Bird scooters is a completely unviable business. It lacks revenues during the rain and winter and when it's dark. One user using it for an hour completely drains the battery and it's unusable until someone picks it up and charges it. It needs to be redistributed every night to popular locations which causes even more cost. As well, damage to electric scooters is almost at a sport-like level now.
The only way they can make it more cost beneficial is if they charge less if the rider drops off their scooters at a charging station and higher costs if they just dump the scooter anywhere. But that is more costs for Bird.
Second is if they franchise out the business to "entrepreneurs" that handle things for them and they just concentrate on the app. But that's not a multi-billion dollar business.
There is no path where Bird becomes a viable business that grows into its absurd valuation.
>There is no way where Bird becomes a viable business that grows into its absurd valuation.
I was recently chided and reproached by the HN mods for knocking scooter companies (even got the old “this isn’t personal, but don’t...”).
the point is with any SV funded company you don’t need revenue or even to be a viable business. You just need SV money (I think Bird has already burned through $415M and now asking for this $300M) to launch the business and “grow” the user base and/or metrics(someone here once fittingly described the model as selling $5 bills for $1).
So now you raise $500M sell $5 bills for $1, the startup staggers their sales so they show constant growth month over month, in reality you raise additional rounds to get more VCs to buy in and help market the company, then finally when you show tremendous growth (metrics), show revenue of $100M, then you file for a IPO and explain away the losses of $400M by saying at any point you can “flip the switch” and cut costs by no longer reinvesting in growth but make profits. Then at IPO you cash out and dump the shit company that’s never made a dollar on the public because all they see is the media pushed by SV/VCs with the media contacts, the big SV investor names, 100% growth month over month metrics, and the hope they to will get rich.
> I was recently chided and reproached by the HN mods for knocking scooter companies
On the contrary, I chided you for posting in the flamewar style (https://news.ycombinator.com/item?id=20347016), which we don't want on HN and which the site guidelines ask you not to do. We don't care about scooter companies, we care about the signal/noise ratio of HN threads.
Well not to rock the boat or beat a dead horse here, but it would appear my down voting/flagging privileges have been removed since this post, could they be reinstated?
This is a very cynical perspective. The public markets are generally very unforgiving. This is why so many tech companies are choosing to stay private longer. If it was all about duping the public, they would IPO asap before the ship sinks.
Sure, there are examples like Blue Apron that seem to fit your narrative, but they are the exception.
If your narrative was correct, hedge funds or other intelligent investors would quickly catch on and short funds that purely track tech IPO's and make a killing. Obviously playing the markets is not this easy.
>The public markets are generally very unforgiving. This is why so many tech companies are choosing to stay private longer.
Can you even explain what that means?
In my estimation the companies are staying private longer so the VCs can blow up the valuations pre IPO higher than anytime in history, whereas, if the startup IPO’d from the start there is no way to continue the growth while sustaining the loss (in the real world business have to make a profit to continue) and VCs couldn’t make the same profit they do now, but in all other respects the risk would be the same.
Anyway it wouldn’t be to hard to look at the IPO of VC backed tech startups and determine what % had profits vs operating losses (obviously my guess is the majority are IPOing at losses). Then, a further analysis could be done to see if the average startup company valuations/market caps declined post IPO and how much pre IPO investors/shareholders took off the table.
Edit: looks like since 2010 there have been 100+ tech unicorns ($1B+ valuation) and ~2/3 didn’t make profit. Wish I could readily calculate how much VCs made taking those companies public, maybe someone can link an article/data.
Sure, many of them are intelligent, and factor in the risk they're duped. Nevertheless, they are all looking for a good investment, and "growth" seems like a good metrics. From an investor's perspective, if you pass on a company like Bird, they will find another investor, and if they succeed, this will be a lost opportunity for you.
The only thing special about Bird is the quality VCs that got into it at seed and series a. Investors will be taking a second look at these funds. If second and third tier VCs had been Bird's primary backers, we would all care a lot less about this failed company.
All you've described is costs, not why costs must necessarily be higher than revenue. Every business has costs, many businesses have seasonality, and every VC blitzscaling business operates at a loss in order to capture market share. It's the playbook.
