Dockless Bikeshare Companies Want to Compete With City-Run Monopolies

What happens when private bikeshare companies approach the public sector?

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Sep 13 2017, 2:00pm

Image: Spin

In early August, a California-based bikeshare startup called Spin was planning to demonstrate 300 shiny new bikes in New York City for the very first time. Then it received a cease and desist letter from the Department of Transportation that thwarted those plans.

City councilman Eric Ulrich, who invited the company to do the demo, wasn't happy.

Euwyn Poon, the co-founder of Spin—which already operates in Seattle, Dallas, and San Francisco—told me they didn't have the permit they needed. But the dockless shared bike entrepreneur still has his eyes on the city. "We're pretty active there and trying to get this out," Poon said. "I think there's a fantastic market."

The challenges that Spin is facing in New York come at an interesting time for bikeshare programs in the US. Some cities, like DC, New York, and Chicago have well-established systems like Capital Bikeshare, Citi Bike, and Divvy, respectively—public-private partnerships that reduce traffic congestion and positively impact health. But the country still lags behind its European and Asian counterparts in turning biking into a common means of transportation. Even with some gains, less than one percent of Americans commute via biking as of 2014, the last relevant census data available.

Several small companies are hoping to tackle this issue with scrappier solutions that don't require years of planning and infrastructure. And there's plenty of money riding on their success: A Beijing-based company called Ofo raised $700 million earlier this year, and Spin raised $8 million this summer.

But as they introduce new ways to get bikes on the road, the startups also have to grapple with slow moving bureaucracy—and safety concerns—of local governments that don't know what to do with them. This becomes especially difficult when competing with existing bikeshare programs that the cities have heavily invested in, even if they're mired by debt and don't reach every corner of the metropolis.

"Bike sharing represents the future, and I don't believe we should be protecting Citi Bike as a monopoly," Ulrich told the New York Post about the city's system.

CitiBike in New York City. Image: Billie Grace Ward/Flickr

Bikeshare startups largely offer a similar stationless model, unlike the already entrenched systems in many cities. Instead of bike docking stations and physical keys, companies like Spin, Mobike, and Ofo offer bikes that have embedded GPS systems. People use mobile apps to locate and rent the closest bike, which can then be parked anywhere in the city.

These programs are new to the US, but have already been used millions of times in other cities across the world. Ofo, for example, has 2.5 million bikes in operation, and runs in at least 40 cities in China. Mobike, which also started in China, recently launched in Manchester, England.

There's no question that stationless bikesharing systems have, and could, lead to increased bike accessibility. "There's a lot of communities that haven't had bike share, they couldn't figure out how to do it," Gabe Klein, former commissioner of both the Washington, DC, and Chicago departments of transportation, told me. And he said they could get to places that other bikes can't. "It's conceivable that they provide first and last mile connectivity."

Klein, who spearheaded the Capital Bikeshare program in DC, still prefers the docked system, and pointed out that there are potential drawbacks to bikes that don't have designated parking spots in a city. In Singapore, for example, the city had to introduce new rules after the dockless bikes were left strewn across the city, and hundreds were impounded.

While each city and country has drastically different biking traffic and infrastructure, the US could face similar problems as Singapore. As I've reported before, Google's free bikesharing system in Mountain View, California, has been plagued with vandalism—dozens of bikes have been thrown into a local creek and many residents see the bikes as a nuisance. Mountain View's experience might be foretelling.

Poon, the founder of Spin, doesn't seem worried about the possibility. He said Spin's local operators pick up and redistribute the bikes throughout the day to make sure there isn't cluttering. He said with competing bikeshare companies, this particular hurdle actually makes them more cognizant. "It creates incentive for each company in the space to be efficient," he said.

But there's also the problem that I keep mulling on, as a daily bike commuter in New York City's hectic bike lanes: traffic. What happens when hundreds or thousands of new bikes from various competing companies are introduced to cities that already have problems supporting their bikers? While the lanes here are far from crowded, I already dodge electric bikes, cars, and scooters who think they should be in the bike lane, and navigate roads that have no bike lanes at all.

A spokesperson at New York's Department of Transportation told me several companies like Spin and Ofo have approached the city, and that conversations have been "informational and preliminary." She said that New York also plans to double the number of regular cyclists by 2020, and expand on its 1,100 miles of bike lanes.

But the spokesperson also said the city will focus on "neighborhoods with existing bike share and neighborhoods with high ridership but low bike network coverage." That means there could be little focus on places that lack existing bike infrastructure—which all seem like ideal neighborhoods to use Spin and Ofo, since they don't require docks.

Both Klein and Poon think that it's more of a chicken and egg argument: get the bikers, then bike lanes will come. Right now, with so few Americans commuting on a bike, cities don't always prioritize their safety. But bikeshare programs have proven to increase the number of bikers, which makes the roads safer for everyone.

"The enemy is a single occupancy car"

"How will we ever build the facilities if we can't get people riding bikes?" Klein said, pointing to the the new bike culture in Washington, DC that arose after Capital Bikeshare was introduced. "Now you come to DC and it's safe to ride."

Spin, as well as its competitors, often roll out bikes in phases and test how they fare on the streets. It currently has around 1000 bikes in Seattle, and the team is gathering feedback from users and city before putting more on the road.

Read More: Citi Bike Is Drowning in Debt, But It's Too Big to Fail

If dockless bikeshares do take off, the trend could be especially effective in smaller cities, where car traffic is still an unnecessary burden. And Klein said most American cities would be remiss to not allow private companies to help expand their transportation systems without having to pay a dime.

"If the government is a little more savvy about leveraging [the] private sector they hold the keys to the house," Klein said. "The enemy is a single occupancy car."

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