Question

This case deals with one of the pioneers in the electric scooter industry: Bird. Please read the articles provided and answer the following questions:

1) Where is the demand for electric scooters coming from? How fast it is expected to grow? Why are investors buying into this industry? Elaborate. [It might be helpful to provide the target segment and its size to justify your answer].

2) What are the possible concerns impacting the demand of electric scooters? How attractive is this industry? [Use Porter’s five forces model to analyze the industry attractiveness]

3) The industry is at a nascent stage and there are already several competitors such as Lime and Skip (Uber and Lyft have also entered this arena). How should Bird position itself to differentiate from the competitors?

Article:

Bird’s electric scooters are getting more rugged to handle heavy use

A year ago, dockless electric scooters first appeared on the streets San Francisco and Santa Monica. The initial reaction was bewilderment, eventually giving over to annoyance and dismissal. The companies that were scattering these scooters everywhere, like Bird and Lime, seemed to epitomize tech-bro arrogance. Surely the fad would fade and the scooters would be shipped back overseas from whence they came, destined for some landfill in China.

Twelve months later, the scooters are in over 100 cities across the globe, and by most accounts, immensely popular. Bird and Lime have each reported over 10 million rides since their launch. Lime is valued at $1 billion; Bird at $2 billion. Ride-hailing giants Uber and Lyft are now getting in on the action, acquiring bike-share companies and applying for permits to operate their own e-scooters. Early complaints about vandalism, blocked sidewalks, and scofflaw riders — while still valid — have since given way to a realization that, hey, these things are kind of fun! And more than that, they could be a crucial link in helping cities solve crucial transportation challenges.

Against that backdrop, Bird CEO Travis VanderZanden spoke with The Verge about phase two in his plan to conquer the micro-mobility sector. Before founding Bird, VanderZanden was a ride-hail executive. He served as Lyft’s chief operating office until August 2014, when he left to join Uber. The move landed in him in hot water with his former employers, who filed a lawsuit claiming VanderZanden stole confidential material. The parties later settled for an undisclosed amount.

Now VanderZanden is out to steal Uber and Lyft’s customers, or at least the ones who use ride-sharing to take short trips across town. He spoke about Bird’s growth in ridership, building a more rugged scooter, and competition with his former employers in the ride-hailing sector.

The Verge: Congratulations on your one year anniversary.

Travis VanderZanden: Yeah. We’re super excited to announce the one year anniversary and take a minute to reflect on the last year. We’re now seeing that we’re doing 10 million rides, 100 cities with two million riders. The reason we get excited to get the numbers out is for us the first year was really... when we started the company it was suggested, can we use electric scooters to really get people out of cars? And we think the data from the first year it’s been kind of a big data point that people are willing to get out of cars and use electric scooters, so, excited to have the announcement.

What is the next stage, would you say, of the business?

Year two is all about, for us, doubling down on our efforts to work with cities and build out government technologies, call it our “GovTech” platform, where we’re spending a lot of our engineering resources building tools that the cities can use to have the insight into Bird’s data and also control Bird in their cities. So an example is that we just rolled out a geo-speed limiting feature where the Bird is already capped at 15 miles per hour, but when you enter a zone like the beach bike path in Santa Monica, the Bird will slow down to 8 miles per hour automatically. So we’re doing a bunch of cool things like that that help the cities. Year two is gonna be about doubling down on those efforts.

That also includes some geo-fencing, too, I understand, right?

Yeah, because there’s geo-fencing, the geo-speed limit’s going to work with geo-fencing on slowing you down. There’s also ‘no ride’ zones, there’s ‘no park’ zones... a bunch of cool things like that that we’re doing, and so we’re going to be continuing that in the second year.

I mean, it’s not that cool, right? For the first year it was ‘anything goes,’ ‘no rules,’ and now it’s like ‘okay, lots of rules that we have to contend with.’

Well, when we first launched the business, you know, we didn’t know if electric scooters were gonna work, we didn’t know if people would ride them. You know, companies have been trying to get Americans off cars for a long time and so it actually started as a small bet and what we found is people really enjoy riding the electric scooters, which we’re excited about. And we’ve been working with cities in year one as well, but we think year two is about doubling down on those efforts.

How are you adapting to cities introducing these pilot programs and wanting to have more control over the deployment and usage of the scooters?

Yeah, so you know, Ridesharing 1.0... we’re calling Bird Ridesharing 2.0 and two of the biggest changes from 1.0 are that we’re using environmentally friendly vehicles to help reduce carbon emissions and traffic. But the second big difference is really collaborating with cities and sharing data with them through the real-time API access, through the dashboards. And then building technology to control and manage Bird in their market.

What about the scooter itself? Are you guys sticking with the one you’ve got? Are you hoping to make any hardware upgrades?

