move up a tier (scooter -> bike -> car) if the price is "just a few dollars more".
It's worth considering the data component as well -- there's a tangible benefit to knowing which mode of transportation people are choosing for which trips.
My 0.02c as a Citi Bike (NYC's bikeshare) subscriber: I wouldn't be surprised if there's a modest profit to be made in bike sharing, at least in NYC. I know quite a few people with a yearly subscription (either personally or via their employer), and I would consider paying for one personally now that I've experienced their convenience. I don't know how much money Citi Bike/Motivate actually makes here, although AFAIK they don't receive any public subsidies (other than free use of public space).
OTOH, I don't think that the e-bike/scooter companies will ever be profitable. I wouldn't be surprised if the people running those companies are equally cynical.
I don't have their unit economy data, but I'm still (stubbornly) skeptical of the profitability of bike sharing. One reason is the market depth, in the sense that most of the time it's just young, educated and often bourgeois people in metropolis, which is a tiny proportion of people, who ride bike for purposes other than recreational.
“According to more than 1,600 participants who responded to the survey, 60% of San Diego Lime riders identify as Hispanic and 54% report an annual household income of $50,000 or less. Additionally, 1 in 4 Lime riders are 36 years old or older, with an average age of 31, and 16.5% of them have previously served or are currently serving in the US military.”
Yeah, I don't expect bike sharing to ever be profitable outside of (major) city centers. Maybe that's a good thing -- once we get over this stupid fad of monetizing basic improvements to urban life, we'll be able to buy the equipment for pennies on the dollar and run it as a public service ;)
FWIW, I think your analysis (young, educated, bourgeois) is spot on, and that bikeshare companies are completely aware. Check out this map of Citi Bike's availability:
If you're not familiar with NYC: it's only available in business, wealthly/middle-class, and rapidly gentrifying areas. To continue my baseless speculation: it wouldn't surprise me if Citi Bike's (hypothetical) profitability relied on only serving these populations. Reprehensible, and another reason to agitate for bike shares as an extension of public transport.
I'm guessing the "young, educated, bourgeois" demographic is the early adopter of most new technologies. If you wrote off everything that was primarily used by that demographic in its early days, you'd have missed out on the personal computer, mobile phones, digital photography, and many other things that are widespread today.
> If you wrote off everything that was primarily used by that demographic in its early days, you'd have missed out on the personal computer, mobile phones, digital photography, and many other things that are widespread today.
Not writing off! I'm in that demographic. But let's call a spade a spade.
That being said, I think there's a substantial difference between PCs/cellphones/digital photography and bikesharing: the former were also adopted as business interests, while the latter is just a luxury or employment perk. PCs and cellphones reshaped the office, digital cameras reshaped newstelling and photojournalism; I find it hard to believe that bikesharing-qua-private-service will be doing much reshaping.
One issue with commuting using public transport to a large tech campus is traveling to meetings and lunch places during the day. You can walk 10-15 minutes or use the company shuttle, which takes +20 minutes to be in another building on time. If you came by car, you can drive 2-5 minutes and spend 1-5 minutes parking. With bike, it's 5 minutes door to door. Providing e-bikes for in-campus travel would do some reshaping, as it can reduce need for parking space and would allow for more efficient use of time.
Not as big as cellphones obviously. Still something.
People who travel to client sites in dense urban environments may have even more interesting numbers.
Is walking 10-15 minutes (especially in a generally nice climate) really a big issue? I hear scooters and bikes mentioned a lot for those cases where people might need to travel a mile. Most of the time, I'd consider having to walk a mile or so to get from Point A to Point B a feature rather than a bug. Certainly I had to regularly walk that sort of distance around college campuses and never considered it a particularly big deal--and I didn't attend schools in nice weather locations.
I think these services can be profitable without being fully mainstream. Even if only 5% of daily journeys within a city are made by shared bikes it's likely possible to optimize asset allocation (how many and where) and revenue model to eek out a profit. More importantly these services have positive externalities (reduced traffic and pollution, better health of riders) so we as a society should root for them.
Public transport, like public roads, healthcare and education, are critical to the viability and profitability of almost any other enterprise. As such, it is logical to subsidize them and take profitability out of the equation.
This works very very well for first world Western societies.
