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Does anyone actually think this is a profitable market? Electric scooters are expensive, repair and charging is expensive. It’s a seasonal business. Vandalism/

Does anyone actually think this is a profitable market? Electric scooters are expensive, repair and charging is expensive. It’s a seasonal business. Vandalism/abuse is fairly common. In terms of any environmental benefit, I highly suspect more gasoline is being consumed to collect and distribute scooters than the offset of a few last mile transports. I suspect the cost to the consumer would have to double for it to maintain any profitability, and the demand already sucks. Why did the VCs value these as billion dollar companies? Desperation?

samatman 7y ago
Too much money, chasing not enough alpha.
john_moscow 7y ago
>Why did the VCs value these as billion dollar companies? Desperation? Because VCs get paid from selling the shares to the public. So as long as a general unsophisticated investor is expected to buy in, it's a good deal for a VC, even if the underlying business model is laughable.
- texasbigdata 7y ago
  While never having been on one due to no helmets being provided, in Denver and in Dallas and in Austin they arguably revolutionized the city core and how younger people get around. For better and worse. And while not fully diligent on this, isn't Uber still not profitable on a unit economic basis? And they are mature and public. Perhaps that statement isn't true but it provides one justification for investing in scooters
  - bransonf 7y ago
    You are correct about Uber not being profitable. They’re burning cash quickly. And if you look at market performance, they’re not where they expected to be. Furthermore, they’re fighting things like employee unionization (See California) which will increase their cost. And Uber is fundamentally different. It’s not seasonal, and the costs fall mainly on drivers rather than the company. Investors are hopeful on Uber, but I bet if a scooter company tried to go public right now, it would get eaten alive.
  - rossdavidh 7y ago
    My impression in Austin is that it peaked last year. Not to say they aren't still common. To be honest I think there's a possible real business here, but maybe only for one or two companies, and only in cities where they achieve a critical mass. The 4am collecting of abandoned scooters, becomes much more efficient if it's only one company per town, and they are commonly used such that there is much less distance between scooters of a given company. I suppose that, like for every 1000 1999 e-business there was only one Amazon, the VC's are thinking there will be one or two survivors here who will eventually do well.
  - viraptor 7y ago
    > isn't Uber still not profitable on a unit economic basis? Uber still has money to burn and is trying to grow even more. They could likely be profitable if they wanted, pretty quickly, by limiting spending/expansion.
- IshKebab 7y ago
  Most companies only go public when they are profitable.
- ibeckermayer 7y ago
  VCs also get paid by getting other VCs to evaluate their companies as more valuable in a sort of Ponzi scheme: https://youtu.be/NVVsdlHslfI https://youtu.be/NVVsdlHslfI
rurp 7y ago
> Why did the VCs value these as billion dollar companies? Desperation? That's my guess. 10+ years of very low interest rates and wealthy people having more and more free cash seems to have led to a lot of crazy valuations in tech investing and elsewhere.
- kikokikokiko 7y ago
  Interest is already negative in Japan for years, and now it's negative on Europe too. The US is heading fast to this insane reality of negative interests too. Since 2008 the FED has multiplied the amount os dollars in circulation by what, 5-10 times? This created this crazy scenario where the Softbanks of the world see a business model that is clearly destined to fail and never be profitable, and still keep pouring money on it at higher and higher valuations. I live in Brazil, and the price these companies charge for the scooter rides here is totally out of our economic reality. I'm just waiting for this HUGE bubble to explode. UBER, Netflix, WeWork, Tesla to some extent. All multi billion dollar companies that never return profits to their investors. I for one am glad to be getting cheap UBER rides down here at the expense of the pension funds of millions of americans, but this can not go on forever. Since the end of 2019 I began to switch my investments to gold and wait for the crash. Trump gave me some help with this gold idea this week, so far so good ;-)
  - rolltiide 7y ago
    > The US is heading fast to this insane reality of negative interests too. Since 2008 the FED has multiplied the amount os dollars in circulation by what, 5-10 times? > I'm just waiting for this HUGE bubble to explode. Wait till you calculate how much money is necessary to push US bonds into negative territory. Ka-CHING long 10 yr bond futures, leverage uuuuup if you think the first you said is actually going to happen, because that means bubble doesn't explode
nimbius 7y ago
Id suspect its the disconnect between wealth and reality. At the end of the day the VC only sees what the VC wants to see. in this case a verdant world of the futuristic e-scooter where each is powered by the fantastic internet technology of the smartphone and destined to enrich and engage the lives of millions while forging a new path in e-commerce that will surely reward the diligent shareholder. unforeseen is the army of charging slaves that patrol the city at 4 AM for a few extra dollars at their own expense. E-scooters launched through shop windows and into streets after bars close. The Litigation prompted from both governments endless frustration with this new corporate detritus littering the public sidewalk, and citizens facing ugly medical expenses after the sobering reality that cars in the United States are still far more prevalent, careless, and lethal than any chinese internet scooter.
- aok1425 7y ago
  How are they slaves? They have the free will to decide if they want to work or not.
  - evv 7y ago
    Yeah? Depends how you define free will. If people want to eat and make rent, they need to afford it somehow, and the employment options are bleak (see: charging scooters). So maybe you meant they have "the free will to decide if they want to work shitty jobs, or not live". We can't be too surprised that the suicide rate is going up in this country.
    - yibg 7y ago
      That’s a weird definition of a slave and free will. By this definition none of us have free will since most things we do are driven by some motivation. I want to eat and make rent, so I work for the money to do so. Now I’m a slave?
      - technobabble 7y ago
        If you hate your job, which has negative affects on your health, are you really free just because you get to choose what clothes you wear or what you have for lunch?
notJim 7y ago
From what I've read, the main driver of profitability is longevity of the scooters, and they've already made a lot of progress extending that. > In terms of any environmental benefit, I highly suspect more gasoline is being consumed to collect and distribute scooters than the offset of a few last mile transports. The report I read stated that if longevity could be extended (which is already being worked on, per above), scooters would be net-negative CO2 wise. However right now, they are net-positive. You are correct that moving the scooters around incurs a carbon hit, but also power generation is dirty, as is producing a scooter that only last for a few months.
