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  • You've probably seen them around. Electric scooters dumped just about anywhere.

  • Litter bikes. Litter bikes. They've been littering the streets lately. And by littering, I mean littering. The scooter invasion. Wheel-mageddon.

  • They've got the green ones and the orange ones and it's basically litter.

  • They are bringing out the worst in some people.

  • Last September, the city of Santa Monica, California woke up to a surprise: sidewalks

  • everywhere were filled with small, electric scooters you could rent by the minute.

  • It's not an entirely new idea, Scooters, in some form, have been around forever.

  • And you've long been able to rent them in cities like San Fransisco.

  • But this company, called Bird, made it irresistibly cheap.

  • And simple.

  • All you do is download their app, point your phone at the scooters' QR code, I guess

  • we finally found a use for those, and off you go at about 15 miles an hour.

  • They're fast, convenient, if I'm honest, a little bit ridiculous looking, and… a

  • lot of fun.

  • Unless you're an investor, In which case, scooters are no laughing matter.

  • Bird became a unicorn, a startup with a billion dollar valuation, faster than Uber, Airbnb,

  • or Facebook.

  • Actually, faster than any company in history.

  • And today, still just over a year since it was founded, it's valued at over two billion

  • dollars,

  • about as much as Reddit or 23AndMe.

  • Remember, we're talking about scooters.

  • and it's just one of many, including Spin, Lime, who is also a unicorn, JUMP, and about

  • a dozen others.

  • Meanwhile, Google, Uber, and Lyft have all invested millions of dollars.

  • Now, depending on who you ask, these are either:

  • ridiculous numbers for barely 1-year-old startups in a fad industry,

  • or, smart investments in what's clearly the future of transportation.

  • So, which is it?

  • Are scooters a useful means of mobility or an invasion of our sidewalks?

  • Let's imagine you live in Seattle, say, an apartment here in the Queen Anne neighborhood.

  • And you work downtown, here at Amazon corporate headquarters.

  • You could walk a couple of blocks and take the bus, but it'll cost two dollars and

  • seventy-five cents, or five fifty a day.

  • And it'll take at least 20 minutes, which is just as slow as walking.

  • Biking would be quick and cheap, but then you have to store, lock, and maintain it.

  • Plus, no-one wants to arrive at work or school sweaty.

  • So, scooters are a nice alternative.

  • It's faster than walking, Cheaper than the bus, and more convenient than a bike.

  • Maybe not revolutionary, but pretty handy.

  • Now, let's say, you live here, near Lakewood.

  • In this case, the bus can drop you off right at work.

  • And the beauty of public transportation is that it reduces redundancy.

  • Even if nobody commutes the exact same route, there's always going to be a lot of overlap

  • in the middle,

  • If we all share 90% of our journeys, it's weird that we take 100% of it inour own

  • separate cars.

  • So, putting people together saves time, space, and money.

  • Here's the thing though: Transit is designed for the average person, but almost no-one

  • is exactly the average person.

  • In other words, it's mostly convenient for most people, but totally convenient only for

  • a few.

  • Because, if the bus stopped everywhere, it would alsostop being useful.

  • In this example, it's a 24-minute walk from home.

  • This is The First and Last Mile problem,

  • The hardest and least efficient part of a trip is the beginning and the end - getting

  • to a transit station, and then, to your final destination.

  • In most cities, the obvious solution is to walk or bike.

  • But many people justdon't.

  • It's too far away, or too inconvenient, so, they drive instead.

  • That's probably what you'd end up doing here, even though transit is technically available.

  • Now, whether scooters are ultimately good or bad kinda depends on what exactly they're

  • replacing.

  • If people scoot instead of walking or biking, like in the first example, they've lost

  • some exercise and gained some convenience.

  • Not a huge win or loss.

  • But if scooters replace cars, that's a different story.

  • That would mean less traffic congestion and fewer carbon emissions.

  • Of course, it sounds ridiculous, Even with their 20 or 30-mile range, they aren't really

  • practical for long trips.

