Bird : are e-scooters dead?
Paris e-scooter's ban, horseless cities and the future of urban micro mobility.
Hi there,
Welcome to The Climate Tiger 🐯. I'm thrilled to kick off this newsletter with you!
For this first edition, I wanted to share my thoughts on a topic down in my heart : urban mobility.
Over the past 2 years, I lived in 18 different city centers. From the tiny tropical streets of Rio de Janeiro, to the giant and windy Manhattan's avenues or the old fashioned Buenos Aires. I’ve become a mindful observer of city configuration.
All cities around the world, large or small, face the same issue : traffic congestion. And one of the biggest transportation challenges is to remove cars from the centers, in favor of greener and healthier options.
But in March, the mayor of Paris - where I live now - decided to ban rental e-scooters.
I don’t know about you, but personally, I see this backlash as an opportunity to reconsider the micro-mobility model. What is the future of e-scooters? What kind of business model would win in this context?
I’ll explain to you why I think ownership is the next big move in micro-mobility and why I see a new generation of actors emerging.
Let's dive in.
Are e-scooter dead ?
“In the transportation industry, cities need to be your first customers, and safety your first priority” Travis VanderZanden.
I remember this sentence like it was yesterday. Four years ago, in July 2019, I attended a conference at the now infamous French incubator “The Family” with a special guest, the CEO of the e-scooter company Bird, Travis VanderZanden. The atmosphere was electric. For young entrepreneurs like me, Bird was the holy grail of startup success. The company just reached a $2.5 billion valuation and Travis came to Paris to settle Bird’s European headquarter - the biggest of all time - with a plan to recruit 1000 employees in the next two years.
But that never happened. Bird isn’t worth $2.5 billion today, but $51 million. They are not generating huge dividends, and have never turned a profit. They don’t lead Paris’ market and were ejected from the city 12 months after the conference, like in Germany, Sweden, Norway, the Middle East, Africa, and several dozen markets in the US. Last June, Travis resigned.
So, what happened?
Like always in the tech world, it’s easy to say “Bird grew too quickly”. But it looks like a short-sighted answer. Many reasons can explain Bird collapse : lack of suitable infrastructure, terrible media’s cover… But I want to pause a little bit to analyse Bird’s unit's economics.
Although the e-scooter business requires a massive upfront investment to fund, renew and upgrade the inventory, Bird was definitely on its way to mastering its unit's economics. They invested massively in R&D. They increased the lifetime of their batteries and hardware - from 3 to 12 months. And because e-scooters did more and more rides, the cost of vehicles kept coming down, and generated each one more revenue.
If Bird’s business model was about to work, why did it collapse?
Perhaps, the answer doesn’t lie within Bird’s balance sheet. But within the history of transportation, one century ago, when cities were the battlefield of another fight, between horses and cars.
Horse commodity.
It’s difficult to imagine, but before cars appeared on our streets, horses were our main means of transportation. However, the “horse mobility economy” was not organized the way you think.
Let’s say you lived in New York City at the end of the 19th century. If you wanted to commute to Brooklyn, you had to take a “horse car” with a teamster. A lot of teamsters drove their own horses with a small carriage, and by 1890, New Yorkers took an average of 297 horse-car rides per person a year. Today, they hail an average of 100 cab rides.
In other words, the horse economy was a giant decentralized Uber.
But there was a problem. Teamsters could not differentiate from the competition. Like Uber today, the supply was highly commoditized and customers would choose the closest horse car they could find. In 1893, the depression struck in the US, and that problem almost killed the ride-sharing economy. As the number of rides dropped, a lot of teamsters were pushed to the brink of bankruptcy and absorbed by a few railway lines. Ultimately, the market consolidated into larger horse car companies.
It’s fascinating to see that the same occurred for bike sharing and e-scooters. All those three, horse cars, bikes, and e-scooters are commoditized. Because the competition increased, the margins dropped and no player could stand out from the crowd. Only the well-financed companies remained alive.
We all know what happened next.
The revolution of ownership.
In Horses at Work, the historian Ann Norton Greene writes :
“Automobiles seemed to provide a way for individuals to remove themselves from the control of these transportation portation monopolies”.
In 1900, the first cars ran down the streets. Over one decade, automobiles replaces the horses in the street of New-York. But there is more. Automobiles extended the market of private transportation. Middle-class commuters didn’t own horses but did own an automobile. That is the most important point according to me. Cars won, not because they were cheaper, not because they were safer, but because they provided a new user experience of freedom for customers.
On-demand sharing micro-mobility tried to capture this value proposition. Getting an e-scooter wherever you want, whenever you want. But I think we are in those moments where history repeats itself. Ownership comes back as a powerful trend that might define the future of micro-mobility. E-scooters are not dead, but it’s not surprising Bird started to sell its inventory directly to consumers with the launch of Bird One.
Now that we saw ownership is the key driver of micro mobility, I’ll try to guess the factor of success and how the market might evolve in the coming years.
The new standards of micro-mobility.
I expect differentiation will become even more important in that context. Of course, brands can decide to verticalize on one user segment with variation on price, autonomy or safety, but as we saw in the past, consolidation is inevitable. Winners in the micro-mobility market need to offer both a large and different inventory. Here are three strategies selected to stand out.
Hyper-personalisation.
To succeed, micro-mobility players need to turn e-scouters into a lifestyle, so you won’t switch easily to another brand. Personalisation already exists in the car industry with detailed configuration on features and accessories. Tesla for example, used hyper-personalisation as a key differentiator from other car manufacturers
I expect to see the same in the micro-mobility industry. Power, flexibility, color or accessories could be interesting customisation opportunities for e-scooters or electric bikes.
I’m not sure incumbent operators like Lime or Bird are the best to win on hyper-personalisation from a manufacturing perspective. But they master the hardware and benefit from a huge amount of data on user experience.
Affordability.
E-scooters or electric bikes are still relatively expensive for mass adoption. Bird’s One cost $500 and electric bikes can go up to a few thousands dollars. The winning brand would be the one offering the best financing options to drop the price down. I see two main smart strategies.
Rental. Ownership should not come with a lack of flexibility. Unlike free-floating startups, the rental model enables users to keep their e-scooters or bikes for a few months or more. The Parisian startup Motto (founded by the former french Bird general manager) pioneered the model of electric bikes rentals in Paris with monthly subscriptions starting at 79€. I guess Motto can expand to e-scouters in the future.
Refurbishing. Upway is another example of a smart model to drop the price of electric bikes. By refurbishing previous bikes, they can offer up to 60% discount. And because they integrate vertically the reparation of bikes, they built a powerful moat. Once again, it’s likely that Upway will expand to other micro mobility vehicles in the years to come.
Beyond mobility.
I’m convinced software should be seamlessly integrated with hardware in the case of micro-mobility. The relationship between the customer and the vehicle should go beyond the one-time purchase. We can imagine that operators would use the data collected by vehicles to recommend other services - fitness, mobility, health - or suggest addresses based on recurring rides in the city. We are not there yet, but the vehicle can become an interface to discover the city, beyond transportation.
Conclusion.
I believe we are living a paradigm shift in micro mobility. City centers in 2050 might look very different from now. While it is not clear yet who the winners will be, we are likely to move forward with more ownership in the industry.
That’s all for today. See you next Monday !
Eliott
Bird : are e-scooters dead?
Really like how the essay turned out!