Yeah, so we’ve been investing heavily over the last year. We built out a really big vehicle engineering team. We have the biggest vehicle engineering team in the industry. We’re working on future vehicles now. We’ve already started testing a new vehicle recently, which is a lot more ruggedized than our original vehicles and built specifically for the speedier sharing model

Can you give me any more details in terms of what that means?

The battery is 55 percent bigger. The shaft is built so it’s very durable. The brake cables aren’t exposed. The tires are solid core tires. We spent a lot of time trying to test tires that didn’t have air in them but still had a good rider experience, which was very important to us. We finally found we think the best tires in the world. So, big things like that, so we’re super excited to be testing these new vehicles.

How are you guys approaching the issue of safety? There have been recent reportsabout a rise in scooter related injuries. How are you hoping to deal with that problem, and how are you talking to the cities about that?“

Early on, Bird has prioritized safety over everything else, including growth. It’s easy to say that, but if you look at our actions, there’s a bunch of ways we’ve prioritized... So, three examples of us prioritizing safety over growth are we capped the vehicle speed at 15 miles per hour, even if the city doesn’t require us to do that. We require a driver’s license and the rider to be 18, even if the city doesn’t require us to do that. And we pick the Birds up at 9PM every night, even if the city doesn’t require it. And we also ship free helmets, even if the city doesn’t require it. It helps us sleep better at night, to really prioritize safety over growth.

Do you have any concern about personal injury attorneys filing class-action claims?

We think cars are dangerous. Our society is kind of built around cars, and cars can be dangerous. I’m sure you know the stat that 40,000 Americans died in car accidents last year. A stat you might not know is that another 6,000 people, pedestrians, died by getting run over by cars. It turns out any time you’re operating... or walking, or biking, or Birding around cars, it can be dangerous, and that’s why we try to educate the riders to wear a helmet. We’re working with cities and encouraging them to build more protected bike lanes. And really aligning with some of the bike advocates who’ve been wanting protected bike lanes for a long time.

In year two, obviously you’re gonna start to see competition from some of your former employers: Uber and Lyft are getting into the game. Are you concerned at all, sort of going up against them, considering obviously the amount of capital that they’re going to be bringing to the market?

No. I welcome Uber and Lyft into Ridesharing 2.0. We think Ridesharing 2.0 will make the world a better place, and we welcome them into that world. I think they’re kind of operating where we were a year ago, and so we think we’re much further ahead on vehicle engineering, on the government technology stuff. We share data with cities, which is something maybe they’re not used to in Ridesharing 1.0. We definitely welcome them.

So why do you think a user would choose a Bird over, say, a Lyft scooter at this point?

One, Bird’s in a hundred cities, and we have a lot more vehicles deployed, a lot more vehicles being manufactured and sent to us. There’s that. So the vehicles will be closer to users because we have more of them. In addition, we have built more ruggedized vehicles, while they’re still working on the vehicles we had a year ago, and haven’t figured out how to ruggedize them yet.

So you’re not worried that they might buy your supply chain out from underneath you?

No, we’re not concerned about it. We have great relationships that we’ve been building over the last year. In fact, we just signed an exclusive deal with the original manufacturer of the ruggedized scooter sharing company. It was the manufacturer that built the original Lime scooters. We have an exclusive deal with them. We continue to work with Ninebot and others. We think we’re far ahead on that, and I think we have access to the most supply right now. I understand a lot of others are having a hard time finding supply.

What’s the latest on bringing the scooters to New York? Obviously that would be a huge market for you guys.

I get excited about any market when there’s massive traffic and car problems, and certainly New York City’s high on that list. For us, we always wanna make sure that we’re legal before we go in. There are folks working with city and state officials to try to figure out how do we best fit in to the existing legal framework. I’m certainly excited about figuring it out. I think New York City would be way easier to get around on Bird than in a car, obviously.

Bird got shut out of San Francisco’s pilot program. Do you think there’s still a chance that you’ll be able to bring the scooters back to San Francisco at some point?

I haven’t spent much time digging into it. I think San Francisco’s just one city. We’re in a hundred cities now. It’s the only city we haven’t been able to stay operating in so far and get a permit. It doesn’t mean we don’t wanna be in San Francisco. We just haven’t spent a lot of time thinking about it right now, because there’s so many other cities that have been embracing the electric scooters. At some point, obviously, we would love to be in San Francisco. We’re just not spending a lot of time... we’re not protesting it or anything like that in the short term.

Yeah, but you did protest in Santa Monica before getting permits there.

Yeah. In Santa Monica, it’s our home state. We felt that’s where scooter sharing, where we originally invented and created scooter sharing. We felt maybe a little more sentimental about Santa Monica. Overall, we’re finding cities are really embracing these scooters. I think that the press tends to over focus on San Francisco. But we’re in a hundred cities now. When we talk to cities about our mission of reducing car trips and traffic and carbon emissions, it 100 percent aligns with the cities’ goals. They have the same goals. So it’s just a matter of figuring out how do we best fit in. Being in a hundred cities and doing 10 million rides in the first year is exciting and we have a lot of cities that are excited about electric scooters.