- disordinary 7y ago
  In Wellington, New Zealand Uber (Jump) replaced their entire scooter fleet a few weeks ago after just six months of operation, their main competitor (Flamingo) will probably have to do the same as their scooters now look worn and tired vs the Jump ones. Lime has been booted out of a couple of markets locally as they had safety issues, all those scooters are probably in a land fill somewhere.
Reedx 7y ago
It seems that a lot of VC is a multivariate ponzi scheme of sorts, which might explain some of it. If they're making fees regardless, then they just need to show/push fast initial growth to attract more layers of investment and it doesn't necessarily need to make long term sense. Chamath Palihapitiya describes this here: https://www.youtube.com/watch?v=NVVsdlHslfI https://www.youtube.com/watch?v=NVVsdlHslfI
- nikajon_es 7y ago
  I was there for this, and starting at the 09:30 mark it was exactly what I was thinking about when I read the headline.
- ibeckermayer 7y ago
  Wow, thank you. This guy decisively describes what I’ve been yammering to my friends about since moving to SF and learning about this industry.
wufufufu 7y ago
> Electric scooters are expensive, repair and charging is expensive Citation needed, at least to convince me. I think they could significantly bring down the cost at scale (production/maintenance wise at least).
- romwell 7y ago
  >Citation needed Here's one supporting piece of evidence: >Lime shuts in 12 markets, lays off around 100
- bransonf 7y ago
  Here are some estimates: https://oversharing.substack.com/p/shared-scooters-dont-last-long https://oversharing.substack.com/p/shared-scooters-dont-last... These scooters are already at a fairly decent economy of production. Chinese factories are producing these in the thousands and companies are buying wholesale. The core technology (batteries especially) is expensive, full stop. I’m curious where you think they could save money in larger scales? That’s not even to mention to get larger scale, they need more consumer adoption. I don’t have reliable data for this, but anecdotally I’ll say consumer interest is stagnant, and that’s already at unprofitable/heavily incentivized margins.
- asdff 7y ago
  They cost $300. Maybe bird gets them for $200. Even if you cut the cost down to $100, that's still $100 a month per scooter to run the network. https://qz.com/1561654/how-long-does-a-scooter-last-less-than-a-month-louisville-data-suggests/ https://qz.com/1561654/how-long-does-a-scooter-last-less-tha...
themagician 7y ago
They saw what happened with bike share. The exit strategy was always: get acquired by Ford, GM, or another major auto manufacturer who wants the ad space. OR look to companies with massive ad spend: Citibank, Wells Fargo, BNP Paribas, Oracle, etc. that would love to have ads in places where ads aren’t allowed (eg. parks) through this loophole. The scooters are just branded litter, which is a huge market. As long as they can claim it serves some other purpose, it’s legal. You could start dumping branded water fountains all over cities saying it has something to do with hydration and it would be allowed as long as there was an app that allowed you to donate in bitcoin.
jressey 7y ago
I don't think anybody thought it was a guaranteed win, but it was cheap enough to enter that a bunch of VCs went in for it.
jeffnappi 7y ago
I think e-bikes in certain markets will be profitable as a division of bigger organizations like Uber/Lyft. For example I spent $6 on two JUMP bike rentals last night to get to and from a Meetup. It was convenient and the bikes did the job handily. As a company that only does the bike share, I don't think they will be able to compete with the likes of Uber/Lyft etc.
- giobox 7y ago
  I used to be bullish on ebikes for commuting, until I started buying secondhand ones barely a few months old on craigslist at steep discounts for my own family. In every case, the owner had a change of heart and switched to a scooter. Why? Because the ebike is huge and heavy, needs dedicated locking, parking etc. Often there isn't room for it on the bus/train. They all found the scooter way better for last mile style commutes. Scooters are a fraction of the cost, capable of similar speed and range with less user effort and have virtually no maintenance. You can carry them easily into an office, and they weigh a fraction of a typical ebike. They fit much more easily into trains and buses. Long term, I think last mile commuting will surely be won by a scooter style machine. I still think ebikes have a huge role to play in future of transport, but I don't think it will be last mile commutes as much as some expect.
  - mdorazio 7y ago
    For me the solution here is a folding e-bike, of which there are many.
    - giobox 7y ago
      Ironically the ones I purchased are all folding models. In some ways the folding models are the worst weight wise, the extra hardware needed to strengthen the frame makes them incredibly heavy. I own a very nice Tern Vektron, one of the higher end folding electric bikes, and I've folded it once, it's just way to heavy for folding and carrying to be practical. I'd sooner walk than try and move it around a busy train, for example. The fold is really only useful for storage at home.
  - 7y ago
nishantvyas 7y ago
> Why did the VCs value these as billion dollar companies? Desperation? 1. FOMO 2. Easy Access to Capital in last decade 3. Winner takes it all culture, which causes more FOMO But then as a VC you also have to bet future with incomplete set of data... which is not truly a science... though there are some Midas in VC... reality/statistics is only 3-5% of all investment will hit home run, 5-15% will do average and other will just fail... we would not have many of the company/services around if someone would not have taken those bets (from UBER to AirBnB and others...)
mumblemumble 7y ago
I can see personal e-scooters as being a great alternative to cars for short trips such as commuting less than 5-ish km to work, or taking the kids to school. However, I still think bicycles are vastly preferable. With a pannier rack you get quite a bit more cargo space, and in the winter, the fact that you're physically exerting yourself helps to keep you warm, which makes for a more comfortable and pleasant trip. Also, the whole "Lithium batteries aren't supposed to be operated below 10C" situation limits e-scooters' value for a large chunk of the year in temperate climates. The for-hire e-scooter market continues to seem to me like a novelty more than a realistic transportation option. My city's recent e-scooter pilot program hasn't done much to dispel that notion. People used them quite a bit in the first few weeks, but, by the end, most the scooters were obviously going all day without being used. Also, the whole "last mile" argument started seeming a lot more hollow once I realized that, by the time I got to the busy areas where e-scooters were being placed in the mornings, I was already 75% of the way to the train station. More like "last block". And, at least when they were being used, I'd have to walk well out of my way to find one to use on the way home, too, because they were scattered all over the neighborhood as a result of their normal and intended usage pattern. So, they didn't seem to be much of an effort saver going in either direction. All that said, I'm guessing that they were being highly valued because of the very low barrier to entry for the market. A fleet of e-scooters is presumably quite a bit less expensive to purchase and maintain than a fleet of docked rental bikes. What got lost in the shuffle was the fact that the dock, while it might seem like an unnecessary annoyance, is actually a big part of what makes those rental bikes pleasant to use.
