Bird Will Try Anything to Turn a Profit

It’s renting scooters, selling them, and creating its own platform

Paris Marx
Source: Bird

It’s no secret that the scooter companies are losing a ton of money as they flood the streets of more and more cities across the world with scooters that last, according to some estimates, mere weeks before ending up getting recycled (I hope!) or, more likely, junked.

At the end of the last year, Lime was getting a lot of attention as it continued to expand internationally and launched its Lime-S Gen 3 scooter, which promised to last longer and be safer. But it’s hard to deny that in the first half of 2019, Bird has been proven to be much more interesting.

“2018 was about scaling. 2019 is about really focusing on the unit economics of the business.” These words were spoken by Bird CEO Travis VanderZanden in a “fireside chat” at the Upfront Summit in Malibu a few months ago, and the company has surely been trying all it can to improve its financial situation — but it’s still planning to expand across Europe this summer.

The Bird Platform

In March, Bird announced a new initiative: the Bird Platform. Instead of rolling out to new cities itself, it would make its software available and sell its scooters at cost to local “entrepreneurs” who want to start their own scooter-sharing service in New Zealand, Canada, and Latin America. In exchange, Bird would take a 20 percent cut off the top.

For Bird, this is a fantastic deal. The unprofitable part of the business — scooters and their management — is outsourced to the operator, but Bird still takes a cut of every ride, likely making the economics worse for the local company. In the short term, this will allow Bird to take a cut of operations in new markets without having to make the capital investment in a rollout, but it will likely fail in the long term without some change to the model or being able to sort out how the current pricing structure and short scooter lifespans make the services unprofitable.

Under the current model, the local operators will fail after some time. It’s inevitable. All that remains is to see how long it takes them to figure out how Bird is using them for short-term gain. But that’s not all the company’s been up to.

New scooter models and business models

Lime wasn’t the only scooter company to start rolling out new models. Bird announced the Bird Zero back in October, designed to be safer and more durable, and its latest hardware update, Bird One, in the past few days. The benefit of these new models, the company claimed, was that they would allow the scooters to last longer in a fleet, as the original scooters were designed for consumer use, but the verdict on whether that’s occurred is mixed.

VanderZanden claims Bird One models last on average 10 months in the fleet even though they came out less than seven months ago, and projects the Bird Zero will last for at least 12 months. However, data collected in Louisville, Kentucky between August and December 2018 suggested that Bird scooters lasted an average of only 28.8 days across all the models. A more recent assessment conducted by the LA Times in Los Angeles between January and April 2019 found that Bird’s scooters had an average lifespan of 126 days, and that the Bird Zero’s lifespan was less than average: only 116 days.

Given that VanderZanden previously said the scooters needed to be active for about six months to break even, the independent assessments suggest that even the new ones are falling short. That may be why the company recently raised prices in a bunch of cities around the United States.

And in the spirit of trying new things to make some more money, the Bird One will also be available for purchase, not just for a quick trip through the Bird app. It comes in three colors and is now available for preorder, but at a price of $1,299, it’s price far higher than most other e-scooters on the market, which means Bird is likely making a sizeable profit on each one sold. The company is clearly trying to position its scooter as a premium product with a premium price — the Apple of scooters — but whether customers will see the value remains to be seen.

The Bird One. Source: Bird

Bird will also be offering scooters for rent at just $25 per month in San Francisco and Barcelona, an initiative specifically designed to get around the company’s lack of an operating permit in the Bay Area. Between sharing, renting, and selling, Bird is trying everything to turn a profit, but the big question is: will it work?

What future for Bird?

Bird is losing money; that much should be obvious. And it’s throwing everything at the wall to see what sticks; I don’t think there’s anything wrong with that. But will these initiatives help it survive? I’m skeptical.

The Bird Platform will clearly bring in revenue as long as the company can find people to use it — I’m not sure how well that’s going so far — but how long it will take local operators to realize they’re being screwed remains to be seen. Monthly rentals and overpriced sales seem like a perfectly fine business, but I don’t see them scaling to the point where they’re bringing in enough to cover the massive loses of scooter sharing when people can buy other perfectly good scooters for half the price.

Finally, VanderZanden is claiming these new scooters have incredibly long lifespans that will allow them to turn a profit, but there’s no evidence to back those claims. On the contrary, all the data we have suggests the new models are having little effect on increasing scooter lifespans, and if they were, why did the company have to increase prices in April? It doesn’t add up.

All the data we have suggests the new models are having little effect on increasing scooter lifespans, and if they were, why did the company have to increase prices in April?

Scooter sharing looks headed down the same road as ride hailing: the companies will lose a ton of money until they’re forced to reckon with their loses, and then they’ll either have to significantly raise prices and/or scale back operations. That’s exactly what the Chinese dockless bikeshare companies had to do when they retreated from international markets; now they’re practically bankrupt. And while Uber’s been allowed to lose money for a decade, Bird, Lime, and the others won’t get nearly as long. That’s exactly why Bird’s already trying to sort out its business model.

In the end, I’m skeptical the private “sharing” model will ever truly work. VanderZanden claims 80 percent of the scooter market will be sharing and 20 percent will be ownership, but that seems like an Elon Musk-level bullshit claim with nothing to back it. Rather, a lot of commuting on scooters will likely involve personal ownership because only ownership provides the dependability that a scooter will be available when you need it. They’ll also last a lot longer than in a fleet.

And if the sharing model does continue in the future, at some point — likely when the companies start going bankrupt — they’ll have to be added to new or existing public bikeshare systems which adopt a hybrid model with docked and dockless options with some incentive for the former.

What Bird is trying is laudable. In the future, public bike- and scooter-sharing systems will see the benefits of what they’re trying today, but even with new scooters and an attempt to branch out into a platform model, it just doesn’t seem that profitability will be easy to achieve for these private services.

Radical Urbanist

Cities have more power than ever to shape the future. In Radical Urbanist, @parismarx explores their approaches to transportation, climate change, and monopolistic tech companies to see if they’re doing enough.

Paris Marx

Written by

Socialist, traveller, urbanist. MA Geog, McGill. I write critically about tech and cities, and curate the Radical Urbanist newsletter: http://bit.ly/radurb

Radical Urbanist

Cities have more power than ever to shape the future. In Radical Urbanist, @parismarx explores their approaches to transportation, climate change, and monopolistic tech companies to see if they’re doing enough.