Hacker News Reader

Comment by wuunderbar | Hacker News Reader

Sure, there's a lot wrong with Silicon Valley, but this article (I understand it's an opinion piece) is "an example of everything that's wrong" with Business Insider.

> 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

View on HN

Sure, I can imagine a world where scooters are as common as bikes. But is that enough to justify a $2B valuation for a scooter-sharing startup?

> is that enough to justify a $2B valuation for a scooter-sharing startup?

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.

>There are probably $100 million in profits in New York and San Francisco alone.

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?

$100m profits in SF sounds optimistic. London's heavily subsidised cycle share scheme, for example, gets a little over 1m rides in peak months even with most of those rides being free.

If this is a profitable scheme (I don't think it is because of charging and theft issues), the competitors will move into the market as well (there is no moat). In big cities the market will be very segmented so they won't be able to reap all the profits, and the margins will be very thin due to intense competition.

A 5% yield is only reasonable for low-risk blue-chip equities. No one will settle for 5% with that much risk to their capital.

> A 5% yield is only reasonable for low-risk blue-chip equities

Emphasis on “eventually”. A basic test for valuation sanity is “are the earnings this company would need for a zero-growth valuation possible?”

Oh yeah. They should bring way more profit home....

You’re not the one investing at that valuation, so why do you care?

Because it could potentially hurt the rest of the investment ecosystem.

I don't agree with the premise, but if it really is the case the valuation is too high, the "bad" investors who don't know what they're doing will lose money and thus have less influence on the markets in the future. It's important for the long term health of the investment ecosystem to have mechanisms to remove the market impacts of those who make bad decisions (and increase the influence of those making good decisions), and this is that mechanism.

Why not? The global bicycle market around $28 billion in sales per year.

Which does not automatically make any bike-sharing startup worth billions though...

The issue is the value of this particular scooter-sharing company here, not the value of the global scooter market.

Sure, but if you believe the scooter-sharing market will end up being dominated by a few companies (because consumers will prefer to use whichever company is most likely to have a scooter available wherever they are), then it's not unreasonable to bet on one particular scooter-sharing company ending up with a large percentage of that market.

Way more than that.

These scooters I think are really interesting, even if the 'leave them anywhere' aspect is a bit over the top/annoying.

They could be especially handy for last mile between subway/light rail stations and homes/workplaces.

It reminds me of the 90s when we has a constant stream of articles about people talking on cell phones in restaurants. Cell phones were a crisis that could destroy the restaurant industry. If we don’t ban them nobody will go out to dinner any more because who wants to eat dinner with everyone shouting around you?

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.

Reply on news.ycombinator.com