- logifail 7y ago
  > I can see personal e-scooters as being a great alternative to cars for [...] taking the kids to school If it's close to 5km, are you really going to take the kids on scooters? If it's closer to 1km, how about simply walking? Reality check: we have two (of three) kids in school, their walk to school is just over half a mile, they both walk more or less every single day, in summer and winter and in the rain and the snow. Oddly they really like walking to school in the snow :)
  - deleted 7y ago
scarejunba 7y ago
I think it's a profitable market if you survive the competition. You build the moat by petitioning the government to force licensing (like docked bikes do) and then enjoy the monopoly pricing. There's a natural advantage to being the same guy serving lots of markets so then you're fine. Whatever happens electric scooters are here to stay. They will be the future of urban last mile transportation.
csours 7y ago
I wonder if the benefit is to shop owners in the area where scooters work. My reasoning: Scooters are a replacement for walking. Shop owners depend on foot traffic. If you can generate foot traffic by reducing the time cost, you can increase shop visits. I do recognize a number of holes in this logic, for instance: is scooter traffic comparable to foot traffic?
- netsharc 7y ago
  For one thing, stopping at a shop when you're on foot is free, but if you want to get back to scooting, you can only park the scooter but not end the rental (otherwise someone else might rent that scooter while you're in the shop), but (AFAIK) Lime, etc, will charge you money as long as the scooter is still being rented out to you.
thanatropism 7y ago
I rode Lime-branded scooters in my "global South" town for a couple of weeks. It was a really expensive proposition and I was basically paying for the thrill. But the city (probably wisely) banned them from sidewalks -- when the whole point was to replace walking, not renting a highly vulnerable motorcycle substitute to ride with the cars in the street. To answer your question: high prices/margins.
- maccam94 7y ago
  It's a nice better experience in dedicated bike lanes.
dougweltman 7y ago
Micromobility like scooters are a "first look" experience. The use case is getting from point A to point B: who is first in line in terms of showing the user options to do that? The first app to be checked for transportation options to point B has a tremendously valuable asset -- it's not just the scooter, but the fact that it's first in line for the demand. Useful in a world where ridesharing companies and others are duking it out over users. Less so after the dust has settled.
naravara 7y ago
>I suspect the cost to the consumer would have to double for it to maintain any profitability, and the demand already sucks. I suspect if you price in other externalities it would be even worse. Those things are flimsy trash that are meant to be utterly disposable. You can barely service or replace something as simple as a broken wheel. If these things ever did actually take off it would have been an ecological catastrophe. For all the waste generated by things like Keuregs, at least they're not going to leach heavy metals into the landfills.
- netsharc 7y ago
  In my city (Zurich) it already feels like an environmental disaster, with 5 or 6 scooter companies jumping into the market, there's probably more scooters on offer than there is demand.
mytailorisrich 7y ago
> Does anyone actually think this is a profitable market? I recall a study in Paris last year (iirc) in which they concluded that the useful life of these scooters was shorter than their individual rental break even points...
deleted 7y ago
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raiyu 7y ago
At the beginning VCs love to see the revenue increase and when you are dealing with companies like this you can grow revenue rapidly by moving into new markets. And it requires a tremendous amount of capital to do so, because they are purchasing and servicing the scooters. There's always the promise of we will get to free cash flow positive and net profitability in the future to stave off concerns immediately especially when revenue growth is high. The problem for Lime and other scooter companies is that they grossly underestimated the amount of issues they would run into from operating and servicing them. So they began to see those ill effects in the first 12 months of bringing them on to the streets. Of course massive revenue growth and promises to fix that allows new investors to plow money in, but now as the scooters become ubiquitous in many large metro areas, the revenue growth is harder to get and an increase in competition also slows down revenue growth. With growth slowing, now they need to immediately focus on improving their unit economics where ever possible. Getting out of failed cities, reducing staff where they over hired planning for the future. Also at a company of their size firing 100 people is the equivalent of getting rid of poor performers and not that big of an issue. This is all done to show how they can be unit economic profitable in a single large city, and then use that combined with revenue growth to raise a new round. But if you look at the landscape of Uber, Lyft, Doordash, Postmates, Instacart, everyone is no where close to profitable, so definitely that story arc of continuing to grow without profitability is taking a large hit. More layoffs will definitely follow across the board in this sector.
smileybarry 7y ago
> In terms of any environmental benefit, I highly suspect more gasoline is being consumed to collect and distribute scooters than the offset of a few last mile transports. I agree, however, it's obscured by an Uber-style gig: a lot of these startups incentivize random people to drive around, collect & charge their scooters. That allows them to set the financial cost of charging and ignore the underlying environmental cost. I suspect it's one way they hide the maintenance costs while pretending to contribute to the "gig economy".
brainzap 7y ago
They also share the market with bike rental.
Koremat6666 7y ago
It is a solely hipster thingy of bay area. The alternative to scooter is walking little more. If the range of your feet is say half a mile (you are willing to walk half a mile after getting out of train say) then scooter probably makes it 1 mile but adds a lot of other variable to it such as unreliability, availability, availability to return etc. I will happily short position in any of these scooter companies meant for consumers.
- RowanH 7y ago
  .... actually for a more global perspective, they have been operating in New Zealand. Visiting Christchurch which is a fairly compact flat small city Lime's were the best thing ever to get around on. Living in Auckland, I haven't touched one - hilly, not enough coverage, too large a distance. So they do have their place outside of the hipster bay community :)
