!

Upgrade now for access to our newly re-launched org charts and save 15% a year as an annual
subscriber.

DATA POINT AUTONOMOUS VEHICLES STARTUPS UBER/LYFT

Scooters’ Worst Enemies:

Wintry Weather, Vandals
By Cory
Cory
Cory
Cory
CoryWeinberg
Weinberg
Weinberg
Weinberg
Weinberg Jan 24, 2019 7:01 AM PST " Share full article

Cory Weinberg
T
he two leaders in electric scooter rentals, Bird and Lime, saw significant declines in
ridership in November and December—the first wintry months they’ve had to
navigate with large fleets, new data show. The drops put a year-end chill on months of
rapid expansion and showed how seasonal the scooter business is likely to be, which has
already caused potential investors to more closely scrutinize the companies, some told
The Information.

The number of Bird scooter rides processed in the U.S. dropped by 23% from October to
November, and fell an additional 27% in December, according to a sample of credit card
data collected by the analytics firm Second Measure. For Lime, ride transactions, which
are a proxy for scooter rentals, declined in the U.S. by 27% from October to November and
then a further 17% in December. Ridership for both companies fell most significantly in
cold-weather cities like Baltimore and Denver, while San Diego and Los Angeles generally
held steady in November and December, according to Second Measure.

THE TAKEAWAY
• Scooter rentals fall at Lime and Bird in November, December
• Seasonal declines lead to more investor scrutiny
• Companies counting on warmer climates, better scooters to grow

Confronted with the cold-weather slowdown, and other challenges such as regulatory
scrutiny, damage, theft and unpredictable rider habits, the two companies are expanding
to warmer climates, improving their scooters and taking other steps to make their
businesses work everywhere, at any time of year.

“The key question for the industry—and where we put all our focus—is, ‘How does the
system work sustainably?’...It can’t work sustainably just in summer,” said Sanjay
Dastoor, CEO of Skip, a Y Combinator-backed scooter rental firm operating in San
Francisco and Washington, D.C.

There’s evidence that the cold weather and loss of scooters to theft and damage hit some
companies harder than expected. Lime told potential investors in mid-2018 that by the
end of the year it would be generating global revenue at an annualized rate of $500
million, or $40 million a month. In reality, the company fell short of that, recording a “run
rate” in December of between $250 million and $300 million annually, or about $20
million to $25 million a month, according to people familiar with the matter.

David Sacks, general partner of Craft Ventures and a Bird board member, said in an
interview that the firm accounted for seasonality when it invested in the startup in late
2017. “We look at it as a reduction in [the total addressable market], but it’s still a huge
market,” he said. “Even in the months with the worst seasonality, you’re still looking at
over $100 million run rate revenue for a company that launched 15 months ago. You just
don’t see many companies like that.”

Regulation is another significant hurdle, at least for now: Eight of the top 15 biggest,
densest cities in the U.S. don’t permit scooter rental firms to operate, although several are
planning to open up this spring.

In the meantime, both Lime and Bird have been targeting Latin America as a growth area
and moved more scooters to warmer states like Texas and Arizona. Lime has moved many
scooters to Australia and New Zealand to take advantage of the southern hemisphere’s
weather. Companies have also been racing to build up operations in Europe, which has
denser cities, less car ownership and potentially more friendly regulation.

Recently, Bird raised $300 million from new investor Fidelity Investments and existing
ones like Sequoia Capital and Craft Ventures, according to people familiar with the matter.
Lime brought
brought
brought
broughtin
in
in
in$400 million, mostly from existing investors such as Andreessen
Horowitz and GV. However, the companies needed the recent cash injections in part
because their services have been losing money quickly. Both had raised hundreds of
millions of dollars last summer. Each was valued most recently at $2 billion.

The companies used the money largely for fast expansion into hundreds of markets.
Nationwide, the number of ride transactions Bird processed grew 170% between April
and December, while Lime’s climbed by 230% in the same period, according to Second

brought
Measure. in
The companies have also used some of the money for new versions of the
scooters that they say will be more rugged.
Regular Riders Needed

Executives running electric scooter firms have reason to think their businesses won’t
totally wash away in the winter, as long as they cater to people who rely on the services
for regular commutes rather than joy rides or infrequent trips.

Lime and Bird have been targeting Latin America as a growth area and
moved more scooters to warmer climates.

New York’s Citi Bike, a bike-share system mostly used by commuters and acquired
recently by Lyft, saw ridership decline by just 35% between its peak in August and

December. It frequently touts its ridership in winter months, including Monday, which
topped out at 14 degrees. The company said it had 10,000 rides Monday.

