10 ms·

As an investor who has looked at this space a little bit + talked to other investors who have backed some of these companies, it seems like: - the economics of

• pascalxus 8y ago
  I'm sure government will be providing more than plenty of moats to prevent any new entrants into this market as soon as this industry is developed.
  • kenhwang 8y ago
    Santa Monica is already planning on enacting a sort of moat law that would seemingly protect Bird (conveniently HQed next door in Venice).
• Shivetya 8y ago
  Just let us get through one winter season. Is anyone trying this in an area other that those with mild weather. Northern cities will have days if not weeks worth of time where the roads won't be safe. plus have any of these startups had issues with injury lawsuits?
• hkmurakami 8y ago
  Regulatory moat is a possibility, where an established player can coerce a city to impose an expensive compliance guideline that prevents upstarts from entering.
  • ttul 8y ago
    Yeah, I foresee cities picking a winner through a competitive process. What city wants 40 different scooter companies to deal with?
    • _zachs 8y ago
      A city that values the free market!
    • nordsieck 8y ago
      Sounds like a recipe to create the Comcast of electric scooters. The right way to solve the problem of too many electric vehicles on the sidewalks is to charge owners rent.
      • prawn 8y ago
        Have painted parking spaces in appropriate areas and charge for access via audit of scooters in a given zone (city, state, etc).
  • nathanm412 8y ago
    A suburb of Columbus Ohio is starting a review process with Lime Bike. Depending on the outcome of a trial process, they'll announce a bidding process where the winner gets exclusive access to the city.
    • sitkack 8y ago
      Is it a reverse auction or one where the company agrees to gouge the user with high fees that is passes a fraction of to the municipality?
  • 8y ago
• joejerryronnie 8y ago
  As an investor, I would be seriously concerned with FOMO. Not on actually missing out on the next best thing - I would be worried that this phenomenon would lead me into bad investments because everyone else is doing it. In the current environment of overfunding, everyone looks like they are the next hot company. You need to look beyond the current trends and find something which matches your strategic vision of the future but has not received a huge amount of attention yet. It feels like the scooter space opportunity has already passed for seed investors.
  • lpolovets 8y ago
    I definitely see this from inside the VC industry: half of the investors I meet think this category is dumb and doesn't have moats, and the other half have FOMO and want to bet on the space in case an Uber- or Lyft-sized company emerges from it. A 3% chance at a $50b company makes an investment decision rational even at crazy early stage valuations.
  • eldavido 8y ago
    The entire industry has FOMO. Look at valuations. The top investors will be fine because they get right of first refusal on all good deals. It's the lower ranks of angel investing/VC that's going to suffer. I think to be a great investor you have to be in it for the long term. Guys like Fred Wilson, they've been doing this 20-30 years and are reaping the rewards just now.
• dnomad 8y ago
  The dockless approach doesn't work. People rightfully hate the race-to-the-bottom that leads to bikes/scooters being dumped everywhere. Once you accept the dockless approach doesn't work there's three interesting possibilities: 1) The city picks a winner. This could be done fairly by auctioning off a five year contract or it could be done via corruption. Either way the scooter companies should be taking the millions they've raised and greasing officials. 2) Establish a market for docks. There's an interesting opportunity here in that scooter "stations" don't need to be the sort of big official stations that have beeen deployed for bikes where each station holds 30+ bikes. You could imagine a lot of small business, stores, etc. offering to host small stations that hold 4-5 scooters on their own private property. The scooter companies would then either race to lease as many of these stations as possible or would be forced to pay each time a scooter of theirs gets docked at the station. The winner is the company that owns the most stations. That's a real moat and the stations become real assets. 3) The simplest solution is probably to just to give people scooters. Let people "lease" a scooter and trade in these "leased" scooters at any time 24/7. Trade ins need not be a big centralized, complicated thing; you could imagine something like a scooter delivery service. In <20 minutes an Uber shows up and drops off a new scooter and collects an old one. Don't charge people if the scooter is stolen or breaks but do charge people if their scooter is left on the sidewalk and gets seized by the city. Then it would be up to individuals to make sure their scooter doesn't get left on public property. Scooters are so small -- and only getting smaller and more portable -- that you could imagine that most people won't mind stashing them under their desk/in their office. All three of these possibilities btw lead to a single winner. At the end of the day, like with most transportation plays, you're looking at powerful economies of scale where the big guys only get bigger. It's a market to invest in if you think you can pick the winner cuz that winner probably will take all.
