
Hit by Big Loss, Bird Seeks $300M in New Funds - prostoalex
https://www.theinformation.com/articles/hit-by-big-loss-bird-seeks-300m-in-new-funds?pu=hackernews38uvpt&utm_source=hackernews&utm_medium=unlock&utm_content=bird-big-loss
======
ballmers_peak
Hi everyone! Jay from The Information here. We are big fans of HN and have
specifically unlocked this article for the HN community. Use this link to view
the article in full.

[https://www.theinformation.com/articles/hit-by-big-loss-
bird...](https://www.theinformation.com/articles/hit-by-big-loss-bird-
seeks-300m-in-new-
funds?pu=hackernews38uvpt&utm_source=hackernews&utm_medium=unlock&utm_content=bird-
big-loss)

~~~
aj_icracked
Jay, this is awesome! I really appreciate this and it's super great to open
this for the HN community. I love that approach to balancing paywall vs.
critical mass / sharing. Thank you!

PS. I'm an Information sub and love how deep you go in the reporting - keep it
up, it's very refreshing.

~~~
ballmers_peak
Love to hear it.

------
nimbius
Finally, some sober response from the market. there is just no way these can
make money at the rate they get destroyed.

Im an auto mechanic by trade, and realized these things were a terrible idea
when we started having to remove them from cars and trucks. Running over one
of these things is somewhere between hitting a land mine and a bicycle rack.
Ive personally had to cut at least 30 of them from various drive shafts, wheel
wells, and suspension arms. I have a Mercedes van customer looking at nearly
six thousand in damage to everything from the radiator all the way back to the
driveshaft knuckle after hitting two of these at highway speed as they fell
out of the back of a pickup truck.

The real joke is they are looking to file an insurance claim against Bird, as
their attorney believes state vehicle law covers the scooters as a motor
vehicle similar to a motorcycle.

~~~
minhazm
I don't see how what you described has anything to do with Bird. It could be
any scooter, or any random object that's falling out of a pick up truck.
Running over things in general is going to be bad for your vehicle.

~~~
save_ferris
It's relevant to Bird because Bird makes these scooters available to use at
very low cost.

Nobody would leave their own scooter in the street, but people have no problem
leaving someone else's scooter wherever it was convenient. People leave them
all over the place where I live, and it's been a huge problem. They're
constantly being fished out of the rivers, dumpsters, etc.

~~~
delinka
Bird isn't responsible for securing the load on a truck. They need to go after
the driver of the truck that dropped them - he has liability insurance, or his
employer does.

~~~
btrettel
My experience suggests that Bird won't tell the victim the identity of the
guilty party even if they know it. Here's a video of a Bird scooter rider
running a red light and almost causing a collision with me, a cyclist:

[https://drive.google.com/open?id=19Bl1ZhMvxbLliIyNkNe_Aj3QWD...](https://drive.google.com/open?id=19Bl1ZhMvxbLliIyNkNe_Aj3QWDbPznzp)

I contacted Bird and while they did look at the video and seemed sympathetic,
I got the impression that nothing was done in response. That's because they
refused to tell me even simple things like "The rider was reprimanded". I
didn't ask for the rider's identity, just for what was done in response. And I
contacted them within an hour of the incident, providing precise time,
location, and the video above, so I'm very confident they knew who the rider
was.

(Sorry for the strong language in the video. Note that I included some time
before the incident because I know from experience that some people always
seem to suggest that if a cyclist had a bad time on the road it was because
they antagonized who gave them a bad time. I hope it's clear that I had no
contact with this guy before the video.)

~~~
stefco_
To be fair, this kind of idiocy is in no way limited to scooters. In NYC we
don't have Bird yet but we do have tons of delivery people on bikes (electric
and traditional) that do stuff even more dangerous than this. One time while I
was coming off of a steep downhill a delivery guy wheeled his bike out from
between two parked cars without looking either way, and another delivery guy
who was about 30 feet in front of me hit the bike, went over the handlebars,
and smashed his face on the ground. He was visibly dazed for minutes after and
bleeding from his head; it would have happened to me if I was about a second
ahead of where I was. I've also had electric bikes whiz by about 2 feet from
me on the sidewalk at 20+mph many times. They are nearly silent, so it's easy
to imagine abruptly turning around or shifting over (as pedestrians are wont
to do) and very getting severely injured. I've seen plenty of other awful and
dangerous behavior in addition.

Fortunately, I don't see this as much with non-delivery cyclists. In NYC at
least, this is mostly a problem with delivery people; the extreme pressure
they are under to deliver on time, combined with the fact that many of them
have clearly received no safety training, seems to be a major cause.

NYC's bad cyclists (and, in the future, bad scooterists) are actually scarier
to me than NYC drivers because they can come at you from so many more angles
thanks to their small size; it's much easier to predict and avoid cars and
even pedestrians. (People are also used to cyclists here, so the cars are
paradoxically not nearly as scary to me as they are in less dense
environments.)

[edited to clarify that I was also on a bike]

