↑    eScooters in Copenhagen’s central plaza Kongens Nytorv.

Photo credits: Liselotte Sabroe for Berlingske, August 19th, 2019

The article provides a inventory of issues that have arrisen in cities that have licenced e-scooter sharing companies

Navigating the micro-mobility mess: VCs vs regulators

by Erdem Ovacik  –  23 Sept. 2019

The micro-mobility industry is going through a special period of hype. This hype has produced the bike and e-scooter sharing companies (Bird, Lime, Voi, Tier, Circ, Dott, Mobike, Ofo etc.) who reportedly signed up users faster than any tech innovation before. And they (supposedly) support (somewhat) the green vision. Behind these companies are investors who made aggressive placements and wish to tell a good story.

Yet, this the good story is not what we experienced in the past years with business models not adding up, and citizens and policy makers feeling alienated by these companies. Investors are sending the signal that tech companies don’t have to prioritize the needs of the society. Writing fat cheques, they can grow trends that make money, and can be green-washed. Why bother with understanding and dealing with regulatory concerns?

Before going further, short clarification: I am cofounder and CEO of Donkey Republic: a leading bike sharing service operating across Europe since 2015, HQ’ed in Copenhagen. We aim to build the worlds most responsible, sustainable and scalable micro-mobility service. Hence my interest in the topic.

Problems with eScooters

After about one year of operating in Europe, the conflict of interest between e-scooter companies (and their investors) and the cities where they operate is increasingly clear. Many cities are now limiting the use of e-scooters after experiencing accidents, a cluttering of side walks and increasing doubts in whether the devices are actually contributing to solve the car congestion problem.

It seems the investors who ventured into European e-scooter market have not payed enough (or rather, any?) attention to what the cities had in mind to solve their congestion issues. Moving approximately half-a-billion USD worth of American capital to European markets, these venture capitalists (including Balderton, Accel, EQT, GoogleVentures, Index, Sequioa) investors had one aim: to be the first to scale the new vehicles in Europe that were a hit in the USA. It seems an American perception and lifestyle is pushed onto European cities, expecting their norm to be adopted. So, what is the problem?

Accidents

Scooters seem to be killing and injuring people riding them as well as others at a higher rate than e.g. bicycles. Stockholm hospitals report that they receive on average one patient per day who is injured by escooters. This constitutes a cost on public pockets. And it makes sense that there are these accidents: the vehicle is much shorter compared to a bike but its centre of weight as high as a bikes, while it goes as fast as a bike.

Environmentally not sustainable

~14kg of plastic, metal, and most importantly, li-ion batteries. Extracted and manufactured for average usage time of 2–3 months. Many are ending up to rot on the streets, and in rivers. Since scooters are collected daily by vans to be charged, and being replaced, it may well be that they are introducing more car trips than they are removing. Remember: almost all scooters are daily collected and redistributed for charging and there aren’t any studies to prove they have a positive impact on usage as an alternative to cars.

Parked everywhere

It’s not entirely e-scooters fault: cities don’t have parking spots for them. However, that doesn’t mean companies offering e-scooters shall not get any of the blame in defending the free-float nature of the vehicles. Take it to the metro, leave it in front of the entrance. And I have even seen some on the platform! Leave it in the middle of the pedestrian walk, where the mom pushing the cart will have to go around.

Cities are tired of it. Lisbon, Paris, Hamburg are requiring operators to use specific locations to park the vehicles. Such virtual stations can limit the location where the vehicle can end up after being rented — just like Donkey Republic. Of course, while helping the city’s goal, this comes at some reduction of the rider’s convenience. After all, would you make the 300m trip on the scooter if you had to walk 50m to get it, or to drop it off?

Lack of physical activity

Walking or biking is active mobility. Standing up on a brick isn’t. Studies show great public health improvements when people get their 30mins of moderate exercise a day. A Copenhagen city study shows 0.14 € saving of health-related social costs for every km of biking thanks to physical activity. Cities clearly prefer active mode of transport over inactive.

Not affordable

E-scooters are too expensive for commuters. With a per trip average price exceeding €3, two daily last mile e-scooter journeys of mere 15 mins makes the service economically unattainable for most commuters in European cities. Taking at least two such journeys per day, a commuter needs to spend more than 120 EUR per month on her last mile compared to a 60 EUR monthly train pass. That is why at Donkey Republic we offer bike rides at 10€ per month to commuters.

