ViaCycle (YC S12) Is A Zipcar For Bikes, Coming To San Francisco Soon
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I live in a city with a bike-sharing system. It's deeply unprofitable and exists only at the sufferance of the city government. There are a number of flaws. Number 1 is that people who ride bikes don't rent them, they own them. For $100 anyone can purchase a bicycle that will last indefinitely and be available 24/7/365. Number 2 is that people vandalize the shit out of bicycles. Seats will be stolen, tires slashed, bicycles thrown in the river, cables cut. You're free to go after this sort of bicycle since it has no owner - no one is going to come storming out of a nearby store and kick your ass. Crackheads will steal a bicycle seat and try to sell it for $5 to get a hit of crack - I have watched them do it. We live in a world where people are routinely electrocuted trying to steal copper from live power wires and blown up stealing gasoline from pipelines. Those bikes might as well have a sign on them saying "steal me". If even ONE of the components can be removed and sold for a few dollars...
http://www.theglobeandmail.com/news/world/pariss-pedal-power...
http://www.cbc.ca/news/canada/montreal/story/2009/06/26/mont...
Combining high cost of bicycles, ongoing cost to repair/replace/corral wayward bicycles, and low cost of the alternative (owning a bicycle), there is just no chance that this can be a successful business. You will recall people talking about the future of electricity, as being "too cheap to meter". Well, electricity never made it that far, but time on a bicycle did. Bicycle-time is too cheap to meter.
(There may be some future for the company selling to cities or other large entities which intend to subsidize all the costs associated, but it can never be successful as a stand-alone business.)
Here's a picture of them
http://www.bikehype.com.br/wp-content/uploads/2012/02/alugue...
and a supporting article
http://www.smartplanet.com/blog/global-observer/take-two-for...
Cars are subsidized via road building/maintenance, after all, and it's likely to cost less to maintain a few bikes than it does to maintain roads/parking for the cars that would displace them.
Imagine if there were no transportation subsidies and road maintenance were privatized. A nightmare. It seems entirely reasonable that forms of transportation that can help bring tax revenues to a city are subsidized, and therefore entirely reasonable to create a start-up based in part on those subsidies.
Isn't HN usually full of people saying you have to figure out what customers will pay for (meaning, what customers will pay more for than it costs you to provide)? Bike-sharing is not one of those things. End-user customers will not pay you more than it costs to provide.
A lot of successful start-ups don't sell to consumers at all. And kazevedo comments that they are in fact structured as a B2B start-up. [1]
For example, DC's capital bikeshare comes from Federal grants that covered the setup costs, while Velib in Paris is entirely operated by JCD, an advertising agency that operates the system in exchange for advertising rights.
Take Velib. Last time I checked, JCD had revenue of $54 million, with an operating expense of roughly $35 million on Velib. The theft and vandalism complaints were regrettably exaggerated when the City and JCD were re-negotiating their contract last year. That they need subsidies to exist is patently false.
Financial aspects of US systems are also healthy as pointed out by other commenters.
On a related note, the subsidies to other modes, mainly rail and roads, are several orders of magnitude higher.
Denver's bike share is a blessing, especially for visitors who don't have a rental car.
Your article on Velib is from 2009, and while they did have a lot of theft early on, it was due to a design flaw. They've since fixed the problem and recently celebrated their 100 millionth ride. Also, theft hasn't been a problem at all in the US:
http://www.streetsblog.org/2010/11/29/theft-and-vandalism-ju...
A $1K bike may seem expensive, but they have a lot of differences from your local $100 Walmart cruiser. Our bikes are meant to last for years while being used 24/7 and withstanding any weather. They're also hardened against theft.
The financials are good as well. DC breaks even on operations, while Denver has made a sizable profit:
http://www.commuterpageblog.com/2012/02/capital-bikeshare-st...
Their main issue is high capital cost, which viaCycle solves. We can do a large city programs or let organizations install bikes on a grass-roots level, so you don't need to splash out $5+M to have reliable transportation.
- I don't have to worry about my own (rather nice) bike getting stolen
- I don't have to lug around a lock+chain for short trips.
- I'm not stuck with my bike if I use another means for the return trip
(e.g., going to a bar, then cabbing home or hitching a ride)
When I first moved here I was amazed by the number of people that use the program. I'm quite curious about the actual municipal cost, though-- especially as a before/after comparison. Also would be interested in other effects. For instance, did it decrease parking woes? Increase public transportation usage? Cause more traffic accidents?
Sign up for CaBi - if for no other reason than it helps prevent you arriving at your destination looking like a sweathog from the walk from the metro.