~~~
btrettel
Yes, I agree that delivery folks can be particularly dangerous. I also watch
out for ridershare drivers as they are frequently distracted by their phone
and in a rush.

The small size was a major problem here. I probably would have seen the
scooter rider earlier if they were a driver running the red light. I now
always check for red light runners at that intersection.

(As for how visible I was, I was wearing a hi-viz jacket at the time. My air
horn seems to have been the only thing that caught the scooter guy's
attention. Not sure what more I could do.)

------
slovette
This whole model is such an obvious failure it’s shocking it ever got off the
ground.

Leaving the easy business reasons aside, I was in Denver and the amount of
these scooters littered around the city pissed me off. They where everywhere.

It’s just a matter of time before the city has enough and either bans them or
just regulates them out of business viability.

This is one of those things that had this business been forced to stand on its
own 2 feet with early revenue survival and not been gifted life by investors
it would have met its doom naturally without the waste of billions of dollars.

It’s a great example of how the new “start-up” method of business building can
be toxic and unproductive to the betterment of society. It allows bad ideas to
have life because a few people wanted it to be so. Society would have killed
this quickly.

~~~
goobynight
I'm a Denver local and like them a lot. So much that I bought my own premium
model for $2500. Cars, even if they are in designated parking spaces, are even
worse litter to me. They are everywhere and get a free pass.

As for the waste, it's not like Bird is funded by people's personal retirement
accounts. Nobody invested is getting a fast one pulled on them. The money
didn't vanish. The VC goal is to take a massively scalable idea and see if it
is possible to find profit in it. This is clearly scalable, so they're testing
it out and seeing if they can find a formula. For better or worse, VCs are
members of society.

~~~
barkingcat
The fact that you bought your own for $2500 means their business model is a
failure.

If you spent $2500 on Bird subscriptions and rides then that means that the
business model is successful at least in your case.

Your comments directly prove the previous poster's thesis.

EDIT:

And yes, Bird has realized the failure in their previous business model of
renting scooters, and will be SELLING scooters directly (which in my opinion
is a much better business model)

[https://shop.bird.co/pdp.html](https://shop.bird.co/pdp.html)

Alas, "Delivering in US and Europe summer 2019" means that they have lost out
on $2500 worth of business from goobynight (and from the market segment
represented by goobynight).

~~~
robocat
> The fact that you bought your own for $2500 means their business model is a
> failure.

Rubbish: they can be successful because not everyone wants to buy a scooter.
Also commenter still probably uses Bird, for example one way trips or when it
is just more convenient.

~~~
miranda_rights
Yep. My use case for scooters is when the bus will take too long to get me
to/from work, or running errands, or when I'm too tired/it's too far to walk.
I decide that I need it at the spur of the moment, and don't want to plan to
have it with me.

~~~
DrScump

      running errands
    

... is exactly the kind of use case for which these shared scooters are ill-
suited.

You stop for your first errand, come back outside afterward, and bam! someone
else took it. What if there are no others nearby?

~~~
miranda_rights
Mm, good point. My use case is usually that I'll walk up to 40 minutes 1 way
if I need a cable or something like that (non perishable, semi urgent) etc,
but am not willing to walk 40 minutes each way. I end up ubering otherwise.

------
jason_JA
It's worth checking out the response from the Bird founder:

[https://twitter.com/travisv](https://twitter.com/travisv)

The Information willfully printed misleading information here.

[https://twitter.com/travisv/status/1149763861731352577](https://twitter.com/travisv/status/1149763861731352577)

I know of them doing this in a very messed up way at least once before.