Loss-making business

Given each trip costs e-scooter companies €3 or more per trip (see McKinsey study) and they charge less than that, the business is a large loss-making trap. Bird’s financial difficulties should be a signal to others in the industry. But of course, like every loss-making business, it takes time until a lot of money gets burned and markets become convinced that the numbers do not add up, or will not anytime soon. In the meanwhile, other promising and sustainable business models and initiatives may suffer public attention.

Investors vs Regulators: Whose ‘will’ shall win?

Regulators find themselves in a difficult spot when there is a hype, and they have to do the task of public education concerning issues of environment, health, space, accidents.

No doubt, we do need to get private cars out of the cities. We need to reduce the congestion, air quality, physical activity and space issues in cities.

However, it seems investors backing the scooters have not weighed the social pluses and minuses. In fact I unfortunately know that many of the investment decisions into these scooter companies came after at few weeks’ usage numbers and found it irrelevant what cities have to think or say about the devices.

Time to Challenge the Silicon Valley in the Driver’s Seat

During the past decade, we witnessed much disregard for common good and lack of willingness to engage with regulators by Google, Facebook and Uber. The culture that runs these big tech companies seem to also govern the capital and culture behind the aggressive micro-mobility companies: “Ask for forgiveness not for permission”, right? Perhaps it’s time we update it to, “Ask for permission, invite for dialogue, share data” or simply “Be a good citizen!”.

It seems that some in the tech community in the Valley with their deep pockets feel entitled to not only spot but create mega-trends. Stuck in their echo-chambers, they seem to find it easy to make otherwise non-sensible bets in f.x. European mobility space given everybody around them (which is their peers) talk about how future will be this and that. Of course that group doesn’t include the authorities they should have reached out to, first.

Look at the most recent act of GoogleMaps. I have been a loyal customer of GoogleMaps, like 80%+ of European citizens, and I am quite disappointed by seeing this:

GoogleMaps now nudges you to take a Lime escooter when you’re asking for walking directions!

So many things are wrong with this, it’s hard to know where to start. For one, GoogleVentures is a major investor in Lime, and by not showing any other vehicles or brands, Google is abusing its dominant market power.

Then, it’s also not considering what is socially desirable. Do we want people to replace walking trips with standing on a brick? And pay a fortune for it?

What GoogleMaps doesn’t show is the cost of the trip, the health benefits you would make if you walked, and bikes that may be available, i.e. Donkeys.

In the meanwhile, Lime prides itself for reducing car usage in cities. At least the company could have asked to be shown as alternative when people are looking for driving navigations, not walking directions!

Aligning business goals with social goals requires active communication with regulators. And I get that it may be difficult to find common language and talk to civil servants or politicians about technology and possibilities. We still have to rely on our democratically elected authorities to call the shots. And work with their limitations: legislations, budgets, processes. And sure, let’s make our democracies work better!

Many in the US challenge the role of regulation, might not see why/how GoogleMaps results should be regulated, and simply let people to choose for themselves. But we know better, at least in Europe: government is there to reflect our collective understanding of social welfare. The Danish government nudges you to eat well, to exercise, to use bikes. It is well conceivable that it could also regulate what kind of mobility GoogleMaps promotes. The solution for tech cannot be (at best) to ignore social goals, and (at worst) overrule them with sheer force of capital.

I was at an OECD meeting this summer, bringing up the issue with lack of (appropriate and fast enough) regulations in the micro-mobility space. One of the ambassadors‘ eyes lightened up and he asked me: “Do I hear you correctly that you are a company who advocate for regulation?”

Yes, we do, and we think the era of the “ignoring regulators for as long as possible” kind of business growth is — or should be — over. Because the framework established by regulators is a great thing for business. It is a guideline that can help the industry build on the right fundaments. Investors increasingly get that. But those who don’t get it are a liability to everybody.

P.S. There is a new awakening amongst the European tech community. TechFestival in Copenhagen brought together a group of 150 (including myself) publishing the Copenhagen Tech Letter in 2017. This year we published the TechPledge. If you like this article, feel free to have a look and take the pledge!

View original article at medium.com