The scooter company that raised 400M in 4 months is what is wrong with SV
businessinsider.com
businessinsider.com
> And what about winter? Not much of a consideration in Santa Monica. But riding scooters in Chicago in February? Seems like a hazard.
> How about using a scooter to get anywhere that is more than a short distance away? An hour's commute? In the rain? Traveling with one or more friends? Carrying groceries? Taking your kids to soccer practice?
> Those considerations make scooters more of a novelty and a niche than something that every person will use regularly, like a car.
Aside from carrying groceries, all of these points are completely fruitless when talking about how these scooters could take of. All of the same can be said of bicycles yet bicycle commuting is growing year over year in metro hubs: https://bikeleague.org/commutingdata
The issue is the value of this particular scooter-sharing company here, not the value of the global scooter market.
For a 5% earnings yield, they would eventually need $100 million in income. There are probably $100 million in profits in New York and San Francisco alone. So yes, if this works that valuation seems appropriate.
Emphasis on “eventually”. A basic test for valuation sanity is “are the earnings this company would need for a zero-growth valuation possible?”
If we extend "San Francisco" to mean "Bay Area" and estimate that New York + Bay Area have a population of about 16M then if the company manages to get 5% of locals to become regular riders, $100M in annual profit is over $10 per regular rider per month. Assuming sufficient demand is there, consider the number of scooters that would need to be deployed and maintained to provided sufficient density to service this adoption level. Does that $100M in profit still seem probable in these two metros?
They could be especially handy for last mile between subway/light rail stations and homes/workplaces.
Turned out to not be a problem.
People complain about dockless bikes and scooters on sidewalks. But its not like anyone is inconvenienced by them. You’ll get used to seeing them eventually.
I don't know anything about the former, but I would think the right way to analyze it would be to do napkin math on what revenue yield might be.
I do know something about the latter. Bird positions itself as a last mile type opportunity; you take a bird two miles to get the train or bus you were always going to get; you take Bird if you're a college student and you need to get around campus. This dismissal of Bird is a little bit like "I own a car and I'm not a big drinker and I don't travel, why would I ever call an Uber?" No one gives half a shit if you'd call an Uber. The question is whether you have the imagination to suppose there is someone else who might call one. Then it ends with the laughable idea that "Scooters are cheap so if there actually is any use for them, which there isn't, people should just buy some". The whole point with Bird is that you don't need to worry about the scooter being stolen or parked. Most of the controversy around Bird is cities complaining that what's convenient for Bird users is inconvenient for anyone else -- it's hard to observe that while simultaneously complaining that Bird offers no convenience.
Disclaimer: I've only ridden a Bird once and I crashed it badly and got cuts up and down my leg and arm and ripped my pants. Apparently I don't have very good balance. Either way, Bird isn't for me. But I'm not an idiot watching dozens of people go by me on Birds and yelling at clouds about how they're making the wrong decision.
Hope you rode it on the road and not the sidewalk like over 80% of these scooter riders in San Francisco were....
I've been on the receiving end, walking on the side-walk in downtown San Francisco and getting crashed-into by Bird and Lime riders routinely.
A scooter sharing startup? Yeah, I'm pretty sceptical. But I too have seen projects at least as ridiculous funded by various companies I've worked for - honestly, I think it happens all the time. There's one in particular that I really want to name but sadly I just can't.
The difference, as you've said is that these things are not shown in the full light of day, and the amounts involved (particularly with respect to revenue and worth of companies) are often hard to determine at best for outsiders even for projects that are known about[1].
[1]There are, of course, exceptions. This, recently posted by LGR, is a particularly bizarre example in many ways: https://www.youtube.com/watch?v=dv6UaHZxUys.*
Sounds like an over-the-top scene on a comedy show. Really
Perhaps I'm showing my age, but wasn't the same said about Segway?
That aside, $2 B for a hardly new and hardly original idea / model?
Yeah. Something has gone sideways.
Segway is a great product, and they're very popular for city tours and other niche markets that can afford such a high price point.
Either way, it’s silly to critique other people’s bets. You don’t know what they know and your money and reputation is not on the line. Does the valuation make sense? It doesn’t need to for anybody not involved in the transaction. Will the valuation need to make sense by the time/if the company goes public? Yes, much more so. But you could argue that even then public company valuations have no basis in reality right now.
