There are bad tech businesses and very bad ones. And then there is Ofo.
At the height of its growth in late 2017, the bicycle-rental startup had trucks driving around cities across China, dropping off brand-new yellow bikes continuously throughout the day for customers to use. Each bike cost Ofo nearly $100. They were meant to last two years. Instead, many lasted only a month or two, either breaking or going missing. As a result, only about half of the bikes supposedly in circulation were usable, former Ofo managers estimated.
Ofo’s revenue? It charged as little as 15 cents a month for unlimited use of each bike. No wonder, then, that Ofo burned through the $1.5 billion-plus it raised between 2016 and 2017 from such high-profile investors as Yuri Milner’s DST Global, Didi Chuxing, Alibaba and Coatue Management. Ofo now owes hundreds of millions of dollars to bike manufacturers. Its workforce has been slashed from about 3,600 to a few hundred. A company once valued at $3 billion is now on its knees.