Here's a counterpoint why it might be a viable business: it unlocks a new market. Scooters enable a new class of trips: trips between 0.5 and 2 miles. There's currently not a lot of trips happening in that distance... below that you can walk, above that you take transit, but that coffee shop 1 mile and change away is just enough of a pain in the ass that it's not worth going there. Unless there was something that made it easy to go that distance.
Scooters are a new modality of transport that opens up an entirely new class of trips. Combined with the fact that the population is broadly trending towards dense urban environments, you have a whole new market you've unlocked.
Scooters aren't about replacing Lyft rides -- no one uses a scooter for a full hour -- scooters are about servicing trips that are too short for an lyft.
If there were a scooter every single time I wanted to use a scooter, then it would make sense. But that's not reality. The reality is that trying to get a scooter is haphazard at best.
You need to walk around and find one. And during rush hour, it won't be at the Caltrain station because they're already taken and distributed around the city.
It's clear as day that there's no way this is going to work at scale in order to justify a multi-billion dollar business.
Wait, so in a thread about a company raising more money for the VC blitzscaling playbook, you're complaining that popular demand for this service appears to be outstripping supply?
Lyft and Uber have shown that you can improve matching logistics by bolting on games like demand charges and utilizing various supply-side nudges to direct assets to where you need them to be. These are solvable problems. It seems like you're saying you would happily use the service if there was more of it available.
No that's not what I said. I said the only way it unlocks a new market is if there is guaranteed availability, which is functionally impossible. It doesn't take much effort to show that if the scooters start from an area that is very useful, then end up in random locations around the city, and once they are in an unuseful location, they stop getting revenue. And even worse there's the additional cost of getting them charged and then picked up overnight and redistributed by hand.
You need to flood the market with scooters so that people get scooters when they want it but cities won't allow it. Plus, it's cost prohibitive. Creating a new market is NOT a solvable problem, especially at the scale of funding that they have received. You can't throw a billion dollars and expect that a new market will create itself. That's why Bird is going to die, probably by the end of 2020.
> It seems like you're saying you would happily use the service if there was more of it available.
Which is a problem when the scooter companies lose money on every single scooter they put into the world.
Being popular alone is enough to grift SV investors who have money to burn, but when that well dries out they can't afford to subsidize these things to the extent required to keep them useful to people. If you can't find scooters they lose their utility, but the companies won't be able to afford leaving so much excess capacity around.
Where I live, this is not much of a problem. The only time I have trouble getting a scooter if I want it is during some large conventions and after large sports events. It would not take that much effort to plan appropriately for those events and make many more scooters available.
Also, the scooters have widened my options for lunch from maybe 3 choices within walking distance to something like 50. Sure it's a luxury, but for a few extra dollars, it is nice to be able to get a pita or burger instead of always a burrito.
Exactly how much do you expect someone to spend on a scooter daily? People can just buy their own scooter if Bird is forced to pay for all the real costs the Parent post described.
Ownership comes with significant inconveniences like having to transport and lock it up outside wherever you're going. A major convenience of Bird / Lime / etc is being able to just grab one at any location and then just leave it wherever when you're done, and not have to worry about these things.
A major convenience of ownership is that, most of the time, a working vehicle will be available when you need it.
To get that with a bike share program, bike share companies likely need to accept that their bikes get used less than once a day, on average. That means that users must pay for more than one bicycle. That, in turn, would make ownership cheaper than bikeshare programs.
Yea that's true. Bird will always have the casual rider base that wants the convenience. I think the real money is in capturing the daily commuter, however.
It would be interesting to see Bird have an offering to address the daily commute, something to the effect of Lyft Line. I'd be curious to see an Uber's Ride Pass [1] for scooters.
Where I live the scooters are mostly in very concentrated areas that few people would use them for commuting, either because they live in the suburbs (so far away it'd be impractical) or downtown (so close that you could walk nearly as fast as a scooter ride after accounting for sitting in rush hour traffic).
Much like a car or bike as you go from A > B > C > ... the scooter you own is where you are and thus where you want it to be.
