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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

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.
    - shivaas 8y ago
      This. Was in Venice beach this past May and the Birds were everywhere, to the point where we almost felt compelled to give them a try, even though we had no need. Both wife and myself signed up and spent 30 minutes riding to Santa Monica. Great advertisement, cool factor and high word of mouth marketing.
  - tehwebguy 8y ago
    Have they done any advertising? I saw a dozen people riding them before asking someone, never seen an ad for them.
    - xapata 8y ago
      They don't exist in my city, yet I've heard about them. Maybe a PR team?
- yazr 8y ago
  Is $3/ride really that low ? On my personal ebike, i do 2-4 rides a day and it has almost entirely replaced my car. So really, anyone in SF or NY who spends $50/month will surely consider getting his own? 3$ and even 2$ seems in fact un-sustain-ably high for mass market adoption (I live in a small European country. Salaries about 2/3 of US).
  - ggg9990 8y ago
    At some income level, there isn’t any difference between 1 penny and $3. It’s like getting a coffee, people can spend a lot of money on them thoughtlessly. And many people wouldn’t want to own their own scooter. I would rather not have to carry it or store it anywhere. Ride it to a store and just ditch it. If it breaks just get off and find another one.
  - tytytytytytytyt 8y ago
    What kind of ebike, where'd you get it, how much was it, can it be serviced under warranty anywhere? I was casually looking at the e-Joe. $50/month is something like an ebike every 2 years, which seems like a decent price to pay, not something that would make me rush to buy my own, all things considered. $50/mo. instead of buying my own $100 scooter would be a different story.
  - cameldrv 8y ago
    I tried out the Bird scooters, liked them, and then bought my own. I use it to speed up the Caltrain commute from San Mateo to FiDi in San Francisco. The trip is: 0.6 mile scoot to Caltrain -> 2.0 mile scoot to FiDi -> 2.0 mile scoot to Caltrain -> 0.6 mile scoot home. If I were to use Bird, and Bird were available in San Mateo, it would cost about $12 a day for Bird, plus I would have to fire up the app and hunt down a scooter four times a day. The scooter cost $300, folds up in seconds, is easy to take on the Caltrain, and takes up very little space at home or at work.
    - wallacrw 8y ago
      What scooter did you buy? Where? (I've tried briefly to find the model Bird uses but couldn't)

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.
  - shivaas 8y ago
    This. Was in Venice beach this past May and the Birds were everywhere, to the point where we almost felt compelled to give them a try, even though we had no need. Both wife and myself signed up and spent 30 minutes riding to Santa Monica. Great advertisement, cool factor and high word of mouth marketing.
- tehwebguy 8y ago
  Have they done any advertising? I saw a dozen people riding them before asking someone, never seen an ad for them.
  - xapata 8y ago
    They don't exist in my city, yet I've heard about them. Maybe a PR team?
yazr 8y ago
Is $3/ride really that low ? On my personal ebike, i do 2-4 rides a day and it has almost entirely replaced my car. So really, anyone in SF or NY who spends $50/month will surely consider getting his own? 3$ and even 2$ seems in fact un-sustain-ably high for mass market adoption (I live in a small European country. Salaries about 2/3 of US).
- ggg9990 8y ago
  At some income level, there isn’t any difference between 1 penny and $3. It’s like getting a coffee, people can spend a lot of money on them thoughtlessly. And many people wouldn’t want to own their own scooter. I would rather not have to carry it or store it anywhere. Ride it to a store and just ditch it. If it breaks just get off and find another one.
- tytytytytytytyt 8y ago
  What kind of ebike, where'd you get it, how much was it, can it be serviced under warranty anywhere? I was casually looking at the e-Joe. $50/month is something like an ebike every 2 years, which seems like a decent price to pay, not something that would make me rush to buy my own, all things considered. $50/mo. instead of buying my own $100 scooter would be a different story.
- cameldrv 8y ago
  I tried out the Bird scooters, liked them, and then bought my own. I use it to speed up the Caltrain commute from San Mateo to FiDi in San Francisco. The trip is: 0.6 mile scoot to Caltrain -> 2.0 mile scoot to FiDi -> 2.0 mile scoot to Caltrain -> 0.6 mile scoot home. If I were to use Bird, and Bird were available in San Mateo, it would cost about $12 a day for Bird, plus I would have to fire up the app and hunt down a scooter four times a day. The scooter cost $300, folds up in seconds, is easy to take on the Caltrain, and takes up very little space at home or at work.
  - wallacrw 8y ago
    What scooter did you buy? Where? (I've tried briefly to find the model Bird uses but couldn't)