  - dzhiurgis 7y ago
    I've used them a ton when downtown (and even in North Shore). Shame there's nowhere close enough of bike paths for stuff like this. Really disappointing. Plus council took their licence away and gave to local company. That's like a pure corruption, nepotism or protectionism. The amount of smear articles on NZHerald about Lime was disgusting too. It's either an by delusionally old farts or again - corruption.
sireat 7y ago
E-scooters are a very tempting business because the napkin math is very tempting. In my neck of woods escooter rentals are 10+ Euros an hour. So 500 Euros for scooter / 10 => 50 hours to break even Then you say okay maybe only 1 percent utilization => 5000 hours which is still ~6 months (we are talking napkin math). This makes for a great elevator pitch. Only later do you start worrying about vandalism, logistics/costs of gathering scooters every night etc.
sparkling 7y ago
> Does anyone actually think this is a profitable market? Can a eScooter business be run in a profitable way? I think yes. Are these companies going to ever make back money for their investors? Probably not. > Electric scooters are expensive, repair and charging is expensive The retail price for these Scooters is $400-800, depending on the exact hardware. I assume these companies are not paying retail prices but have a sweet deal with some Chinese manufacturer, maybe paying $500-ish for a mid-tier model. Really not that expensive. In Europe most firms are charging 1 Euro to start the eScooter and then additional 15ct per minute. In my opinion this is more than enough to make a decent profit. There are profitable car sharing companies here that let you rent a car for effectively 25-35cents per hour - that is including gas. So somehow, these car sharing companies that have huge upfront costs for purchasing the cars (30-40x more than a eScooter), high maintenance costs, annual registration fees, insurance costs etc. are turning a profit despite charing only a few cents more than the eScooter companies.
BrainInAJar 7y ago
There is no population that is better serviced by scooters than bicycles and better public transit
icebraining 7y ago
I think it can be in some places. For example Lisbon, Portugal has decent weather all-year (not too cold, not snowy nor very rainy), lots of tourists, low labour costs; plus a fairly clean electricity supply. The only drawback is the lack of separated lanes, but most cities are working on improving that. It's probably more niche than these companies hoped for, but I think a profitable business can be made from it.
CalRobert 7y ago
The environmental benefit would ultimately be in reducing car trips and allowing cities to once more be built human scale, enabled by scooter-transit-scooter trips (scooters solve the last mile problem). It would be a laudable thing for governments to support but instead the response has been deep hostility.
holler 7y ago
Very simple, have you ever rode a scooter? Once I took a ride along the beach in Southern California, it was immediately obvious, and, I was hooked! It's a disruptive, perfect combination of technologies, that immediately antiquates riding a bike for short distances. The main problem is that it's too good, and people with poor balance, poor judgement, or bad luck, have been in accidents which ruined it for everyone else. I could see scooters completely wiping out local ride-share, taxi, and bicycle shares in many places. But again, people have been injured and because of that, along with the excessive inventory that has littered some areas, cities are cracking down and writing new regulation to curb their use. In the short term they will win and we might not enjoy their full potential for awhile.
- catalogia 7y ago
  Like three quarters of American men, I'm overweight. I'd never use an electric scooter because the absolute last thing I need in my life is an excuse to walk less. I'd wager at least a significant portion of that three quarters probably have thoughts similar to mine. Of the rest, most probably drive instead (which for the particularly obese, is probably a lot more comfortable than a scoooter.) I see a ton more scooters on the sidewalk than I see people riding them. From my perspective these scooter companies have greatly overestimated the demand.
  - holler 7y ago
    Have you ever used one? I get what you're saying, but as an example: my girlfriend and I have on multiple occasions, in multiple cities, used scooters to explore local geographic regions that would otherwise not have been possible in the same time constraint. We would ride across town, then get off and walk around for a bit until we decided to hop back on and ride way across town to another place and do the same thing. So it is possible to still get the exercise etc, with the benefit of being able to cover more turf than possible strictly through walking. Of course you could do the same thing with a bike, but it's more cumbersome and less agile imo.
- HenryBemis 7y ago
  Depending where in the world you are, these scooters are as expensive as Uber for the same distance (in Europe). But you cannot carry a suitcase, it is not safe, you get wet when it rains, etc. I get that it feels like a 2-dollar-Harley, and once parents realize that their kids are both at risk AND it costs as much as an Uber, I expect loses to grow. Unless something drastic happens and the cost drops dramatically.
shsyduueh3h 7y ago
Your explanation is exactly why environmentalism is losing ground in the public zeitgeist outside of sensational headlines. People thought they would be profitable because large swathes of people liked them. The cities where they've lost ground have passed laws restricting them but the public votes along party lines so no politician of significance cares about the public reaction. The rest of your comment is essentially an appeal to the idea that cities can't have nice things unless they match your standard for environmrntal friendliness. The products were widely used before they were restricted, the public votes with their wallets, entrenched interests found a way around that vote. The cost to the consumer now is that they're basically useless because entitled people like yourself felt that the focus of a city shouldn't be facilitating the things that its people enjoy.
tim333 7y ago
I use Lime ebikes rather than scooters in London and they get quite a lot of money off me - a short trip (5mins) is about £1.50 which means if you pop to a shop and back then somewhere else and back that's £6. You don't need so many of those a day to make a profit.
wiseleo 7y ago
I think it’s a great business. They are not expensive. There are no employees except for depot repair and customer service call center. Repair can be handled by driving with a van after dark and collecting all sick units. Easy for a small team. It can be a Chrysler Hybrid minivan if you want to be environmentally conscious. Fuel consumption is a non-factor if done overnight without traffic. Solar can charge the batteries, but so can random people, which is how it is done. They are not cheap to ride. Riders are paying $20/hr. I paid a few times and found it convenient compared to catching an Uber. Unit cost is less than $1000. You are looking at a month of use before the thing becomes profitable. At their volume, the cost is likely far less.