And just like car rentals for regular users ownership is much cheaper. Tourism or some other niche maker surely exists, but the overhead assuming they need to break even is huge.
No, the scooter I own would stay at home, as it would be in the way during my morning commute.
(I’m not saying it’s for all, but for me, the shared scooter could not be replaced by having my own, which is the argument that kicked of this subthread)
> The bird (or lime or Voi or...) can be picked up where I need it
It sounds like the problem is that it's never where you need it. Unless you had 10x as many scooters as people and they were littered literally everywhere.
Or you lazy asses could just walk. If you people reinvested all the time you spend justifying stupid businesses that are only kept afloat by 0% money that is running out, you'd all be better off
Is it bad for business to walk to a fundraiser meeting asking for money to build a scooter business because scooting is the future? Asking for a friend?
In several large cities there is already a workable solution for those trips though. Bike share with fixed stations, like CitiBike in NYC or Capital Bikeshare in DC.
As I understand it the fixed bikeshare costs are controllable and those systems are not losing money at anywhere near the rate of Bird.
EBikes will be rolling out soon for some of these systems too so that solves another one of the disadvantages they have against eScooters.
The electric bikes are great but having a small number of relatively far apart docking stations is a big inconvenience compared to dockless with scooters. Particularly so when you find a station empty of bikes when you need one or completely full when you need to drop one off. I use scooters way more than bikes personally even though the bike program has been in my city years longer. Convenience is everything for a 5-15 minute trip.
The problem with bikes is that you get incredibly sweaty even in the winter. I'm sure there's solutions to that as well but I would prefer not to have to towel down or change clothes after arriving at my destination.
Maybe it's just because I bike a lot, but during the winter, I don't get sweaty at all. I used to be able to bike 95% of the way to work (2.5mi) in jeans without getting sweaty until late June or July. (Those last two blocks going uphill would usually get me, sadly.)
And this is in Austin. Yeah, right now I'll get sweaty, because we hit 107f heat index every other day. During the winter I can bike ten+ miles in jeans and a t-shirt without getting sweaty.
And in the marketplace of ideas, why must there be only one workable solution?
An electric scooter is a fraction of the cost of an ebike, so you can have more of them, creating a denser transport network. Not as durable, sure, but why not let the investors deal with that risk?
And as much as I'd love the US be like the Dutch and have personal bikes go everywhere, I don't bike to the coffeeshop a mile away because the only bikes I see locked up outside in my city are missing, lets say, critical pieces. Bikeshare and scootershare offload the risk of personal property theft.
That doesn’t guarantee you will have a bike available at all time (if it breaks down, you won’t get a new one in a second), but neither do bikeshare programs.
Well, in this case, there may not be enough (literal) space to fit both solutions. Since cities are regulating this, if one solution is generally superior for last mile commuting it will probably take the cake.
How about a compromise and people start using the Halbrad [0] instead? It has the upright posture that scooter users seem to like with the pedal action that cyclists are used to, plus you can carry it on public transport. Disclaimer, I want these to take off so that the unit costs come down to the point that I can afford one.
The value in unlocking the 0.5-2mi trip distance makes sense, but the way you describe it seems like the biggest beneficiary is the hypothetical coffee shop that is just a bit too long of a walk away -- they get the benefit of the increased business and customer base, while each individual rider gets only a marginally better coffee, at the cost of a Bird ride.
Perhaps Bird should be looking at hooking up with these sorts of businesses as ways to increase the reach of their locations, either as a co-marketing effort or using the shops as a source of revenue (e.g., sharing value for each ride to & purchase at the shop)?
Bird, like Uber before it, is ultimately making a play that in part includes skirting regulation at first, and then pivoting to regulatory capture and alliances with companies who benefit from its services. Just as Uber was practically unlicensed cabs until saturation made it oftentimes politically untenable to ban, entire new regulations were created to fit Uber going forward, and Uber now delivers people to stores and food out of restaurants. In some places, it even has government contracts to serve as a substitute for transit.
Bird is dumping these scooters in cities, and is now working with them to become the preferred provider who is allowed to do this in that city, while others aren't allowed yet. Having that head start is a significant advantage in capturing marketshare. And while a second or later mover can come along and dump their own scooters and convince people to get their app, Bird can then choose to leverage their relationships with governments and businesses and dent the progress of an upstart.
