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Are scooter starts really worth billions?

It was hard to miss the start-up wars of scooters that opened up new techno-powered slots in Valley society in recent months. Another horseshoe-mounted flavor that apparently sprouted overnight to clutter the sidewalks – angering the city's seemingly more lenient traffic congestion regulators if delivered in the traditional car-shaped capsule.

Even in their best PR snaps, the dockless negligence of these slender scooters hums with an air of carelessness and privilege. As if to say: Why so, we turned a toy for kids into a battery powered teleporter – what are you going to do about it?

A first set of starts for electric scooters – offering road mopeds full of grease that certainly need a license to ride (and, unless you're crazy, a helmet for your head) – can only just do not compete with that. The last kilometer does not carry.

But a short-distance replacement tool that is so easily abused is of course easily vandalized. Or diverted. Or both. And there has been a plethora of horror stories of dismemberment / scooter removal coming from California, judging from reports of the front line of scooters. Scooter hanging in the trees is probably a thing of protest.

The Lime scooter brand hit a specially dumb technical note when trying to solve this problem after an update added a security alarm that screamed robotic threats to call the cops on anyone who was trying to unlock them. Sure to say, throwing abusive scooters in public spaces is not a way to win friends and influence people.

Even when they work "properly", that is to say as expected, scooter rides may ooze some kind of impunity right. The convenience without perspiration seems to allow another breakthrough in technology-powered shower behavior like a t-shirt wearing nerd alpha zippers barking in AirPods and inhaling a take-away slat while reducing pedestrian patience.

However, none of these rapidly growing societal frictions has dampened the e-scooter's startup dynamics. On the contrary. They raised massive amounts of investment on rapidly expanding valuations ($ 2BN is the latest valuation for Bird).

But buying a lot of e-scooters and leaving them at the mercy of the whims of the man is an expensive affair to try to put on the scale. Therefore, big fundraisers are needed if you want to replace all the cluttered duds with the canals and keep getting enough room for the competition.

At the same time, there is not much to do to differentiate one experience from one scooter over another – beyond price and proximity. Branding could do it, but then you have to scramble even harder and faster to create a smooth experience and inflate a brand that sticks. (And it goes without saying that a sticky scooter with fecal matter is absolutely not that.)

Start-ups still in turmoil are certainly jostling on the scale, some already pushing towards international markets. Lime has just dispersed ~ 200 e-scooters in Paris, for example. He also tested the waters more quietly in Zurich. While Bird also has his eye on the European territory.

The idea behind some very obese assessments for these nascent start-ups is that scooters will be a key part of a multimodal transport mix reworked for urban mobility fueled by convenience based on the application and adherence to greener transportation options. with no-emission benefits. (Although the green of scooters depends on what they move, great if the cars are fuel-hungry, less convincing if they are walking or peddling.)

And while investors adhere to the vision that many city-dwellers will take the last mile in the future, and bet big on the considerable value being captured by some plucky scooter startups – more than one Half a billion dollars Since February, two of these brands of ultra-thin scooters, Bird and Lime, have been sent to skeptics.

Ask if the scooter model really warrants such heady upgrades and evaluations. Wondering if it's not a bit crazy for a fledgling fledgling to already be 2x a unicorn.

The case of the bear for these slender scooters says that they only repair a fairly limited urban mobility problem. Too abrupt and dangerous to go to the distance, too quiet of pace (and contested for the sidewalk space) to feel useful if you do not have far to go anyway. And of course, you will not be able to carry your children and / or a lot of luggage on a two-wheeler. So, they are useless for families.

Meanwhile, scooter invasions are illegal in some places and, where possible, prompt public and regulatory frictions and frictions – contributing to congestion and peril on already overcrowded sidewalks .

After taking one of Lime's electric scooters just ashore for a ride to Paris this week, Willy Braun, VC at the start of the European Daphni fund, left without being impressed. "I did not really feel like I was saving time on a short distance, because there are always a lot of people on our narrow sidewalks," he tells us. "And it's not comfortable enough for me to imagine a longer distance, so it's quite expensive ($ 1 per use and $ 0.15 / min)."

