by Joseph Brennan, cofounder of Zoba. Originally from a small town, Joseph has fallen in love with more than a few cities on two wheels — Bangkok on a motorbike, Beijing on an electric moped, and Boston on a Bluebike. Joseph is a graduate of Harvard College and Peking University.
Zoba provides demand forecasting and optimization tools to shared mobility companies, from micromobility to car shares and beyond.
Zoba works closely with micromobility operators from every corner of the globe on issues of fleet performance, giving us a unique view into how the ongoing pandemic is impacting the fledgling industry. When we look back at the evolution of the market some years down the road, coronavirus will undoubtedly be a difficult chapter in the story. The industry is seeing a total demand shock that, in the near term, could crush an industry already plagued by foundational vulnerabilities related to hardware, operations, and regulation. But in the long-term, the coronavirus pandemic will not be a death knell for micromobility and may even accelerate its adoption.
I. Micromobility before coronavirus
Micromobility today is experiencing the growing pains of a hardware-centric, operationally intensive industry seeing meteoric growth. Our world is increasingly urban, dense, and on demand. With these tailwinds, adoption rates for micromobility services have been unparalleled — twice as fast ridehailing (Bird became the fastest ever startup to hit a $1B valuation). What started in Beijing found magic in Santa Monica, then exploded to cities across the globe. Venture capital fueled turf wars as cities left scarred by Ubers’ takeover sprung into action to enact regulations. The breathtaking rate of scale left us with growth masking unsolved, foundational problems related to hardware, operational efficiency, and regulation. The industry has problems, but also incredible demand for its offering.
Running a micromobility company is hard. These are hardware-centric businesses with complex, expensive operations and all the difficult realities of operating in the physical world. Margins are poor because it is difficult to get enough ridership to offset the price of a vehicle that breaks quickly. Though early models broke in weeks, hardware in the industry has been rapidly evolving. New generations of vehicles, built for commercial use, will last months or even years. Operations are also improving. We regularly see operators increase per asset utilization 10–75% using Zoba’s platform, enough to make the business incredibly compelling when combined with robust hardware. The industry’s hardware and operations are quickly catching up to its scale — and not a moment too soon.
Micromobility competes in a market for urban miles mainly consisting of trips 5 miles (8 kilometers) and under. The other transportation modes in this range include transit, personal vehicles, walking, and ridehailing. The size of the micromobility market is a factor of the amount of miles travelled in this range and micromobility’s share of them.¹
The market is massive and growing in both total size and micromobility’s piece of it. By 2050, 68% of the world’s population is projected to live in urban areas. Already today, 60% of total passenger miles in the US, Europe, and China are from trips under 5 miles. Micromobility is a new industry and its current share of addressable trips is under 1% — tiny compared to any other mode. According to a McKinsey forecast, if micromobility gains a 15–18% market share of addressable miles, by 2030 it will be a 300–500 billion dollar industry. For comparison, that’s about a third the size of the potential global market for autonomous driving. Micromobility is still in its infancy, but it is seeing spectacularly fast adoption in one of the largest and fastest growing parts of the transportation industry.
II. Micromobility and coronavirus
Coronavirus lockdowns have crushed every form of transportation impartially — micromobility included. This is devastating to the young industry, especially one that is seasonal and entering the warmer months in the northern hemisphere, when ridership can be as high as five times that of the winter. In a world where we are all living day by day, the focus has understandably been on the near term impacts for the market. These are devastating. The largest players in the space are laying off people in droves. Much of the venture capital many operators rely on will dry up and no one is coming to rescue scooter operators (though some cities are trying). The short term picture is devastatingly clear.
But if we can think over longer time frames — months and years instead of weeks — the picture looks very different. The pandemic will end, and our cities will once again be open for business. And when our cities reopen, we will need to get around them, just as we did after wars and other pandemics. When we do, we will do so with the experience of this pandemic forever scarred into our collective psyche.