samatman 7y ago

Too much money, chasing not enough alpha.

john_moscow 7y ago

>Why did the VCs value these as billion dollar companies? Desperation? Because VCs get paid from selling the shares to the public. So as long as a general unsophisticated investor is expected to buy in, it's a good deal for a VC, even if the underlying business model is laughable.

texasbigdata 7y ago
While never having been on one due to no helmets being provided, in Denver and in Dallas and in Austin they arguably revolutionized the city core and how younger people get around. For better and worse. And while not fully diligent on this, isn't Uber still not profitable on a unit economic basis? And they are mature and public. Perhaps that statement isn't true but it provides one justification for investing in scooters
- bransonf 7y ago
  You are correct about Uber not being profitable. They’re burning cash quickly. And if you look at market performance, they’re not where they expected to be. Furthermore, they’re fighting things like employee unionization (See California) which will increase their cost. And Uber is fundamentally different. It’s not seasonal, and the costs fall mainly on drivers rather than the company. Investors are hopeful on Uber, but I bet if a scooter company tried to go public right now, it would get eaten alive.
- rossdavidh 7y ago
  My impression in Austin is that it peaked last year. Not to say they aren't still common. To be honest I think there's a possible real business here, but maybe only for one or two companies, and only in cities where they achieve a critical mass. The 4am collecting of abandoned scooters, becomes much more efficient if it's only one company per town, and they are commonly used such that there is much less distance between scooters of a given company. I suppose that, like for every 1000 1999 e-business there was only one Amazon, the VC's are thinking there will be one or two survivors here who will eventually do well.
- viraptor 7y ago
  > isn't Uber still not profitable on a unit economic basis? Uber still has money to burn and is trying to grow even more. They could likely be profitable if they wanted, pretty quickly, by limiting spending/expansion.
IshKebab 7y ago
Most companies only go public when they are profitable.
ibeckermayer 7y ago
VCs also get paid by getting other VCs to evaluate their companies as more valuable in a sort of Ponzi scheme: https://youtu.be/NVVsdlHslfI https://youtu.be/NVVsdlHslfI

rurp 7y ago

> Why did the VCs value these as billion dollar companies? Desperation? That's my guess. 10+ years of very low interest rates and wealthy people having more and more free cash seems to have led to a lot of crazy valuations in tech investing and elsewhere.

kikokikokiko 7y ago
Interest is already negative in Japan for years, and now it's negative on Europe too. The US is heading fast to this insane reality of negative interests too. Since 2008 the FED has multiplied the amount os dollars in circulation by what, 5-10 times? This created this crazy scenario where the Softbanks of the world see a business model that is clearly destined to fail and never be profitable, and still keep pouring money on it at higher and higher valuations. I live in Brazil, and the price these companies charge for the scooter rides here is totally out of our economic reality. I'm just waiting for this HUGE bubble to explode. UBER, Netflix, WeWork, Tesla to some extent. All multi billion dollar companies that never return profits to their investors. I for one am glad to be getting cheap UBER rides down here at the expense of the pension funds of millions of americans, but this can not go on forever. Since the end of 2019 I began to switch my investments to gold and wait for the crash. Trump gave me some help with this gold idea this week, so far so good ;-)
- rolltiide 7y ago
  > The US is heading fast to this insane reality of negative interests too. Since 2008 the FED has multiplied the amount os dollars in circulation by what, 5-10 times? > I'm just waiting for this HUGE bubble to explode. Wait till you calculate how much money is necessary to push US bonds into negative territory. Ka-CHING long 10 yr bond futures, leverage uuuuup if you think the first you said is actually going to happen, because that means bubble doesn't explode

nimbius 7y ago

Id suspect its the disconnect between wealth and reality. At the end of the day the VC only sees what the VC wants to see. in this case a verdant world of the futuristic e-scooter where each is powered by the fantastic internet technology of the smartphone and destined to enrich and engage the lives of millions while forging a new path in e-commerce that will surely reward the diligent shareholder. unforeseen is the army of charging slaves that patrol the city at 4 AM for a few extra dollars at their own expense. E-scooters launched through shop windows and into streets after bars close. The Litigation prompted from both governments endless frustration with this new corporate detritus littering the public sidewalk, and citizens facing ugly medical expenses after the sobering reality that cars in the United States are still far more prevalent, careless, and lethal than any chinese internet scooter.

aok1425 7y ago
How are they slaves? They have the free will to decide if they want to work or not.
- evv 7y ago
  Yeah? Depends how you define free will. If people want to eat and make rent, they need to afford it somehow, and the employment options are bleak (see: charging scooters). So maybe you meant they have "the free will to decide if they want to work shitty jobs, or not live". We can't be too surprised that the suicide rate is going up in this country.
  - yibg 7y ago
    That’s a weird definition of a slave and free will. By this definition none of us have free will since most things we do are driven by some motivation. I want to eat and make rent, so I work for the money to do so. Now I’m a slave?
    - technobabble 7y ago
      If you hate your job, which has negative affects on your health, are you really free just because you get to choose what clothes you wear or what you have for lunch?

notJim 7y ago

From what I've read, the main driver of profitability is longevity of the scooters, and they've already made a lot of progress extending that. > In terms of any environmental benefit, I highly suspect more gasoline is being consumed to collect and distribute scooters than the offset of a few last mile transports. The report I read stated that if longevity could be extended (which is already being worked on, per above), scooters would be net-negative CO2 wise. However right now, they are net-positive. You are correct that moving the scooters around incurs a carbon hit, but also power generation is dirty, as is producing a scooter that only last for a few months.

disordinary 7y ago
In Wellington, New Zealand Uber (Jump) replaced their entire scooter fleet a few weeks ago after just six months of operation, their main competitor (Flamingo) will probably have to do the same as their scooters now look worn and tired vs the Jump ones. Lime has been booted out of a couple of markets locally as they had safety issues, all those scooters are probably in a land fill somewhere.

