Dockless Bike Companies: The Next Uber Might be on Two Wheels

Bike and Scooter ride-share apps are starting a battle in America. Older Americans view them as a “hip” trend that won’t last, while young people see them as a necessity to get around. City officials impound unwanted bikes and scooters, while Uber is investing hundreds of millions of dollars into startups like LimeBike.

Companies like LimeBike, Bird and Spin run through smartphone apps and give riders a cheap and easy way to get around. The bikes and scooters are “dockless,” meaning they can be left anywhere and can be found using a map on the app. These transportation services are largely used to cover the “last mile,” or the distance between public transportation stations and the rider’s final destination. LimeBike reported that 40 percent of their rides start and end at public transportation stations. They also stated that the average ride is seven minutes and only .99 miles. Rides are cheap and accessible, with thousands of bikes in many cities around the country and in Europe.

Many city officials think the bikes and scooters cause clutter around cities. The Wall Street Journal reported that city officials enacting “regulations that limit the companies’ rapid growth,” could “prove a big challenge for Bird and Lime.” However, the rapid growth of these companies is a clear indicator that they are a worthwhile investment. They could even be the future of urban transportation, as long as they work with the government to ensure public safety and further invest in themselves. Due to these private companies’ youth, there is not a lot of data about growth or projections for the future. However, their incredibly fast growth thus far and their potential in easing travel in cities is reason enough to invest.

First, investors need to recognize how fast these companies have been attracting large investments. Bird and Lime were both under two years old when they had already received two billion and 1.1-billion-dollar valuation respectively. According to PitchBook, they are the two fastest American startups to reach a one-billion-dollar valuation. These dockless services are receiving fast investments because, like Uber, they have created a new business model that connects our livelihood with technology. They have found a cheaper and more efficient way to travel short distances in an increasingly urban and crowded world. These companies have also single handedly invented “last mile” transportation and filled a void for commuters.

As investors flock, these companies have to be able to prove that they are not just a trend and can hold market share for years to come. Although the exact numbers were not released, the New York Times reported that Uber invested a “sizable” amount into Lime as part of a 400-million-dollar advancement campaign. According to the same source, Uber has said they will include Lime’s bikes and scooters on its app in the future. Lime has also received investment from Google’s parent company, Alphabet, according to The New York Times. Partnering with established companies with capital could push Lime and Bird towards more success. These big companies already have millions of users with registered credit cards, so attracting customers to their “last mile” services wouldn’t be difficult.

While partnering up with an already established e-travel company was a good move for Lime, these companies need to and will invest in substantial amounts of research and development in order to maintain their spot-on top of their market. Lime and Bird offer the exact same service: cheap, “dockless” last-mile transportation. Finding specific urban areas with an untapped need for transportation would allow for differentiation through strategic placement of bikes and scooters. Also, careful global expansion could lead to large gains. Lime stated in their year-end report that they have already expanded operations to Zurich and Frankfurt.

With such high valuations, investors hope that Lime and Bird can invest in R&D and continue to grow the number of scooters and bikes in cities. However, the companies are running into issues with cities who feel that the bikes and scooters clutter sidewalks and streets. The Wall Street Journal reported that thousands of scooters were impounded in Denver after the bikes were dropped into the streets “without permission or a permit to operate” and were banned altogether in Nashville. Travis VanderZanden, the CEO of Bird, responded by saying, “Go back to the early 1900s, and people would have a similar reaction to cars because they were used to horses. They had to figure out where to park all the dockless cars.” His quote carries real merit. By working together with cities, specific regulations can be made to accommodate the bikes and scooters.

Quartz reported that each Bird scooter makes about $11 a day. With thousands of scooters already in cities and more to come, there is a lot of profit to be made. Bird, Lime, and Spin’s models fit the millennial need for fast, green transportation and will be welcomed by cities for their cleanliness and efficiency as further agreements are made. These dockless vehicles can allow for easier transportation to local businesses, a decreased carbon footprint, and less traffic in urban areas. For those with the opportunity, investing now while skeptics complain is a very good idea.