In this week’s round up, the scooter wars continue to burn bright, and cities step up their regulations on the scooter-and-bike frenzy. Senior RSG contributor John Ince covers that, plus more background check issues and flying taxis.
Uber Is Building Its Own Scooter to Compete in Frenzy [Bloomberg/Business Week]
Sum and Substance: This spring, Uber moved into a cavernous brick building at San Francisco’s Pier 70, along a postindustrial stretch of waterfront. Shipbuilders occupied the 130,000-square-foot facility in the late 1800s, but today Uber uses it to tinker with self-driving cars, flying taxis, and, most recently, scooters.
In the past several months, Uber has announced plans to integrate bike- and scooter-sharing services on its app, an acknowledgment that cars aren’t always the best form of urban transport. Now the company has quietly begun engineering its own scooter, say people familiar with the plans, which haven’t been previously reported. Jump Bikes, which Uber acquired in April for more than $100 million, is overseeing the project.
A year ago the idea that Uber Technologies Inc. would dedicate resources to scooters would have seemed ludicrous. But the little two-wheelers have become a tech industry fixation since Bird, a Santa Monica, Calif.-based startup run by a former Uber employee, launched a scooter-sharing service there last fall. Bird Rides Inc. and its main competitor, Lime, have raised hundreds of millions of dollars at valuations of more than $1 billion, figures reflecting the excitement around alternative transportation startups that began with the explosion of bike-sharing in China.
… Eventually, Uber and its competitors envision a business that extends beyond cars and into more novel forms of transportation. Earlier this year, Bloomberg News reported that Lime was developing a motorized rickshaw. Rzepecki says Jump wants to put similar vehicles on the road. “There’s going to be a lot of innovation in terms of what types of light electric vehicles are out there,” he says. “It’s clear that to go a couple of miles, you don’t need a 2,000-pound lump of steel.”
My Take: Just like Uber/Lyft a decade ago, the scooter space is hot, hot, hot right now. Uber doesn’t want to be left behind, so they’re taking steps to jump right into the thick of the competition, with their most recent acquisition Jump leading the way. But the aggressive tactics that put Uber on the map in ridesharing may not work in the scooter space (See Article Below).
San Francisco Denies Scooter Permits for Bird, Lime, Uber and Lyft [Wall Street Journal]
Sum and Substance: San Francisco dealt a blow to the largest shared-scooter companies on Thursday, awarding two smaller startups exclusive rights to rent the electric-powered vehicles for a year in a decision that could change the course of the nascent market.
The nation’s tech capital denied permits to 10 companies, including Bird Rides Inc. and Lime, which have raised nearly $1 billion in capital to quickly populate cities with scooters—often against the will of regulators. The ruling is a clear rebuke to their pugnacious strategy, with officials citing, in part, the companies’ aggressive move this past spring to drop more than 1,000 scooters combined on the streets of San Francisco before rules could be established.
The city also rejected permits for ride-hailing companies Uber Technologies Inc. and Lyft Inc., which only recently jumped into the scooter craze. Officials said past violations in their ride-share businesses hurt their applications.
Instead, San Francisco awarded the permits to two other startups, Scoot Networks and Skip Scooters, which together have raised less than $50 million. Scoot runs a shared electric Vespa-like scooter program in the city already and a bike-share program in Barcelona, while Skip offers shared electric scooters in Washington, D.C., and Oakland, Calif.
While San Francisco is just one city, it could have spillover problems for the big scooter companies, whose high-powered investors see enormous potential to reshape urban transportation.
My Take: This move underscores just how dependent the scooter/bike startups are on local regulators. Regulators, in San Francisco at least, were less impressed by the size of a company’s bank account and more impressed by the company’s willingness to abide by local regulations. Lessons learned the hard way here.
Uber, Lyft reportedly skimp on background checks [CNET]
Sum and Substance: Uber and Lyft use a background screening service that’s less expensive than one used by parts of the taxicab industry, and the two ride-hailing companies failed to identify some drivers with criminal backgrounds, according to Download.com.
Lyft and Uber use Checkr, which reportedly failed to catch 25 drivers in the Los Angeles and San Francisco areas with criminal records in its screening process in 2015, according to Download. Uber confirmed to Download, a sister site to CNET, that it used Checkr, while Lyft didn’t respond to an inquiry from the site…
Ride-hailing companies have come under fire for reported sexual assaults by their drivers. Critics say insufficient background checks might be part of the problem.
My Take: For companies that are so visibly in the public eye, I just can’t understand why Uber and Lyft skimp on the background checks. Goodness knows they have the money to pay for the more expensive and thorough checks.
Do a Google search for Uber or Lyft and almost every day, the lead stories are about alleged incidents of sexual assault or some other heinous crime that might be avoided with better checks. Surely it would be worth it for the companies in PR to put their money where their mouth is and invest in “safety”?
Uber is searching for a third city to test its flying taxis [Engadget]
Sum and Substance: Uber’s flying taxi service was supposed to debut in Dallas, Los Angeles and Dubai, but its deal with the emirate fizzled out before tests could even begin. It still wants to trial UberAir outside the country, though, so it launched a search for a third test city in May. Now, the company has announced that it has narrowed down its choices for the third spot to five countries: Australia, Brazil, France, India and Japan. In particular, Uber seems to be considering Sydney or Melbourne, Rio de Janeiro or the state of São Paulo, Paris, Mumbai, Delhi or Bangalore, and Tokyo…
According to The Verge, Uber decided on the five final choices due to what they can offer the company during the test period. India has congested cities, for instance, while Tokyo is humongous and Narita Airport is miles away from the center of the city. Paris, of course, is where Uber is building its flying taxi technology center.
Uber plans to announce its final choice in six months and to deploy its flying taxis there within five years. It’s hoping the tests it conducts in those three cities can gather the data it needs to be able to expand to more locations and to make Vertical Take-Off and Landing (VTOL) aerial vehicles a common means of transportation.
My Take: Yep… flying taxis. It’s unlikely to have much of an impact except to the very rich who will soon be able to get from Point A to Point B without having to contend with the horrendous traffic jams, which we now know are caused, in part, by all the Uber and Lyft drivers down there in the streets. The rich get richer, and the rest of us are left to fend for ourselves.
Readers, what do you think of this week’s round up?
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-John @ RSG