Reedx 7y ago

It seems that a lot of VC is a multivariate ponzi scheme of sorts, which might explain some of it. If they're making fees regardless, then they just need to show/push fast initial growth to attract more layers of investment and it doesn't necessarily need to make long term sense. Chamath Palihapitiya describes this here: https://www.youtube.com/watch?v=NVVsdlHslfI https://www.youtube.com/watch?v=NVVsdlHslfI

nikajon_es 7y ago
I was there for this, and starting at the 09:30 mark it was exactly what I was thinking about when I read the headline.
ibeckermayer 7y ago
Wow, thank you. This guy decisively describes what I’ve been yammering to my friends about since moving to SF and learning about this industry.

wufufufu 7y ago

> Electric scooters are expensive, repair and charging is expensive Citation needed, at least to convince me. I think they could significantly bring down the cost at scale (production/maintenance wise at least).

romwell 7y ago
>Citation needed Here's one supporting piece of evidence: >Lime shuts in 12 markets, lays off around 100
bransonf 7y ago
Here are some estimates: https://oversharing.substack.com/p/shared-scooters-dont-last-long https://oversharing.substack.com/p/shared-scooters-dont-last... These scooters are already at a fairly decent economy of production. Chinese factories are producing these in the thousands and companies are buying wholesale. The core technology (batteries especially) is expensive, full stop. I’m curious where you think they could save money in larger scales? That’s not even to mention to get larger scale, they need more consumer adoption. I don’t have reliable data for this, but anecdotally I’ll say consumer interest is stagnant, and that’s already at unprofitable/heavily incentivized margins.
asdff 7y ago
They cost $300. Maybe bird gets them for $200. Even if you cut the cost down to $100, that's still $100 a month per scooter to run the network. https://qz.com/1561654/how-long-does-a-scooter-last-less-than-a-month-louisville-data-suggests/ https://qz.com/1561654/how-long-does-a-scooter-last-less-tha...

themagician 7y ago

They saw what happened with bike share. The exit strategy was always: get acquired by Ford, GM, or another major auto manufacturer who wants the ad space. OR look to companies with massive ad spend: Citibank, Wells Fargo, BNP Paribas, Oracle, etc. that would love to have ads in places where ads aren’t allowed (eg. parks) through this loophole. The scooters are just branded litter, which is a huge market. As long as they can claim it serves some other purpose, it’s legal. You could start dumping branded water fountains all over cities saying it has something to do with hydration and it would be allowed as long as there was an app that allowed you to donate in bitcoin.

jressey 7y ago

I don't think anybody thought it was a guaranteed win, but it was cheap enough to enter that a bunch of VCs went in for it.

jeffnappi 7y ago

I think e-bikes in certain markets will be profitable as a division of bigger organizations like Uber/Lyft. For example I spent $6 on two JUMP bike rentals last night to get to and from a Meetup. It was convenient and the bikes did the job handily. As a company that only does the bike share, I don't think they will be able to compete with the likes of Uber/Lyft etc.

giobox 7y ago
I used to be bullish on ebikes for commuting, until I started buying secondhand ones barely a few months old on craigslist at steep discounts for my own family. In every case, the owner had a change of heart and switched to a scooter. Why? Because the ebike is huge and heavy, needs dedicated locking, parking etc. Often there isn't room for it on the bus/train. They all found the scooter way better for last mile style commutes. Scooters are a fraction of the cost, capable of similar speed and range with less user effort and have virtually no maintenance. You can carry them easily into an office, and they weigh a fraction of a typical ebike. They fit much more easily into trains and buses. Long term, I think last mile commuting will surely be won by a scooter style machine. I still think ebikes have a huge role to play in future of transport, but I don't think it will be last mile commutes as much as some expect.
- mdorazio 7y ago
  For me the solution here is a folding e-bike, of which there are many.
  - giobox 7y ago
    Ironically the ones I purchased are all folding models. In some ways the folding models are the worst weight wise, the extra hardware needed to strengthen the frame makes them incredibly heavy. I own a very nice Tern Vektron, one of the higher end folding electric bikes, and I've folded it once, it's just way to heavy for folding and carrying to be practical. I'd sooner walk than try and move it around a busy train, for example. The fold is really only useful for storage at home.
- 7y ago

nishantvyas 7y ago

> Why did the VCs value these as billion dollar companies? Desperation? 1. FOMO 2. Easy Access to Capital in last decade 3. Winner takes it all culture, which causes more FOMO But then as a VC you also have to bet future with incomplete set of data... which is not truly a science... though there are some Midas in VC... reality/statistics is only 3-5% of all investment will hit home run, 5-15% will do average and other will just fail... we would not have many of the company/services around if someone would not have taken those bets (from UBER to AirBnB and others...)

mumblemumble 7y ago

I can see personal e-scooters as being a great alternative to cars for short trips such as commuting less than 5-ish km to work, or taking the kids to school. However, I still think bicycles are vastly preferable. With a pannier rack you get quite a bit more cargo space, and in the winter, the fact that you're physically exerting yourself helps to keep you warm, which makes for a more comfortable and pleasant trip. Also, the whole "Lithium batteries aren't supposed to be operated below 10C" situation limits e-scooters' value for a large chunk of the year in temperate climates. The for-hire e-scooter market continues to seem to me like a novelty more than a realistic transportation option. My city's recent e-scooter pilot program hasn't done much to dispel that notion. People used them quite a bit in the first few weeks, but, by the end, most the scooters were obviously going all day without being used. Also, the whole "last mile" argument started seeming a lot more hollow once I realized that, by the time I got to the busy areas where e-scooters were being placed in the mornings, I was already 75% of the way to the train station. More like "last block". And, at least when they were being used, I'd have to walk well out of my way to find one to use on the way home, too, because they were scattered all over the neighborhood as a result of their normal and intended usage pattern. So, they didn't seem to be much of an effort saver going in either direction. All that said, I'm guessing that they were being highly valued because of the very low barrier to entry for the market. A fleet of e-scooters is presumably quite a bit less expensive to purchase and maintain than a fleet of docked rental bikes. What got lost in the shuffle was the fact that the dock, while it might seem like an unnecessary annoyance, is actually a big part of what makes those rental bikes pleasant to use.

