Sharing Economy

Sharing Economy 2: Electric Scootaloo

Put down your avocado toast, tie up that man bun, and button up your overpriced flannel: rentable motorized scooters are the latest millennial trend and hopefully they are here to stay.

Get The Timeless Reading eBook in PDF

Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

We respect your email privacy

Q2 hedge fund letters, conference, scoops etc

Sharing Economy

MarkMartins / Pixabay

Living in cities with awful congestion managed by blundering bureaucracies leaves yuppie hipsters (yipsters) with a problem: How do you get from your tech startup to hot yoga without spending a lifetime stuck in traffic? Or for me personally, how do I get from my apartment to work most efficiently?

One option is ridesharing, but sometimes that can be too expensive for a short trip and it doesn’t quite solve the traffic problem. Another option is public transport, but that is often inadequate, breaks down quite frequently, and is rarely on time. Walking works, but it can be too slow and inefficient. To solve these problems, new sharing economy startups have been implementing “dockless” scooters—and bikes—across the country.

The Dockless Revolution

Unlike traditional bike-shares, these vehicles are found scattered throughout the city, instead of being harbored at physical docking stations. That means you can rent and drop them off anywhere you like, making for an easier commute.

Two companies in particular, Bird and Lime, are leading the charge in the dockless revolution. These innovative companies have been placing thousands of rentable scooters across the streets of major metropolises such as Atlanta, Milwaukee, and D.C. for a $1 unlocking fee with 15 cents per minute after that. All you have to do is download an app, put down your kombucha, scan the scooter’s barcode, then you’re off to Whole Foods in no time. The scooters get up to 15 mph and last for about 15 miles with a full charge.

I recently moved to a new apartment in downtown Atlanta, so I no longer live within walking distance of the Foundation for Economic Education, where I work. I put in a request for a Metrocard, but it takes about a week to process. Due to the inefficiency of government transportation, I’ve been taking a market-provided scooter to and from work. I get to work about 10 minutes faster than the train/bus route would take and the three-mile trip only costs about $3.50. The only detriment is having to weave through hordes of groggy professionals. But nearly getting hit by a renegade scooterer might wake them up quicker than their Starbucks cold brew, so it’s good for them anyway.

But I’m not the only one who seems to see the value in these scooters—it’s actually quite surprising how much these companies are worth. Ridesharing giant Uber and Google’s parent company Alphabet have put $335 million in investments towards Lime scooters and the valuation of Lime is around $1.1 billion, whereas Bird is valued at $2 billion. The scooters might seem silly but are valued highly for a reason; they are a solution to a transportation problem that government has proven incapable of fixing.

What Sets Scooters Apart?

You might be thinking: “Slow down, speed racer, how are Bird and Lime any different than bike-shares? Also, haven’t dockless companies failed time and time again?”

Yes, it’s very true that these companies fail hard. In Baltimore, so many rideshare bikes were stolen or vandalized that officials had to end the program. In France, a dockless bike company by the name of Gobee had to shut down after 60 percent of its fleet was destroyed in just four months. In Los Angeles, it is now a meme to set the scooters on fire and throw them from rooftops.

However, there are many reasons as to why Bird and Lime are succeeding where others have failed. First of all, traditional bike-sharing systems require docks, which means charging taxpayers up to $5,000 per bike to maintain the network. Due to this high expense, cities can only afford a few bikes, which means limited docking stations, and that leads to high costs with few riders.

Implementing dockless scooters means not having to pay for the stations, which means zero taxpayer dollars needed. That leads to companies spending their capital on increasing the supply of scooters, instead of stations and maintenance. This means easier accessibility in terms of quantity and location.

What About Vandalism?

While it's true that many dockless bikes have failed due to vandalism and theft, Lime and Bird have been developing technology to prevent this. The scooters are enabled with GPS, 3G wireless technology, and self-locks. Lime reports that less than 1 percent of its scooter fleet has been vandalized or stolen. If you try to steal a Lime scooter, it will warn you saying, “Please unlock me to ride, or I’ll call the police.” While some might think it’s funny to destroy the scooters, the problem doesn’t seem to be widespread in America as in other countries. Let’s pray we don’t meme our scooters into oblivion.

The scooters also seem to be used more frequently than the dockless bikes, so they don’t sit in the same location for days at a time, and also take up less space than a bike would. You could argue they are still a nuisance, but maybe less of a nuisance than a dockless bike.

It could also be possible that bike-shares fail because market demand is not there. It’s no surprise that thousands of dockless bikes would go unused in a city like Dallas where less than 0.2 percent of the population commutes via bike. In cities where biking is nearly impossible, scootering provides a solution. I would feel terrified riding a bike on the streets of Atlanta and would feel like a jerk riding a bike on the sidewalk, but scooters seem just fine to ride on sidewalks—even though you aren’t supposed to—but everyone does anyway.

So it is clear that Bird and Lime are innovating in major ways, which continues to solve transportation issues for commuters and even recreationalists. Past companies have failed, but that’s the dynamic process of the market. Sure, products constantly fail, but that means new products constantly evolve. As long as industries are allowed to create without government’s permission, we will continue to see crazy solutions like dockless scooters. Unsurprisingly, San Francisco and other cities have banned them, let’s just hope the trend doesn’t continue.

Say it with me: “Don’t tread on my scooter!”

Tyler Brandt

Tyler Brandt is the Henry Hazlitt Fellow at FEE. He is a graduate of UW-Madison with a B.A. in Political Science. In college, Tyler was a FEE Campus Ambassador, President of his campus YAL chapter, and Research Intern at the John K. MacIver Institute for Public Policy.

This article was originally published on Read the original article.


Saved Articles

Are you a smart investor? Join tens of thousands of sophisticated investor reading our authoritative free newsletter

* indicates required

Congrats! Are you a smart person?

We have an exclusive targeted for being a sophisticated and loyal reader.

Sign up today and get three months free

Use coupon code vip19 or click on the button below

Limited time offer only ENDS 10/31/2019 or after next 25 20 subscribers take advantage whichever comes first – please do not share this discount with others