C For Men

Scooter Wars

by slh

The next great transport revolution is happening right on your doorstep. But who will come out on top in this two-wheel race for global dominance?

Electric scooters, suddenly, are everywhere. For the believers, they represent an elegant and obvious solution to California’s smog and gridlock. Others see them as a dangerous nuisance foisted upon the public, with two companies locked in an all-out war for your $1 plus 15 cents-per-minute fares.

In reality, at least a dozen companies have cropped up in the last 12 months, but the mayhem can largely be traced to two lavishly funded startups: archrivals Bird in Venice and Lime in San Francisco. Bird was set up by a former executive from Lyft and Uber and has pulled in more than $400 million in backing from the cream of Silicon Valley venture capitalists. Lime nabbed $335 million this summer from a group of investors, including Google and Uber, pushing its cash pile to nearly $470 million. Keep in mind, in August 2017, there wasn’t a single electric scooter for rent on the streets.

More than 20 cities, from San Diego to Lake Tahoe, have been taken over by battalions of the silent two-wheelers. The results have been dramatic. Electric scooter rental companies may aim to convert urban commuters to a more convenient and efficient mode of transport, but emergency rooms have reported spikes in scooter-related injuries ranging from chipped teeth to broken arms and, this past September, its first fatality. (In Dallas, a 24-year-old man was killed while riding a scooter. It was the industry’s first death, and has raised tricky liability questions that could stunt the companies’ growth ambitions.) City councils are scrambling to police how they are used, where they can be left, and who is responsible should something go wrong. Some cities, such as Beverly Hills, have simply banned them outright. Others, including Santa Monica, have awarded retrospective licenses to the two biggest players. High-priced lobbyists, meanwhile, have been drafted by the new industry, applying pressure to keep regulations light and the number of scooters on the streets climbing from the thousands to, eventually, the millions.

 

The land grab broke out quickly. San Francisco, ground zero of the state’s tech industry, was one of the first places both Bird and Lime went head-to-head. And it wasn’t just them. Smaller rivals, such as Spin, also rushed in. Virtually overnight, thousands of scooters materialized on the streets. They proved immediately popular—and unpopular, too. Nearly 1,900 complaints about tripping pedestrians, inebriated riders and cluttered sidewalks rolled in over just a six-week period from around mid-April to the end of May.

Caen Contee, one of Lime’s founding team members, said it was not to blame for the chaotic rollout. “If you look at the meeting notes, you’ll see that we were working with support from city stakeholders. Others did not,” he says. “Unfortunately, when there are bad actors, especially in an industry that’s early on, they often get lumped together.”

San Francisco, however, did not take kindly to either Bird or Lime: Both were banned in August from operating in the city for a year—as were eight other companies—after scoring poorly on 12 different operating criteria, such as safety and labor practices. Instead, San Francisco handed licenses to two smaller rivals, Skip and Scoot, to run a one-year pilot program.

 

Outside California, the breakneck expansion has seen scooters pop up in dozens of cities across the country

So, who started all this? A refugee from the ride-hailing war between Uber and Lyft. After a stint as Lyft’s chief operating officer, Travis VanderZanden, 39, worked hand in glove for more than two years with Travis Kalanick, Uber’s former chief executive and resident enfant terrible. The latter led the transport-disrupting app to extraordinary heights before he was unceremoniously ousted last year by his board of directors due to a combination of the “toxic” work culture he fostered and the bare-knuckle, grow-at-all-costs approach that saw Uber clash with officials around the world and shirk regulations amid its bitter war for market share with sworn rival Lyft.

VanderZanden, as vice president of global driver growth, was at the controls of the Uber machine, and took a few pages from its playbook for his own startup, Bird, when he left the car-hailing colossus in 2016. After a few months, VanderZanden, the son of a public bus driver, came up with what he considered to be “the best way to get people out of cars” and reduce congestion: scooters. (The irony is not lost on critics that the very congestion he is seeking to ameliorate has been made worse by the ride-sharing revolution he stoked.)

VanderZanden released the first 1,000 “Birds,” which were repurposed electric scooters from China (meant as personal recreational toys), on the streets of Santa Monica. That was in September 2017. Only after he had released them “into the wild” did VanderZanden get in touch with the mayor via LinkedIn message to talk about how his fabulous idea would solve the city’s problems. Mayor Ted Winterer reportedly responded, “If you’re talking about those scooters that are out there already, there are some legal issues we have to discuss.”

Despite the mayor’s annoyance, a lot of people liked them. VanderZanden showed the usage numbers to investors, and the feeding frenzy began. In February, Bird raised $15 million in its first round of venture backing. The next month it brought in $100 million, then in June, $300 million from a round led by Sequoia Capital, the legendary venture firm known for backing Apple, Google and PayPal.

Today, Bird is worth an astonishing $2 billion and is in more than 100 cities in America, plus Paris and Tel Aviv. The plan for global domination is aggressive, as you might expect from a man who made his name helping to scale Uber. VanderZanden plans to open in more cities before the end of the year.

 

“The amount we’ve learned about how to work with cities is tremendous.”

