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Why Are Ride Sharing Firms Uber And Lyft Buying Bike Sharing Startups?

Ride Sharing Firms Uber And Lyft Have Acquired Bike Sharing Startups:
In April 2018, Uber announced that it had acquired Jump, a New York City based e-bike startup, for a rumoured $100m-$200m. The two companies were not strangers to each other as they had already been working together for the previous two months to integrate bike sharing options into Uber’s app. Jump now becomes a subsidiary of Uber. Dara Khosrowshahi, the CEO of Uber, officially stated that this acquisition will help Uber’s mission by “bringing together multiple modes of transportation within the Uber app—so that you can choose the fastest or most affordable way to get where you’re going, whether that’s in an Uber, on a bike, on the subway, or more.” Jump’s business currently includes 12,000 dockless, GPS enabled bikes spread over 40 cities in 6 countries. Access to Uber’s capital will allow Jump to increase investment and expand to more cities in more countries. If you are doubting Uber’s transportation ambitions, be aware that last year CEO Khosrowshahi told Wall Street analysts that he wanted to run bus systems for cities.


The Uber deal definitely acted as a catalyst for key USA competitor Lyft to acquire bike sharing startup Motivate for a rumoured $250m a few months later in June 2018. Motivate currently operates Citi Bike in NYC, Ford’s GoBike in San Francisco and other bike networks in Chicago, Boston, Washington DC, Portland, Columbus and Minneapolis. Overall, Motivate accounts for around 80% of bike share trips in the USA. Lyft plans to establish bike offerings in its major markets in the USA and to grow Motivate’s business in the markets where it already operates. However, it is not yet clear where and when Lyft will expand Motivate’s bike sharing service, and when Motivate bikes will be available in the Lyft app.

 

Jump Bikes.jpg

Above: Jump’s electric bikes
Source: jumpbikes.com

 

Why Are Ride Sharing Firms Buying Bike Sharing Startups?
The Jump acquisition by Uber clearly created a buzz in bike sharing startups. City officials are expecting a wave of venture capital funded bike sharing startups to cover major cities with their bikes in the next few months. Meanwhile Uber and Lyft have also applied for permits for electric scooters in San Francisco which announced a permit process for a 12 month pilot program in June. The reason behind all of this is as follows: tech firms are now racing to become the first to offer consumers a multimodal transportation service that allows them to compare prices across transit, ride hailing, car sharing vehicles, bike routes and walking. Companies like Uber and Lyft are in the process of transitioning themselves to be far wider marketplaces for transportation (or urban mobility platforms) rather than just ride sharing firms.

 

In other parts of the world, ride hailing firms have also expanded into bike sharing including China’s Didi Chuxing, Southeast Asia’s Grab and India’s Ola to protect themselves from competition. Didi and Grab have also made equity investments into bike sharing startups Ofo (Didi) and OBike (Grab) which could lead to these ride hailing firms acquiring these bike sharing firms in the future. The bike sharing market is currently growing at around 20% per year.

 

Motivate Bike.jpg

Above: Motivate’s Citi Bike program in NYC
Source: motivateco.com

 

How Do Bike Sharing Services Work?

  • Bike sharing platforms generally allow users to rent or return a bike in either a designated bike rack or any designated public bike parking area by using an app. These apps use your location to find the nearest e-Bike on the app’s map and users can then reserve an e-Bike by clicking on the bike icon. Unlocking an e-Bike is simple by scaning the bike’s QR code. Some bike sharing services charge a refundable security deposit but otherwise you pay low rates of based on an initial 30 minutes usage and additional fees thereafter depending on the service.
  • JUMP, for example, operates dockless, pedal-assist bikes (their batteries kick in when you start pedaling) integrated with GPS and a payment system. These bikes can be legally locked to bike parking racks or light poles, benches and utility poles on sidewalks. The bikes also come with integrated locks. Jump’s bikes cost $2 for the first half hour and 7 cents per minute afterwards.

Bike Share in USA.jpg

Above: Daily Active Users (DAU) in the past 3 months in the USA of bike sharing programs
Source: mashable.com

 

Personal Opinion:
Ride sharing firms have lots of cash and venture capital investors are betting that these transportation platforms are going to change car ownership in urban areas in the coming decades. The vision is for most urbanites not to own cars (city officials want to reduce the number of cars to reduce traffic congestion) and instead to use multi modal transportation apps to decide how to best get from point A to point B in the most convenient, economical way. With the advent of autonomous vehicles, this transportation vision becomes significantly more likely. Users can just call an Uber, reserve an e-bike or electric scooter, or take public transport. I personally do not enjoy driving and I think many people who drive to work, the gym or the supermarket, will quickly realise the benefits of having your hands free and time free while you commute so you can do more important things including working, studying, talking on the phone, surfing the web or social media or doing admin. The future of technology always looks a bit unclear but some tech firms are preparing for a world with less cars, less drivers and way more transportation options.

 

Feedback From The giffgaff Community:
Are you surprised that ride sharing firms Uber and Lyft are buying bike sharing startups? Do you think there are any synergies for ride sharing firms to buy bike sharing startups? Do you think ride sharing startups will successfully transition towards multimodal transport platforms in the coming years?


Thanks for reading!
Jeff Elephant

 

Jeff Avatar - Nov 2016.jpg Jeff loves tech, wine, exercise and travel. He posts every Friday morning.


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24 Comments
phenomenon

Interesting, thanks for posting.

guide

Makes sense to be able to offer multiple different options (and prices) on how to get from A to B within a single app. As you say, the utopia car solution is no one owning cars but everything sharing rides via driverless vehicles. Diversifying their portfolio with a multitude of different options is a smart idea.

consultant

Or you could just walk. It is shocking how close London tube stations, for example,  are to each other.

newcomer

It will be interesting if TFL London collaborate with Uber as there are many routes to London Uber can facilitate rather than jumping into the already busy city sharing startup.

giffgaff; ergo sum

thanks for sharing this it was awesome.

associate

Fantastic, well-researched article which enlightened me no end.  How things have changed.  Lots of people seem to be so time poor so probably appreciate different methods of lift sharing, etc.  I would certainly appreciate the cycle service if visiting places on holiday, but I wouldn't use it at home as I have a bike of my own.

virtuoso

I like the idea of e-bikes being available everywhere so this is a step in the right direction. Intersting blog. thank you.

newcomer

Thanks for sharing. Just studied an article on driverless vehicles this sums it up with alternative transport systems. Personal opinion is informative.

enigma

Very interesting blog article! Living in cities (London and Manchester)  has made me realise how biking is becoming a popular mode of transport and cities are starting to accommodate cyclists more. So it only makes sense that companies like Uber would want to get in on this from a business perspective. I think more cities are starting to do things like the "Boris bikes" in London  where you pay to use. Thanks for the blog article. 😁📱😊

aspirant

Thanks for the blog. It's interesting and I notice there are more of these bike schemes appearing all round the country.

Although I cycle a lot I have yet to try one.

Cheers