How to make scooters profitable

A dispatch on scooternomics from my panel at Micromobility Europe

Earlier this month I was in Amsterdam for Micromobility Europe, a conference focused on e-bikes, e-scooters, and other lightweight electric vehicles. The event was held at Kromhouthal, a refurbished factory with an industrial-chic vibe. I moderated two panels, one on scooter profitability and the other on instant commerce, met lots of interesting micromobility folks, and was especially delighted to meet and chat with some very kind Oversharing readers. It was also my first time in Amsterdam and, as promised, cycling around was a dream, even on my dinky rental hotel bike. (The locking mechanism gave me a lot of trouble; shoutout to the two nice passers-by who sorted it out after a group of Helbiz reps who’d been watching me struggle declined my request for help.)

Below are highlights from the panel on “How to make scooters profitable.” Later this week, we’ll dive into my other panel on instant commerce (for a primer on the current dumpster fire that is instant delivery, see my previous subscriber-only post on Jokr).

My first panel of Micromobility Europe was “How to make scooters profitable,” or as I like to call it, scooternomics. The panelists were:

• Dott: Maxim Romain, co-founder and COO

• Tier: Georgia Yexley, general manager UKI

• Lime: Ghassan Haddad, head of public policy and comms EMEA

• Swobbee: Ludwig Speidel, CFO

Since the panel was on profitability, I asked everyone to start by introducing themselves and saying whether their company was profitable. No one was profitable, but everyone had a different way of saying it:

• Dott: “All our cities today are profitable but the company is not yet profitable. We aim to be profitable overall as a company by next year.”

• Tier: Many of its 530 cities are profitable, and “those that are not are absolutely on the pathway and taking the learnings from those profitable cities into the ones that we want to develop further.”

• Lime: “We are currently on track for profitability.” Lime said it had two months of profitability in 2020 and five months in 2021.

• Swobbee: “Regarding the profitability question, yeah, we are not profitable.”

Dott, Lime, and Tier are all private companies, which means information on their financial performance is largely limited to what company insiders choose to share at events like this. Where we have a clearer picture of scooter financials is from Bird and Helbiz, the two scooter operators that have gone public and are subject to reporting rules. It’s not a good one. We know from SEC filings, for instance, that Bird BRDS 0.00%↑ reported an adjusted ebitda loss of $66.9 million in 2021, and its first quarter adjusted loss widened to $36.8 million this year from $29.5 million in 2021. Bird’s stock price has been hovering around 50-55 cents for a market cap of around $150 million, less than any of its private valuations since its series B financing.

Things are even worse over at Italian scooter operator Helbiz, which posted a ‘going concern’ warning in mid-April and was recently notified by Nasdaq that it has fallen out of compliance with continued listing requirements. Helbiz has until December to remedy its noncompliance—in this case, by having its Class A common stock and publicly traded warrants valued at more than $35 million for 10 or more consecutive business days—or the company that boasted of becoming the first U.S. publicly listed micromobility operator could also be the first to be delisted. Helbiz currently has a stock price of around 80 cents and a market cap of $28 million. Earlier this month, Helbiz CEO Salvatore Palella bought up 2 million shares, nearly doubling his stock holding, presumably as a show of faith in his company.

What, I asked my panel, are the publicly traded scooter companies doing wrong, and their privately held rivals doing better? Dott’s Romain offered a thoughtful analysis of why Bird is struggling, particularly in Europe:

If you look at Bird, the first thing is operations. So they are outsourcing, like today, all the operations, they are using franchises, which means that they have very little control on operations… they cannot directly control the operational efficiency and therefore the cost of the operations. So I think that’s probably the first issue that they have.

The second issue, is if you look at their hardware, is that they decided, and it's a conscious decision, to stick to fixed batteries. I would say in opposition to almost every operator here. Very clearly, this generates a very big burden when it comes to variable costs.

And then the last point about regulation and competitive pressure. The fact that they have outsourced most of the operations, especially in Europe, means also that they really struggle to win the key tenders. If you look at it, within the key tenders in Europe, they have not won I think a single one… It seems that Bird is in a very difficult spot because they cannot access the big protected markets, which are going to be the most profitable.

I also asked Haddad to weigh in, as Lime is frequently compared to Bird. Haddad said Lime and Bird are “fundamentally two different companies, mostly on the operating model.” He pointed out that Lime “followed the trend” on swappable batteries, designs its own hardware, and handles operations both in-house as well as with external partners, depending on the market and seasonality. He continued:

I think the other thing, which I said earlier, is we were profitable on an ebitda basis for two months two years ago, five months last year, during a very difficult time. Now that business is coming back, we are growing more than we ever were before. I think another thing, which is unfortunate for those two companies—the market has shifted significantly. Public markets were rewarding high-growth companies. Lack of profitability was tolerated for a while. I think Lime, especially from covid times, we became extremely thrifty and really focused on making sure we’re more efficient than anybody else. And I think that, combined with the larger-than-anybody-else fundraising** that we have, puts us in a very strong financial position to sustain this kind of market downturn. We were already prepared for such cost-tightening that others I think will have to go through. And that all makes me extremely positive about our financial position.

**Lime most recently raised $523 million in convertible debt in November 2021 at an undisclosed valuation, bringing its total financing to $1.5 billion. That compares to total funding raised to date of $1.1 billion for Bird; $210 million for Dott, which added $70 million to its series B in February; and $560 million for Tier. Lime also said at the time that it planned to go public this year, though no update on whether that’s still the plan.

One recurring theme you might have noticed from the scooter operators is the value of managing operations in house vs. contracting them out. The theory is that running operations in-house gives a company fuller visibility into its costs and operations and greater control over them. Romain compared it to how Amazon manages its own operations and constantly works to make them more efficient. “It’s exactly what we do at Dott,” he said. “Year after year, month after month, we see cost reduction.”

By contrast, Bird before spring 2020 managed operations in-house and with independent contractors, but has since shifted to a “fleet manager” model in which franchisees oversee the operations (repairs, storage, charging, deployment, etc.) of typically 100+ Bird vehicles. Bird pays these franchisees using a revenue-share model based on ride revenue generated by their fleet. As of Dec. 31, 2021, 95% of Bird’s local operations were “supported by Fleet Managers,” the company said in a filing. In classic gig economy fashion, Bird is being sued by some former fleet managers who claim they were misclassified as independent contractors.

That our panel ultimately couldn’t answer the titular question of how to make scooters profitable didn’t dampen the enthusiasm for scooters as a new mode of transport at the conference. Off stage, though, I found it interesting that people I chatted with who worked in ancillary micromobility support services seemed very happy to be in their lines of business rather than in actual scooter operations. The general consensus among those folks was that making money in shared scooters is hard, and I agree! It might be possible—based on what was said at the panel, it sounded like Dott might be closest—but it’s definitely not easy, and why would it be? Most public transit systems around the world lose money. Scooters are chasing impromptu urban journeys but also trying to position themselves as public-transit adjacent. It’s unclear how much money there is to made there, especially if the service is ultimately going to be offered at public transit costs. If not, the question remains what price point consumers are willing to tolerate before they switch to another mode or, just as likely, invest in their own e-scooter or e-bike.