Scooter Mayhem

July 30, 2018

This past week I was sitting in my car at a red light when I noticed something whiz by me heading in the wrong direction. After checking my rear-view mirror, I realized that it was someone riding on a “Lime” motor scooter. Lime is one of the recent startups in the growing shared economy space. The shared economy is defined as online peer to peer markets of products or services, like Uber or Airbnb. These companies are both good examples of how quickly startups in the shared economy can grow from simple ideas into companies worth billions. Lime is just like Uber, but for motor scooters.

Just over three weeks ago, Lime and one of its competitors, Bird Scooters, announced the closing of investments that value each of the companies at over $1 billion. Bird later closed an additional round of funding valuing the company at $2 billion. The valuations may seem crazy, but what is even more amazing is that both companies were only started in 2017.

Shared scooters can now be found on most street corners around Atlanta. To get a ride you begin by downloading the phone app. After entering in your payment details and contact information you are ready to go. The typical cost structure is to pay $1 to begin your ride, and then for every minute you travel you will be charged an additional 15 cents. Anyone with the app can walk up to any scooter and take it for a ride. Once you are done, you can leave the scooter at the end of your journey.

Using technology like GPS, and the enhancement of internet speed & security, companies like Bird and Lime have been able to deploy their fleets of scooters through the network they have built through their apps. The scooters run on lithium ion batteries and must be recharged each night. To enable this to happen the company will pay users of the app to pick up the scooters each night, charge them, and place them back out on the city sidewalks before 7am. Charging scooters can be a great side gig for millennials who are already familiar with making money by giving rides through Uber, or renting out spare rooms in their houses through Airbnb.

While their system is working, and the scooters appear on the sidewalk each morning like clockwork, it remains unclear whether the businesses will be successful long term. The biggest problem facing Bird and Lime has been push-back from the cities in which they operate. While a scooter is a fun and cheap way to commute, many people traveling on foot and in cars find them to be a nuisance. It seems that it is only a matter of time before someone has an accident. Maybe that will prompt regulators to create rules and restrictions that will impact the valuation of these companies, if not outlawing them altogether. An investment in Lime or Bird may well be riskier than simply taking a ride on one of their scooters.

Corey Erdoes