Moving Along — Micromobility and the future of urban transportation
Under Kenneth Schlenker’s guidance, Bird France has grown to become the company’s largest international subsidiary, while Paris has become a worldwide benchmark for micromobility solutions. As he steps down this week from his role as General Manager to pursue other career interests, I finally have been been able to catch up my son long enough to explore what he has learned about the market and its opportunities.
What exactly is the Micromobility?
“Micromobility is a term coined by my colleague Horace Dediu that refers to the use of light vehicles under 500kg , including shared electric scooters, bicycles, mopeds and potentially many more types of vehicles coming down the line. Micromobility provides substantive value in solving the ‘last mile’ challenge of personal transportation in urban areas. It has been a major subject of both conversation and investment capital over the last two years because local authorities all around the world have been looking for solutions to improve the quality of life in our cities, in particular by reducing car use.
Keep in mind that roughly 60% of car trips are less than six miles, yet cars are increasingly ill-adapted to urban travel because of the pollution they produce and the congestion they create, not to mention the costs of ownership and infrastructure. Micromobility is cheaper, takes less space and is more environmentally friendly for urban travel. Several micromobility startups, including Bird, Lime, Ofo, and Uber, have collectively raised hundreds of millions of dollars of venture capital in the last two years.”
What are the business opportunities here?
“Business opportunities arise when you find solutions to either consumer or organizational problems. In the case of urban transportation, there are a multitude of both. It has become a critical and costly challenge for cities and local governments around the world who are looking to cut pollution and traffic. On the other hand, consumers face inefficient transportation networks and are increasingly willing to adopt alternative forms of transportation to get from point A to B.
Bird, among others, has provided an innovative solution to this challenge both for consumers and for cities. In a way Bird illustrates the opportunities of the micromobility industry: two years after its inception the company generates well over $100m in annual turnover. Bird France alone ihas grown this year into a $35m+ business.
This movement has been accelerated by the evolution of digital technologies. Today most people use a smartphone and are have come to rely on location-based services like Google Maps or Deliveroo, so the learning curve is short if you have a viable solution. Contrary to marketplaces like Airbnb or Uber, micromobility requires the ownership of assets (bikes, scooters, or mopeds) which represent a considerable investment that needs to be offset. Micromobility is an asset-heavy business with very low margins in a rapidly evolving industry, making money requires rapid product and service innovation and a willingness to test and iterate on new buisness models. ”
Which challenges still need to be addressed?
“The biggest challenge today is infrastructure. Urban transportation networks around the world have been designed for personal cars and transit, not for micromobility. For example, in Paris, 50% of all public space is dedicated to automobiles (including roads and parking lots) yet they only provide 10% of the trips in Paris. Consider that there are 140,000 car parking spaces on the public roadways in the French capital and next-to-none for shared micromobility. In most cities, gas stations are never further than a few minutes drive away but charging stations for electric vehicles are few and far between. In sum, our cities have been built with a car-centric approach that is outdated, the future will belong to intermodal systems redesigned for shared mobility.
Public authorities have a major role to play here in focusing on the primacy of collective well-being, including the air we breathe, the water we drink, the safety of the transportation network, and the pleasure of living in a city. The micromobility industry will need to continue to innovate and build vehicles with more resilient materials, extended battery life and better location tracking. Rather than marketing cars designed for obsolescence, manufacturers need to design clean vehicles built for sharing that can withhold multiple trips a day and can contribute to, rather than damage, the urban landscape. Like any example of product or service innovation, the industry has to work closely with national and local governments to develop sensible regulations.”
Where are the future opportunities for growth?
“We are going through a major shift in how people get around in urban settings. One research we commissioned recently projected 20% of all trips in Paris will be micromobility trips by 2030, up from 2% today. London, New York City and others will follow similar trends. This mindset itself offers multiple opportunities for innovation.
A good example of need for innovation in the near future is solving the charging challenge: In the same way that there are fuel pumps everywhere, there will need to be charging stations adapted to the needs of micromobility and positioned where they are needed. A second example, is the issue of parking and storage: Cities need to develop dedicated shared space for micromobility, ideally on every street corner, while integrating them successfully into the urban landscape. This shouldn’t be that difficult if you consider that you can fit up to 12 electric scooters in one car spot.
A third area addresses the need for more effectively designed vehicles: Future vehicles need to be designed and built for sharing with more resilient hardware, better location tracking, and need to be more convenient to ride.
Finally, there is a huge challenge around the management of open data: Micromobility produces tremendous amounts of information on consumer’s objectives, actions and choices. This aggregate data can be of tremendous value to public officials trying to understand citizen needs and consumption patterns when designing multimodal transportation options. Not only can public authorities use this data to design a more coherent network, they can build upon this data to encourage transportation practices that benefit the public as a whole. “
What advice can you give companies wishing to enter or to develop this market?
“Most importantly, both public and private investors need to elaborate strategies that address the future needs of the market. It is easy to remember that two years ago there were no electric scooters anywhere in the world. Today it is quite difficult to predict what urban street traffic will look like in 2020. Because of this need for agility, investors will benefit to work with partners and suppliers that have both demonstrable experience working in transportation and a strategic vision for this fast evolving environment.
On one hand, BMW and Daimer AG’s project to invest $1 billion to bring ReachNow, car2go, moovel and mytaxi together under one roof- this is a telling example of getting things right- offering their customers multiple urban transportation options of driving, riding or being taxied provides a future vision of global urban mobility. On the other hand, the logical challenges tied to the City of Paris’ choice of Smovengo provides a counterexample of this vision- the quantity and quality of the subcontractor’s offer this past year has demonstrated a genuine lack of understanding of both the industry and the evolution of consumer demand- Confiding the future to historic transportation operators may well prove to be a losing proposition unless they partner with the innovators and movers in the market.“
Ken suggested that he would be happy to develop these insights and propositions offline. Give him a shout on Twitter at @KSchlenker or by mail at kenneth (at) stellarbase.com