The Newest Craze of Silicon Valley: Electric Scooters

Electric scooters are the newest craze of Silicon Valley. This new method of transportation has already become a phenomenon among people. Electric scooters from different companies including Bird, Lime, Spin, Skip, and Scoot have flooded the streets in many cities. Citizens have adopted electric scooters very quickly and implemented them to their daily transportation routine. These electric scooters have started to fill up the sidewalks. 

The technology is not new: these are your ordinary two-wheeled electric scooters branded with company logos and stickers along little customization. The electric motor can travel at speeds up to 15 miles per hour for around 30 miles with a full charge. What these startups have innovated is the rental business model. Since these scooters are dockless, riders can leave and pick up them from anywhere in the streets. Using the mobile app, users locate the closest scooters nearby through GPS and unlock it to ride. These startups typically charge a flat fee of 1$ plus 15 cents per minute to ride. 

The sudden demand for e-scooters have worked up an appetite for the Venture Capitalists. With the major success of the car-hailing industry, investors are pouring hundreds of millions of dollars to the e-scooter rental business in order to not miss out on the opportunity. In less than two years since their foundation, the two largest players in the e-scooter industry – Lime and Bird – have raised more than $400 million each, with billion-dollar valuations. These investments were led by Silicon Valley VC big guns Sequoia Capital, Google Ventures as well as Uber. Besides Lime and Bird, Spin has also raised more than $130 million to race with its competitors. Uber’s hefty investment in Lime shows that the ride hailing giant is trying to become the go-to place for all transportation needs, including reserving Lime’s e-scooters, through its app. The e-scooter craze is not limited to the US, the model has been very successful in China as pioneer Mobike has been sold for $2.7 billion. American startups are competing with each other to be the first-mover in new states and certain European markets.  

There is strong controversy around e-scooters. While it has created a cult following, it has also enraged citizens as the sidewalks are being filled with left-over scooters and people passing by pedestrians at high speeds. Since most cities and states have not anticipated this e-scooter trend, regulation is pretty inadequate. Policy makers and company executives are trying to work together to find an effective solution to the transportation problem that would satisfy all stakeholders in the society. Differences within each state law and local laws make it hard for startups to follow a one-size-fits-all approach. For example, in San Francisco, the home of Silicon Valley, the Municipal Transportation Agency banned all e-scooters in one night and decided to roll out a pilot program by issuing operating permits to only two companies: Skip and Scoot. E-Scooter startups have been following the “Uber Playbook strategy”: they launch without having any explicit permits, create brand ambassadors and public support, and gather valuable public transportation data to negotiate with local lawmakers after they have been shut down. 

This e-scooter industry has also given birth to a new gig economy. During the night when it’s illegal to ride scooters, people come and collect the e-scooters from the streets using a different app to locate ones with low or dead batteries. They bring these scooters home to charge their batteries and leave them back to their specified spots. Each company pays the chargers between 5 and 25 dollars per fully charged scooter. Startups rely on these gig workers to ensure that their fleets are fully charged and ready to use by the customers in the morning. People utilize this as an opportunity to make extra money by working a few hours a day.  

Although branded as environmentally sustainable, e-scooters are being questioned on this aspect. This argument mainly depends on what form of transit is e-scooters are replacing. Are you using an electric scooter instead of walking three blocks or are you using it to go to work instead of taking your car? In a country like the United States where two thirds of energy production come from coal and natural gas, electric scooters would have some environmental impacts too. If the electricity is coming from renewable energy, the e-scooters are a much better alternative than carbon emitting and fuel wasting vehicles. Moreover, e-scooters could be a solution for one of the major problems in urban transportation: the “Last Mile problem”. Public transportation networks could be inefficient for some people as it doesn’t reach to their end destinations. E-scooters would expand the reach of a metro stations and bus stops, thus promoting the use of public transportation.  

It is certain that e-scooter startups have addressed the demand for quick, convenient, cheap, and environmentally friendly commute for short to medium distances. They will be a part of the future of city transport in all major cities. Soon we will have the possibility to try them out as Lime is in talks with Canadian regulators to become the first entrant to the Canadian market.