A new wave of dockless bike-share startups want to revolutionize cycling, but they’ve already faced regulatory issues in the U.S.
New transportation startups enabled by the ubiquity of smartphones want to change the way you move throughout your city. As they begin operations, their revolutionary business models run into resistance from cities that are skeptical of their promises and worried about their impact. Sounds like an Uber and Lyft redux, right? But this time, the new technology comes on two wheels.
The rise of dockless, or stationless, bike-share systems—which allow users to find and check out free-roaming bikes with a smartphone and leave them anywhere they want once they finish their trip—can help expand the benefits of biking without the financial overhead, according to proponents.
“Bikes are like a city’s best friend,” says Rob McPherson, a cofounder of Baas Bikes, a D.C.-based company promoting dockless technology for college campuses. “This could be the next big evolution in public transit, if done well.”
Picking up where traditional bike-share systems, such as Divvy in Chicago, left off, these stationless systems, connected and controlled with GPS and mobile tech, deliver a more “frictionless” experience (to borrow a phrase from the startup world, which is beginning to invest in the technology—LimeBike, which is seeking to enter the Bay Area market in April, just raised $12 million from venture capital firms, including the influential Andreessen Horowitz). When spared the expense of docking stations, cities can devote more money to bike infrastructure, and more riders get access to cycling at a cheaper cost.
But some city transportation officials in the U.S. where these systems have already rolled out aren’t fully convinced. Two companies working in those markets—Bluegogo in San Francisco, and Spin in Austin—have already run into issues, making the Uber comparison even more apt.
Maddox, who is also on the board of directors of the North American Bike Share Association, a nonprofit promoting the expansion of the industry, is for technological innovation and an expansion of bike-share systems, as long as companies play by the rules.
The next phase of city bike sharing
For startups pushing dockless bike share, the time seems ripe. In the space of a decade, the technology has proliferated across the country, with 55 systems and more than 42,000 bikes available in a number of U.S cities, with more growth expected in the coming years.
By freeing systems from infrastructure investments, the dockless concept hopes to make expansion quicker, help it reach more underserved communities, and save riders money (Bluegogo charges $0.99 per half hour, while Spin costs $1 for the same ride).
According to Maddox, the systems don’t use new technology; it’s more of an evolution of what’s already on the road. Current systems in Portland and Phoenix already utilize smart bikes with cellular hookups on each bike, which can be parked anywhere, but include “dumb” docks (just branded bike racks, really) to incentivize centralized return so operators can better monitor, maintain, and track their fleets. Operators of the new systems without docks or physical infrastructure promise that they’ll be able to leverage technology to help them reposition and recover bikes to avoid cycles clumping in high traffic areas, or potentially being left on the street or in unsafe places, blocking traffic.
According to Derrick Ko, co-founder of Spin, his company has a strong technical team analyzing traffic flow and publicly available data to smartly and efficiently position bikes. With the right systems for placement in place, he thinks Austin can be a huge market (Spin plans to put 100,000 bikes on the road in the U.S. this year).
“It’s the last step in solving the last-mile transportation issue,” Ko says. “We’re talking about affordable transport available to everybody.”
Some even go a step further. McPherson’s company, Baas (short for “bike as a service”), doesn’t even provide the bikes. Their sharing system, currently in use at James Madison University in Virginia and Salisbury University in Maryland, provides digital locks, which look like big gray water bottles, that can be attached to any bike. According to McPherson, the technology lets schools purchase their own fleet, and allows students to add their own, old bikes to the marketplace.
“We want to get bikes into the hands of people that want them,” he says. “We cost pennies compared to normal systems.”
While a transit planner like Maddox agrees the technology could extend bike sharing and provide access to underserved areas, he’s slightly skeptical of the business models of these new companies. He’s not sure of the maintenance costs required to both reposition bikes (an expense shared by all bike share programs) as well as clear away bikes that are blocking right-of-ways or left in the wrong place.
China’s Great Wall of discarded bikes
Part of the skepticism comes from the industry’s history in China, where stiff competition between startups has led to a literal flooding of the market. Tapping into the country’s traditional embrace of cycling, as well as the growth of the sharing economy, companies such as Mobike and Ofo have aggressively expanded dockless technology in Chinese cities. The rush, dubbed “Uber for Bikes,” is frenzied: Mobike alone has introduced roughly one million bikes into 18 Chinese cities.
