Page 23 - Forbes - Asia (June 2018)

round in March, a month Ofo seized on the idea and illed the streets with brightly col-
before Mobike, its rival in ored bikes that anyone could scan to unlock. “We had to adapt
China, sold to Meituan-Di- the business model,” says Ryan Rzepecki, the founder of Social
anping for $2.7 billion. Bicycles, a bike-share service that operates in 40 U.S. cities and
Ofo’s early start, though, saw two government contracts fall apart ater years of negotia-
won’t enable it to coast to tions. At his heels were other U.S. startups like Lime and Spin,
success in North Ameri- which are bringing the Chinese model to the U.S. Rzepecki re-
ca. here will be plenty of branded his company as Jump and sold it to Uber for about
homegrown competitors $200 million in March.
to ight of ater investment Ofo’s opportunity to enter the U.S. came last year when out-
in U.S. bike-sharing and doorsy Seattle, ater investing millions in a dock-based pro-
scooter-sharing companies gram, tore up the docks and opened the city to privately fund-
topped $260 million in the ed dockless systems. Ofo, Lime and Spin are all giving the city a
irst ive months of 2018, tryout. In six months the trio booked 469,000 trips, nearly dou-
according to PitchBook. ble what the dock-based system did during its entire 30-month
here’s another problem. lifetime. hat’s not good enough, though, with a bike averag-
Americans love their cars ing six uses per week, a third of what an operator will probably
as much as the Chinese need to make a proit.
love their bikes. “he cities In China, Ofo charges 15 cents for a ride. In the U.S. it gets
are built in a way where $1 and up. Buying the bikes is just the start of the operator’s
it’s car-friendly and it’s not costs: It has to pay people to rebalance bikes around a city and
bike-friendly,” admits Yanqi collect and repair broken ones. In China low labor costs mean
Zhang, 32, a cofounder of Ofo can hire swarms of people to comb the streets. For the
Ofo. “It did not look very U.S. Ofo had to develop sotware that would track how oten a
straightforward that we bike was being used. If a bike hasn’t moved in 24 hours, then it
could do any bike business.” might be broken or in an unreachable location, and Ofo sends
Chris Taylor, a former someone out to collect it.
Uber employee who is head Compliance costs? Nothing much, perhaps, in Asia, but
of Ofo’s U.S. expansion, something to be reckoned with here. Seattle requires compa-
knows he has an uphill ride. nies to respond within two hours to any bike parking com-
A polite Midwesterner who plaint. In Chicago, a new pilot is requiring bikes to lock to ob-
hasn’t owned a car in ten jects like a bike rack or signpost. Many cities also put limits on
years, Taylor, 36, didn’t even the number of bikes each company can deploy.
visit China before he took hen there’s the cost of keeping up at the high end of the
the job to translate Ofo’s market. Bird, in Santa Monica, California, introduced motor-
business for the U.S. mar- ized kick scooters in September 2017. Spin gets $20 a day per
ket. He knew that what scooter in San Francisco (its bikes bring in around $1 a day).
worked in China, with its Lime also added scooters to its lineup alongside electric power-
cheap labor costs and little regulation, doesn’t necessarily work assisted bikes. Not to be let out, Ofo will add battery-powered
over here. bikes and scooters this summer.
But there are signs Americans can be persuaded to part with Hype is not enough. As Susan Shaheen, co-director of the
their car-centric ways. In 2010, people took 320,000 trips on Transportation Sustainability Research Center, points out: Re-
bike-share systems in the U.S., according to the National Asso- member the frenzy around the Segway a decade ago? It didn’t
ciation of City Transportation Oicials. hat number jumped exactly transform transportation.
to more than 28 million in 2016 with the rise of dock-based With 9 billion rides cumulatively (and 1 million in the U.S.),
bike-sharing, which requires customers to ride from one bike- Ofo is probably well short of the volume it needs to be prof-
parking station to another. itable on its huge asset base. But there’s no reason it can’t get
Dock-based rentals have two things going against them. there.
One is that they are less convenient than free-loating leets. he company plans to expand from 30 cities here to 100
he other is that the docks cost a lot of money—$3,700 for by the end of the year. If it survives, Ofo could become one
each bike and its dock in the Washington, D.C., program. Dock of the irst Chinese companies to be a household name in
systems wouldn’t exist without either handouts from the gov- the U.S. “I just knew right away that this technology was ex-
ernment or revenue from advertisers like Citi (in New York actly what is going to fundamentally change how people get
City) and Ford (San Francisco). around in cities,” Taylor says. “You have to have that belief to
Smartphones make docks a lot less compelling. Mobike and will it to reality.” F

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