logifail 7y ago
> I can see personal e-scooters as being a great alternative to cars for [...] taking the kids to school If it's close to 5km, are you really going to take the kids on scooters? If it's closer to 1km, how about simply walking? Reality check: we have two (of three) kids in school, their walk to school is just over half a mile, they both walk more or less every single day, in summer and winter and in the rain and the snow. Oddly they really like walking to school in the snow :)
- deleted 7y ago

scarejunba 7y ago

I think it's a profitable market if you survive the competition. You build the moat by petitioning the government to force licensing (like docked bikes do) and then enjoy the monopoly pricing. There's a natural advantage to being the same guy serving lots of markets so then you're fine. Whatever happens electric scooters are here to stay. They will be the future of urban last mile transportation.

csours 7y ago

I wonder if the benefit is to shop owners in the area where scooters work. My reasoning: Scooters are a replacement for walking. Shop owners depend on foot traffic. If you can generate foot traffic by reducing the time cost, you can increase shop visits. I do recognize a number of holes in this logic, for instance: is scooter traffic comparable to foot traffic?

netsharc 7y ago
For one thing, stopping at a shop when you're on foot is free, but if you want to get back to scooting, you can only park the scooter but not end the rental (otherwise someone else might rent that scooter while you're in the shop), but (AFAIK) Lime, etc, will charge you money as long as the scooter is still being rented out to you.

thanatropism 7y ago

I rode Lime-branded scooters in my "global South" town for a couple of weeks. It was a really expensive proposition and I was basically paying for the thrill. But the city (probably wisely) banned them from sidewalks -- when the whole point was to replace walking, not renting a highly vulnerable motorcycle substitute to ride with the cars in the street. To answer your question: high prices/margins.

maccam94 7y ago
It's a nice better experience in dedicated bike lanes.

dougweltman 7y ago

Micromobility like scooters are a "first look" experience. The use case is getting from point A to point B: who is first in line in terms of showing the user options to do that? The first app to be checked for transportation options to point B has a tremendously valuable asset -- it's not just the scooter, but the fact that it's first in line for the demand. Useful in a world where ridesharing companies and others are duking it out over users. Less so after the dust has settled.

naravara 7y ago

>I suspect the cost to the consumer would have to double for it to maintain any profitability, and the demand already sucks. I suspect if you price in other externalities it would be even worse. Those things are flimsy trash that are meant to be utterly disposable. You can barely service or replace something as simple as a broken wheel. If these things ever did actually take off it would have been an ecological catastrophe. For all the waste generated by things like Keuregs, at least they're not going to leach heavy metals into the landfills.

netsharc 7y ago
In my city (Zurich) it already feels like an environmental disaster, with 5 or 6 scooter companies jumping into the market, there's probably more scooters on offer than there is demand.

mytailorisrich 7y ago

> Does anyone actually think this is a profitable market? I recall a study in Paris last year (iirc) in which they concluded that the useful life of these scooters was shorter than their individual rental break even points...

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raiyu 7y ago

At the beginning VCs love to see the revenue increase and when you are dealing with companies like this you can grow revenue rapidly by moving into new markets. And it requires a tremendous amount of capital to do so, because they are purchasing and servicing the scooters. There's always the promise of we will get to free cash flow positive and net profitability in the future to stave off concerns immediately especially when revenue growth is high. The problem for Lime and other scooter companies is that they grossly underestimated the amount of issues they would run into from operating and servicing them. So they began to see those ill effects in the first 12 months of bringing them on to the streets. Of course massive revenue growth and promises to fix that allows new investors to plow money in, but now as the scooters become ubiquitous in many large metro areas, the revenue growth is harder to get and an increase in competition also slows down revenue growth. With growth slowing, now they need to immediately focus on improving their unit economics where ever possible. Getting out of failed cities, reducing staff where they over hired planning for the future. Also at a company of their size firing 100 people is the equivalent of getting rid of poor performers and not that big of an issue. This is all done to show how they can be unit economic profitable in a single large city, and then use that combined with revenue growth to raise a new round. But if you look at the landscape of Uber, Lyft, Doordash, Postmates, Instacart, everyone is no where close to profitable, so definitely that story arc of continuing to grow without profitability is taking a large hit. More layoffs will definitely follow across the board in this sector.

smileybarry 7y ago

> In terms of any environmental benefit, I highly suspect more gasoline is being consumed to collect and distribute scooters than the offset of a few last mile transports. I agree, however, it's obscured by an Uber-style gig: a lot of these startups incentivize random people to drive around, collect & charge their scooters. That allows them to set the financial cost of charging and ignore the underlying environmental cost. I suspect it's one way they hide the maintenance costs while pretending to contribute to the "gig economy".

brainzap 7y ago

They also share the market with bike rental.

Koremat6666 7y ago

It is a solely hipster thingy of bay area. The alternative to scooter is walking little more. If the range of your feet is say half a mile (you are willing to walk half a mile after getting out of train say) then scooter probably makes it 1 mile but adds a lot of other variable to it such as unreliability, availability, availability to return etc. I will happily short position in any of these scooter companies meant for consumers.