McPherson says the mad rush to get bikes on the street was due to China’s strong cycling culture, and the government’s quest to fight smog and pollution. The government promoted the growth of these companies, and since most bike manufacturing in the world now happens in China, the startups could “flip the switch and make thousands in a week.”
But that boom, which is prepping for export to cities across the world, has its downsides. The increase in dockless bikes hasn’t been met with a parallel drive to build cycling infrastructure, and maintenance and fleet upkeep has been fickle in many cases. There are numerous reports of users discarding these rental bikes in huge, colorful piles.
“The strategy we’ve seen in China is to flood the market with bikes, so there are all these companies out there that aren’t really interested in promoting bikes in transportation, they’re just trying to get and spend venture capital money,” says Maddox. “We’re seeing that strategy begin to emerge in San Francisco and Austin and other cities.”
Chinese companies are now eyeing Britain and the U.S. as potential markets. Bluegogo, which had a false start in San Francisco, is the U.S. arm of a company that has 130,000 bikes operating in China.
According to a spokesperson for Bluegogo in San Francisco, North American operations will be totally different.
“We will not be operating like the company does in China,” says Lindsay Stevens. “We won’t be allowing bikes just anywhere on the street. They operate lawlessly in China.”
Making waves in San Francisco
Another big part of the skepticism comes from the rocky reception some of these new systems have had in the U.S. Bluegogo’s introduction to the San Francisco market recalls some of the same pitfalls experienced by transportation companies like Uber and Lyft: a new tech company jumped in, not willing to wait for the city to update rules and regulations to accommodate a new business model.
According to Maddox, Bluegogo began operating without permits in late January. When city transportation officials initially expressed skepticism about the system opening in San Francisco, Bluegogo decided to try a different tactic: they purchased 19 private parking lots around the city, setting them up as “stations,” to get around city complaints.
“The problem was I didn’t have regulatory authority over them,” says Maddox. “We don’t want to stifle this technology. But it’s important for cities like San Francisco for there to be a level playing field. When we negotiated a contract with Motivate [the city’s traditional bike-share system], we got bike redistribution, certain safety standards, maintenance standards, and a system compliant with existing rights and regulations.”
Bluegogo’s rollout was also met with condemnation by many city politicians, who called the system a safety issue and cited frustration with similar moves by tech companies, such as Uber’s botched December rollout of driverless cars without permits. Spin faced similar issues in Austin, where the city temporarily shut down the system during its SXSW rollout due to fears the bikes would block sidewalks.
“Every single time, these arrogant tech companies ask later for forgiveness, or ask later for permission,” said San Francisco city supervisor Aaron Peskin, according to the San Francisco Business Journal. “This is the first time where San Francisco has gotten ahead of the curve.”
On March 24, 2017, San Francisco approved a new law, co-sponsored by Peskin, establishing rules and a permitting process for dockless systems, which will go into effect in late April.
Stevens, Bluegogo’s spokesperson, says there’s a misunderstanding about how her company operates.
“If the bikes are parked illegally, we can easily fix them up and move them back to the public bike racks,” she says.
Stevens says the company is dedicated to promoting health, extending bike-share systems into underserved communities in San Francisco, and expanding the availability of cycling in general. Plus, Bluegogo, at just 99 cents for every half-hour of use, is cheaper than Motivate, the Ford-sponsored bike-share system which uses docks, costs $9 for a day rental (Bluegogo also just cut their $90 deposit fee to use the system, making it even more accessible).
“We didn’t realize it would take so long to get approved, but we’re happy to work with the city,” she says. “Everybody wants to start up here in the big tech hub. We want to show other cities that legislation can work. If we can do it here, we can do it anywhere.”
According to Stevens, Bluegogo started the process of suspending operations yesterday, and will soon have all their bikes off the road, in anticipation of working with the city on the new permitting process. One the process begins—Maddox expects to start permitting in late April—Bluegogo expects to scale quickly, eventually putting few hundred bikes on city streets this spring.
During a follow-up call this morning, when Maddox was informed that the company had suspended operations, he said it was “news to him.” He opened up the Bluegogo app and saw bikes spread across the city.
“Bikes are all over San Francisco right now, and they haven’t cleaned up their mess yet,” he says. “It’s going to be a tall order for them to get a permit, based on the behavior we’ve seen so far.”