Essentially, I pay my membership fee so that someone else bears the risk of owning a bike in a city filled with vandals and thieves. It's a good deal.
Or do you use these bikes going between destinations which have these bike stations so you don't expose yourself to any risk of leaving unattended?
viaCycle's system allows riders to secure their bicycle between stations, so you're not forced to ride from to specific points until you're ready to check it back into the system. Enforcing a penalty for bikes that get stolen helps reinforce proper locking of the bicycle.
I'm in Montreal, and there aren't many bikes with missing parts. There are deflated tired, but that's about it.
It's not profitable domestically yet, but that seems more due to mismanagement than an underlying flaw.
I remember that just a few years ago (in 2000), Amsterdam aborted a pilot program for public bicycles, because they all got stolen or vandalised [1]. Since 2006 a new nationwide scheme is being operated by the country's largest train company and it's doing great.
I currently live in London and the Barclays Cycle Hire scheme, operated by the TFL, is pretty successful. Successful enough to recently get expanded to cover a greater area [2]. It's not just popular with tourists, but also with people who use it to commute to work. I rarely see a bicycle vandalised and you have to be an idiot to steal one.
Some differences that I think make the London bicycles successful, whereas other plans failed:
1. To hire a bike, you need to either rent one on the spot, or become a member. In both cases, you are using a credit or debit card, knowing that you will be charged if the bike gets stolen or vandalised on your watch. They are also linked to your name.
2. Hiring a bike gets progressively expensive as you keep it longer, so you are likely to return it to a docking point sooner rather than later.
3. The bikes are ugly, heavy and instantly recognisable. Not something you'd like to keep home.
4. The bikes are built like tanks. I don't think it's easy to remove things like bicycle seats etc. at all.
5. The scheme only costs slightly over £50 a year. That is how much I pay in maintenance of my own bike.
6. Even if you buy a bike in London, you cannot always park it at your home or workplace. Renting allows you to bike and just park it in a docking station in the city.
The London bike plan also has plenty of problems (no available docking points, AARGH!), but overall it seems to work pretty well. I wouldn't discount the concept altogether.
[1] http://nl.wikipedia.org/wiki/Witte_fiets
[2] http://www.tfl.gov.uk/corporate/media/newscentre/metro/18137...
It's a stretch to say "This will never work!" when something already is working, and avoiding the specific issues complained about.
http://blogs.montrealgazette.com/2012/03/16/bixi-raising-mon...
"In total, the Montreal operation will bring in $7.4 million. Bixi will spend $7.3 million on operations, marketing, administration and research and development."
That's for 2012. Projections aren't results, but things don't sound too far off. What are you basing your statement on?
I agree that there is room for creativity here. There are so many things to try. For instance, I noticed that ViaCycle seems to be piloting on college campuses. Might it be possible to put docking stations _inside_ of academic buildings, requiring a college ID swipe to get in, and possibly being within viewing distance of a building attendant?
There are quite a few cycle hire alleycats around the world. The London ones are fun.
One of my friends rode the Dunwich Dynamo on a cycle hire bike. 200km overnight on a bike that you couldn't service or fix a puncture on... pretty brave.
http://www.bromptondock.co.uk/
Then you get one of the best folding bikes, perfectly good for general use too.
They have plans for long-term hires too so you can use a bike daily and guarantee it is there for your commute. In the UK these Brompton Docks are mostly located at rail stations so that you have a bike waiting for you at the end.
By the way, stashing bikes behind locked doors is actually what the "OV-fiets" plan in The Netherlands is doing (they are more like lockers, really: http://3.bp.blogspot.com/-PeUfIZbrzY4/Ti8hHZCsLyI/AAAAAAAAAE...), and it works quite well. As a bonus, you can also rent those lockers for your own bike.
http://ruk.ca/content/how-use-copenhagen-city-bikes/
It's a free system, because the 20 kroner coin that is used to unlock the bike is released when the bike is returned. These bikes have 20-inch wheel, which are non-pneumatic. Single-gear with a coaster brake. And weigh about 50 pounds. Also built like tanks. As a tourist, it increased my enjoyment of the city by a factor of 10.
So instead of a $100 headache, you now have a $1500 headache.
You do avoid maintenance costs, of course. Which are $0/year for many bicyclists.
How does zipcar handle car theft?
Having a bike locked up at my apartment doesn't do me much good after walking downtown with friends. For $65, I can get an annual membership to the Minneapolis bike share program (Nice Ride MN, a Bixi system) and have bikes just waiting for me all over the city. It's awesome.
The end-user price points are just examples of what's feasible if you buy their products.