This means some behaviors and preferences will be changed possibly for the long term. The balance of power, or share of miles, will shift towards those modes best positioned to serve the new, anxious predilections of urban consumers. Our collective trauma and fear will cause us to rethink transportation options in a fundamental way that would have been unimaginable even a few months ago. This may not be dissimilar to how differently we all began viewing air travel after 9/11. Air travel went to zero, then reopened slowly, then began growing, albeit with a new sense of normal in the form of security.
III. Form factor as fate
When you use any method of shared transportation — transit, ridehailing, micromobility — you interact with others along two vectors: spaces and surfaces, often asynchronously. Spaces and surfaces are how contagions spread and are intrinsic to form factors of different transportation modes. These will be the vectors on which modes of transportation will be judged in the minds of billions of urbanites as they decide how to get to work and how to get to play.
Unfortunately for the health of our cities, transit is the ultimate in both shared spaces and surfaces. The densely packed subway car, the fare machine, the turnstile. On an average weekday, the New York City subway sees about 900 riders per subway car. In ridehailing too spaces and surfaces are intimately shared with dozens or hundreds of other riders asynchronously and the driver synchronously. Emerging research suggests the subway in NYC may have been a leading, if not the leading, source of transmission in the city. These modes will suffer.
In micromobility, there are no shared spaces — only shared surfaces, and small ones at that. Users share the same handlebars and brake levers, usually hours apart. If it’s safe to touch those parts of a vehicle, it’s safe to ride. As shared transportation options go, it’s the best positioned to serve a public afraid of sharing spaces. With a bit of work, it is also possible to make micromobility an even lower risk transportation option.
Unlike the shared surfaces of other modes, micromobility vehicles spend most of their time outside. Emerging evidence suggests that the virus is undetectable after just minutes in full sunlight and over longer times in weaker light. In a sunny market, risk is minimal, and in less sunny markets one can derive transmissibility timing using UV indices. Proactive micromobility operators can take it a step farther. For example, an operator could coat the shared surfaces in copper tape or foil, which renders the virus undetectable in a few hours (or use these). On rebalancing, charging, or servicing runs, service teams could add a vehicle spray down to their task logging.
To communicate a vehicle’s safety status, an operator could flag a vehicle as disinfected if it has (a) not been ridden in a few hours (meaning the copper or day’s sunlight has rendered the virus inactive) or (b) has been recently disinfected. Taken a step farther, the operator could make available only vehicles that fit these criteria. If the vehicle is essentially no risk — recently cleaned or unridden for a few hours — show it as available, and for all others do not. This would require effort, but idle times are long enough that it might not reduce availability significantly. In the US & Europe, the average time between rides tends to be 5–7 hours. Operators would be giving up rides by making riskier vehicles inactive in only the busiest areas on the highest demand days. In return, micromobility becomes a truly safe option to users.
These remedies are not available to the other urban transportation models with high degrees of shared spaces — Ubers, busses, etc. If form factor is fate, the deck is stacked in micromobility’s favor. We see this playing out already in increased ridership. NYC’s Citi Bike saw a 67% spike in early March demand as users looked to get away from crowded spaces. Chicago’s saw a 100% increase. This echoes much of what Zoba is observing around the world: micromobility usage stays constant or grows even as total miles across all modes decrease dramatically.
IV. The view from China
China, where free floating bikeshare got its start, also offers a window into what is to come — and some guidance on how operators can respond. A few years ago, ofo and Mobike launched and then battled to expand through some of the same fundamental operational issues now facing micromobility operators in other parts of the world. With little regulation, poor fundamentals, and mountains of cash, the two companies bled each other out until ofo died and Mobike was scooped up by Meituan, creating Meituan Bike. But the mode endured, relaunched by newer, savvier operators with more regulations on fleet sizes and all of the painful lessons ofo and Mobike had to learn by collapsing. I had a front row view of the drama as a graduate student in Beijing during the period and have been following it since.
