This is a guest post by Applico CTO and Principal Tri Tran. Prior to joining Applico, Tri was the co-founder and CEO of Munchery.
After years of public battles with Uber, San Francisco has learned some valuable lessons.
This time around, three electric scooter rental companies – Bird, Lime and Spin – are trying to roll out their service in downtown San Francisco. But the city is fighting back. As I happen to live in San Francisco and work in downtown, I’ve been able to witness this battle first hand.
As a startup entrepreneur, I quickly recognized the strategies that these three companies have taken to maximize business traction in as short a time as possible:
- Flood a certain limited geography (such as downtown San Francisco) with a lot of scooters.
- Get as many people as possible using them, very quickly. Once certain critical mass is reached, perhaps leverage them and their loyalty to fight off any regulations.
- The default is seeking forgiveness afterward instead of seeking permission prior to operating. Let the city take any actions it needs to, assuming it’s historically very slow to react anyway.
I would not be surprised if these three companies also employ “fake” users and have them ride the scooters around town to create buzz, and thus word of mouth referral.
The City Fights Back
To my surprise, the city worked quickly and City Attorney Dennis Herrera issued cease-and-desist orders to all three companies.
The city wants the scooter companies to take actions to:
- Keep users from riding scooters on sidewalks
- Keep scooters from blocking sidewalks when parked
- Ensure that riders use helmets
It’s all in the name of public safety. Until then, the city will impound these scooters and may issues fines of a minimum of $125 for each violation. That is unless the companies can abate the problem within 30 days or prevail in an appeal hearing.
What Will Happen Next
It is not clear what these companies would do next, but here’s my take:
- These three companies don’t have the operations to meet the city’s demand for the above described points
- Limiting riders from sidewalks and ensuring unused scooters not block sidewalks is too tall of an order
Technically, it’s entirely possible to track riders on where they ride and whether they had left the scooters on sidewalks. They can even issue fines to riders who disobey such rules. But these rules would be a direct conflict to the convenience of ride-wherever and park-wherever, and thus would greatly reduce the attractiveness of using their scooters in the first place.
So what should they do? San Francisco has clearly established that it can move fast to regulate AND has created a repeatable process to impound these scooters.
Not complying will simply be too costly. More importantly, San Francisco also provides a model for all other cities to copy if/whenever the service rolls out to their cities. That’s bad news for Bird, Lime and Spin.
Ultimately, the service that these scooter companies provide is convenient, but not nearly as convenient as Uber was when it first arrived and replaced the painful taxi experience.
Additionally, the immediate public disruption of a horde of unfamiliar vehicles taking over sidewalks is much more apparent. Scootering on the streets has its own dangers as well when mixed with automobile traffic. The bike accident rate in San Francisco hasn’t changed much in the past few years. Relatively few people will brave their lives for that convenience.
Thus, these scooter companies will not have similar leverage nor political power from their small user bases to what Uber had when it fought against regulation attempts.
Based on the above, my prediction is that this service will go down into history as a fail, at least in major U.S. cities. It’s not necessarily a bad thing as these entrepreneurs will have learned a lot from the experience. They may find better, more sustainable businesses as a result. Cities are still grappling with what the future of transportation looks like, as are entrepreneurs. Scooters may not be it.