But scooter companies are still working to attract commuters. The zippy two wheelers
were quickly adopted in the U.S., first in Southern California, partly because they were
novel and looked fun. But in a recent survey
survey
survey
surveyof about 3,400 scooter riders in Portland,
Ore., only 26% of respondents said their primary reason to rent a scooter was for more
regular trips like to or from work, school or public transit. Fully 41% said they were using
scooters for “social/entertainment” or “fun/recreation.”

Skip’s Dastoor said scooter companies can attract more regular commuters if they make
scooters that work better in bad weather. That would take improved safety systems, better
battery performance, and changes to the way the scooters are built, he said. Ryan
Rzepecki, CEO of Jump, an e-bike and scooter service owned by Uber, said
said
said
saidon a subscriber
conference call organized by The Information that companies may eventually add
vehicles with covers and three or four wheels in colder climates.

“Demand is clearly there, people want this. The device infrastructure just isn’t where it
needs to be,” Dastoor said.

Another problem facing scooter firms is the rate at which the vehicles break down, are
stolen or vandalized. That’s apparent from the first few months permitted companies—
Skip and Scoot—have been operating in San Francisco. New data fromsaid
the city’s
transportation department show the two scooter rental firms operating fleets of 625
scooters each there have had to replace every scooter they were allowed to have on the
streets in just 10 weeks due to disrepair or theft. (See graphic above.) Both companies
started operating in San Francisco in mid-October.
Scoot CEO Michael Keating has said the company curbed the rollout of its fleet in the city
to make improvements, including the ability to lock scooters up. It typically runs
significantly fewer scooters than it is permitted, with plans to slowly increase its fleet in
the coming months. Scoot lost 421 scooters due to breakdown, theft or vandalism from
mid-October to the end of December. It garnered just 12,584 trips in that time span. Skip
lost 978 scooters for those reasons, generating 151,355 trips over that time span. Mr.
Dastoor said Skip sometimes has more than 600 scooters on the street, sometimes
“significantly below.”

Mr. Dastoor said Skip had seen less vandalism and losses than expected, and he
anticipated the rates would decline over time, as they did in Washington, D.C., where it
rolled out scooters in early 2018.

“In 2019, this clearly needs to be a sustainable business. Vehicles that last longer, are
safer, easier to charge and not being subsidized [by investors],” he said.

Correction: Scoot said 421 of its scooters were decommissioned, stolen or lost between mid-
October and the end of December. A previous version of this article gave the number as 881
scooters, based on what Scoot said was incorrect information it provided to the San
Francisco Municipal Transportation Agency.

2 SUBSCRIBER COMMENTS

Aaron Wall
5 days ago
Founder, SEObook

"Scoot lost 881 scooters due to breakdown, theft or vandalism from mid-October to the end of
December. It garnered just 12,584 trips in that time span."
 Only 14.28 rides per breakdown or loss is horrible economics. The number is so low that
they'd need to charge a lot per ride & view them as disposable.

Walmart has a bunch of scooters listed on their site for $80 to $200 or so
https://www.walmart.com/browse/toys/electric-scooters/4171_133073_3209634_7994546
people would surely take better care of them if they bought them directly, but as the price on
them comes down, is there value to using a rental service for regular rides when you could
just use your own on the most common commutes like to & from work?

Like· Vladimir Andral liked this.

Bobby Martyna
3 days ago
CEO, Tradavo

The usage patterns are easily solved -- and there is plenty to study in the travel industry and
elsewhere. Surge pricing in summer, discounts in winter or by daily weather or by
availability. Also discounted annual subscriptions or pre-purchased rides with expiration
dates and promos can level it out nicely. To level corporate revenues, open in the Southern

Hemisphere cities.

Whatever, it seems Black Friday for these guys will be in the summertime.

Like

Want to comment? Become a contributor.

To keep the quality of our comments high, we review each person's profile when they apply to be a contributor.
It's simple to sign up and will only take a few minutes. We'd love to read your take and so would your fellow
subscribers.

Become a contributor
 Recent Articles

AUTONOMOUS VEHICLES STARTUPS UBER/LYFT CITIES STARTUPS UBER/LYFT

Uber Exploring Deal to Buy Bird or Scooter Firm Chases Funding to

Lime Staunch Losses
By Amir Efrati, Juro Osawa, and Cory Weinberg By Cory Weinberg

CITIES UBER/LYFT POLICY CITIES UBER/LYFT E-COMMERCE

Scooters Grapple With Safety After Latin American Scooter Startups

Dark Merge, Raise $150 Million
By Cory Weinberg By Cory Weinberg
The Information writes deeply reported articles about the technology industry you won’t find
elsewhere.

Stay informed

© 2013-2019 The Information. All Rights Reserved.

Terms · Privacy · Payment Policy · Help & Support · RSS Feed