  • dnomad 8y ago
    The entire dockless business model started in China and they're way ahead with the backlash. Shanghai has cracked down hard [1] but it's still a huge problem with bikes being dumped all over the place [2]. If people can move past the dockless approach and realize it doesn't scale then we might get more efficient business models that could be defended without gobs of VC money. [1] http://www.wri.org/blog/2018/01/chinese-cities-aim-rein-bike-sharing-boom http://www.wri.org/blog/2018/01/chinese-cities-aim-rein-bike... [2] https://news.sky.com/story/in-china-rental-bikes-have-become-a-social-menace-11191053 https://news.sky.com/story/in-china-rental-bikes-have-become...
• decacorn 8y ago
  VCs are laughable fools for dumping hundreds of millions of dollars into this. there is very little profit margin, even ride sharing isnt really profitable yet after nearly 10 years. not against scooters, but Bird being valued at over a billion? venture capital has really lost its collective mind! wow.
• misterbowfinger 8y ago
  > Maybe one moat could be scooter durability. There's also the option of more efficient support & operations, which is arguably the approach that Lyft took. Uber chose to raise a ton of money and outspend their competitors in the hopes that they bleed them out via spending in acquisition and creating new products via R&D (maybe express pool is an example of this). Lyft, however, seems to aim for profitability and stability. I assume this means investing in internal tools & processes so that they can be more efficient. I'm not sure who wins in this situation. But I imagine Lyft isn't going away, and Uber may, truly, run the well dry at some point.
• ganeumann 8y ago
  Responding solely to the 'moat' question: think railroad price wars in the late 1800s in the US. Industries with capital expenses relatively large compared to contribution margin tend towards local monopolies. When faced with a potential new entrant the incumbent can lower prices to where the entrant's assets can't return their cost of capital. The incumbent's capital is already sunk so they can afford to bring prices close to the marginal cost of providing the service. This threat of a price war is usually enough to deter entry. This also leads to agglomeration in local markets both to avoid duplicative assets and to add credence to the price war threat.
  • lpolovets 8y ago
    (Hi Jerry!) That is a good point. A few thoughts here: 1) Bundling could help new entrants with existing platforms. E.g. if Uber comes into a local market and offers a free scooter ride for every car ride, that could really hurt a company like Bird -- even if Bird is the incumbent when it comes to scooters. 2) I view these capital expenses as being relatively small. If it's $1m-$2m to cover SF in scooters, and if scooter costs are similar across players, then I don't see why a new entrant couldn't also offer services at cost until the incumbent gets tired of running at break even. 3) The price points are so low here -- often $2-$3 for a ride. If that's the case, I wonder if consumers will care about someone shaving 30 or 50 cents off their price to provide scooters at their marginal cost, or if they will care more about scooter proximity or safety or comfort or something else.
    • xapata 8y ago
      You forgot the $10m advertising campaign to get folks to install the app and register.
      • zhoujianfu 8y ago
        That’s the other beauty of the business, the scooters sitting everywhere ARE the ad campaign.
        • 8y ago
• jakecrouch 8y ago
  I would be skeptical of new entrants to scooter / bike sharing. In China, ofo and mobike together captured about 95% of the market. If it were possible to challenge the companies that have reached scale, one would think one of the many dozens of failing competitors in China would have figured out it by now.
  • cjhopman 8y ago
    If there's no moat, there's no reason to challenge the current companies until it's proven that profit is possible.
• jiveturkey 8y ago
  are you stratechery?
