Bird made better scooters. Now it needs people to actually ride them.

Utilization is desperately low despite improved hardware and nice summer weather

Once upon a time Bird’s biggest problem was that its off-the-shelf electric scooters didn’t last long, leading to losses of around $300 per device. Bird and its peers in the shared scooter industry have since spent several years redesigning and customizing their hardware for shared use and longer, more durable lifespans. Most of Bird’s fleet these days is made up of the Bird Three, an e-scooter the company unveiled last year that sports a longer rider platform, wider handlebars, a larger built-in battery, and a sturdy aluminum frame, all of which is supposed to make the Bird Three more sustainable and much longer lasting.

In short, Bird’s scooters have gotten a lot better. The problem now is that not nearly enough people are riding them.

In the latest quarter, ended June 30, Bird’s deployed vehicles (mostly e-scooters but also some bikes) averaged just 1.5 rides per day. That was up from the first quarter of the year, when each deployed vehicle averaged just one—1.0!!—ride per day. To put that in context, Bird in the second quarter made 110,000 shared vehicles, on average, available to riders each day, up 58% from Q2 2021. That’s 110,000 bikes and scooters that spent most of each day from April to June—a period of generally nice weather in the U.S. and Europe that should be peak season for a shared micromobility company—just hanging out, waiting for someone to ride them.

By comparison, Citi Bike, the popular New York City cycle-hire program now owned and operated by Lyft, averaged 3.7 rides per bike per day in the second quarter, based on monthly data Lyft shares with the city. In June, when Citi Bike did a record 111,260 daily rides, utilization hit 4.5 rides per bike per day.

Bird knows utilization is a concern. On the quarterly investor call, Bird co-founder and CEO Travis VanderZanden, who stepped down as president in June, said that Bird would “conduct a thorough review of our deployed vehicle fleet by city through the lens of profitability” after the summer ends, “rightsizing our footprint based on where we anticipate positive pricing and profit per ride in fiscal year 2023.”

Shane Torchiana, the former COO who replaced VanderZanden as president, added that Bird sees “opportunity in the remainder of 2022 and 2023 to recalibrate our deployment strategy to match increased local supply with local demand in cities, and for pricing structures to continue to shift to better fit with an increase in commuter use cases.” That includes focusing on hyper-local details like which street corners scooters are placed on, which Torchiana said the company has learned “is a massive driver of rider retention as well as per day utilization per vehicle.”

Bird BRDS 0.00%↑ has repeatedly promised to deliver its first quarter of positive adjusted ebitda in the third quarter of this year, and to be profitable for the full 2023 year on an adjusted basis. If the company pulls it off, it would be a welcome change after a decidedly rough first half of the year. In Q2, Bird posted a $310 million net loss, which it attributed largely to impairments and write-offs on the value of long-lived assets, on $77 million in revenue. Adjusted ebitda, Bird’s preferred measure of profitability which excludes a number of expenses such as stock-based compensation and impairment of assets, came to -$19.1 million, a deeper loss than in the same period last year.

In May, Bird said it would slow or drop its nascent retail sales business and in June it laid off 23% of staff, around 140 people. Bird has been trading as a penny stock since May and has been warned by NYSE that it risks being delisted. The stock closed yesterday with a share price of $0.48 and a market cap of $137 million, which is about 12% of the $1.1 billion in funding Bird has raised over its life, according to PitchBook. For the record, if anyone reading this would like to give Oversharing $1.1 billion, I could probably spin up a product worth at least $200 million in exchange for that.

Bird will likely achieve its adjusted-ebitda profit in the upcoming quarter, which is when it plans to realize most of its expected $80 million in cost savings from layoffs and ditching the product sales business. But utilization is a trickier problem, and one that can’t be solved by cost-cutting or restructuring.

Not only are Bird’s rides per scooter per day worse this year than in 2021, they are also roughly the same or worse than in the first half of 2020, aka the start of covid. It’s hard to know how Bird’s numbers compare to those of its competitors, which by and large are still privately held and not required to report their data (if you’ve come across utilization rates for other scooter companies and want to talk, by all means, get in touch). That said, one reason Citi Bike provides a useful contrast even though Bird doesn’t operate in New York City is because it shows the advantage of being a single micromobility operator with a large fleet in a market versus one of several operators with smaller fleets competing for riders.

We often talk in the sharing economy about network effects, or the idea that services get more valuable and efficient as more people use them. The common example is Uber: you can get an Uber faster and more reliably when there are more drivers on the road, and there will be more drivers if there are more riders. (On the flip side, having way too many drivers or supply that far exceeds demand is also bad, see: my interview with James Parrott on congestion and New York City’s pay floor for ride-hail drivers.) But network effects also apply to micromobility: shared bikes and scooters are more valuable if they are widely available and facilitate lots of different routes than if they only exist in limited pockets. More ridership sustains more vehicles, and, up to a point, more vehicles leads to a better, more comprehensive service.

James Parrott tells the inside story of the first-ever pay floor for Uber drivers

Because Citi Bike has an exclusive monopoly on New York City bike-share, it gets to invest in building its fleet into something with a public-transit-esque footprint. The obvious danger for riders is that prices go up in the absence of competition, but the benefit is that when you want to rent a bike you are dealing with a single system throughout the city rather than toggling between apps. Bird, by contrast, is typically one of several micromobility operators in a given market, and often limited to a certain number of devices based on operating terms set by the municipality. For cities that were steamrolled by ride-hail and then briefly besieged by unauthorized e-scooters, these contracts are understandable and arguably very necessary. But for the companies it means that their service can only be so comprehensive, and for riders it means dealing with a patchwork of bike and scooter rental options that is overall less reliable and convenient than a single operator. That’s a structural problem with shared micromobility that undoubtedly contributes to the sort of low utilization rates Bird is now struggling with. In the absence of major changes to city regulations, it’s going to be a very difficult one to overcome.