The Information got their hands on Bird’s presentation to current investors and the overall picture is not pretty. The e-scooter company, currently valued at $2.3 billion, is low on cash after losing $100 million in the first quarter of 2019. This despite the fact that the scooter company has raised more than $700 million in a year and a half.
As one does when money is tight, the company is looking for a few hundred million extra bucks from investors, The Information further reports, because scooters are the future of urban mobility.
The company is trying to paint a rosy picture for potential investors by talking up their newer, more durable scooters, but the overall numbers are shockingly bad. Apparently, the company writes off about $1 of each ride, or about 25-30 percent of the revenue of each ride, for depreciation, because the scooters simply don’t last very long or get thrown into lakes or stolen and such. It also pays a fifth of per ride revenue for charging. And those are with the newer scooters that are apparently more durable and longer-lasting.
Overall, it’s really hard to see the long-term business proposition. As The Information noted:
Bird told existing investors recently that, over two four-week periods in May, June and July, the newer versions of its scooters, known as Bird One and Bird Zero, pulled in more revenue per ride on average than the company had to spend on repairs, replacement, insurance, payments operations and charging costs. The contribution margin, or revenue that remains from each scooter ride after costs, for those four-week periods ranged from 15% to 30%, according to the company. The figures exclude R&D and general and administrative expenses such as staff salaries and stock payments.
That last sentence sure does seem important! Elsewhere in the article, The Information said Bird generated between $25 and $40 million in gross revenue in Q3 and Q4 last year, respectively. That means, at most, the company had $12 million per quarter left over to spend on such trivialities as paying employees, renting offices, and so on, to say nothing of research and development.
It’s worth remembering that Bird’s founder is Travis VanderZanden who, prior to founding a scooter company, was COO of Lyft and VP of International Growth at Uber, the two poster companies for losing a crap ton of money because business models that involve making money is for suckers.
And it’s not like investors have significantly punished either of those companies for failing to make money. So why should VanderZanden et al try anything different this time around? After all, he has certainly made plenty of money.