The whole point of VC funding is to build out the capital-intensive parts quickly and develop moats that make switching to later comers difficult. Discussions about how Uber has no moat come up from time to time, but ventures like Uber Eats that form a captive market are demonstrably moat-like. The real question is whether Bird can develop such a moat, or is simply laying the groundwork for some other knockoff to come along later, by which time Bird is low on cash, and all hurdles that would have impacted similar companies have been cleared by Bird.
It's harder to see the tangential markets for Bird to break into analogous to Uber's added verticals like Uber Eats, business travel, freight, etc. Maybe last mile package delivery from a nearby hub?
Maybe they are holding out to become a future Uber Scooters acquisition like Jump Bikes.
One idea I would like to see is Bird rides sponsored by the business you're going to, kind of like how some businesses reimburse a parking garage ticket. It looks like Uber has started offering a program like this [1] as well.
I never lived in a city with these types of scooters, but I'm just now finding out you don't need to stow them at a docking station.
Guadalajara has a "mibici" bike program ($20/year) where you undock a bike, get 45 minutes on it, and plug it back into a rack somewhere, else the costs mount up. Always assumed these scooter programs worked like that.
Being able to dump the scooter anywhere makes me realize why people consider them such an urban nuisance. Not really something I'd task the average person to do with forethought or courtesy unless it hits them in the wallet.
That seemed obvious to everyone though so how did they ever get valued so highly? Is the whole point of companies like this to fool investors into giving them money and then keep the sham up for as long as possible?
Business is complicated, so some people earnestly believe that if they have a bit more time they can work out the bugs. In some cases, this is true. In others, it's not.
When it's not, it may seem like they are deluded or scammers. Maybe they are, but a more charitable interpretation is that business -- especially new businesses -- are like six blind men and an elephant, which means people can strongly disagree about the nature of the beast while both parties are simultaneously right about the pieces they know and understand and both are equally wrong in the aggregate.
You make a paper airplane. You toss it into the wind and see if it flies. No amount of debate (concerning what should fly) changes whether it did or did not actually fly.
VCs are generally greedy and stupid at the same time. They follow the herd more than any other industry. The fact they invest in something means little as to how savvy they are or how successful the product will be. 90% of all startups fail, and there have been plenty of spectacular implosions in the past and there will be plenty of spectacular implosions in the future. Bird will be the WebVan of this business cycle.
(edited to consolidate my comments) Here are the reasons I can think of
1) compelling if it all works out. Invest clear-eyed and hope the founding team figures out the roadblocks. Greedy but not stupid; most successful startups start by 'doing things that don't scale.'
2) Pattern-matching / top-down portfolios. Mobile apps. Sharing economy. Subscription businesses. Electric Vehicles. Internet of Things. A lot of investors decide on themes for portfolio before they look at investments. Scooter sharing ticks a lot of boxes.
3) Adverse selection. It's a simple idea - anyone can grasp scooters as subscription. So the simplest-minded investors chose this rather than more subtle ideas.
4) as another comment suggested, investors are playing a game of musical chairs between funding rounds. Chamath Palihapitiya claims this as the reason his firm is stepping back from VC -- so he's walking the talk here https://www.cnbc.com/2018/10/10/start-up-economy-is-a-ponzi-...
I agree with Chamath Palihapitiya. VC money is like taking steriods. You get the muscles, but it will disappear once you stop taking them.
I have come to the realization that VCs are really bad at distributing resource. For all these pedigrees to show for, they all seems to be playing musical chairs.
Part of the problem I see is that most VCs don't have a founder background and most of them you meet are pretty arrogant.
So, point two would mean that, in an environment that regards VC finding as success, any good idea, in the sense of getting VC funds, would optimize to tick the right boxes, wouldn't it?
If you think of VCs / founders as a marketplace, which it kindof is, then yes. You have a larger 'market' for selling your startup idea, and optimize the 'product' for 'fit'.
If you think of VCs as totally independent, open-minded, critically thinking professionals, dutifully providing a financial service, then no. You pick the VC for the idea rather than the idea for the VC.