I think bikeshare programs have been very successful in cities where they are monopolies and partially run by cities. My experiences with bikeshares in NYC, London, Hamburg, Berlin, and DC have all been great.
The places where they have become nuisances are largely those that have been flooded with multiple competing (usually dockless) systems, because it turns out that you don't need a large capital investment to create a lot of junk sitting idle that gets in people's way.
I think bikeshare systems should be municipally owned (or at least municipally regulated). For me, the real killer app would be one that lets me get a bikeshare in any city.
Just on this - Hamburg in particular has a system where it's free to use for up to 30m for subscribers to the service, which is super cheap.
I believe it's run by the local authority, and at such a level its easy to explain why it's much more likely to be economically viable. The state also has to deal with the externalities associated with other forms of transport (traffic, noise, pollution etc.), as well as the health consequences of its citizens. Additionally, it's not-dockless - which I think massively reduces the nuisance on everyone else.
Yeah, Hamburg's system impressed me the most of all the places I've been, even though the quality of the bikes is not great. I went to CycleHack (bike-themed hackathon) and DB gave us a bunch of StadtRad data to play around with. It turns out the Hamburg system has the highest usage in Germany by some distance, in large part because of the free 30 minutes you're given.
I think the system is still docked though, isn't it? IIRC, you don't have to physically attach your bike to a docking station when you're done, but you are required to park within a certain (small) radius of a station to end your trip.
Exactly - it's like "flexible" docking. You have to dock it in areas, but there's some grace if there's no stations left. Seems like the best of both worlds from my perspective.
I absolutely don’t understand why cities let their streets be literred for free by dockless bikes. I really hope at least the politicians involved got a kickback :-/.
Cities spend a lot of money trying to improve public transportation and reduce traffic. Dockless bikes and scooters can help alleviate those issues. So I can understand why a city might decide to take a hands off approach (at least initially) to let these programs get off the ground and prove out the concept.
Cars are ticketed or towed when not left in specifically designated areas.
Nobody is "littering" the streets with cars. You just don't agree with the specifics of how the government has allocated the physical space resources under its control so you see it that way.
Consider the emission and noise "litter" cars generate too, I would much rather see a few scooters lying around the place than breathe in diesel fumes everday. Really it's just a temporary issue, a bump in the road to emission-free cities.
I'm not convinced it's a temporary bump, though. Space is at a premium in large cities, especially pedestrian/cycling space. As long as bikeshare companies are allowed to use this space for free and wash themselves of responsibility for the negative externalities, I don't see the nuisance and clutter going away anytime.
Don't get me wrong, I'm definitely on Team Ban Cars. But I think that recent unregulated dockless schemes have demonstrated that access to street/sidewalk space is the limiting factor for these companies, and it's sensible to restrict this access somewhat.
Perhaps cities should take simple first steps to regulate without overburdening bike/scooter shares. Portland has designated spots in the downtown core that are reserved for car shares (not any specific company but you can't park your personal vehicle there). Maybe one every 4-5 blocks. Why not do the same for bike share?
We have a docked system already but Lime scooters litter the sidewalks all over town. Why not remove a few car parking spots and require scooters be parked there? One spot could hold many scooters and keep them off the sidewalks.
This may be easier said than done, but converting roads into shared spaces may be an answer to that.
London for example are phasing in stricter low-emission areas, which should technically mean less cars will be passing through. Eventually, they could re-purpose roads so that the primary function of them is for pedestrians, bikes, bike/scooter storage etc rather than 4+ lanes of car traffic.
That is why I believe it is temporary anyway, it seems natural that cities will head this way.
Without knowing the actual logistics, just speaking as a user. I see bike sharing being somewhat popular where I currently live (SF -- mostly JUMP bikes. Not sure about GoBike, the bright red jump branding is too "eye-grabbing" to ignore). I have no idea if it can be profitable or not, but as an end user it is a nice option to have!
Maybe lyft wants to use it to strengthen their brand perception. They have bikes too = they are environmental friendly! Also play the marketing illusion that they are everywhere, as essentially people will be moving around the city riding lyft branded bikes.