"Finally: Before renting it I read two newspapers that told me that I had to use it only on the sidewalks and they tell us we should not use it on the road only during boarding – and that wearing the helmet is mandatory without providing it.) By way of comparison, I prefer to use electric bicycles (or emoto-bikes) for a long trip without hesitation. "

"Give us the jump instead of the lime!", He adds, recalling the start of an electric bike under Uber's leadership since April, adding a rope more green at its urban mobility arc. the continuous efforts of the ride-pull giant to revitalize its regionally beaten brand.

"Uber is ready to help German cities tackle some of the biggest challenges: fighting air pollution, reducing congestion and improving access to cleaner transport solutions," said Dara Khosrowshahi. in Berlin earlier this month. Uber e-bikes will be launched in Germany this summer.

E-bikes seem to offer more urban mobility than electric scooters. Although a scooter is probably a more accessible type of crutches to wheels compared to a bike, since you can simply stand on it and be moved.

But in dense and dynamic urban environments of Europe – which, unlike the United States, tend to be filled with public transport options (usually at a price range) – transportation choices Individuals rely first on the economy. After that it is essentially a matter of personal taste and / or weather.

Urban transport horses for courses – depending on your thresholds of risk, convenience and comfort, thanks to a luxury of choice funded by the state. So, scooters have a lot of competition already integrated.

Romain Dillet, a Paris resident of TechCrunch – a regular on-demand bike service in the city (which is plentiful), and before that, the city's bike rental program – was also tested on a Lime scooter this week. And also came out feeling disappointed.

"It's bad," he said after he left. "It's slow and you have to brake constantly, but the worst thing is that it feels more dangerous than a bike, so basically you can not brake suddenly because you're right there." "

Martin Mignot of Index Venture was also in Paris this week and he took the opportunity to take a Lime scooter for a ride too – check the competition in his case, given that the European company of venture capital is a bird . So what did he think?

"The experience is pretty cool – it's a little faster than a bike, it's not sweaty.The weather was just awesome and very hot at Paris, so it was really great in terms of speed and lack of effort, "he says, deploying the positive vision of sharing scooters." Especially climb the hill to go to the train station. North.

"And the lack of friction – just to get on board and start, so in general I think it's a great experience and I think it's a really niche niche between walking and bicycles on demand … In Paris you also have mopeds, so this kind of "between supply." I think there's a big market out there. that it will work pretty well in Paris. "

Mignot is a little dissatisfied with the quality of the Lime scooters compared to the model deployed by Bird – a scooter model that he also owns personally. But again, as one can expect given his particular interests.

"Obviously I'm biased but I would say that the Xiaomi / Ninebot scooter is better than the one used by Lime," he says. "I thought the Lime, the handlebar is a bit too high.The braking is a little too soft.Maybe it was the one I used, I do not know."

Speaking generally about scooter starts, he says that investor excitement boils down to the frequency of trips – thanks to exactly the trips being these itty-bitty links of the last mile.

But it is also possible that all of this last jump is a shortcut to gain a coveted niche on home screens of smartphone users – and that the underlying game looks like a jockey for a run of urban mobility

Lime, for example, started with bike rental before jumping into scooters and becoming multimodal. So, scooter sharing is starting to look like a strategy for mobility startups to find themselves at the top of the attention foodchain – where they are then positioned to deliver a complete mix and capture more value.

So really scooters could mostly be a tool to attract the attention of people's application. Think about it the next time you see one on the sidewalk.

"What is very interesting if you look at the distribution of the trip, is that most trips are short, so the vast majority of trips if you walk, of course, are less than three miles away. It's actually where the bulk of mobility takes place – and the scooters are playing really well in this area, so in terms of the number of trips, I think this will eclipse any other type of transportation. And especially the ride, "says Mignot.

"If you look at how often people use Uber, Lyft or Taxify … it's going to be a lot less common than scooter users, and I think that's what makes it such an interesting asset. … The frequency will be much higher – and so the applications that power the scooters will tend to be on the home screen.And somehow on the foodchain, so to speak.So I think that that's what makes it super interesting. "

Scooters also get a big advantage from investors because of the lack of friction between available urban options such as bikes (or, non-electric scooters, skateboards, in-line skates, public transportation and so on) – both on integration (going forward) and propulsion (that is, lack of sweat necessary to ride) terms.

"That's what's great with these devices, just take the QR code and go," he says. "The difference with the bikes is that you have no effort to provide.I think there are cases where obviously the bikes are better.But I think there is a lot of cases where people will want something where you do not sweat.