They've got a business to run, but they seem to have let their "exclusive",
scoop driven brand excuse their crossing of clear, ethical lines.

~~~
Cacti
That’s an awfully strong accusation for what amounts to them not originally
listing the $100mil as depreciation. That is hardly the crossing of ethnically
lines, and neither your accusation nor the CEOs clever spin changes the fact
that they’re still hemorrhaging money due to fundamentally poor business
decisions.

What is your affiliation here, considering that you created this account an
hour ago solely to post this inflammatory and misleading accusation?

------
supernova87a
On a different note -- I refuse to take these scooters around any typical
city.

You are one pothole or crack in the road from being knocked on your ass under
a passing bus. And given the state of our US city roads, this not just a
remote possibility. The size of the wheels is just not safe at high speed +
you being able to avoid situations like this. Don't even try it at night --
very dangerous.

Ride a bike.

~~~
bllguo
i have the same safety concerns around bikes, having had a close shave before.
the problem is the infrastructure

~~~
deathanatos
A bike's wheel has a considerably larger diameter than a typical scooter's. It
should be able to handle cracks and potholes much better, since the ratio of
pothole-depth to wheel size means it can essentially climb out of the hole,
whereas to a scooter, it's like hitting a wall (that the higher center-of-
gravity human is then going to be flung over).

That's not to say there's aren't potholes large enough to take out bikes, just
that there are a set of potholes that bikes can ignore and scooters cannot.
Nor is the above point that bike's don't have danger associated with them.
(Largely, idiots in cars.)

------
jadbox
As someone living in Los Angeles, I used to take a Bird all the time because
there was always one nearby when I had to go somewhere. However in the last
two months, this has dramatically changed. Now the closest scooter is on
average a 10m walk, which really takes away the convenience. I'm not the only
person in my neighborhood that are not talking about buying either a scooter
or an e-Bike.

It seems if they can't get their fleet numbers higher, that they risk
customers going the buying route, especially when the costs of scooters has
gone down over time.

~~~
Aloha
a 30 foot walk is too far?

~~~
projektfu
I read "10 minutes"

------
Animats
_" In this year’s first quarter, the electric scooter operator lost nearly
$100 million while revenue shrank sharply to only about $15 million, people
familiar with the matter said. In the spring, it told people it was down to
about $100 million in cash, even after raising more than $700 million over a
year and a half."_

This is a business? How, exactly, does it get better? The cost and revenue are
pretty straightforward here.

Just because Uber found a big enough sucker, the Saudi Arabia sovereign wealth
fund, to keep them going, doesn't mean everybody can do it.

~~~
randyrand
SpaceX was incredibly unprofitable for years - as are most companies when they
first start.

I’m not saying you are wrong, I’m just saying that data you’ve cited is not
very helpful.

~~~
xphilter
How can you compare SpaceX with Bird? One has a giant moat of billions in R&D
and one would not expect it to be profitable until the actually Hard To Make
product exists. The other is literally a board with wheels + a battery and
small motor. To say Bird's market is easy to enter is a huge understatement.
Worse--the companies themselves are just commodities that will be aggregated
by Uber/Lyft. I already find myself just opening Uber to see whatever scooter
is closer. I am--and I'll make a not so big jump here, other people too are--
not loyal to one brand at all.

------
docker_up
Bird scooters is a completely unviable business. It lacks revenues during the
rain and winter and when it's dark. One user using it for an hour completely
drains the battery and it's unusable until someone picks it up and charges it.
It needs to be redistributed every night to popular locations which causes
even more cost. As well, damage to electric scooters is almost at a sport-like
level now.

The only way they can make it more cost beneficial is if they charge less if
the rider drops off their scooters at a charging station and higher costs if
they just dump the scooter anywhere. But that is more costs for Bird.

Second is if they franchise out the business to "entrepreneurs" that handle
things for them and they just concentrate on the app. But that's not a multi-
billion dollar business.

There is no path where Bird becomes a viable business that grows into its
absurd valuation.

~~~
izzydata
That seemed obvious to everyone though so how did they ever get valued so
highly? Is the whole point of companies like this to fool investors into
giving them money and then keep the sham up for as long as possible?

~~~
JumpCrisscross
> _how did they ever get valued so highly?_

Bird isn’t WeWork. Yes, they’re unviable on a unit basis now. But that’s a
hardware problem. They’ve grabbed market share; now they must build margins
through R&D. The traditional model is R&D first market capture second, but
there isn’t a fundamental reason not to go the other way when the R&D is
reasonably feasible.

