Bird's new CEO is under no illusions
Michael Washinushi is a micromobility outsider. That might be just what Bird needs.
Last December, in one of the strangest transactions to happen in micromobility, Bird Global was bought out by Bird Canada. Bird Global, the original e-scooter operator founded in 2017 in Santa Monica, California, by Travis VanderZanden, was in rough shape after a year of layoffs, management shakeups, market exits, and stunning operational errors like systematically overstating revenues and chasing down customers for unpaid sums in the pennies. Bird Canada, a separate operator that brought e-scooters to Canada by licensing Bird’s name and technology and claimed to have cracked the code on running an e-scooter service, took control of its struggling namesake in a $64 million deal.
Over the past 10 months, the Bird Canada team has led a near-total overhaul of Bird: new leadership, new markets, new operating strategy. This summer saw the final departure of VanderZanden, who stepped down as board chairman after previously being stripped of his roles as president and CEO. In August, Michael Washinushi was appointed interim CEO, taking over from longtime Bird exec Shane Torchiana. Washinushi is now tasked with leading a company that has yet to turn a profit and was recently delisted from the NYSE over its anaemic market cap.
Washinushi is an unusual choice in an industry where most CEOs come from backgrounds in the gig economy or micromobility. Wayne Ting, the CEO of Bird’s chief domestic rival, Lime, spent 4.5 years at Uber, including a stint as chief of staff to Uber CEO Dara Khosrowshahi. VanderZanden founded Bird after working in executive roles at both Lyft and Uber. You can think of micromobility as the second wave of the gig economy (along with stuff like instant delivery), and its top roles are overwhelmingly populated by people who came from the first wave (ride-hailing, home-sharing, food and grocery delivery).
After several tough years at Bird and across micromobility more broadly, an outsider might be just what Bird needs. In its latest quarter, ended June 30, Bird booked a net loss of $9.3 million on $48.3 million in revenue. That wasn’t great, but it was a huge improvement from a year ago, when Bird lost $320 million on $66.8 million in revenue. (Growth will always be king in tech stocks and critics focused on the 28% slide in revenue, but I’d take the 97% reduction in net loss any day.) In September, Bird acquired US competitor Spin from European scooter operator Tier Mobility (also having problems and reportedly up for sale since the spring) for $19 million. Bird has said it intends to appeal the NYSE delisting, as it “does not believe the current market cap is reflective of the intrinsic value of the business.”
Earlier this month, Washinushi and I sat down on Zoom in one of his first interviews as Bird CEO to chat about his unlikely path to the e-scooter industry, Bird’s recent acquisition of Spin and NYSE delisting, and whether in retrospect any company should have used a SPAC to go public. This interview has been condensed and edited for clarity.
Oversharing: You were CFO of SiriusXM Canada for nearly 11 years, and then CFO of FreshBooks, an accounting software company. Jumping to a struggling e-scooter startup seems like a surprising move. How did you end up there?
Washinushi: It might sound surprising, but I think for me it's about understanding the category as well as the business model and the management team. And so I understood the category, the business model, and then the management team, predominantly—John Bitove, Stewart Lyons, JJ Bitove—the first two I've worked with for almost 20 years. Working with John and Stuart [at SiriusXM] I think was a very successful management combination. SiriusXM at one point was a struggling business or struggling category. And we worked through this to make it very successful over the course of that 11 years. So, it may seem like a big jump, but having worked with John and Stuart, and understanding the category that they worked in, it didn't feel like a big jump for me. And then combined with seven years of experience with what I'll call a SAAS [software-as-a-service] technology firm, which I think really helped me understand technology as a space in terms of working through new and emerging technologies, I think is very helpful in terms of what I can bring to Bird.
What is Bird’s category, as you understand it?
It's a mode of transportation for the last one or two miles, specifically for urban centres. Riders can either walk or take public transportation or Uber. Micromobility provides that sort of cost-efficient way of getting from Point A to Point B within one or two miles. That's one of the primary uses. Secondary use in this category are people who are visiting the cities and would prefer to view the city on a vehicle versus walking. I see this category growing because as we experience within urban centres the reduced parking, the higher congestion, the emergence of more pedestrian and bike lanes—these are all tailwinds towards promoting this particular category. I.e., it's faster to use our product. It's more convenient to use our product. And it's safer, given what the city infrastructure is.
