Operational dis-excellence: the cost of electric scooter breakneck growth
So I just came from the ride on an electric scooter, where my fate was to hit something hard and crash.
Luckily, this didn’t happen, but the story goes like this: I’ve been driving electric scooter of one green company in Warsaw for five minutes when I went down the little hill. As the vehicle reached the speed of 28km/h it completely switched off. The brake-throttle stopped working and the screen didn’t show anything. I felt that the speed was increasing and with a high chance, I would crash into some tree unless I recalled that there is a manual brake on the back. I stopped, parked at the appropriate place and left.
That’s an absolutely normal story if you don’t take into account that the majority of users (including my smart friends) aren’t aware of the manual brake and if you don’t take into account that this malfunction happened with people in other cities at the same time.
Launching 3 cities a week
Even in autumn, scooter sharing companies are trying to fuel the growth through expansion in the new cities. Managers are setting growth KPIs, enthusiastic employees are suggesting even higher goals, Ninebot is running out of scooters in its Chinese warehouses and the whole movement of innovation in urban transportation is developing at an unprecedented speed.
For classic businesses, being present in one city, and then being present in seven cities the next month sounds like a dream. Because classic businesses know that firstly you have to analyze the market, then find people, open an office in the country, launch the service and offer customer support. All this in order to provide 100% of value to the customers. However, it’s not always the case for electric scooter companies, where 30% of management is ex-Uber and 20% is from food-delivery startups.
Some of these people are used to approach, when they come to the city, send press releases to the local media, drop 200 vehicles and forget about the service until it gets banned by officials. It allows to launch more cities in a shorter period of time, but this is a fragile operations system doomed for underdelivering in the long term.
I mean, look at Vienna (200 vehicles by Lime), Brussels (100 by Bird) or Lisbon (300 by Lime). Are they kind of forgotten children?
Discount the scooter number by vehicles that physically aren’t in the place indicated on the map and by vehicles with 10% of the battery, that claim they have 2/3 sections of charge. You will end up with only half of the fleet being usable.
The next time a friend of yours will be bragging about the number of cities where he/she launched the scooter operations, ask this person: are these real operations? Or this is one and a half scooter charged by non-juicer contractors?
Condemned to repeat the history?
These problems with expansion remind me of how Google Cardboard changed social opinion about VR. Because it was cheap and easily accessible, a lot of newcomers had Google Cardboard as the first encounter of this “revolutionizing technology”, as marketers put it. Very often, instead of promised breathtaking experience, users were watching some boring 360° video. The disappointing performance made Google Cardboard a gatekeeper, letting only hardcore enthusiasts in the VR world and discouraging millions of ordinary people from trying better options.
The same thing I can see in Warsaw: 200 scooters, previously used in another European city, with a big text “$1/1CHF to start”. It’s not even the local price, which is twice lower. Juicers, that are referred to as a core of the company business, are sitting without the work because of central management decision. Scooters don’t get appropriate maintenance and rebalancing. Digital expansion often fails too: while Polish currency should be displayed as PLN, on practice polish values are displayed with symbol “$” without any conversion.
Retention rate — the best-kept secret of scooter sharing industry is getting lower and lower. And the reason for this are repeatedly failed customer expectations.
Social capital is not the only thing getting lost due to poor expansion practices. Media potential is lost too. Normally, at least 10 serious outlets/portals will write about service expansion to a new city. Plenty of bloggers will share the info and the wave of user-made photos will move through FB and Instagram… only to introduce 100 scooters? And when there is a real need, when the fleet gets expanded with 1000 vehicles, only 2 niche blogs will write about it. Because every inch of the local operations was already discussed.
The better way
Tech experts and futurists all predict that the era of startups that truly deliver value is going to start tomorrow. Or the day after tomorrow. Or later. But CEOs and VCs, sponsoring their endeavors, have to make changes in their approach to building tech business today. Instead of decreasing the cost of the scooter to improve unit economics, they should invest in R&D to make truly long-lasting vehicles. Bike-share models have expected lifecycle of 4 years. How does it compare to your 2 months?
The case of Ofo, the case of scooters in San Francisco and many others prove that we are not in some 2014. It’s almost 2019 and in order to build a real value, solve the real problems and consistently make a ton of cash we have to put quality overgrowth.
“We just launched electric scooter sharing service in City_Name” should mean there are hundreds of scooters, established contact with city administration, clear UI in a local language, customer support and all required safety features. The same rule should be applicable both to $100M and $1Bn companies.
Among European cities, Paris operations offer the best experience so far: Thousands of electric scooters from two companies ride the streets of the city. Vehicles are new, there are customer support and plenty of free helmets. This is the product I may want to share with my friend. This is the product another city administration may consider importing for own citizens.
I am an avid supporter of the micro mobility revolution that is going on, and I want existing companies to succeed — there is plenty of space for growth for all of them. But the expansion of the operations should be deeply redesigned. We are at the beginning of the long route to seamless urban transportation, and this is just one of the many challenges we have to overcome.
Note: estimation of employees from Uber and food startups is not backed by any data apart from brief LinkedIn analysis.
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