~~~
organsnyder
How is their market share at all secured? It's not hard for anyone else to
dump a bunch of scooters in a locale already swamped by Bird. Yes, users would
have to install a different app, but my hunch is most users will use whatever
scooter is closest and/or in the best repair (even if it means installing
another app).

~~~
likpok
It's pretty irritating to install a new app and go through a new-user
onboarding. I know that I've walked past scooters for a competing app in favor
of one I'm using.

If I start seeing them around enough I might go to the trouble, but that
requires a fair amount of density to start working.

~~~
zucked
That works - to a price point. There's a threshold where the described
behavior is overcome. I'm sure there's a marketing term for it (I don't know
it) but the OP is not off-basis.

If some new company with deep enough pockets starts promising No Unlock Fee
and $0.15/min, they could quickly capture a lot of Bird, Lime, etc's market
share. They'd be burning cash at an unsustainable rate, but there is no moat
between these businesses at the moment.

------
seniorThrowaway
Bird also had horrible problems with fraud from chargers. I gave it a try and
the number of high value birds that were locked up in people's houses and
garages was astounding. Just blatant outright fraud, a house in the burbs
would have 20 $20 scooters showing at the location. I think they finally have
it under some control as high dollar scooters never show in the app anymore,
that probably also means they have less people charging.

------
anbop
I hope the scooters don't vanish. I used to get home on the train, get in the
car, drive to my son's daycare (no traffic in this direction), and spend 45
min in rush hour traffic driving him home. Now, I get to the train, take a
scooter to his daycare in 10 min, and walk home (30min). If I walked both ways
I'd get to his daycare too late. The scooter has unlocked a really awesome
transport modality for me.

I get that the business model is fucked but hopefully they can design a more
robust piece of hardware and also figure out the charging problem, perhaps
with swappable batteries.

------
mushufasa
>> Bird charges each vehicle once every five or so rides, or roughly every 10
miles. That suggests Bird isn’t making use of the 30 miles or so it says its
scooters’ batteries can last.

that makes sense. Any growth oriented company would much rather lose margins
by prematurely charging than risk having an user run out of battery and churn.
I don't see that changing much post-saturation.

I could imagine this flaw in unit economics being overlooked by investors and
omitted in pitches. Doesn't this destroy the unit economics? Only way around
it would be paying independent re-chargers per % refill rather than flat per
charge? But I think I remember some firm trying that and the re-chargers would
just run it down in their sheds...

~~~
john-foley
They could be lying about the 30 mile range. That was my first (cynical)
thought.

~~~
atwebb
Or it is under ideal conditions/weight, if you use a smaller example rider but
users tend to be heavier (maybe scooter riders don't like walking as much?)
then that would lead to reduced mileage, pure speculation of course.

