Electric scooters have flooded the streets of several cities across the U.S., propped up by venture capitalists backing several scooter renting startups that are duking it out to become Scooter Champion. One in particular, Bird, is raising an additional $300 million in new funding, according to The New York Times, which would value it at $2 billion. To rent scooters.
The Times charitably characterized this moment as a cap to “one of the fastest and largest start-up fund-raising frenzies in recent memory.” I mean, it’s now known as the goddamn Scooter Wars.
From the Times:
Last month, Bird began raising $150 million at a $1 billion valuation, which quickly rocketed higher because of investor interest, according to one person. Bird, which was founded by Travis VanderZanden, a former executive at Uber and Lyft, in September, had previously raised $15 million in February and $100 million in March.
A Bird spokesperson wouldn’t comment to the Times, but the latest influx of funding was reported earlier by several other outlets. The capitalists are gushing with joy about their scooter investments, so they’re probably just champing at the bit to spread the good news about their scooter firm.
Bird, like the other one-word scooter startups, lets you find a scooter using an app and charges a per-minute fee. You drop it wherever you stop, which expectedly ended up annoying so many people that cities like San Francisco had to roll out a permitting system. My colleague Andrew Collins, grudgingly, tried out a Bird last week and fell in love with the idea.
I’m sure it’s fine—I’ve yet to try one myself—but the nagging noise bleating in my ear is shouting: “How’s this dang idea going to ever turn a profit?”
Again, the Times:
Bird’s strategy and fund-raising bonanza are reminiscent of the days when Uber and Airbnb clashed ferociously with American cities as they fought to flood the market. The playbook is to become ubiquitous and popular with consumers overnight so that city regulators have a harder time banning the product and instead have to negotiate rules.
Ah, cool. So there’s no other idea than ... monopolizing the market? Which ... hasn’t worked for Uber, yet. After nearly a decade in business, Uber still burns cash at a significant rate.
A Bloomberg writer scratched out some numbers the other day, too, and found the potential margins in a long-running scooter business seem pretty damn low.
Bird draws comparisons with Uber, but there are key differences, the main one being that Bird actually owns the scooters. This means that the (theoretical) profit margin on scooter rental is pretty low, with estimates of about 10 percent. If you figure that Bird might make around $2.50 per ride in revenue, there are some estimates that Bird might make $14 million a year. But after paying for maintenance, charging and overhead, there might only be $1 million left.
A $2 billion scooter company. What a damn world.