• gringoDan 8y ago
  Ben Thompson just released a great post that talks about exactly this issue, including moats in the space.[0] Essentially, there is no two-sided marketplace advantage here like there is with Uber or Lyft (the drivers -> customers -> more drivers flywheel). I like the idea of this playing out with 1-2 companies offering several different transportation verticals in each city. Rather than checking Uber, Lyft, Via, Bird, Lime, etc. to try to get from point A to point B, I can check an app that gives me the prices for ridesharing, scooters, e-bikes, whatever...and then I choose one of those options from the given company. The moat here is to be the best aggregator for the entire network. Netflix has enough good shows for me that I don't pay for Hulu to watch the one show there that I'd like to see. The same idea exists here, just in the physical world. [0] https://stratechery.com/2018/the-scooter-economy/ https://stratechery.com/2018/the-scooter-economy/ HN Discussion of the post: https://news.ycombinator.com/item?id=17284094 https://news.ycombinator.com/item?id=17284094
  • webrender 8y ago
    worth noting that the Transit app already aggregates all the options you mentioned, although it redirects to each respective app for payment.
• Stryder 8y ago
  Re: moat- it's gotta be price and accessibility. Since there's no ownership, reliability and durability don't matter as long as it can complete the ride, although it does matter that it's not so crappy a scooter that it's falling apart while riding. After that, it's just about ease of accessibility and price. I'll walk a block to use a service that is dead simple and painless to use compared to a more complicated app, but I'm not walking a block for something that's slightly nicer, or 10% cheaper.
• snarf21 8y ago
  I think the biggest threat to these businesses is municipal. Maybe they don't go dock-less but this might be cheaper than supporting under utilized bus lines at the same cost for consumer without all the waiting. Obviously this is much more applicable to warm weather climates but it seems these will put the bike shares out of business. Interesting to see how it pans out...
• ggg9990 8y ago
  Just looked through my apps and I’ve spent $40 riding these scooters in SF. And that’s just for fun, no commuting.
• JumpCrisscross 8y ago
  > I'm stuck on is what the moats could be in this business San Francisco seems to be solving this problem for the industry. At last glance, their regulatory framework grandfathers in existing providers with a medallion.
• friedman23 8y ago
  >- the economics of scooters are great (very quick payback periods for the scooters). At a few bucks per ride and maybe a dozen rides per day, it doesn't take that long to pay off a $300 or $500 scooter. I bought my own for this reason. The scooters you are renting cost $500, already if you are using it twice per day to get to work you are losing money.
• vadym909 8y ago
  Do you think eGolfCarts on demand might be better? >1 passenger, protection from rain and sun, safe, less likely to be stolen, cheap, ecofriendly
• microdrum 8y ago
  There aren't any network effects a la Uber and Lyft because the scooter doesn't come to you, you go to it. And the scooters do not go fast/long enough to stitch different catchement areas together. Every sign points to commodification here. The way car and bike rentals are commodified. The economics leaks in many places: 1) people buy their own scooters 2) with rising scooter usage, scooters get way cheaper (see 1) 3) multiple competitors bid down rental prices 4) people figure theft/secondary part market out 5) a scooter inventory uniting meta app (a la Kayak) takes all the margin 6) turns out teenagers were only bird hunting as a novelty, gotta pay expensive 25 year olds to do it So many issues. It's easier to see a world where electric scooters are neat novelties for tourists sometimes (as long as it's warm! with no kids! and no rain! and we're going more than 0.7 but less than 2 miles! and my wife doesn't say they're dangerous!) than a world where any one of these companies is a serious $1b technology company. I mean: doesn't it just feel natural?: these are little novelty tourist scoot rental companies.
  • bpicolo 8y ago
    > turns out teenagers were only bird hunting as a novelty If a teenager can grab 20 bucks with minimal effort they're definitely going to be doing it. One big leaky part of the plan is that it doesn't seem scale to non-big-cities like Uber can/did.
• itomato 8y ago
  Demographics, geography.. I bet the number of people riding scooters drops sharply at age 30. Heat dissipation for the mechanism and comfort for the rider are two big factors. Try it in Dallas. It has notoriously low walkability scores and is regarded as pedestrian-hostile. The three months over 100F would make or break.
• Noos 8y ago
  Probably that they aren't really useful in a long-term sense. They can't be used for transporting much, can't be used easily when sick, won't be able to transport young children, and become useless in cold/hot/rainy/and snowy weather. Same moat as any other fad that targets the single young urban knowledge worker; their needs will eventually grow beyond it. I mean, skateboards do what these do as well.