I hate the idea of promoting cycling (roads are for cars, not bikes), but there's nothing about what ViaCycle is doing that suggests it is doomed to failure.
I agree roads are mostly designed with only cars in mind.
That sounds like a bug, not a feature.
That's one of the reasons cyclists prefer streets over roads :)
I own several bicycles, but if I don't ride one to work, I can't ride one home. Due to my schedule, I often don't ride to work in the morning, but I would gladly ride home. A bike sharing program solves that problem. $20 a month? Well worth it.
I really like what via cycle has done with the SMS unlocking. Back when I was in Germany, almost three years ago now (!), you had to call a service line to find/unlock a bike. Late at night there were usually wait times and it was especially difficult to manage the entire process if you were a little tipsy.
There's similar systems in many other European countries. I hear great things about a system in France called velib (I think).
Edit: I forgot to mention, the German bikes also have a second seat on the back. I'm not sure from the picture if this is also true for viaCycle but it's definitely one of the best features. Here's a picture http://www.pedelecforum.de/forum/imgcache/5382.png*
In grad school I did research on a on increasing the average vehicle occupancy in cities and we took a lot of inspiration from the bike sharing programs.
Have you considered offering dynamic pricing based on the likelihood that the bike will be used in the near future? I.e. riding into the city should be cheaper than riding out of the city in most cases.
Edit: a few of us did graduate transportation research as well, your work sounds cool. Is it published anywhere?
[1] http://www.cdtm.de/events/entrepreneurship-camp/about-cdtm/b...
a) a heuristic for optimal routing of repositioning trucks based on anticipated (uncertain) future demand.
b) dynamic pricing using a model predictive control approach (receding horizon optimization on a model of customer reaction to (price) incentives).
Insanely cool stuff. And its working. A paper should come out soon..
E.g. everyone wants to ride towards downtown in the morning, so there are no bikes left elsewhere, and there isn't enough space downtown to hold all the bikes. And only 2/3 of the morning people want to ride back in the evening, because they're doing other things in the evening.
IIRC, some European cities have whole trucks that carry bikes between neighborhoods throughout the day to solve this problem. But that only works if you have big concentrated bike-parking stations. You can't do this if bikes are parked all over the place on the street.
It would be really interesting if this service would pay you to ride bikes in the opposite direction of demand. But I can't imagine that would be economical. There just aren't enough people to bike from downtown to the suburbs in the morning, plus you're going to have to pay for them all to get back downtown afterwards!
On university campuses we have seen the traffic to be much more free flowing, as students do not follow standard commute patterns. During standard maintenance bicycles can be moved around as needed.
We have discussed the possibility of incentivizing riders to help redistribute bicycles, although the effectiveness of this has yet to be proven.
This is almost certainly because no-one has the data or analytics yet. Seems like a very interesting problem algorithmically.
Even small incentives can have dramatic effects – look at the number of under-employed who recycle aluminum cans for 5-10¢/pop. It's by far the most cost-effective way to increase the rate of recycling. There are certainly quite a number of people willing to move bicycles a couple miles for $1-2. I know I'm beating the HN dead horse here, but markets do tend to be efficient at allocating resources when the basic costs are set correctly.
With your mobile app, you have the advantage that you know not only where a bike was picked up, but how far the customer had to travel to reach it. With so much data at your disposal, you should be able to get a pretty good predictive handle on the ebb and flow of demand in the system.
It'll be cool when I can subscribe to a higher tier to have my demand weighted more heavily. ;)
One major administrative cost is moving bikes around. People tend to take them downtown during the day, and out of the town at night. Even if you don't need docks, you still have to move bikes.
Bixi takes a lot of parking spots partly because finding space for large stations is difficult. By using existing bike racks, we can often put in bikes without modifying anything. Plus, although parking is lucrative, replacing room for one car with 10 bikes that 100 people can use is a good trade in our book.
The pricing incentives idea is awesome. A win for commuters, free marketing for your service, and free labor.
Someone would need an account for that, with payment info. Any plans to increase account uptake to serve that purpose?
We do take payment info on signup. Right now programs are localized so we set up different websites for each, but we hope to link everything together in the future. You can see an example at http://gt.viacycle.com
However, when you're talking about transportation systems, Bikesharing is an absolute steal. Repaving a city street costs $338,000 per mile. A city bus costs anywhere from $500-750,000. Subway cars and commuter railcars run in the range of $2 million each.
A 15-dock bikesharing station plus 8 bikes costs as much as a Lexus. http://www.capitalbikeshare.com/assets/pdf/cabi_station_spon...