If you had to choose a top-level category, would you say it's transportation or technology?
Transportation.
Coming in as first CFO and now CEO, what do you see as the most urgent problems for Bird to tackle? I know in the earnings there's been a lot of talk about regulatory relationships and more efficient deployment.
The priority is having the right level of operating expenses to support this category so that this business can be not only profitable on a self-sustaining basis from an ebitda point of view, but also profitable from a free-cash-flow point of view. Because this business is operational in nature. That's why I go transportation. There is a lot of effort on us to make sure that the vehicles are in the best condition, make sure the vehicles are placed in the right place to optimise the ride. There is definitely an element of the right price. Where technology becomes involved is making sure it's the right experience from the app to activate the vehicle. And so there's a lot of costs and making sure that we're investing at the right levels to optimise the rides and obviously still make a profit. I think that's the challenge. Giving the consumer the right experience, generating gross profit, having the right operating expenses to generate edbita and cash flow so that we can invest in scooters and vehicles for the future.
What from your perspective makes Bird different from the many other scooter operators out there?
I think what differentiates Bird first is brand. So there's a lot of brand recognition on Bird, and part of that is because Bird was the one that first launched to create this category in 2017. So that's a differentiator. There's a high level of brand recognition. Second differentiator, I believe, I might be biased, is the vehicle we have. It's a more comfortable vehicle for longer rides. It's got a longer base. It's smoother, it's air-filled tires. It's a more comfortable ride. Third is our technology and our app. We've got a good app for individuals who are riders to find and activate a vehicle for a ride.
Do you think, for instance, Lime wouldn't say the same thing about their own service?
Yes, I think Lime would say the same thing.
So then what is the proof in that case? If every operator thinks they have the most recognition, the most comfortable ride, and the best tech?
I think Lime can say that they have the high brand recognition. I'm not so sure outside of Lime any other provider can say, especially in North America, that they have the high brand recognition. It's hard. For us, when I look at our market share now, and specifically North America, with the combination of Spin, we probably have the highest share.
So on the Spin deal. The price on that was $19 million, a fraction of the $100 million Ford paid for it in 2018. What do you think made Spin so cheap? And then how much of that deal was about buying permits to operate in markets that Bird has lost, including, for instance, Baltimore, which was a loss under new management as recently as August, not under the prior management team?
[Laughs] So, great question. I think obviously market dynamics have changed. The value of vehicles or scooter businesses are very different in 2018. I can't compare the two. But I think for us, in terms of the reasons why we bought Spin, I'll call it three reasons. First was the markets that we've lost and the markets that we don't have exposure to. Some of which are university campuses. Spin has a high exposure to the university campus, which is very helpful. Second reason doing the acquisition is the new vehicles that Spin has. Tier had recently not only acquired Spin, but they made a significant investment in the new Ninebot C1s and had just deployed those vehicles into the marketplace. So relatively very, very new vehicles as part of this purchase price was actually another key reason. And then I think the third reason why we bought this was Spin is in-house operations, and I think we see there is opportunity to expand in-house operations of the North American platform. We'll be very selective and only apply it to where it makes sense, but Spin gives us that step up.
Is Bird in-house in any of its markets at the moment?
Bird Canada was predominantly in-house. There were a few markets in Bird North America that were in-house, as well as in the European operations we have a few markets.
And did you see signs that the in-house markets performed better, not just in Canada but in the US and Europe?
I think I saw a sign that we have better control on all aspects of the rider experience and rider revenue. That gives us the ability to influence that. Whereas with an FM [fleet manager] model, there is less control. Higher, potentially, gross margins, but less control.
Could you give an example of how the two different models would then trickle down to the rider experience?
In an in-house model, we have greater control in terms of where vehicles get deployed. We will obviously leverage data to determine what optimises a ride or the ability for a vehicle to get a ride, and we can direct, because they're our employees, where to place the vehicles at what period of time. In an FM model, we can recommend and try to influence the FM fleet managers to deploy the vehicles at that particular place or time, but we don't necessarily have that control. So that rider experience of having that right vehicle at the right place at the right time has far more control in an in-house fleet than an FM.