"Where you do not crease your clothes.What goes a little faster.Without going to the experience of the moped where you have to put the helmet, which is a bit more dangerous, than a lot of people, especially women, do not know very well.So, I think that what is exciting with scooters as a form factor, is that it's really very common.

"Anyone can fit them in. It's very simple to maneuver.This is not super fast, it's not too dangerous.It does not require any muscular effort – so for the elderly or for people who do not want to sweat because they're going to a meeting or something like that – it's just a fantastic option. "

Index has also invested in a start-up electric bikes (Cowboy) and the company is fully subscribed to the notion that urban mobility will be multimodal. So, if the e-scooters valuations are a little overcooked, Index is not going to be too concerned. People in the cities will clearly mount something. And supporting a mix is ​​a clever way to hedge the risk that one or the other of the options will end up becoming a passing fad rather than an urban stepper.

Mostly Index is betting that people will continue to ride robotic horses for urban courtyards. And no matter what they mount it's a pretty sure bet that an app will be involved in the process of finding (docklessness is so another game of attention) or unlocking (scan this QR code!) The mobility device – opening the possibility that a single application could contain multiple mobility options and thus capture more overall value.

"It's not a one size fits all, they complement each other," explains Mignot of the urban mobility options at play. "I would say that electric bikes are probably a little more fun for a little longer trips because you are sitting. But again it takes a bit longer because you have to adjust the saddle, you have to start peddling. There is a little more friction on both the load and the pipe. But they are a bit better for a little longer distances. I would say that for shorter distances there is nothing better than the scooter. "

He also points out that scooters are cheaper and less cumbersome than e-bikes. And because they take up less space on the street, they can – at least in theory – be more densely stacked, generating the so-called convenience by making them sit close enough to convince someone of do not walk 10 minutes to the cafe or gym. instead. The slender physics of scooters is therefore particularly exciting for investors. (Even if, ironically, he is deployed to make people walk less.)

"I think we're going to end up with more scooter density, which is really important," he continues. "In the end, people will tend to take the vehicle that they can find where they are, and I think it's more likely, ultimately, that they'll have a scooter instead." only because they take up less space and are cheaper. "

But why would people who would get lost in the benefits without last-mile sweat would only buy and own their own car – rather than spend tirelessly to share?

Unlike bikes, scooters are mobile enough to pick up and move around quite easily. Which means that they can go with you to your home, office, even a restaurant – disruptively reducing the risk of theft. While talking to any bike owner and they will almost invariably have at least one tale of unhappiness, which is a key element of what makes bike sharing so appealing: It clears the worry of theft.

Add to that e-scooters on sale in European electronics stores for only 140 €. So, if you are going to be a regular scooter, the purely economic argument of owning your own looks is pretty compelling.

And people wandering on electric scooters are a pretty common sight in another dense European city, Barcelona, ​​which has a very favorable time for scooters but no scooter boot (yet). But unless it is a tourist who walks along the waterfront, most of these riders are not shared: people come to their local electronics store and go out with a scooter into a box.

So the rides do not generate recurring revenue for anyone except the electricity companies.

When asked why people who want scooter will not only buy, rather than rent Mignot, they will have less worries – undermined by the fact that he is also the owner of A scooter (despite the alleged problems such as frequent tires and the chore of the night load).

"The thing you notice very quickly: There are two things, one is the talk," he says. "The models that exist today are not super sturdy – maybe in very flat roads, very smooth, maybe a little less real, but I would say that in Europe the maintenance Required is quite high … I have to do something on mine every week.

"The other thing is that it takes a bit of space.If you have to bring it to a restaurant or in a crowded place, in a movie theater or somewhere else, in an office, in a meeting room, it's a bit heavy, and it's a bit embarrassing.So, certainly, some people will buy them … But I also think that 39, there are many cases where you would prefer to have it on demand. "

Unlike Mignot and Index, Tom Bradley, of British private equity firm Oxford Capital, is not so convinced by the craze of scooters on demand.

The company did not invest in e-scooters itself, although mobility is a "central theme", the portfolio including a start-up travel on demand (Sn -ap) and technological games such as Morpheus Labs. learning for driverless cars) and UltraSoc (complex circuits for auto parts, which sells for tastes similar to those of Tesla).