RowanH 7y ago
.... actually for a more global perspective, they have been operating in New Zealand. Visiting Christchurch which is a fairly compact flat small city Lime's were the best thing ever to get around on. Living in Auckland, I haven't touched one - hilly, not enough coverage, too large a distance. So they do have their place outside of the hipster bay community :)
- dzhiurgis 7y ago
  I've used them a ton when downtown (and even in North Shore). Shame there's nowhere close enough of bike paths for stuff like this. Really disappointing. Plus council took their licence away and gave to local company. That's like a pure corruption, nepotism or protectionism. The amount of smear articles on NZHerald about Lime was disgusting too. It's either an by delusionally old farts or again - corruption.

sireat 7y ago

E-scooters are a very tempting business because the napkin math is very tempting. In my neck of woods escooter rentals are 10+ Euros an hour. So 500 Euros for scooter / 10 => 50 hours to break even Then you say okay maybe only 1 percent utilization => 5000 hours which is still ~6 months (we are talking napkin math). This makes for a great elevator pitch. Only later do you start worrying about vandalism, logistics/costs of gathering scooters every night etc.

sparkling 7y ago

> Does anyone actually think this is a profitable market? Can a eScooter business be run in a profitable way? I think yes. Are these companies going to ever make back money for their investors? Probably not. > Electric scooters are expensive, repair and charging is expensive The retail price for these Scooters is $400-800, depending on the exact hardware. I assume these companies are not paying retail prices but have a sweet deal with some Chinese manufacturer, maybe paying $500-ish for a mid-tier model. Really not that expensive. In Europe most firms are charging 1 Euro to start the eScooter and then additional 15ct per minute. In my opinion this is more than enough to make a decent profit. There are profitable car sharing companies here that let you rent a car for effectively 25-35cents per hour - that is including gas. So somehow, these car sharing companies that have huge upfront costs for purchasing the cars (30-40x more than a eScooter), high maintenance costs, annual registration fees, insurance costs etc. are turning a profit despite charing only a few cents more than the eScooter companies.

BrainInAJar 7y ago

There is no population that is better serviced by scooters than bicycles and better public transit

icebraining 7y ago

I think it can be in some places. For example Lisbon, Portugal has decent weather all-year (not too cold, not snowy nor very rainy), lots of tourists, low labour costs; plus a fairly clean electricity supply. The only drawback is the lack of separated lanes, but most cities are working on improving that. It's probably more niche than these companies hoped for, but I think a profitable business can be made from it.

CalRobert 7y ago

The environmental benefit would ultimately be in reducing car trips and allowing cities to once more be built human scale, enabled by scooter-transit-scooter trips (scooters solve the last mile problem). It would be a laudable thing for governments to support but instead the response has been deep hostility.

holler 7y ago

Very simple, have you ever rode a scooter? Once I took a ride along the beach in Southern California, it was immediately obvious, and, I was hooked! It's a disruptive, perfect combination of technologies, that immediately antiquates riding a bike for short distances. The main problem is that it's too good, and people with poor balance, poor judgement, or bad luck, have been in accidents which ruined it for everyone else. I could see scooters completely wiping out local ride-share, taxi, and bicycle shares in many places. But again, people have been injured and because of that, along with the excessive inventory that has littered some areas, cities are cracking down and writing new regulation to curb their use. In the short term they will win and we might not enjoy their full potential for awhile.

catalogia 7y ago
Like three quarters of American men, I'm overweight. I'd never use an electric scooter because the absolute last thing I need in my life is an excuse to walk less. I'd wager at least a significant portion of that three quarters probably have thoughts similar to mine. Of the rest, most probably drive instead (which for the particularly obese, is probably a lot more comfortable than a scoooter.) I see a ton more scooters on the sidewalk than I see people riding them. From my perspective these scooter companies have greatly overestimated the demand.
- holler 7y ago
  Have you ever used one? I get what you're saying, but as an example: my girlfriend and I have on multiple occasions, in multiple cities, used scooters to explore local geographic regions that would otherwise not have been possible in the same time constraint. We would ride across town, then get off and walk around for a bit until we decided to hop back on and ride way across town to another place and do the same thing. So it is possible to still get the exercise etc, with the benefit of being able to cover more turf than possible strictly through walking. Of course you could do the same thing with a bike, but it's more cumbersome and less agile imo.
HenryBemis 7y ago
Depending where in the world you are, these scooters are as expensive as Uber for the same distance (in Europe). But you cannot carry a suitcase, it is not safe, you get wet when it rains, etc. I get that it feels like a 2-dollar-Harley, and once parents realize that their kids are both at risk AND it costs as much as an Uber, I expect loses to grow. Unless something drastic happens and the cost drops dramatically.

shsyduueh3h 7y ago

Your explanation is exactly why environmentalism is losing ground in the public zeitgeist outside of sensational headlines. People thought they would be profitable because large swathes of people liked them. The cities where they've lost ground have passed laws restricting them but the public votes along party lines so no politician of significance cares about the public reaction. The rest of your comment is essentially an appeal to the idea that cities can't have nice things unless they match your standard for environmrntal friendliness. The products were widely used before they were restricted, the public votes with their wallets, entrenched interests found a way around that vote. The cost to the consumer now is that they're basically useless because entitled people like yourself felt that the focus of a city shouldn't be facilitating the things that its people enjoy.

tim333 7y ago

I use Lime ebikes rather than scooters in London and they get quite a lot of money off me - a short trip (5mins) is about £1.50 which means if you pop to a shop and back then somewhere else and back that's £6. You don't need so many of those a day to make a profit.

wiseleo 7y ago

I think it’s a great business. They are not expensive. There are no employees except for depot repair and customer service call center. Repair can be handled by driving with a van after dark and collecting all sick units. Easy for a small team. It can be a Chrysler Hybrid minivan if you want to be environmentally conscious. Fuel consumption is a non-factor if done overnight without traffic. Solar can charge the batteries, but so can random people, which is how it is done. They are not cheap to ride. Riders are paying $20/hr. I paid a few times and found it convenient compared to catching an Uber. Unit cost is less than $1000. You are looking at a month of use before the thing becomes profitable. At their volume, the cost is likely far less.