Right, there's limits on how much control you can exercise because of employment law.
I would almost say that the conversation is carrot and stick, depending on what you want to use. If you've tried to use incentives for them to deploy it, you may use a stick approach to ensure that the vehicles are safe and being taken care of.
As you've already mentioned, Bird was acquired last year by Bird Canada, and that's part of how you got here. You said when we were first talking that Bird Canada has done quite well. Could you elaborate on that? Because I think for many people, cold snowy Canadian cities don't sound like a natural fit for e-scooter success.
You're correct. Bird Canada was a seasonally operated business through the summer and late spring, early fall. So potentially open eight to nine months out of the year. I can't go into specific details since Bird Canada was a private company, but Bird Canada launched in 2019 with very limited capital. And Bird Canada was very judicious about the capital that was used to grow into the markets. So Bird Canada launched in markets like Calgary with a capital constraint of number of vehicles that they could purchase, and worked with the city to create a regulatory environment where it capped the amount of vehicles that was suited to how much capital they had to invest in that particular market.
So by that you mean, for instance, Bird went to Calgary and said 'we have the funding to launch a scooter service with 500 vehicles. We would like you to set a rule that any scooter operators in Calgary can only have up to 500 vehicles'?
Probably not as forthright as that. I think we probably didn't disclose how much capital we had, but just said 'I think the ideal size of a vehicle count in Calgary is probably 2000.'
But the sentiment was you proactively proposed rules that fit what you thought you could invest in the market, with the idea that then other competitors couldn't just come in and have, say, 3x the number of devices?
With the intention of the city should only have x amount of [devices] in the marketplace.
Okay. Sure.
One of the things I'd say is a big differentiator in terms of the future right now versus before is being mindful about how many vehicles a city should support. I think there is a viewpoint more is better. When capital is plentiful, I can see that viewpoint. When capital is scarce and vehicles are expensive and you have a repair cycle, finding that optimal level of vehicles and obviously unit economics in a given market to make sure that not only are you profitable on a unit economic from an adjusted ebitda point of view, making sure that you're profitable in terms of you can afford to purchase more vehicles in the lifecycle.
One thing I often come back to when writing about Bird and the e-scooter market generally is how the original M.O. of Bird was this Uber-style, launch first, ask permission later. It's how they started in Santa Monica, with that infamous LinkedIn message to the mayor, and I believe part of why we had the referendum over here in Europe where scooters got kicked out of Paris. Because Paris was sort of patient zero for European cities getting littered with scooters with zero consideration for what the right size of the fleet was. So I do wonder, when you're talking about Bird and its brand recognition, how much of a challenge you see changing that reputation specifically with the cities and the regulators, less so the consumers.
You're right. We have strong rider brand recognition. With respect to the cities, there are cities where Bird has bad taste within the city, because of that mentality of launch first, answer questions later. I think the way we're dealing with that is new management. Using Bird Canada as an example of what great regulatory relationships can lead to, and then ultimately proving it. Actions speak louder than words, you know. We have to have a few more quarters or years of runway to prove to the cities that it is a very different management team. It's not a launch and ask questions or answer questions later.
I'll go back to Bird Canada. Building that relationship with the city, being mindful about the framework in terms of how many vehicles we can have and how much a city can properly support. Being responsive to the city's requirements and being responsive to 311 within the city creates a great relationship within Canada, to the point where there's a great reputation in Canada of Bird Canada. I'll use the example of Hamilton [Ontario] where Bird Canada was awarded exclusivity to the City of Hamilton. Which is not a big city. It's a city of half a million. So Bird Canada has a great relationship with many of the cities within Canada because of just being responsive to the cities. And actually also creating that framework where you don't want a city littered with too many vehicles and it just looks visually awful. So we're very mindful of that. I think that's a big differentiator in terms of how Bird Global had operated in the past.
When you're looking at a city or you're looking at a market, how do you assess the right balance between sufficient density of the service, such that it's convenient and available and accessible for people to use, but not too dense so that it's offputting? What is that magic number?
You could use the guideline of number of vehicles per capita as a starting point, but I think it has to flex down or up depending on the specific cities. I think it's better to start low, on a per capita basis, and then as the city evolves ask for permission to expand, instead of starting high or having a large number of competitors within a marketplace and having the city have to scale back.