But this is just not sold on scooter startups. Bradley describes it as an "open question" if scooters end up being "an important part of how people move around cities in the future." It also highlights flying problems with dockless bike sharing systems that have not played well in the UK.

"We are not convinced that this is a fundamental part of the picture," he says of sharing scooters. "That may be part of the picture, but personally, I'm still not convinced that it's such an important part of the picture that people seem willing to pay."

"I keep thinking of the example of the Segway," he adds. "It's an absolutely delightful product – it's brilliant – it's absolutely great – in a way that these electric scooters are not." But obviously, it was a lot more And that made people feel a little weird, but that was supposed to be the answer – and that's not the answer – before his time, maybe. "

Of course, he also agrees that capital is "used as a weapon," as he says, to go full steam to a future where shared electric scooters are the norm on the streets of the city by conducting a "Marketing war". get there.

"Venture capital valuations are what one is willing to pay. And in this case, people value the potential rather than valuing the business … so valuations [of Bird and Lime] are more than anything motivated by the amount of money raised, "he says. "So you decide a rule of thumb on what is acceptable dilution, and if you're going to raise $ 400 million or anything then the valuation should be between $ 1.6 and $ 2 billion dollars to do this kind of stimulus – and leave enough equity for previous investors and founders.There is therefore an element in which valuations are determined by the amount of capital that is collected. "

Oxford Capital's bearish view on scooter sharing is also limited by the fact that the fund invests only in UK-based start-ups. Bradley says that he sees a lot of the strengths of local mobility – particularly in the auto market – he admits that it makes more sense to imagine a leading startup in the whole world. Not least because it's not legal to use them on British public roads or sidewalks.

"If you look at places like Amsterdam, Berlin, they're built for bikes, London is starting to be built for bikes … Cycling has been one of the big success stories in London. that [scooter sharing] will replace cycling? I do not know.Not so convinced … It's obviously easy for anyone to come and go from these things, young and old.Thus it's fine, c & rsquo; This is a little bit like a solution looking for a problem, to the kinds of trips people evoke for these things – on campus, short urban journeys. between them are journeys on foot or by bike in many cities, is there a need for mass?

"Is that Segway 2 or is this bike rental 2 … it's hard to say.And we go down on the first.We are not convinced that this is going to be a fundamental part of the transportation space.It will be a feature but not a huge part. "

But for Mignot the beginnings of urban mobility, the wars of attention mean that there is a lot to play – and a lot of things that can be reshaped favorably to get scooters into The mixture.

"The whole thing, even bikes on demand, is really a two-year-old phenomenon," he says. "So I think everyone is just trying to learn and understand and adapt to this new reality, that it 's about users, of course. companies or cities.I think it's very similar to when the cars were first introduced.There were no parking spaces at the time and there was There were no rules on the road and fast forward 100 years and it looks very different.

"If you look at the amount of infrastructure and effort and spend what has been put into manufacturing – and I would say a lot more than what should have – to make a city-friendly car, if you make only one hundredth of the same amount of effort and expense to make room for bikes and light-duty two-wheelers, I think everything will be fine.

"It's the beauty of this model.If you compare the space of technology and if you look at the efficiency of moving people in relation to the space, the scooters are simply the most effective because their footprint on the ground is so small. "

He even argues that scooters work well in London – arguing that the sprawl of the city brings public service because there are so many tedious trips that people have to make.

Even more so than in denser European cities like Paris, where he admits that jumping on a scooter could be more "fun to have", given the shorter distances and all the other options available. So, really, in terms of urban mobility, it can be a horse course.

Still, the reality is that London is banned from Bird and Lime for the time being – thanks to British laws banning this type of unlicensed personal electric vehicle on roads and public spaces.

You can buy electric scooters for use on private grounds in the UK, but scooter startups who have tried their usual playbook in London would rush straight to the legal hot water.

This is not just the British weather that is inclement.

"I really hope that TfL [Transport for London] and the Department of Transport will make this possible," says Mignot on this subject. "I think that any city should welcome it with open arms, and some cities are, and I think over time, once they see success stories in the future. Other parts of the world, I think they'll do it all.But I wish London was one of those advanced cities that would welcome the new innovation with open arms.I think now, unfortunately, it is not there.

"We talk a lot about the quality of the air, and so on, but in fact, when things move … you have a lot of resistance and a lot of hindsight … So that's it. is a bit disappointing, but, you know, we'll get there eventually. "

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