  • But, they don't actually have to be.

  • Not directly.

  • If scooters make it easier to get to and from the bus station, you're more likely to take

  • it.

  • All they need to do is make transit a more desirable option.

  • The effect is fewer cars on the road.

  • That's especially useful in underserved and far away neighborhoods.

  • Here, scooters aren't just a novelty, they're a means to greater mobility.

  • Lime showed this in 2017, when it reported that 40% of riders started or ended their

  • bike rides at public transit stations.

  • All of this is possible because there's always a scooter nearby.

  • Instead of docks or stations, you pick them up and leave them wherever.

  • Problem is... well, people pick them up and leave them wherever.

  • Technically, you're required to wear a helmet, park out of people's way, and not drive

  • on the sidewalk.

  • In practice, ehh, not so much.

  • I've yet to see anyone wear a helmet, and many streets justdon't have bike lanes.

  • Companies can explain the rules, but they can't enforce them.

  • Sooocities aren't the biggest fans.

  • It doesn't help that many of these companies move in to an area before getting permission,

  • hoping that by the time they notice, people will have already gotten used to them.

  • If this sounds familiar, it's no coincidence.

  • Bird's founder previously worked for Lyft and Uber, who famously used the same strategy.

  • This time, cities were ready.

  • They've already been banned in San Francisco, Beverly Hills, Cambridge, and Columbus.

  • And, like Uber, there isn't much to set companies apart.

  • They all cost the same dollar to start plus 15 cents a minute,

  • They even have similar sounding 4-letter names.

  • So, which scooter do people choose?

  • Well, the one that's in front of them.

  • The first app you download will also likely be your last.

  • Why bother with several?

  • That's why everything is happening so quickly: they saw what happened with Uber.

  • This is their second chance, and nobody wants to be left out.

  • In China, it happened with bikes.

  • Companies dumped them on every street and corner until there was more bike than sidewalk.

  • Demand just couldn't keep up with supply, and now they sit in trash piles so big they'd

  • impress Wall-E.

  • But with enough market share, the economics are good:

  • Most companies use the Xiaomi M365, which, let's assume they buy in bulk for about

  • $250.

  • Lime says they're used an average of 8 to 12 times a day, so let's say, 10 rides,

  • at an average of about $3 each.

  • Of course, there's also charging.

  • Anyone can sign up to become a charger, or as Lime calls them, juicers.

  • At night, they pick them up off the streets, take them home, and plug them in for about

  • $5-10 a scooter.

  • So, we'll subtract seven fifty.

  • That means the average scooter makes something like twenty-two fifty a day.

  • And pays for itself in under two weeks.

  • Even accounting for things like maintenance and theft, which Lime says affects less than

  • 1% of its scooters, there's money to be made.

  • But what's most interesting about The Scooter Wars, may have nothing to do with the scooters

  • themselves.

  • Companies aren't just competing for space on the sidewalk, they're also competing

  • for this space - a slot on your home screen.

  • This is where Uber starts salivating.

  • Anyone with their app can already ride their scooters.

  • It's a built-in advantage.

  • And if you're already on people's phones, why stop there?

  • There's no reason to be the taxi company or the scooter company when you can be, as

  • Uber's new CEO said, “the Amazon of transportation”.

  • Because a smart business sees itself from the perspective of a customer.

  • People think about outcomes, not business models.

  • If you want to watch something, you automatically go to YouTube.

  • If you want to buy something, you go to Amazon.

  • And soon, if you want to go somewhere, you open Uber.

  • Everything else is unnecessary complexity companies convince themselves we care about.

  • We're still in the early days of The Scooter Wars, but there is good reason to get excited.

  • And the big picture is really about platforms, the relationship between government and private

  • corporations, and, increasingly, battery technology.

  • The future of everything from cars, to scooters, and phones depends on how efficiently we can

  • store energy.

  • And the best way to learn the science behind batteries and energy storage, among other

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Why Scooter Startups Are Worth Billions

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    Samuel posted on 2018/10/22
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