You look at Paris. Paris is a patient zero where there were too many competitors, too many vehicles. And, it's been a while since I've been to Paris, but Paris is a very congested city. So there's not exactly a lot of available public space for vehicles to properly reside in. So that is a clear combination of too many vehicles in a congested city creating not the greatest experience for riders. Whereas if you go to a city like Washington DC, it's a very strong vehicle marketplace. It's such an expansive city—wide sidewalks, wide spaces. It doesn't have the feel that there's too many scooters or vehicles in that space. Yet it's probably one of the top markets in the world for e-scooters.
Bird was recently delisted from the NYSE and is now trading over-the-counter (OTC). What is the vision for what happens with Bird's status as a company?
We're still a public company. Our listing has been suspended off of the NYSE. We will be appealing the decision with the NYSE. But for us as an operating company, we're still going to be reporting publicly our results. Our shares do trade on the OTC so there is liquidity with respect to our shares. And so for us, it's business as usual. Just the difference is we're currently suspended on the NYSE.
Would you consider taking it private or do you see benefits to staying a publicly traded company?
Given where the market cap is right now, or the value of the company, especially in relation to the revenue, I think looking at that potential option of private is something we would have to look at. The challenge is just the availability of capital to be able to invest into a company to take private.
But surely, the OTC trading isn't providing all that much capital, is it?
It's not providing any new capital for us. It just provides liquidity for existing shareholders. To take private you would have to find someone who's willing to fund the capital to buy out existing public shareholders.
In retrospect, as a longtime CFO, do you think anyone should have gone public via SPAC?
No. I mean, this is a great conversation. It's a viewpoint of just a handful of SPACs that I've seen. It's an immediate way for private companies to go public. But if the private company is not ready to go public, then it's a really—it's a really bad idea. And I think too many companies that were private were not ready to go public.
And again, just from from an outside perspective, why would a company that's not ready to go public make that jump via SPAC?
Easy access to quick capital. I mean, the companies I've worked for in the past, and companies that are parallel in the past in terms of technology companies—the preparation for going public is a six- to 18 month-journey. You have to take that journey to be ready to go public. I see the de-SPAC as 'we have an opportunity to go public in the next few months. This is additional capital on the balance sheet. Let's take advantage of it.'
Is there anything I haven't asked you about Bird or Bird Canada you want to add?
You made a comment with respect to Baltimore. In terms of under existing management. I would provide a viewpoint that some of the challenges with some cities exist well—months or quarters—in advance of actually losing the license.
Let me ask you this, what do you think of the space?
I think I'm a bit jaded. I love the transition away from cars and all of that, but I don't understand why people would take shared scooters at the price you need to charge to make the business work instead of buying their own bike or scooter. Especially if they're a person who lives in the city—not a tourist case, like you were talking about—but that primary case of they've replaced it for their commute, they're using it multiple times a week. It seems like at the sticker price of a decent retail option, after a few months, it would be cheaper to have a personal device.
You know what, I would agree. It's not just Bird, I think it's all of our competitors. We have been focused on gross margin and contribution per rider, and if you're focused on that, that leads to price increases, and I think there's been a lot of price increases in this particular category. That is reaching that tipping point of, to your point, why wouldn't one buy their own scooter? Europe's a little different. In most markets I see, the rate per minute is about 30 cents. In North America, it can go as high as 40 cents to 50 cents per minute. And as a 5-10 minute ride, that adds up.
It's certainly more than hopping on the bus or your local metro system.
Yeah. And my concern is, there's a fixed dollar amount people are willing to pay for a vehicle. Riders will decide with their feet if they want to use our vehicles or not, and how long they want to ride for. So the challenge is—and every city is different, like every city has a different dynamic in terms of the number of vehicles, every city has a different dynamic in what the right pricing is for that city as well. Finding that right price dynamic is really where I want to spend time: to understand for every city what's the right price point where we maximize the amount of riders, but also having them ride longer on the vehicle. At the same time, knowing that dynamic, we have to make sure that the operating expenses are tuned to make a profit. That's the approach I would like to take, because ultimately it's the riders who are going to decide how often they want to use and how long they want to use our product. Honestly, I want to maximize that.