13 Jun 2018, California – Bird is reportedly raising another US$200 million in its Series C funding frenzy which took in US$150 million just a few weeks ago (see FT article). All this following a US$100 million Series B funding in March this year. So US$450 million raised in 4 months plus a US$1.5-2 Billion valuation for a 1 year old startup which operates electric scooter sharing in only 11 US cities. Are these investors bird-brained or could this be the start of a truly disruptive force in Transport?
What is this amazing electric scooter?
Bird is different from the bike-sharing competitors in that it only operates dockless electric scooters (which they also call birds). Based on ‘bird’ sightings in the wild, Bird’s fleet appears to be a mix of Xiaomi M365 electric scooter and Ninebot ES series kickscooter models that retail for around US$500. Seeing as Ninebot is backed by Xiaomi, these electric scooter models are highly similar with a top speed of 15 miles/hour and an estimated range of 15.5 miles.
Potential obstacles awaiting Bird investors
- Hostile cities – After witnessing the carnage that is China’s bike-sharing wars with city sidewalks literally flooded with rental bikes, many US city authorities have taken a hard line against electric scooter sharing companies, seeking to limit their numbers or even outright ban them. San Francisco has passed a law that limits permits to 5 companies and the entire rental electric scooters population to 1250 for a trial period of six months. In the meanwhile, relations with electric scooter sharing companies have gone downhill in cities like Austin, Charlotte, Denver, Miami, Nashville, Oahu, Santa Monica, San Diego. Actually, it might be difficult to find any major city that has truly welcomed electric scooter sharing.
- Safety – Their immense popularity have been accompanied by numerous accidents, some even fatal. Electric scooters may be as safe as bikes but unlike bikes, the case for their safety has to yet to be proven.
- Lessons from Singapore - Arguably the world’s best planned city, Singapore has been cracking down hard on errant electric scooter riders after a string of tragic accidents. While electric scooter sharing did not take off in Singapore, brisk retail sales brought along its own set of problems; electric scooters bursting into flames while being charged, modified scooters speeding at 60+ miles/hour and the heaviest electric scooter ever impounded came in at a whopping 92kg, more than 8 times the weight of Bird’s electric scooter. From a public perception angle, reports like these might doom continued interest in electric scooter sharing.
- Sidewalk or Road - Electric scooters must use sidewalks in Singapore while US cities ban them from sidewalks. Such is the confusion regarding electric scooters that even a basic safety standard can differ so much.
- Bird is a walking lawsuit – Personal injury lawsuits from accidents are only a matter of time. One major potential liability issue is that the electric scooters used are sold only as consumer products. There may not have been any extensive testing on them being used so frequently and intensively like commercial products. Indeed, a common complaint about the birds is that their braking can be inconsistent and even slippery. A 75kg person on a 11.3kg bird scooter crashing into someone else at 15 miles/hour because of poor braking will not end well for Bird.
- Competitors – The electric scooter sharing hype has not gone unnoticed. Apart from Spin and another well-funded startup, Limebike (reportedly pushing for US$250 million Series C funding led by Google Ventures); there are the ride-hailing giants Uber and Lyft looking to rapidly expand onto Bird’s turf. All have also applied for San Francisco’s 5 coveted electric scooter sharing permits.
- Labor intensive charging support team – Birds have an estimated 15.5 miles range but that can drop considerably depending on the terrain, e.g. uphill, bumpy or the user weight. Basically birds have to be charged every night, a process that takes about 3+ hours. Chargers are paid US$5-20 per bird for collection, charging and relocation. This is a significant expense with each bird rental at only a US$1 initial cost and US$0.15 per subsequent minute.
Wow, these are serious obstacles so how did Bird manage to rip off ….. errr, win over so many seasoned investors?
Most convenient answer - It feels like Uber in the early years. The recent popularity of electric scooters sharing has been phenomenal. Compared to bikes, electric scooters are much easier to use, require minimal effort and users’ dressing or body shape have far less impact on usability and performance. However, it does raise the question of why now? Electric scooters have been available for years and the technology has not evolved significantly so this could very well be a passing fad.
Most cynical answer – There is an insurance policy in the form of a buyout by Uber, Lyft, maybe even DiDi Chuxing or Meituan Dianping. Essentially, tap into the current buzz, raise a ridiculous amount of money, expand like crazy and get as many users as possible. Even if the business does not generate a profit or has no long term viability, there will always be a bigger company out there willing to pay to rapidly expand.
Most creative answer – Bird has a secret brilliant plan to corner the US Ninebot electric scooter supply hence depriving its competitors of an essential resource. Competitors Limebike and Spin are also using Ninebot electric scooters so it seems Ninebot may have the most cost effective and reliable electric scooter in the market. Sequoia Capital is a major backer of both Bird and Ninebot so that could pave the way for an exclusive arrangement in the US (see Bloomberg article).
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