------
stuqqq
I have a hard time understanding why investors like these types of companies?
Is there even a profitable example? Maybe they can still make lots of money
from an IPO... how are they difficult from scammers?

~~~
mushufasa
I can think of several reasons

1) compelling if it all works out. Invest clear-eyed and hope the founding
team figures out the roadblocks.

2) Pattern-matching / top-down portfolios. Mobile apps. Sharing economy.
Subscription businesses. Electric Vehicles. Internet of Things. A lot of
investors decide on themes for portfolio before they look at investments.
Scooter sharing ticks a lot of boxes.

3) Adverse selection. It's a simple idea - anyone can grasp scooters as
subscription. So the simplest-minded investors chose this rather than more
subtle ideas.

4) as another comment suggested, investors are playing a game of musical
chairs between funding rounds. Chamath Palihapitiya claims this as the reason
his firm is stepping back from VC -- so he's walking the talk here
[https://www.cnbc.com/2018/10/10/start-up-economy-is-a-
ponzi-...](https://www.cnbc.com/2018/10/10/start-up-economy-is-a-ponzi-scheme-
says-chamath-palihapitiya.html)

------
ceejayoz
> Executives at other scooter firms caution that Bird likely has difficulty
> knowing the full extent of its potential insurance costs in the four-week
> sample it used because of larger claims that could come later. But Bird
> executives have told people that scooters see fewer at-fault collisions than
> in ride-hailing.

That seems like a highly misleading comparison. They're comparing Uber/Lyft
_contractors_ with Bird _customers_ here.

------
TheGRS
Lost revenue seems like a combination of bad weather seasons as well as cities
outright banning the devices at times. We re-introduced them back to Portland
just a couple months ago and Bird doesn't have nearly as big of a presence
this time around. But ultimately, scooters seem like the ideal ride in the
summer and not in the rainy, cold, dark winter. I'm not gonna ride one in
those conditions at least.

------
apo
The path to profitability seems to flow through lowering costs - especially
depreciation:

> Bird’s largest cost per ride is depreciation, or the decline in value of its
> scooters. Depreciation, as calculated by the company, is a four-week
> trailing figure taking the total depreciation expense for that time and
> dividing it by the total number of rides, a person familiar with the matter
> said. Currently, that figure ranges from $0.94 to $1.17 per ride, or about a
> quarter of revenue for each ride, Bird says. ...

These numbers appear to apply to Bird Zero and Bird One, not the older
scooters which presumably have even higher depreciations.

The article doesn't appear to break this down further, but it seems a big part
of depreciation might be loss/theft/vandalism. That's unlikely to decline
because better quality scooters are put into service. If anything, it seems
the move to more robust (and expensive) platforms might make the scooters even
more attractive to thieves.

------
mikeryan
Profitable minus CapEx on a capital intensive company seems like some creative
accounting. They’re going to need a path to real growth or their next raise is
going to be a down round.

~~~
trevyn
They include depreciation in the calculation, so it's not that bad.

~~~
Cacti
Not bad? It’s _worse_. They’re not depreciating servers here that they got use
out of, they’re depreciating scooters that are broken, stolen, missing, or
otherwise falling apart. Considering this is their fundamental business, it’s
pretty bad.

------
nlh
I’m completely at a loss for understanding electric scooters in a city like
San Francisco (reminder for those who aren’t familiar: wildly hilly!).

I tried one of the scooters when they first hit the streets here and it
promptly gave up the second I tried going up even a moderate hill. So I guess
they’re great if you happen to need to go on a totally non-hilly route in one
of the hilliest metro areas on earth?

I am, btw, otherwise a massive alternative-transportation fan. The e-assist
bikes (Uber/Jump in particular) are life-changing. Enough of an electric kick
to keep you from breaking a sweat, but you’re still moving your body and
getting some cardio (even if a small amount), and if you need to go over a
hill (likely), you can put a bit of muscle into it and actually make it to the
top.

~~~
Psyonic
There's plenty of people who live in SOMA, Bayview, Dogpatch or the mission
commuting to SOMA and FiDi who barely have hills at all. I used a single speed
bike for years when I lived in SF.

I'm not saying they're a great fit for everyone -- but there's definitely a
market.

------
ApolloFortyNine
Interesting timing, I just read about the Scooters Richmond, VA seized last
year about to be sold at auction. [1]

Obviously the $70k in scooters they're losing here won't break them, but
scooters are now legal in Richmond, so one would assume Bird could just pay
their fines and get them back now. My guess is they already wrote them off
last year so they just don't care, but it's not a good look for them.

[1] [https://richmondbizsense.com/2019/07/11/flipping-birds-
flock...](https://richmondbizsense.com/2019/07/11/flipping-birds-flock-
impounded-scooters-headed-auction/)

------
hartem_
Response from Bird
[https://mobile.twitter.com/travisv/status/114976243959386112...](https://mobile.twitter.com/travisv/status/1149762439593861120)

~~~
Cacti
Lot of noise for what amounts to a squabble over whether to call the $100
million a loss because of horrible business decisions or depreciation...
because of horrible business decisions.

I’m sure Bird will have equally good spin as to why, despite claiming this is
such an egregious abuse of journalistic ethics, they won’t sue. “Priorities”
or some such lazy excuse I’m sure.

------
KibbutzDalia
Bird works very well here in Tel Aviv! I use them every day. However, I've
never seem them work well in other places.

I see more electric scooters in the bicycle lanes by the boardwalk than
bicycles, by a factor of 2x or 3x.

I'm not sure the Bird model will work everywhere, but in "beach towns" or
college campuses, etc, it's a good model. It's probably overvalued, but the
concept of a "ride share dockless scooter" isn't always bad in some places.

------
jklein11
How could it possibly cost $300 million dollars to create a scooter company?