Bike sharing is still a thing in China, but they’ve definitely scaled it back. It was getting a little out of hand with hundreds of yellow bikes per city block, half of which were broken, littering the streets. The newer generation of bikes are also more robust, making it less likely for the bike to be unusable. On a recent trip to Beijing I still saw a healthy number of people riding the shareable bikes.
I use docked, manual bikes in the city of Vancouver. It costs less than the bike storage fees in my building for unlimited one hour trips (and for longer trips you just dock and undock again.) So I sold my bike long ago and just keep using the bike share system. It's faster than a taxi to get around downtown. Pretty useless in the winter though with all the rain.
Nextbike have some very shady business practices. Don't ever have a negative balance with them. They won't tell you and will proceed to threaten you with legal action a year later. Happened to me over £3 (which later became £10 as they don't accept payments below £10).
They also don't comply with GDPR. After confirming several times they have completely deleted my account and any reference to my email, I still get marketing emails from them every now and again.
I think ideology plays a larger role than profit. Many people in the American financial world are Randian extremists. They like various "sharing" services because they operate outside regulatory frameworks.
Was reading about some bike sharing startups in India raising millions of dollars (Altero ~$3.5M, Rapido $50M) and felt the exact same thing today morning.
The money in this market is in subscriptions. Recurring revenue from just a small percentage of all possible users can pay for a lot of bikes and it's pretty reliable revenue as long as you don't alienate customers too much.
I've been a Mobike subscriber for a year now (in Berlin). The bikes are crap (i.e. cheap, in need of maintenance) but they are everywhere and I see it as saving on gym cost (hard work to ride one). But, if I need to get from A to B, I get one because I already payed for it. I probably payed them around 100 euros or so over the last year. I just renewed for 3 months for 24 euros. Every time I do this the price seems to change. This gets me unlimited 30 minute rides. After that they charge 1 euro per additional 30 minutes (tip, lock and unlock seems to work). I consider this good value. I don't have to worry about bike repairs, bike theft, or leaving my bike in a dodgy area. As soon as I lock it, it's not my problem.
I've done over 1200 km on mobikes in the last 12 months. Even in the winter when the weather is less nice, I still used them enough to make it worth the subscription.
The back of the envelope math is pretty interesting. If you have 10K users like me that's about 1M revenue. For a city like Berlin (4M inhabitants), you can probably do better. At 100 euro per bike, 1M buys you 10K bikes. I have no idea what these things cost per year but both the upfront investment to flood a city with bikes and setting up the support organization (maintenance mainly) are not that high. I'd say if they shoot for recurring revenue from around 20K users in a city like this, they ought to be very profitable. They have plenty of capacity to improve utilization as at this rate most bikes are not in use most of the time.
The main issues I've seen with competitors is that they think too small. Something like Mobike only makes sense if you can find one without effort. A lot of the failed startups in this space did not have enough bikes or too complex bikes (they break). Launching with a few hundred bikes is pointless. Everybody that did this in Berlin is gone (ofo, byke (with a y), lime, etc. Mobike did this right. They flooded the city with between 5K and 10K bikes. They are all over the place. I suspect the bulk price for these things is pretty OK. The main challenge is the growth strategy: they need recurring revenue.
I suspect Jump, which recently re-launched here, won't make it in Berlin because they don't do subscriptions, their operational zone is tiny, and they don't have enough bikes on the streets. The value proposition kind of sucks compared to Mobike.
Mobike looks like it might fail because their bikes are deteriorating and they seem to be in limbo now that their China based headquarters looks like they want to focus on just China. Apparently they are looking to sell off the European operations. I think it's an operation worth saving but it is going to take an investment to keep their existing user base and there's a bit of urgency because the experience is getting worse as the bikes get shittier.
The only way to mess this up is poor execution. There seems a lot of that in this business. But it's not an inherently bad business.
Another thing beyond me is although the business model/development of this kind seems to be bound to fail, why they are still chased by enormous amount of capital.
My cynical suspicion is these so call tech start ups are just instrument of a grand new ponzi scheme in which a bunch of investors use borrowed money(from banks, insurance company and the likes) to set up a start up and increase the value of it(manufacture hype to justify the inflation along the way) and the sell to public, which is mainly pension funds, 401k, government backed institutions and so one, that is, ordinary folks.
I hope someone would correct me and shed some light on this matter.