His most well-wheeled competitor is Lime. Toby Sun, a graduate of University of California, Berkeley’s Haas School of Business, set up the company last year with co-founder Brad Bao in Silicon Valley’s San Mateo (later moving its headquarters to San Francisco). His focus, initially, was on dockless bicycles, which Chinese factories were churning out by the millions. However, as it became clear that scooters, both economically and culturally, resonated more, Lime (originally the company was called LimeBike) switched its focus.

In July, it raised $335 million from the group of backers led by Google and Uber. The deal valued the company, 17 months after its founding, at $1.1 billion. In what could be interpreted as a middle-finger-shaped reprisal to VanderZanden, Uber also agreed to integrate scooter and bicycle rides into its ride-hailing app: Lime has bikes, scooters or both in more than 80 American cities, 25 college campuses and four European countries.

The two sides, while in the midst of a battle for market share, are united in their ultimate goal: to have California so chock-full of machines that you will simply walk out your door and happen upon one. If that vision comes to fruition, the need for short cab rides—or even trips with your own car—would be obviated, as would the bike-sharing programs that require expensive docking stations sprinkled throughout the cities where they operate.

Outside California, the breakneck expansion has seen scooters pop up in dozens of cities across the country, as well as in European capitals including Madrid, Berlin and Zurich.

Executives speak with an only-in-California zealotry about how pay-by-the-minute electric scooters will soon take their place alongside humanity’s other great feats of ingenuity, like the harnessing of fire or the invention of the internal combustion engine. “In 100 years, people will look back at this innovation, these electric scooters, and see them to be as profound as the invention of the automobile,” says Saar Gur, partner at CRV, a venture capital firm that has backed Bird. “There could be an Apple-like company that builds the hardware for this last mile.” 

 

For anyone who hasn’t ridden one yet, designs vary slightly from company to company, but they all work the same way. Using an app, you unlock a vehicle by scanning a QR code between the handlebars. After the $1 rental fee, they cost, say, 15 cents per minute, and can be left anywhere once the destination is reached. This last point is much to the chagrin of the vehicles’ detractors, who brazenly destroy them—setting scooters on fire, dropping them off four-story buildings, hanging them from trees and burying them in sand—with little apparent fear of getting in trouble with the law. The Instagram account @birdgraveyard, with more than 40,000 followers, showcases the aforementioned acts, bringing a new meaning to the spoils of war.

Vandalism aside, as scooters have appeared in more and more cities, the primary obstacles are still red tape and regulation. In August, Santa Monica announced a 16-month pilot sanctioning the scooters. As happened in San Francisco, it appeared at first that Bird and Lime would not make the cut because they were left off the short list of contenders. In response, the duo staged a 24-hour détente. The “day without a scooter” protest at city hall in Santa Monica created sufficient pressure to do the trick. Two weeks later, both were selected, along with Lyft and Uber-owned Jump, for the pilot. The quartet will operate 2,000 scooters and 1,000 bikes between them; each has also agreed to pay a $20,000 annual operator fee, plus $130 per device.

Euwyn Poon is the co-founder and president of Spin, a smaller San Francisco startup that operates in 19 U.S. cities and was one of the companies excluded from the Santa Monica pilot. He says the decision to overlook his powerful rivals’ behavior was tantamount to rewarding companies for “disrespecting cities.” He adds: “It’s hard to keep count, but we have recorded 33 separate rogue launches across the United States. It concerns us that our competitors are trying to distort the public process by inviting users to rally at unrelated city council meetings, spamming public servants, and asking forgiveness for antagonizing cities.”

For its part, Bird claims to have learned from its mistakes. It will blitzkrieg no more, says David Estrada, Bird’s head of public policy: “The amount we’ve learned about how to work with cities is tremendous. What we do generally now is, rather than launch with a large number of scooters, we really start small.”

 

Lime has also pledged to play by the rules.

Lime has also pledged to play by the rules. Contee says: “First and foremost, we’re going to always do things according to regulations. We only work in collaboration with cities.”

Yet issues remain. One of the most difficult? Liability. Estrada says the biggest opponents when Bird comes to a new place are the city attorneys, who are generally worried about being on the hook if people get hurt.

Bird, extraordinarily, has agreed to assume all that risk, which will only grow should VanderZanden achieve his rather heady ambitions of transforming transport the world over. “We immediately agree to indemnify cities in cases of liability,” Estrada says. “We put them on our certificate of insurance.”

The company has handed out thousands of free helmets, yet it has also fought a move to make them a legal requirement. (The company argues that riders of electric vehicles—bicycles and skateboards, specifically—are not required to wear a helmet, so why should they be singled out and fined up to $200? Bird’s machines have a top speed of 15 miles per hour.) In a potential glimpse of a future that is less Wild West and more measured, Bird has also created “no-ride” zones, including some parks and residential areas, that it shades red on its app, denoting where riders should refrain from riding or leaving scooters. VanderZanden says the company is working on technology that will send a push alert to riders and remotely slow down their scooters as they near a restricted area.

The scooter war will only get more interesting from here. Segway-Ninebot, the Chinese company that makes most of the world’s e-scooters, including for Bird, Lime, Spin and others, says that until VanderZanden’s brain wave last summer, they were a niche product with tepid demand. A year later? Segway-Ninebot has quintupled production so that it can now pump out 250,000 scooters per month. Strap in. It could be a bumpy ride. 

Written by BRADLEY SPEWAK.
Illustrated by PAULIUS KOLODZEISKIS.