Again. Not a critique. Just stating a fact.
https://techcrunch.com/2018/05/01/lime-partners-with-segway-...
> "Lime, along with its competitors Bird and Spin, all ultimately rely on Ninebot, a Chinese scooter company that has merged with Segway. Ninebot is backed by investors including Sequoia Capital, Xiaomi and ShunWei."
Point being that there’s a LOT of these scooters around. I think they’re great. I keep wondering where the people complaining about the carelessly left scooters are living, because the majority of the scooters in town are dropped off considerately, and don’t take up more space than bikes.
I think the backlash against the scooters is driven by people who don’t like tech, and by people who believe transit solutions should be driven (and owned) by the government. The scooters solve a problem, are dirt cheap to use, are available to anyone with a phone, and are environmentally friendly. The externalities are nonzero but not larger than bikes. There’s a lot to like.
Given the lack of accountability in policing good behavior I can understand why people are against scooters.
Another thought: are VCs and funds transparent about in what round they invest their own and the funds money? Can they sell their own series A investment in subsequent rounds with / without disclosure?
https://www.cbs58.com/news/bird-scooters-in-milwaukee-are-il...
Hope they don’t come back. Or if they do, they’re confined to the GoBike areas or a very limited number per company.
If it's a stupid idea the VCs lose money. If a VC invests too often on stupid ideas they might go bust. Why should anyone else worry or care?
This may not be a huge deal if it's confined to the tech startup space. But these large investors are not putting all their eggs in one basket, they're spreading money out into many other industries like housing, financials, emerging markets, etc. If this large amount of money chasing returns has the same effect in these other industries, then we have the beginnings of systemic risk. This is now a very big deal for everyone.
I’m kinda looking at it like this: per-industry, there is a local-minimum solution which is being exploited
For transportation, let’s call that “cars”. Scooters are a bet that if we climb out of that hole we might be able to get to an even lower minimum (but investor dollars are the fuel that’s burned on the search path).
So despite these walkabouts in the solution space (ie companies), there remains the local-minima solutions.
Now, for pension funds and what not other LPs that invest in VC firms, they have made commitments for returns to their share holders (eg retirees). I think it’s disingenuous to guarantee returns for 30 years (effectively what these fin products are), which also kinda sucks, but I don’t understand the problem outside of helping previous investors keep promises they weren’t able to make in the first place. That feels like a pyramid scheme.
Big, bad investment decisions have systemic effects.
In any case, the worry about scooters is overblown. They are an experiment. If it works, we gain a new transportation mode between walking (uncomfortable), cars (cause congestion) and mass transit (expensive).
I also don't get what's wrong with walking. For me, personally, it's the best mode of transportation in the 15 - 30 minute range (granted, on a nice day in a city that's made for walking).
To each his own, I guess.
Capital intensive would have been more accurate. And in terms of maintenance, too, it’s more expensive than a road. Its economics only balance above a certain density threshold.
Shit needs to be channeled away and cleaned, electricity and networks need to be provided, water has to be served, etc.
Public transport is not different. And calculated on the amount of people it serves I'd argue that it's cheaper than cars. Especially if the externalities are factored in.
I'm not saying that scooters can't add something to the mix if done right. But the situation - as is - is not as bad as you make it out. Especially for cities that do it right.
Seems to me that scooters (or bikeshares etc) are highly complementary to mass transit, since you're never going to get rail lines everywhere.
Cities that aren’t big at all like Bern really show off the advantage of mass transit infrastructure.
I think there's a lot of truth to that view. But the way SV VCs and the current capitalist environment operate are a bit strange. I think that's what the article tries to shine a light on.
SV VC capitalism is extremely motivated to find new, nifty companies that will dominate and own new, nifty "tech" niches -- even if they're never profitable.
People care about this because the tech industry provides so much of the economy's growth. The underlying question is: why is so much cash lavished on businesses that, in general, are not profitable? What opportunities are being missed in the larger economy?
What is it about our overall system that means that companies that attack America's really vital problems (health care cost control/transparency, health care mistakes, health care inefficiency, public health problems, elementary education inefficiency, relatively high murder rates, high death rates from car accidents, infrastructure repair backlogs in big cities, the shortage of seats at the elitist colleges, opioid addiction and death) do not get this high level of funding?