The second case is the ideal, but assumes highly-competent VCs and founders with equalish leverage. I think the perverse incentives for VC partners (read Palihapitiya) and the lack-of-prestige factors for first-time founders break the model. But this seems to be more true for second-time founders with moderate success under their belt.
Given the high percentage of startups that fail, I wonder what percentage of VC funds fail, where perhaps we can define fail as "return less than the S&P 500 over the same timeframe". I imagine the true answer is a much more difficult number to come by. Easier to get late money in a successful company and claim "qualitative success".
The informal definition we think of day-to-day is fairly fuzzy. There's nuance in differentiating a small business operated by a few people from a startup. Being venture-backed is a simple differentiator but there are still legitimate startups this would exclude, e.g., serial founders who don't need to raise or products that make money early.
With respect to "fail"... is an acquihire or an even-money, 1-3x exit etc a "failure". Probably, yes for the VC, but not necessarily for the founder. Accelerators are incentivized to count "successes" liberally as well.
With a more broad definition of startup, it's easy to see the failure rate at 99%+.
A cursory glance at that data tells me it makes no sense. They cite several industries with failure rates substantially below 90%, don't give a single instance of a failure rate greater than 90%, but tell us it averages out that way.
Also real estate businesses only have a 42% failure? So I have a greater than 50% chance of becoming a real estate mogul? I just don't buy it, and I don't believe those other numbers either.
I think their data is wildly skewed by sampling bias, as they claim to get their data from interviewing failed founders. Welp, they never interviewed me - how many other people have they never interviewed because they simply never knew the company existed? How many founders, after failing, go out of their way to talk about their failure?
VCs have a strong incentive to create a story that starting a company has a greater chance of success than it does, because it's low-risk for them and they want a churn of potential investment prospects.
I think 1% is a much more realistic number than 10%, unless we're limiting ourselves to Sequoia-backed post-Series A companies.
Just because people have money to burn does not mean they earned it or acquired it through hard work and good thinking. Most people with money are absolute idiots just like everybody else. In fact, in many cases, and especially with wealth inequality as it is, they can afford to be stupid.
I am not joking-- I'm willing to bet that there is a direct correlation between inequality and stupid products/business models making it to market. When you can just keep trying new things until something sticks, you're not going to try very hard or act with much caution.
Bird isn’t WeWork. Yes, they’re unviable on a unit basis now. But that’s a hardware problem. They’ve grabbed market share; now they must build margins through R&D. The traditional model is R&D first market capture second, but there isn’t a fundamental reason not to go the other way when the R&D is reasonably feasible.
How is their market share at all secured? It's not hard for anyone else to dump a bunch of scooters in a locale already swamped by Bird. Yes, users would have to install a different app, but my hunch is most users will use whatever scooter is closest and/or in the best repair (even if it means installing another app).
I doubt the app will matter long-term. Mapping and transportation will be dominated by Google, Apple, and maybe Uber. City bikes, scooters, ride hailing, and any other alt transit options will eventually be forced to completely integrate into those apps and be forced to operate as a commodity.
It's pretty irritating to install a new app and go through a new-user onboarding. I know that I've walked past scooters for a competing app in favor of one I'm using.
If I start seeing them around enough I might go to the trouble, but that requires a fair amount of density to start working.
That works - to a price point. There's a threshold where the described behavior is overcome. I'm sure there's a marketing term for it (I don't know it) but the OP is not off-basis.
If some new company with deep enough pockets starts promising No Unlock Fee and $0.15/min, they could quickly capture a lot of Bird, Lime, etc's market share. They'd be burning cash at an unsustainable rate, but there is no moat between these businesses at the moment.
I could see this -- except Lyft and Uber are both getting in on the game, and people already have those apps, so if this is true, it's actually an argument against Bird, not for it.
I think it's a social engineering problem. If the scooters didn't get routinely destroyed by people 1. smashing them into curbs because it's fun or 2 tossing them in the river because they're obnoxious / blocking the sidewalk, I believe they'd be already be profitable, or at least close.
