The electric scooter market has expanded rapidly, yet some scooter executives think the fast growth has obscured real challenges with issues such as hardware, battery charging and road space.
On Thursday, executives at three scooter and bike companies, Ryan Rzepecki, CEO of Uber-owned Jump, Michael Keating, CEO of Scoot, and Darren Weingard, chief legal officer of Skip, explained on a conference call with subscribers of The Information why they think the real battles in the so-called “scooter wars” will be fought over years and decades, not months. In a wide-ranging conversation, they also discussed how some firms are exploring alternative business models and vehicle types, and talked about why the toughest problem in the industry was figuring out low-cost ways to charge scooters and bikes.
• Scooter executives say fast growth obscures problems
• Batteries, hardware remain challenges
• Some operators exploring daily rentals
The conversation has been edited for length and clarity.
Cory Weinberg, The Information: What is the most misunderstood thing about scooters and bikes?
Ryan Rzepecki, Jump: Hardware. [You can’t] buy something off the shelf, put it out in the field and have it last in a fleet context without it falling apart. We’ve learned a lot in the last year about what it takes to deploy these vehicles and maintain them. People are seeing the consumer-grade equipment is falling apart after one, two, three months in the field.
Darren Weingard, Skip: These are not toys, and they have a vital role to play in the redesigning of city infrastructure and in the way cities are organized. [This isn’t] an industry by tech bros for tech bros.
Michael Keating, Scoot: There is a misconception that this is a land grab. In the past year there have been four trillion trips in cities around the world, such as people going to work, to school and going home again. We estimate that about a trillion of those trips could be addressed by a small electric vehicles, including autonomous small vehicle trips. When you think about the scale of demand and opportunity, the idea that over a couple of years a couple fast-moving startups could lock that down just doesn’t hold. It’s important when thinking about this market to think really big and to think long-term.
Cory: But companies like yours have shown lots of urgency around launching. Firms are pitching themselves for permits, flying jets to other continents to get scooters in time, and lots of is capital being raised. How you would characterize the urgency around launching services in different cities, and how do you draw that line between a land grab and long-term play?
Michael (Scoot): It is really early days, and these markets are really, really big. Even Barcelona does about five million trips a day [of all types]. To serve that with any number of electric stand-up scooters, motorbikes, electric cars requires tens of thousands of vehicles at least to make a dent. Where the urgency comes from, from us, is we want to participate in these cities, and get a team on the ground in San Francisco and Barcelona and some other cities launching soon.
Darren (Skip): We have found being welcome in a city is more important than being first in a city. We’ve seen it in Portland and some other cities like Washington, D.C. There is obviously pressures to launch in these cities, but regulators I’ve talked to these days are less interested in playing kingmaker and more interested in seeing in the pilot phases vigorous competition to produce different data sets, experiences and innovative solutions to various problems plaguing solutions so far.
Amir Efrati, The Information: What happens in bad weather? A lot of places get cold for half the year, so what happens in the next six months?
Ryan (Jump): You can model in seasonality and still make it work. And through vehicle design and fleet mix, we might be able to mitigate the problem. You might imagine a covered vehicle—three- or four-wheeled vehicle protecting you from elements and that getting traction as part of the fleet in colder climates. But just because you have a winter doesn’t mean the solutions aren’t going to work. If you look at first-generation bike-share systems like New York, they have a decline in ridership in the winter, but they’re still doing a lot of trips.
Darren (Skip): I think the industry will be moving toward more of a commercial fleet design and independent scooter design that will be designed to ameliorate weather or geographic effects.
Subscriber #1: What’s your take on how these companies are valued right now?
Ryan (Jump): It’s the massive size of the overall market. Consumer adoption has been very, very strong. When you put light electric vehicles onto the streets, people use them at very high rates. There are some things that need to be tuned in, like unit economics—the lifespan of vehicles, methods of recharging. Those are the things that need to be fixed to make it a strong business and get a debt source of financing. But growth has been really fast, and that’s driving valuations.
Michael (Scoot): My take is unusual for a tech call. We see ourselves evolving from being funded like a tech company in San Francisco to a company that will be deploying more something like infrastructure finance or project finance. We look at each city as a standalone asset with a certain number of vehicles deployed. We look at those as long-term, valuable, cash-flow-generating productive pieces of transportation infrastructure, like toll roads.
