Spin And The Urban Commuter’s Last Mile Problem

Globally, bike-sharing, particularly dockless bike-sharing, has exploded of late. In the last twelve months alone, China has seen over 30 dockless bike-sharing startups enter the fray — though that particular market is currently dominated by two large competitors in the space — Ofo and Mobike. Those two leading firms have raised a combined $1 billion in fundraising dollars between them.

Talking to Karen Webster earlier this summer, Mobike’s Head of International Expansion, Florian Bohnert, said that bikes are a winning strategy for consumers nearly worldwide — and dockless is the wave of the future.

“Bikes are really culturally agnostic; it doesn’t matter if you are in Europe, North America or Asia — everyone pretty much understands the concept of bikes, and the vast majority of people know how to ride one,” Bohnert told Webster. “The problem with docking stations, other than the space they take up, is that consumers have to find them — and often can end up walking to get the bike.  Dockless bikes solve that pain point.”

And while both Ofo and Mobike are eyeing U.S. expansion, the market stateside in bike-sharing is still largely dominated by dock-based solutions — from metro Boston’s Hubway service to Los Angeles’ Metro Bike Share.

But, Euwyn Poon, co-founder and president of Spin, told Karen Webster in this week’s Matchmaker Is In interview, that many of those docked bike-sharing solutions are entirely publicly owned and have been a burden on the cities that operate them. Spin is a San Francisco-based bike-sharing service that announced news that it is going online for the first time this week in the Bay Area — after previously having launched in Seattle and Dallas.

The firm’s Seattle launch, Euwyn Poon told Webster, was greatly boosted by the fact that one of those publicly owned docked bike solutions, Pronto, was folding just as they were launching in the city earlier this year.

“In Seattle, it was an interesting experience. We came into the market right when their existing station-based bikes had folded,” Poon said. “Pronto was paid for by the city government, and many of the previous bike-sharing systems were sold to local governments … Cities are looking to augment their existing station-based system because their geographic reach is pretty limited and controlled entirely by infrastructure.”

Spin, he noted, offers their urban partners a very different proposition. The city pays nothing — in fact, in some cases Spin pays them a fee to operate. As a private enterprise, Spin builds its own bikes, is responsible for meeting customer demand, maintains and upgrades the equipment and manages theft and damage.

“We come in and take nothing from a location; we ask for permission, and, in Seattle, we are paying a fee for each bike we place on the street. Dallas, for one, is excited to have private companies come in and offer something that can be up and running in a week or so at no cost to them.”

Moreover, Poon said, the cities get happy constituents with access to bikes on demand, without having to triage urban space that might otherwise be used for parking, and the benefit of streets that are less crowded with cars and less choked by smoke from exhaust systems.

“This is quickly becoming more than a niche idea,” Poon emphasized. “As a company, we believe this is going to be a really viable alternative to commuting and an environmental necessity when you think about all the smog and pollution cars are spewing out in a crowded city environment.”

But to build that really viable alternative, Poon said is not without its challenges.

Keeping Bikes on the Road

Everyone who wants a bike needs to be able to get a bike — that is a primary challenge. Poon said it’s also the first major data challenge to be solved. A challenge that piqued the natural curiosity of the software engineer in Poon and his colleagues and resulted in the development of a full software stack that works with a bike’s GPS locking system and can monitor the whereabouts of the bikes — where users are opening the app and looking for bikes, where bikes are being dropped off and what the peak usage times and areas are.

Poon said that since rebalancing supply is a major part of their business, access to that data in real time helps Spin get the right bikes to the right places. Spin has contract workers who move bikes in the middle of the night at peak times, and they are actively working on ways to better develop the technology to refine that process.

Poon told Wester that the current average length of a ride is about 16 minutes — and even that average might well be expected to come down as the service expands its footprint both geographically and in consumers’ lives.
 
The Bike-Sharing Future

Today, Spin makes its money by charging users for riding the bikes — at a rate of $1 per 30-minute interval (one cannot buy a fraction of 30 minutes) or for a monthly cost of unlimited rides for $29. But at a buck an hour with an average ride of 16 minutes, it takes a lot of riders and a lot of bikes, Webster pointed out, to make money in a metropolitan area that counts bike-riding commuters in the tens of thousands and not the hundreds of millions.

But, Poon intimated in his conversation with Webster, that is only Spin’s first revenue stream — it may well not be its last.

“We are charging our users for our service, but at the same time [there] are a lot of interesting possibilities for revenue generation in the future.”

He explained that the definition of the sharing economy user is expanding as the number of startups — not to mention international popularity of these types of services — is growing.

Users who commute in on public transportation who want to quickly commute to the urban core, for example, are a common use case; or consumers who need a bike for a few things within the urban area where they live but who lack the storage space for bike ownership.

The bike-sharing service, he said, also appeals to cyclists who are already bike owners but who don’t fancy taking their expensive bike out and about in the city during the day for quick commutes — risking theft or vandalism.

“I’ve owned a few nice bikes in my time and had them stolen while they were locked up at work. There are a surprising number of hardcore cyclists who ride their personal bike to work but prefer to leave it safely locked up in their office during the day while they use a Spin bike out in the city.”

But more than just expanding the reach of who bike-sharing reaches in urban environments, Spin is hoping to develop the ability to refine what the service can do in collaboration with its partners in urban commerce and the sharing economy.

“It is pretty exciting what we are doing with local retail and using our mode of transport to drive our riders to them,” Poon told Webster. “We are scratching the surface on the uses of our platform.”