Bird fired as coronavirus drives scooters out of cities

Dockside scooter companies entered cities in 2018, promising a mobility revolution with clean, inexpensive rides and billions of dollars in venture capital. However, they quickly encountered obstacles, including faltering business models, safety concerns and rapidly changing urban regulators. At the start of 2020, operators losing liquidity were reducing their workforce and their vehicle fleet.

Now that governments around the world are struggling to slow the spread of the coronavirus, businesses face a deeper existential challenge. The two largest, Lime and Bird, reduced their fleets considerably in mid-March.

Friday, Santa Monica-based Bird made major layoffs, cutting its workforce by 30% due to the financial and operational impact of the pandemic, according to an internal note from general manager Travis VanderZanden. We just raised hundreds of millions from investors, wrote VanderZanden, but given all the uncertainty, we needed to secure a cash trail to last until the end of 2021.

Several other startups, including Uber-owned Wheels and Jump, say they are looking to continue operating as cities issue lock-out orders and demand for cyclists drops. The call to share a tactile vehicle with an unknown number of strangers has succumbed to the fear of viral transmission.

Lime CEO and co-founder Brad Bao wrote in a blog post March 21 that the startup is closing or suspending the service in all markets except in South Korea. Before the pandemic, the company operated nearly 120,000 scooters in 30 countries across the Americas and Europe. Bird has announced the withdrawal of its fleets from six American cities: Sacramento; San Francisco; San Jose; Portland, Ore .; Miami and Coral Gables, Fla. He had already pulled vehicles from 21 European cities.

Jump has suspended rental of electric bikes and scooters in most of its European markets and reduced the size of its fleets in the United States. It has stopped operating in Sacramento altogether at the request of the city. Lyft Inc. continued to operate its network of bicycle sharing systems mainly docked in eight US markets. So far, its guarded dockless scooters are available for rental in all urban markets, except in Miami. All companies with vehicles in circulation reported having strengthened their handlebar remediation protocols and encourage cyclists to do the same.

The sudden disappearance of scooters and electric bikes comes after months of turbulence in the industry. Bird and Lime have struggled to raise funds from investors, and the two have cut staff from the end of last year. Companies, once focused on growth, have achieved their problematic business plans need to rethink.

Last year, discussions regarding a Uber acquisition of Bird or Lime were unsuccessful. Some industry observers have said that the staggering valuations of everyone in 2019, Bird and Lime, reached $ 2.5 billion and $ 2.4 billion respectively. Information announced Thursday that layoffs are now imminent at Lime, which is seeking emergency funding at a valuation of only $ 400 million. (A Lime communications manager denied the layoffs.) Uber and Lyft, both of which were made public in 2019, made layoffs in their own micromobility divisions late last year, and both have recently removed dockless vehicles from several markets.

Wheels and Lime claims that ridership increased before the onset of widespread social distancing. Decisions to reduce urban fleets are now largely driven by a sense of responsibility for the health of their motorcyclists and workers who service vehicles, say Lime and Bird. The economics of the business is also an undeniable factor, said David Spielfogel, director of policy for Limes. If everyone takes shelter on site and does not move, the business is no longer sustainable, he said. Tourists, who generate significant scooter traffic in many cities, have also disappeared from most markets. Although there may be ways for Lime to generate income during the crisis, it is not a priority as long as people are at home, and governments are trying to control the virus, said Spielfogel.

Many investors, already skeptical about the viability of the electric scooter business, say the current situation could be the nail in the industry’s coffin. I have heard a number of people compare the plight of scooter companies to Uber and Lyft. Like them, scooters see their use drop, explains Aaron Michel, a partner in the venture capital company in start-up 1984 Ventures, which has no investment in micromobility space. Unlike Uber and Lyft, however, the verdict was pretty much on the scooter industry before the virus arrived. He expects companies without large donors to collapse, while companies with deeper pockets will return to the bare minimum.

Emily Castor Warren, Director and Director of Policy at Nelson Nygaard Transportation Planning Company and Former Director of Policy at Lyft and Lime, agreed that the pandemic could be a death blow for scooter businesses with overhead costs high, especially those who were already in an uncertain financial situation. I think it’s pretty terrible, she says. If these bottlenecks persist, they will, at the very least, have to make major layoffs for the main teams, because the only cost that they cannot reduce to zero is the staff salaries and the office buildings.