There are now nearly 1 million shared bikes in Beijing, likely more than global totals of Lime, Bird, and the next 5 largest non-Chinese operators combined. Since government shutdowns have relaxed, Chinese bikesharing has exploded in usage, with reports of ridership jumping just after shutdown in Wuhan to a volume 10x what it was before (source, Chinese only). In Beijing, weekday ridership numbers have jumped 187% with average trip distance climbing 69% (source, Chinese only).
Chinese bikeshares are playing a central role in providing a safe transportation option in the Covid era. In an interview, an official at China’s Center for Disease Control made the following suggestion: “For public travel, the first choice is definitely a private car; the second choice is to ride a shared bicycle; the third choice is subway and bus, ridden to the greatest extent possible when few people are out.” The bike sharing industry has also helped itself. In Beijing, operators are cleaning hundreds of thousands of shared bikes in the city each day. The operators have agreed to an ‘indiscriminate disinfection’ approach, whereby all operators agree to clean the vehicles of all other operators in a given area (source, Chinese only).
Owned modes — cars, bikes, and more — will also see a boom. As precedent, the early 2000s saw biking (and largely electric biking) explode in China as SARS caused a massive shift away from public transport towards cycling. A recent Swiss study suggests all modes of transport losing ridership in the coronavirus era except biking, which is up over 200%. Owned bikes and shared micromobility do not compete in a zero sum way ². As popularity increases, so does pressure to build infrastructure to protect those on two wheels, which in turn increases the addressable market for the two. Paris is set to roll out 650 kilometers of cycleways and is immediately readying “corona cycleways” to encourage bike travel. Similar developments are underway around the globe (inc. ambitious projects in Milan and Bogotá). Shared micromobility certainly will lose some users to owned vehicles, but this negative impact is swamped out by total market growth of the mode and the accretive effects of their mutual requirements for cycling infrastructure to enfranchise new users.
V. Micromobility as mode
The long term prospects for micromobility do not abate the fear around the current state of the industry. Operators are still rushing to backfill the basic fundamentals in hardware and operations they forwent to scale faster. The coronavirus is an exogenous, existential threat that is shaking the industry as it was working to pay down this debt in the form of better operations and hardware. Some incumbents may not survive to see the next, brighter chapter of the industry, just as in the Chinese evolution.
In micromobility (and autonomous mobility, car sharing, etc.), you buy the supply. This creates very different dynamics than that of a two sided marketplace (Lyft and Uber, Doordash and Grubhub, etc.); chief among these differences is that it is easier to launch a service that doesn’t have supply side network effects. It also means that, unlike gig economy marketplaces, costs cannot be easily variabilized down, putting overextended operators in a dangerous position during a shutdown. That any one large player, burdened by massive burn rates, should be threatened from an unprecedented, exogenous shock means little for the mode as a whole. This of course is currently playing out. Just this week, Uber got out of the micromobility business (for now) in a deal that slashed Lime’s prior valuation.
The intense demand for micromobility is more for the product than the service of any particular brand (just as in aviation, subways, etc.). If some of today’s operators do not survive, the demand will be serviced by other players, some of them not yet in existence. These new players will have the advantage of skipping the most painful early innings of micromobility. They will compete in markets that have a reasonable cap on vehicles, with off the shelf hardware built for the business. Some will work with Zoba, enabling efficient operations through the best demand forecasting and optimization in the industry.
The micromobility market is currently closed and the coming months will be rough. But as sure as the pandemic will eventually end, transportation will return in our cities. When it does, micromobility will be among the transportation modes best suited to meet the moment. With proactive measures to make this real and clear to users, micromobility has an opportunity to accelerate the trajectory it was already on and become an essential mode of mobility in an increasingly urban world.
¹ Much of my framing of the concept of a market for miles comes from Horace Dediu, the most essential voice in the space.
² I am referring to owned bikes, scooters, etc. as vehicles separate from modes of micromobility in order to avoid confusion, though many in the space group them together under that classification.