~~~
xenospn
Salaries. Hundreds of engineers @200k per year is tens of millions of dollars
PER YEAR. And that doesn't even include the scooters!

------
jmull
Exploring new business models seems like a good idea for them.

I can't see how ubiquitous scooters is anything but a niche business.

Selling scooters to those that want them does make sense as a business. But I
doubt that helps Bird because that's still probably not a very big business.
I'd think it would take something on the order of decades to make $300M
selling scooters.

------
monksy
I hope these leaches go out of business. They enable their users to use them
in terrible ways.

------
mushufasa
How well does the library/blockbuster video subscription model work for
bike+scooter shares?

You offer the item for free or heavily subsidized, and make money off of late
fees. In this case, rides are freeish but if you don't return it on time you
pay an arm and leg?

Someone has to have tried this, right?

~~~
jonlucc
This is how my city's docked bike system works, though with a small added
monthly membership. The effect is that I have never once used it. The risk of
the dock near my destination being full is too big for me to bother.

------
microdrum
Oh my god. Please, investors, do not put more money in. It's enough already.
Anyone who studied economics and looked at this from the beginning knew it was
a poor idea not likely to succeed. The experiment is over!

------
lanrh1836
I think there’s a good chance they go under in less than a year, with the
final nail on the coffin being the poor performance of Lyft and Uber stock
since both represent the very best case scenario for Bird...

~~~
microdrum
The big question is when will the VCs take the write down on their quarterly
pro forma financial statements!

------
jmpman
I live in a suburban area, and want a scooter in just two locations - one:
next to the oil change/car repair and tire change places - where I’m going to
be without a car for a number of hours. Two: close to the bars, so I can bar
hop without the long walk or expense of an Uber...

Bird does a good job with the second, but seems to neglect the auto service
locations. They seem to park their scooters next to the bus stops, which, if
this were San Francisco, might make sense, but here, only poor people ride the
bus and they’re unlikely to pay for a scooter. Now, they could offer geofenced
price reductions for rides originating around these bus stops and increase
utilization, but their current pricing prevents the poor from using the
service.

~~~
jm20
> riding electric scooters after a few pints is about as much thrill as I get
> these days

You're literally advocating drunk driving. Whether or not you're driving a car
or a scooter, this is dangerous, illegal, and you should never do it. You're
endangering yourself and others.

~~~
secabeen
> You're literally advocating drunk driving.

And just in case you didn't know, in California the penalties for driving a
scooter drunk are exactly the same as a car. The law makes no distinction
between driving a car, driving a scooter, or riding a bike. If you are in
control of a vehicle and drunk, you are committing a DUI.

------
AtlasBarfed
Low barrier to entry, and not particularly safe. Jalopnik preferred
"minibikes".

However, a great start for eliminating the auto as the primary city
transportation.

------
acd
Previous Fed chairman Ben Bernanke, decides to helicopter drop money through
printing press at zero interest rate.

Electric Scooters drops from the sky. Now what?

------
Presidio001
Bird needs to get serious about docking stations - seeing them littered
everywhere in San Diego was depressing. Think this through @bird

------
nraynaud
Kill them and bring back the bikes!

------
andrew_
I'm looking forward to buying one on surplus when the market eventually
bottoms for these services. Not being a cynic, it's simply inevitable.

------
Kiro
Bird lost the race and expanded too late. In Europe Lime is dominating.

------
ballmers_peak
Correction: Hey everybody! Jay from The Information here. We are testing out
unlocking articles for HN readers as we are big fans. Here's this article
unlocked! [https://www.theinformation.com/articles/hit-by-big-loss-
bird...](https://www.theinformation.com/articles/hit-by-big-loss-bird-
seeks-300m-in-new-
funds?pu=hackernews38uvpt&utm_source=hackernews&utm_medium=unlock&utm_content=bird-
big-loss)

~~~
zmanian
Seems like that is a link to a Tesla article?

~~~
melvinmt
This is the right link I guess:
[https://news.ycombinator.com/item?id=20412622](https://news.ycombinator.com/item?id=20412622)