Subscriber #2: Have we thought about how these models can work in the suburbs?
Ryan (Jump): The business models we’re talking right now in cities about are utilization-based business models. You need a certain number of trips per vehicle per day to make it work. To explore the suburbs, you need to explore a different business models. There are a few ideas we’re thinking about; I’m sure others will emerge.
The cost of charging a vehicle is a significant one, equivalent to the cost of a ride.
Cory: On Thursday, Bird announced that it will offer full-day rentals, with scooters delivered to the user. Jump has explored subscription service in San Francisco. Are those the kind of business models you are alluding to?
Ryan (Jump): That’s what I was kind of hinting at. If there is something that’s more like ownership of vehicles as subscription, you can start exploring different markets a bit. We put out some feelers on that a few months ago (called Jump+). I can’t announce a timeline just yet, but I will say it’s top of mind. While we’re ramping up supply, we’ve needed all new vehicles to launch new markets.
Michael (Scoot): We had a service like that at Scoot a few years ago. It was pretty popular, but not as productive a use of the scooter. We ended up shutting it down. We see in cities that when there’s a cap on number of vehicles you can deploy, if you want to have more people using services, you can explore a non-free-floating business model.
Subscriber #3: How do you build trust with local officials in markets where you launch?
Darren (Skip): We developed a community advisory board, which we’re in the process of rolling out in San Francisco. It will involve individuals at all levels of the city—policy makers, community groups, companies—to make sure we’re plugged in with issues people are concerned about. It’s really important when you acknowledge something we don’t have all figured out and we don’t have one system to offer to cities.
Michael (Scoot): We think the gig economy way of running the business is somewhere between gimmick and mistake. We hire people full time, give benefits and stock options and everything. That goes a long way to building trust with a city.
Subscriber #4: What gives you global advantages and not just local advantage?
Ryan (Jump): One is hardware. It’s early days. There may be long-term commoditization, but for the next year to two years, maybe longer, there are ways to differentiate on hardware that consumers love and lowers operating costs. Second is value of having a big network and being part of a big network, having the ability to offer rides across services. We were acquired by Uber in May, and a big part of that was tapping into a global network.
Subscriber #5: How do you plan charging infrastructure that will allow huge fleets of vehicles to be charged and deployed?
Michael (Scoot): Our San Francisco business is a mix of charging of swapping batteries [replacing depleted batteries with freshly charged ones] and plugging them in. The cost of charging a vehicle is a significant one, equivalent to the cost of a ride. The charging infrastructure is still dynamic enough that there isn’t really a race to deploy any particular kind of charging infrastructure at the moment because the technology is still evolving.
Ryan (Jump): It’s the No. 1 problem that has to be solved in order for the industry to really scale. We’ve tried a few different things. We deployed a charging station near the Caltrain station in San Francisco and incentivized users to bring it back to that charge point. We just announced that we rolled out several charging stations near light-rail stations in Sacramento, so really seeing if you put charging locations in high turnover locations you can serve a lot of riders and trips. Secondly, there is a place for battery swapping. We’ve been trying to develop that as well. Either approach is valid. There likely will be companies that emerge that try to do this as a service. It’s the No. 1 pain point. Clearly, the things scooter companies are doing aren’t scalable in the long term.
Cory: You don’t think the model of having independent contractors picking up scooters and charging them at home—how Bird, Lime and others are doing it—can scale?
Ryan (Jump): I think there are problems with it. I don’t want to go too deeply into them. I think there are ways to use your user network—ways to use these casual workers—but the way it’s being done right now—where people are taking the vehicles, and bringing them into their own home and plugging them in—doesn’t seem like the right solution. There should be some charging infrastructure or battery stations in the world rather than people bringing them into their homes.
Subscriber #6: How do you convince people who aren’t early adopters to jump onto e-bikes and scooters?
Ryan (Jump): To get this to mass scale, we’ll see a transformation of our cities. The public sector will have to take space from cars and bring it to pedestrians, bikes and scooters. Government doesn’t move at the speed of technology. Cities don’t change at the speed of an app. You won’t see that happen in a year or two. In next 10 years, you will see a shift in how cities are built.