Bird has promised to provide funding for bike lanes. Are you doing that in every city that you’re operating in, or only just the cities that ask for that kind of thing?

We offer it in all cities and try to figure out who to pay, what initiative makes the most sense. For us, what’s important is investing in improving the bike infrastructure and scooter infrastructure in a city. The cities that have... a lot of cities have permits with their own permitting fees and then they use the permitting fees to go towards the bike infrastructure. An example is, you wanna use the money, you’re happy to help pay for dedicated bike lanes, to get dedicated parking spaces. There are dozens of parking spaces on the street per block, instead of taking that one space away from a car, you could probably fit 10-15 Birds in that same space... And we just think it’s a much more efficient use of space, but that said, we’re not asking for the city to pay us, and we’re not asking [for] a handout. We’re asking them to pay for that space. It’s just a matter of figuring out how do we make that happen. So we’ve certainly been trying.

Bird is in Paris and in Tel Aviv. Are you eyeing any other international cities?

Yeah. We just launched Brussels. We’re gonna be expanding throughout Europe and then next week we’ll have some more exciting announcements about some other international markets.

Did you ever expect this year to be as busy as it has been in terms of this business? Did you expect this to be as popular and as polarizing as it’s turned out to be?

I certainly didn’t expect it to be as polarizing. I think when I first thought about doing the business, I really felt like we could get people out of cars and using electric scooters. I didn’t think we would be able to do 10 million rides. By comparison, if you go back and look at... I think Lyft released an infographic and blog post about on their 15-month anniversary, and they did a million rides in that first 15 months. And to do 10 million rides in 100 cities has been very exciting to see. It doesn’t mean we don’t have a lot of work ahead, and we wanna continue to work with cities to see how do we make it less polarizing, how do we fit in, how do we get dedicated parking so that people don’t complain about the Birds being parked where they shouldn’t be. I think we’re... we’d like the team to work on that so we’ve gotten less polarizing... I know when the car was first introduced and everybody got around on horses, the car had a similar reaction as commuters now to scooters. I think if we can break this car addiction we have, I think it’s ultimately that we will make a road there.

Answer 1

1) Where is the demand for electric scooters coming from? How fast it is expected to grow? Why are investors buying into this industry? Elaborate. [It might be helpful to provide the target segment and its size to justify your answer].

The demand for electric scooters is coming from all the major cities or rather from the entire globe. The main reasons for the increase in the demand of e scooters from all major cities can be described as-

a) The transportation problems due to the increase in cars and other bigger vehicles which lead to heavy traffic and a lot of time waste as well as fuel waste.

b) It's also a serious problem of Pollution in major cities due to the increase in cars and other vehicles. This is directly affecting the health of people and the environment.

c) The scarcity of fuel and the increasing fuel prices throughout the entire globe is also a major issue.

d) Safety issues and an increase in the number of car accidents every year is also a very serious issue. The casualties are increasing every year in the entire globe.

e) As the number of cars and other bigger vehicles is increasing, the major cities are facing very big problems with regard to the parking space and parking lots.

Considering these factors, the entire nations worldwide are looking for better options that can overcome these problems. The e-scooter is one of the best options available as of now. So the demand for e-scooters is definitely going to grow rapidly.

The target segment for e-scooters will be all the major cities in the US as well as the entire world. The commuters, visitors and local residents in major cities are the target customers for e scooters. As this number is very huge, there is a tremendous potential for investors to enter into this industry.

2) What are the possible concerns impacting the demand of electric scooters? How attractive is this industry? [Use Porter’s five forces model to analyze the industry attractiveness]

With the help of Porter,s five forces model, the e scooter industry can be analyzed as below.

1 New Entrants- As the demand for e scooter keeps on increasing globally, there will be more number of investors to enter into this industry.

2 Substitute products - With the increase in investors, they will be introducing the e scooters with their own brand name with different features and styles. So the e-scooter market will have lot of substitute products.

3 Rivalry within an industry- With the increase of new investors, everyone will try to promote his e scooter in the market with various attractive schemes and benefits. This leads to rivalry among the players within the industry.

4 Customers or buyers - With the increase of numbers of companies, the customers will have better options for e scooters.

5 Suppliers - With the increase of investors, the suppliers will also have better options to choose within the industry.

3) The industry is at a nascent stage and there are already several competitors such as Lime and Skip (Uber and Lyft have also entered this arena). How should Bird position itself to differentiate from the competitors?

Bird should position the e-scooters in following ways.

a) Competent Pricing of the e-scooter.

b) Availability of various models of e-scooters

c) Battery size, weight and recharging time.

d) No of miles covered in one recharging of the battery.

e) Availability of recharging stations at various convenient spots.

f) Low maintenance cost of e scooters and availability of service stations.

g) Ruggedness and Asthetics of the e-scooter.