Bird Cruiser via Bird

Product innovation is not enough to beat a competitor’s network effects

Jeremy Liew
Jun 17, 2019 · 3 min read

Bird recently announced a new form factor for micromobility, the Bird Cruiser. It’s a cross between an electric scooter, a bicycle and a moped.

It looks remarkably similar to the Wheels “electric bike” cruisers. When Wheels launched their whole value proposition was based around their superior hardware, which promised better comfort, safety and durability than electric scooters.

Wheels electric bike via TechCrunch

I imagine we’ll see a similar form factor from Lime in the future; they’ve already made the transition from bikes to scooters.

If this is the start of scooter wars 2.0, it does not bode well for Wheels.

Product innovation does not beat network effects

Product innovation is particularly vulnerable in a two-sided marketplace like micromobility. Where there are network effects, the smallest players can’t win just by building better products. The bigger players can choose to fast follow the most successful innovations. They can outsource experimentation and R&D to the market and then replicate the winners.

Micromobility isn’t the only industry where this has happened. Smaller companies often pioneer innovations which become industry standards. Then the bigger players end up reaping the benefit.

The ridesharing example

But Uber and Lyft fast followed and ultimately won due to their larger base of riders and drivers. Network effects beat product innovation.

Even after Sidecar was acquired, the pattern continued. Lyft innovated ride sharing with Lyft Line by allowing two passengers with the same rout to split the cost of a ride. This was quickly followed by UberPool.

The daily deals example

The social media example

Conclusion

Lightspeed Venture Partners

Lightspeed is a multi-stage VC firm focused on accelerating…

Lightspeed Venture Partners

Lightspeed is a multi-stage VC firm focused on accelerating disruptive innovations and trends in the enterprise and consumer sectors. In the past two decades, Lightspeed has backed 400 companies and currently manages $10.5B across the global Lightspeed platform.

Jeremy Liew

Written by

overcompensating for a geeky youth

Lightspeed Venture Partners

Lightspeed is a multi-stage VC firm focused on accelerating disruptive innovations and trends in the enterprise and consumer sectors. In the past two decades, Lightspeed has backed 400 companies and currently manages $10.5B across the global Lightspeed platform.

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