Hipster Data

Turning an unprofitable business into something great

Raphaël Hassid
Nov 4 · 5 min read

If you live in a big city, you might have noticed the arrival of weird new vehicles: electric scooters.

If you’re over 40, you might have been annoyed by all these 20-something, wearing hemmed jeans, with wireless Airpods and an helmet carelessly cruising the streets on their rented scooters: it’s called millennials.

You also might have wondered if they are going to disappear at some point…

Guess what: it won’t happen.

Ever been annoyed by these?

With over 37,000 of them in Los Angeles, 15,000 in Paris and a lot more in 120 cities, Bird and Lime dominate the market. 10 other companies compete, including Uber’s JUMP or Wind.

The new era of micro-mobility.

In Paris for instance, the major launched a few years a “go-green” policy: heavy road-works started to build bike-lanes, easy access to buses, etc. One Sunday in a month, cars are not even allowed to drive in some parts of the city, letting pedestrians enjoy large spaces to walk. In this context, some new players developped and changed the urban landscapes: free-floating vehicles.

It all started with dockless bikes such MoBike, the trendy grey bicycle with orange wheels, and then arrived the electric scooters in 2017: Lime, Bird, Circ, Wind, Hive, and a few more invaded the streets, without any authorization from cities. Most of them come from hipster Silicon Valley and San Francisco companies.

They define a very new wave of mobility, especially in towns with heavy traffic.

In Tel Aviv for instance, traffic is everywhere. People get up at 6:30 in the morning just not to get stuck in the traffic when they go to work. Also, public transportation is terrible. I mean TERRIBLE. It makes sense to search for something else to ride around the city.

1 out of 20 Tel Avivi knows the Bird

According to TheMarker, an Israeli daily newspaper, Bird recorded around 25,000 unique users in October 2018 in Tel Aviv.

That means 1 out of every 20 people residents had already tried it.

Beyond the hype: the metrics

Lime last recorded +100 rides

In early 2019, Bird raised $275 million from rock-star investor Sequoia Ventures and asset-manager CDPQ, bringing its valuation to $2,5 billion.

However, the e-scooter companies — as many fancy start-ups nowadays — seems not to have found the secret profitability sauce, mainly because of their high fixed costs: scooters companies get their vehicles between $400 and $600 each, and the average scooter’s lifespan in about 28 days, making their turnover very high.

According to Crunchbase, repair, charging and regulatory fees added to fixed costs put Bird’s gross margin at 19% only. The same source reported Bird burned $100 million on Q1 2019, while its revenue shrank by $15 million. Even with its new rental programs (rent a Bird for one month) in San Fransisco, the company makes little revenue.

But for now, it doesn’t matter, according to Travis VanderZanden. As any self-respecting Silicon Valley’s CEO, even though his company is not profitable, he claims that he and his team ‘are not going to be happy till there are more Birds than cars’.

Public transportation is Mr. VanderZanden’s trip: started as a Product Manager at Qualcomm, the 39-entrepreneur also worked as COO at Lyft and Uber.

This case may remind you of WeWork, the giant co-working company, sinking from the most-valuable tech company in the US to nearly bankruptcy in only 6 weeks, or even Tesla.

However, it seems like former Lyft COO planned it all…

Collecting Data

Tracking your location trying to avoid THIS situation…

If you think you are making these companies a favour riding a scooter for a few dimes, you are probably wrong. YOU are part of their business-model.

Whenever you take a scooter to come back home, it tracks your movement.

Interesting, no?

According to Lime’s privacy policy /privacy) — yes, the ‘I Agree’ blank you checked without reading — the company requires your location to provide the service. It makes sense, since locating scooters is paramount to the operating cycle of the companies.

Even more interesting– Lime can share this information with third parties, such as universities or local government authorities. At this point, one cannot value the data these companies store, but it makes sense to assume they will find a way to sell it, especially since their business model is not profitable. For instance, South Bend, Indiana, started to analyze this data.

Yes, you agreed to that condition!

In early 2018, governing authorities asked Lime to share data, which first provided them with spreadsheets. The startup then launched a browser-based dashboard providing statistics (according to the MIT Tech Review).

South Bend county then used this data as a decision tool, to place new bike-lanes and to determine most popular bike drop-off areas.

Same in Seattle, where Joel Miller, head of the city’s bike-share program:‘It will help us designate [bike] parking and where it might make sense for the city to invest in more general [bike] infrastructure.’

On its side, Lime claims it’s only trying to be a ‘good partner’to cities. However, some may raise concerns about data collection: Lime is reliant on Snowflake, a company running its cloud data warehouse for data storage. If some hackers could breach into their systems, they may access tens of millions of data points a day…

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