People hate the scooters. People who ride the scooters hate the scooters. Hell, I like the scooters, and I hate the scooters. :-)
I was walking my dog down Santa Monica Blvd in West Hollywood when I was almost clipped by an idiot riding on the sidewalk while snap chatting. He was perfectly silent and was behind me, so I had no idea he was coming. He could've killed my dog and I would've been in prison for killing him immediately after. Since then I've come to hate scooters with a passion.
I would rather see the police spend 3 months ticketing everyone for littering. They are leaving shit on the sidewalks with no licences to do so.
I would also like to see them ticketing the riders for reckless driving/endangering of the people. I almost had an accident 2 weeks ago because some stupid riders decided to race on the street. I also see some of them riding in the sidewalks zipping through pedestrians and many times hitting their bags.
Agreed. That part bugs me. Cities are effectively subsidizing sidewalk space for these scooters that we paid for with tax revenue (and continue to pay to maintain). Most business that want to capture a parking spot need to pay for that privilege, and scooter companies should have to pay for that as well.
And you’ll see that most scooter riders on sidewalks are going max speed. It has made walking in cities with these things a lot more annoying, and it was already bad enough with cars but at least cars are separated from walkers.
This is my thinking as well... however, my assumption is that the majority of R&D will need to go into operations innovation and brand new last mile mobility strategies.
Strong operations will allow bird to continue to cut costs.
(I'm hoping) There's still room to innovate on winterized, electric, single person products.
Their primary business is unavailable to them for half the year in most of the world because of weather, and half of the day. How is this multi-billion dollar business, if they already have 700M in funding and they want another 300M?
Fear of missing out. These risky bets fit into the long-shot side of part of a balanced portfolio, and if they do make it, those who have backed them are positioned to make good money. When the appetite of VCs cools, these get dumped on the public stock markets, where the cycle repeats once more.
>> Bird scooters is a completely unviable business.
There's almost certainly a viable business. At the end of the day, it's a question of whether the unit economics will work out. These scooters cost $1K and on average, each scooter gets ridden ten times a day with an average fare of $5. It doesn't take rocket science to see a profitable solution even with maintenance costs. The problem right now is that these companies are being extremely wasteful in order to capture market share.
”and on average, each scooter gets ridden ten times a day with an average fare of $5”
FTA: ”revenue shrank sharply to only about $15 million”. That’s per quarter, so about $160,000 a day. At your claimed $50 revenue a day, that would be 3,200 scooters. Bird operates in over 100 cities worldwide (https://www.bird.co/cities/), so for that to be true, at least one of those cities would have less than 32 scooters.
⇒ it would surprise me if each scooter gets used even once a day, on average.
If the scooters would solar charge and return then somehow automatically, it'd help immensely. Self driving scooter is somewhat further in the future then a self driving car though.
The scooters usually even have enough charge left to slowly return home.
This sounds fixable with some technology.
So, I'm dreaming here, but a scooter with 2-3 times the battery life, able to self balance and limp (1-2mph, with flashing lights) on the edge of the road (or sidewalk if allowed) back to a charging station (or to a high traffic area based on some predictive algo) would fix almost every problem in their current business plan.
I know that the self driving bit is far from trivial (understatement of the decade) but at very low speed you can stop, get out of the way, phone home for some help.
Simplified scenario, and likely full of holes, but you get my idea.
We don't have them in my city (thankfully), but in the cities I've visited most of the people using them were teenage joyriders who would otherwise be walking.
To purport that these people drive cars and ride scooters in the same manner is unfair. Same with bicyclists - I witness dozens of them running stop signs and red lights every single day. Can't imagine they do the same in cars.
There could be some compatibility between government bike programs and scooter rentals. My city just installed a ton of rental bikes and now they compete with scooters.
Not sure what the collaboration/execution would be, but that's my first thought.
The only way they can make it more cost beneficial is if they charge less if the rider drops off their scooters at a charging station and higher costs if they just dump the scooter anywhere. But that is more costs for Bird.
Second is if they franchise out the business to "entrepreneurs" that handle things for them and they just concentrate on the app. But that's not a multi-billion dollar business.
There is no path where Bird becomes a viable business that grows into its absurd valuation.