Washington, DC built its entire bikesharing system for somewhere between $6 and $10 million. That's way less than the cost of a single 8-car Metro train.
If we're talking about a system for a large city, the infrastructure costs are low enough as to be irrelevant. If the system can cover its operating costs (which DC's does, even at a surprisingly-high $1,860/bike/year cost), it's basically a slam-dunk.
The bigger challenge will come from figuring out how to scale the system out into the suburbs.
The problems associated with a decentralized system such as ViaCycle (difficult to attract causal users/tourists, significantly more prone to theft, much more difficult to redistribute, similar maintenance costs, more expensive bikes) don't seem to compensate for the reduced capital costs.
UnterCab: the Uber for pedicabs and piggyback-rides
SmallBearings: the RelayRides for rollerskates & skateboards
Hoparound: that seldom-used pogostick doesn't have to be gathering dust anymore
We'd love to hear if more people think a consumer device like that would be useful.
However I think this is a textbook example of the shortcomings of capitalism: while it is great for everyone to live in a city where you can use such a bike, there is no way in hell this will pay for itself.
JCDecaux operates the Vélib' system and was estimated to get the equivalent of 2000 euros per bike per year in advertising concessions from Paris' municipality [1] and still not to make a profit.
As pointed out by others there are very high running costs and I believe the only viable way to pay for this is through taxes. I also believe taxes are the only just way to pay for it, because everyone benefits from living in a city with more bikes and less cars not only the users.
Again, I'd love to be proven wrong and see SF become a greener city through this, but I'm a bit skeptical.
[1] in French http://fr.wikipedia.org/wiki/Vélib%27#Viabilit.C3.A9
In particular, I'm curious to see how they plan to avoid the "Velib Extreme" phenomenon:
For a bike that is available 24 you would want a bicycle lamp on the front with a dynamo instead of just reflectors. This is a safety concern because reflectors have proven to be unreliable to signal other road users.
The bike doesn't have any mudguards but I suspect the weather in SF allows that :).
The carrier on the back wheel doesn't look that sturdy and there is a large gap in the middle. A front rack to place heavier cargo on could be a benefit.
What about bright colors so the bike stands out?
[1]http://www.ov-fiets.nl/binaries/content/gallery/OV-fiets/nie...
ViaCycle does not plant to operate the bikeshare, but providing the bike infrastructure for the operator. Which is a smart move - because a) being the operator is unprofitable and b) operators probably dont want to deal with the bike tech.
I would love to see a standardized, mass-produced bike intended for rent-a-bike services. It's really a different kind of bike - you need excellent protection against vandalism and theft more than sportiness or low weight. Also, each system currently has its own GPS/Phone tracking and hire system. If a company liek ViaCycle provides a cheaper, standardized system, it would probably lower the cost of runing a bike-for-hire system quite a bit.
Don't get me wrong. I love the idea in every way, shape, and form - but I have serious questions about the legal safety issues.
For health reasons, helmets are not considered as hireable with bikes in the Australian schemes. This makes it extremely difficult for either tourists or casual interests to just get up and go.
There is undoubtedly a solution out there, but it may take some time to see how users adopt helmet requirements. We're definitely excited about the Puget Sound planning that is going on. I would love to see bikeshare in my hometown!
As an aside, riding on the sidewalk in the business district of Mountain View (the video is clearly Castro @ Villa) is not actually legal (http://library.municode.com/HTML/16508/level3/PTIITHCO_CH19M...)
The only issue I see with this is that it looks particularly easy to remove their locking system. It uses a chain lock, so what is to stop me from "locking" it without putting the chain through the wheel? From there is looks easy to remove their hardware with a spanner as it seems to just be attached to the pannier rack mounting points.
I saw the headline, read the article, got excited, landed on the homepage, looked for San Francisco on the list of programs... then left the site, disappointed. You won't get a lot of opportunities to capture customers like the one you just got (and lost) with me.
Use mailchimp or something similar and you can fill this deficiency in a few minutes.
A recent article from the Economist says London's bikes cost average price is £14,460/bike each, subsidised by government and advertising. Companies like ViaCycle will hopefully drop the price of these schemes. http://www.economist.com/node/21557527
Exciting times. It looks like the next generation of bike sharing systems is arriving.
We have this type of system( Bixi) in Toronto. When I first heard of it I kind-of sneered at it. I wasn't sure who would actually use this system.
But it's pretty popular. Not sure if it makes any money though.
Regardless, glad to see some fellow Yellow Jackets doing well! Good luck guys!
There are hundred of modern programs in operations around the world, and it seems the theft issue has been overblown: http://www.startribune.com/local/minneapolis/149446485.html