The short-term outlook may not be as precarious for every micromobility company. Wheels, a start-up that operates electric mini-bikes without a docking station in 17 cities in Europe and the United States, raised $ 50 million in October during a round table led by DBL Partners.

The company announced on On March 27, it will deploy vehicles with self-cleaning handlebars and brake levers that can be used for delivery services and other essential uses, while its shared bikes are suspended until the end of March. The company joined forces with NanoSeptic, which developed the self-cleaning surface. The technology uses mineral nanocrystals which continuously oxidize organic contaminants.

The scooter operator Spin did not feel the same pressure on capital as some of its peers belonging to Ford Motor Co. Until this week, Spin was the only supplier of scooters to maintain normal activities in its case, serving 66 American cities and 12 college campuses, but it changed courses on Tuesday. The company will keep scooters only in Austin; Baltimore; Denver; Detroit; Los Angeles; Portland, Ore .; San Francisco; Tampa; and Washington, D.C.

We have made the decision to suspend operations, starting today, in all other cities due to a significant drop in demand as communities fight the fast-spreading virus, the co-writers wrote. founders of the company in an average article. This break will remain in effect until further notice. Spins communications staff could not clarify which specific markets would lose vehicles, and the Fords communications team denied several requests for executive interviews.

Molly Turner, lecturer in public affairs and public policy at UC Berkeley and consultant to tech startups, including Spin, said the cities the company continues to serve may indicate where it has had the greatest financial success to date. The markets that Spin is withdrawing from can show where scooters were not a viable business or did not have enough penetration to succeed without the special partnerships or promotions that are impossible at the moment, she said.

This may be the case for all of the companies in question, as travel at this time, regardless of the mode of transportation, is in neutral. Several scooter operators, including Jump, Lime, Spin and Wheels, are considering partnership opportunities with local governments or essential service providers as a way to continue operations, as residents avoid buses, trains and other transportation in common within the framework of shelter mandates on site. New York City saw its Citi Bike users jump 67% in mid-March, after Mayor Bill de Blasio announced guidelines for social distancing. Sure March 21st, ridership on the city’s metro, the country’s largest public transportation system, fell 87% from the same period last year.

Some investors see the decline in the use of public transit as one of the reasons for optimism about the medium-term prospects for micromobility. Assuming commuters remain concerned about crowded buses and subway cars after orders for on-site shelters have lifted, scooter and electric bicycle companies could seize the opening to lobby for looser regulations and the cancellation of scooter bans ordered in some cities of the worldsays Bradley Tusk, co-founder and managing partner of Tusk Ventures and investor in Bird. With global warming, better needs and arguments for legalization and less saturated markets, [and] with companies like Lime Contracting, there is a legitimate opportunity in the next 3 to 6 months, he wrote in an email.

An additional benefit could come from selling or renting scooters and electric bikes directly to cyclists, says Niko Bonatsos, managing director of General Catalyst, an early-stage venture capital fund that did not invest in rental without dock. Right now, we hate each other and can’t keep each other company, and getting an Uber or grabbing someone else’s shared scooter might not be the best idea, he said. But if you have your own bike, now is the time to use it. Bird offers a monthly rental program, just like the Zebra electric moped start.

For cities that have come to view shared micromobility services as a sustainable transportation option, subsidizing them may be the only way to ensure their long-term existence, says Castor Warren. Some traditional dockside bike sharing systems, including those in Boston, Chicago and Washington, D.C., are owned by local governments but are operated by Lyft. In this model, the city has more capacity to ensure continuity of operations and to ensure that the service will be provided to the public, since they have extended their own resources, even if the bottom falls from the economy, she said.

Such a scenario would prove what skeptics have said about dockless scooters and transportation companies from the start. History has shown that establishing a new transport service often requires massive subsidies from investors or governments.

For now, while they may be allowed to continue operating in many cities, scooter companies are going it alone. Said Turner: Theyre don’t get a bailout from Congress.

Bliss writes for Bloomberg. Times author Sam Dean contributed to this report.