> The recent events are a reflection of shifting geographical needs
You know, I think what they're experiencing is, uh, Winter. This might be a foreign concept for people who live in sunny Santa Monica, so I'll explain: for about 5 months in most of the US, it gets really cold outside, kind of like your freezer. Crystalized water falls from the sky, and riding a scooter becomes both dangerous and very uncomfortable, so most people don't do it. Unlike, say, Uber, your revenue will likely take a real big hit during this time, instead of increasing.
More bad news for you, this does happen every year. Heck, in many of your largest markets, like Minneapolis and Chicago, it can last up to 8 months!
I'm available for hire if you need boots on the ground in this part of the country. First recommendation: Maybe don't keep hundreds of scooters on the streets during heavy snowfall! As far as I could tell, the total scooter capacity didn't decrease substantially over the past four months, no one was riding them, and I'm sure they took a lot of damage from the bad weather. Hunker down and wait for the sun!
We have four seasons in L.A.: Fire, Flash Flood, Earthquake, and Awards.
Seriously, I've been noticing the cold. I haven't had to wear long pants for the whole season in over a decade. It feels so normal, going back to how it was in my childhood, but I know it's only a brief respite from climate change.
And even if you're a transplant (at least with me) that's used to cold winters, you've got 1-2 years before you normalize to the weather. First year here I really believed there was no winter in LA, but after you acclimate you realize it was all a lie!
I live in LA and the scooter situation is starting to get out of hand, at last count we had 5 companies competing in my neighborhood. I think it does solve a necessary problem, but there are easily 5+ scooters for every rider now. I fail to see how any of them can get this to profitability soon, let alone all 5.
To put this in perspective, there are about 8 parking spaces for every car in the US . A parking lot costs about $5,000 to $50,000 per space, depending on if it’s a gravel lot vs a parking garage. Yet parking lot operators and rental car companies are still able to make a profit.
In transit planning the walk shed for transit extends from one mile (that seems to be very optimistic high density east coast planning) to a quarter mile (more realistic in California’s cities) away from the station. By that same metric there should be plenty of parking spaces within a quarter mile of where you’re trying to dine. There’s also likely the parking space you have at home, and the space you have at work (assuming that like most Americans your job offers free parking).
When a startup is roughly a year old, and its rival just raised $300M, alarm bells should go off in investor's heads, "If both these companies started a year ago, and it only takes $300M to fund the next one, and none of them have IP or even make their own scooter, maybe we shouldn't do this since there are no barriers to entry."
If you throw in NEA's new fund, that's five funds where $300M is less than 10% if they did the whole round, and if the economics are great, a bunch of growth equity funds.
It's crazy to me that you'd invest that much without having more data on the unit economics given none of these companies even have an advantage on making the underlying scooter. The more scooters you have and the more market share you have, the faster your bleed money. If the unit economics were great with off the rack scooters, what's to stop Lyft/Uber from adding a scooter option given they already have the demand side of "trying to get somewhere"?
yes, but the unit economics probably pencil out, meaning the direct costs of providing the service (distribution, charging, maintenance, and support) are paid for by the revenue. that’s unit profitability.
but they’re probably losing money in capital costs and overhead (marketing and the like), so overall unprofitable.
lyft was (is) principally both a hedge against uber and a way for VCs that didn’t get into uber (ever or early enough) to make a bet in the space (the top 2-3 companies in a new market usually survive to a decent exit), so profitability wasn’t an important metric for funding (but the probability of surviving to exit very much was).
At least you had to build a two-sided network. Without the driver, there literally is no barrier to entry, which is funny when you think about all the future rideshare "profitability" once you have self-driving cars...
How do you think rental car companies stay in business? You are still liable for the damage to the car if you blatantly abuse it, and you are still liable for property damage or accidents in states that require insurance and insure the driver.
This is just a car rental for a shorter amount of time. And in D.C. we had something called ZipCar which was pretty close to that.
When I was in the bay area zipcars were consistently driven by some of the worst drivers on the road.
It's like tourists in rental cars but worse, since these people often have never owned a car and drive very infrequently. I know people who never drove until their 30s then got a drivers license just to access zipcars. They're exceptionally bad drivers.
Right but it doesn't matter if they are bad drivers. They are still liable for damages and any accidents they cause. If you get in a wreck/get a ticket in a ZipCar, it is still your insurance that goes up, and points on your license, and you have to pay the ticket.
It’s such a bad business model, it has nasty externalities, but people still leap to defend it because they don’t like cars. I think we need to be optimistic about this and accept that a lot of the last few years and probably a few more are all an incredibly expensive lesson as to why regulation exists, burdensome nature and all. Five years ago everything was “Uber for X” and “disruption” and Crytpocurrency. Now... not so much except for the true believers and the sunk costers.
So yes, it’s out of hand, it’s inherently unprofitable and cheap Chinese scooters are probably not a net environmental benefit. It’s still one of those things that millions of people apparently need to figure out the hard way.
Spoke to a (well known) VC who saw the Bird deal and passed... the gaps in the model would have been fairly obvious to any suitably critical person. Namely that Bird and Lime dont unite catchment areas thus the coefficient of the network effect is tiny compared to Uber.
Or you could have just looked at—-you know—-actual bike and scooter rental companies. They’re small mom and pop shops. No Hertz for scooters. There’s a reason.
Cab companies weren't mom and pop shops, though (at least not in the sense you're getting at). In fact, obtaining a medallion was a substantial investment ($1M+ in some cases). It's not particularly difficult to make the argument that scooters are a niche market at best.
No, I don’t mean to say that at all. The beauty of Uber is that it stitches together multiple markets on both the supply side of the marketplace and the demand side. For both small, medium, and large distances, riders know they will have a car and drivers know they will have a fare.
Bird investors failed to consider that this isn’t true for scooters. Each catchment area is isolated from the next.
Yes, I agree with your argument here. But comparing Bird to mom and pop bike rentals is wrong for the same reason that comparing Uber to traditional taxi companies (or comparing Cragslist to traditional classifieds, etc) is wrong.
Here in Vienna there are three companies competing, with Bird having significantly reduced their radius of operation, it is practically unusable now. We have a few "startup-hubs" here and I don't think you can reach a single one by Bird, which seems like a bad strategy.
I love the scooters in Washington DC, and I don’t really mind that there are all these different companies. Eventually they will consolidate and will get two or three really good ones, and all will be great. Parking is miserable here, but it makes it more tolerable when I park six blocks from where I need to be, and scooter over.