Bird Scooter’s chief product officer (CPO) shot back at skeptics this past week in a Linkedin post aimed at reassuring investors as the Santa Monica-based company tries to raise money amid mounting concerns about the viability of the micro-mobility business model.
“I rarely write about Bird’s business performance, because I find it distasteful/lame when people brag about being #1 of this or that,” wrote Ryan Fujiu. But in light of some “recent disinformation, I’d like to share some progress we’ve made.”
The CPO ticked off several performance metrics (charts included), noting the company is growing revenue four to five times year-over-year and is “massively profitable” on every ride.
“We are making $1.27 on every ride after all ride-based costs are deducted on Bird Zero and Bird One (including cost of the vehicle). This is a 30 percent plus contribution margin.”
Fujiu’s defensive play followed a report by The Information citing Bird revenues of $15 million over the first three months of 2019, down from $40 million in the fourth quarter of 2018 and $25 million in the third quarter of last year. The “disinformation” Fujiu refers to is a statement in the article claiming Bird saw losses of $100 million in the first quarter of 2019.
That figure was not a loss but a one time accounting write-off as a result of vehicle depreciation, Fuijiu said.
The tit-for-tat exchange comes as investor appetite for scooters appears to be on the wane. Scooters are seemingly ubiquitous and seemingly universally adored by the consumers that ride them. Even city regulators who once frowned on the new mobility option seem to be coming round, with many if not all viewing the scooter as a relatively easy, fun and eco-friendly way for residents to travel, especially for short trips.
But dollars invested tell a different story. According to Asad Hussain, emerging technology analyst at PitchBook, although venture investing in micro-mobility exceeded $3.8 billion in 2018, just $968 million has been invested in the first half of 2019.
“We believe Bird’s management team is at a critical junction,” Hussain wrote in a recent note, “as it seeks to convince skeptical investors that its scooters can operate long enough to justify their higher manufacturing cost, while investors become more selective in how they deploy capital.”
Bird reportedly has told potential investors it wants to raise $300 million by the end of the summer. The company’s previous funding round was based on a $2.3 billion post-money valuation, which it reached after only 12 months of operations.
The e-scooter space is marked by sky high valuations attained in remarkably short periods of time. San Francisco-based Lime, Bird’s biggest competitor, raised $310 million in February at a valuation of $2.1 billion.
These figures have raised some eyebrows among industry analysts.
“We believe high valuations in micro-mobility have been driven by investor exuberance and high expectations for the total addressable market available to companies in the space,” Hussain told FreightWaves in an email. “Going forward, we expect investors to be more selective in deploying capital into the industry as it faces mounting operational and regulatory challenges.”
Existing investors are more upbeat. The e-scooter business model bucks conventional investment wisdom, acknowledged Sarah Smith of Bain Capital, a Lime investor, during a Tech Crunch mobility event held last week in San Jose, California. Growth investors usually have access to two to four years of data, Smith said. At the time Bain invested in Lime, in the early growth stages, the firm had only seven months of data.
“Because it’s grown so fast, it’s an anomaly,” she said.
A “near vertical demand curve,” coupled with sharing economy trends, gave Bain the confidence to invest. “The confluence suggested this wasn’t just a fad,” Smith said. “But it’s certainly a risk. You have a physical fleet on the street; are cities going to invest in this? There are a lot of questions.”
Winter is another harbinger of discontent. Bird’s relatively weak showing in the first quarter was driven by cold weather in its core markets as ridership dropped even as the company invested heavily in expansion.
How scooter companies will slog through future winters, profit and loss statements intact, is unclear. General concerns about safety and dependability also plague the scooter business.
Over the weekend a YouTube star was killed in what is believed to be the first fatal crash involving one of the scooters in the U.K. In a separate incident that also occurred over the weekend, a U.K. teen is in critical condition following another scooter crash. The incidents occurred ahead of the U.K.’s transport minister’s meeting this week with the heads of major scooter companies, including Bird and Lime.
In the U.S., at least eight people have died riding electric scooters since 2017.
Bird didn’t immediately respond to FreightWaves’ request for comment.
But broadly speaking, the startup’s game plan focuses on making hardware improvements to its fleet so it doesn’t have to invest as much in repairs and replacement. In addition to some restructuring – laying off 5 percent of its staff – Bird has diversified in recent months including requiring riders to preload money into the app, selling its new Bird One scooters for $1,300 and franchising its scooters for expansion abroad.
The company also entered the e-bike market with a two-person moped.
Lime also has followed a diversification path, expanding its offerings from bikes and scooters to LimePods, a line of shared vehicles that bear a striking resemblance to the SmartCars launched by Car2Go more than half a decade ago.
As the industry matures, investors will take a more reasoned view toward the electric scooter companies, Hussain believes. Scooter longevity will be a critical factor for companies seeking to raise capital.
“Despite currently unfavorable unit economics, we believe micro-mobility could become a profitable, albeit low-margin business model if management teams can execute on manufacturing durable and cost-effective electric scooters,” he said.
If Bird’s Fujiu has his way, investors will also take a more holistic view of scooters as a game-changing mobility option.
“In the end, what matters to us is reducing traffic, pollution and congestion, making our cities a better place to live,” he wrote on LinkedIn. “We are also focused on building a profitable, sustainable business. It’s never easy to make positive change in the world, and create a great business. We respect others who do so and aspire to that ourselves.”
Google search for rental bike graveyards in China. And search for Bird Graveyard on Instagram. I call peak.
Ignore the positive change speech. This is about profit, period.
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