(The excerpt is published on All Tech Asia)
Mobike is currently the world’s largest bike share program. You may not hear about it. I can fully understand. It expanded so quickly! Mobike launched the first bikes in Shanghai, China in April, 2016. In December, 2016, Mobike launched the 100,000th bike in Shanghai, which made Shanghai has the world’s largest bike share program.
Users download the APP and pay the CNY 299 (~44USD) deposit for initial setup. Users can locate the available bikes and scan the barcode to unlock the bikes. Returning the bikes is extremely easy. Mobike doesn’t require the traditional parking docks. Users can return it to any parking area.
The current cost of a single bike is around CNY 1,000. The rental fee is as low as CNY 1 for one hour. Mobike doesn’t incorporate any advertisement placement on their vehicles. How can they get the return? The founder and the CEO said, they are aiming to solve the urban last-mile problem and don’t think too much about return at the beginning.
Don’t worry about how they gonna survive! In January, 2017, Mobike announced a $215 million Series D funding. Prior, they received $110M from Series B and C funding. Recently, Singapore’s Temasek invests an undisclosed amount funding for Mobike’s expansion plan in Singapore.
Do you believe they Mobike doesn’t make money in terms of the high cost of the bikes and the maintenance? I don’t believe. Let’s look at New York City. The second largest public-private bike share program (Paris is the largest) costs $45M to build the infrastructure (docks and stations). Mobike doesn’t need these infrastructure in most cases. In terms of operation and maintenance (O&M), Mobike doesn’t rebalance the bikes or needs to maintain the stations. Citi Bike releases monthly reports for O&M and revenue. I highly doubt the private Mobike will release such a detailed report even on the annual basis.
There are many similar business models since the launch of Mobike in China. The most competitive one is ofo which started in Beijing. Bear in mind, ofo’s most famous investor is Didi Chuxing: the Chinese version Uber, but fully dominates car-hailing in China. Electrical bike share programs also appeared on the street since then. More players created more unpredictable problems regarding safety and space conflicts.
In December, 2016, there are many issues of public bike share programs in many cities in China. There are conflicts between public bike riders and private bike riders in the limited parking area. There are also conflicts between bike riders and non-riders for the street safety. There is no way for the police officers to identify a public bike rider who disobeys the traffic rules and jeopardize the public safety. Again, I would like to mention Citi Bike’s monthly report, which include all the incidents and O&M observations. In the report, I can find action plans and actual performance rate regarding O&M problems. You can read the January 2017 report if you are interested in knowing more about a serious program.
I attended “the 100,000th bike launch event” in Shanghai last December. Mobike invited urban planners, law enforcement departments, academic and industrial experts, and journalists. At the event, Mobike showed their passion for expansion. At the end of the event, Mobike released a so-called “consensus”. But I have to say, it is not a consensus at all. They appealed to the local government to help build infrastructure for both biking and parking. It was very unusual in China that a private start-up gives “pressure” to the government.
Companies who created new problems should seriously refine the rules and incorporate a credit/penalty mechanism, rather crying for government support. Building infrastructure requires large capital coming from all the taxpayers. Why should taxpayers pay for a private company? Does it make sense? I don’t think any new infrastructure can be finished in a short period of time. How can they solve the increasing problems when they wait for the new bike paths or parking areas?
The fundamental question is why should government only support Mobike. The government needs to support low-carbon vehicles, which include all the bikes, electric bikes, electric cars, all the public transportation. There is way to much I can write here regarding how the policy making process can be influenced regarding the complexity of the environmental, economic and social considerations in China. Mobike was lucky to hold the event in Shanghai, one the most transparent local government in China, and received some constructive feedback, rather than a simple No.
The New Concerns
Mobike’s deposits suddenly became a hot topic over the past week. I was not surprised when I heard about this. Both Paris and NYC bike share programs rely on advertising sponsors and membership fee for infrastructure O&M. They are both public-private owned program which means the local governments are the biggest supporters. How can a private Mobike without sponsorship keep the world’s largest bike share program? First of all, the significant amount of funds. Secondly, the deposits which they may use for other purposes.
The accumulated amount of the deposits from all the active Mobike user is about $131M by the end of 2016, and estimated to be $255M in February , 2017. Apparently Mobike doesn’t need this amount of money for O&M. What Mobike responded to CCTV (China Central Television) was they have set up a dedicated bank account and won’t use the deposits for other types of investment, for example stock, real estate, or other portfolio. I believe they are the most closest guess for people who live in China. I heard some rumors like Mobike bought a house in Palo Alto in California: all-cash through a offshore company. It is far beyond my knowledge to judge if it is true.
The early stage of Mobike sounded like a good dream to bring the low-carbon vehicles to China. Environmental benefit actually plays a highly visible role in Mobike’s marketing and PR strategies, for the general public and local government. Does it sound appealing for investors? I don’t think so. But what if I tell you that you will have a huge amount of the deposits that you can manipulate?
Davis Wang, the CEO of Mobike was the former managing director of Uber Shanghai. He was a very important person for the expansion of Uber China. You can find 82 results of Mobike employees on LinkedIn, and 40 worked at Uber. Do you think it is a coincidence? Do you still remember I mentioned earlier about Mobike’s rival ofo received huge invest from Didi Chuxing. Didi Chuxing not only killed off Uber China, but forced Uber to sell its China operations to them. Ofo is also expanding to Singapore. Do you still think it is a coincidence?
I have my strong opinion on Uber’s company culture based on their recent actions in the U.S. from what the CEO Travis Kalanick reacted seeking profit at JFK airport during the protests to his excuses for joining Trump’s Economic Advisory Council. I would rather believe what his former employees do in China is irrelevant to Mobike. So I would like to give my personal POV from the environmental perspective:
Myth 1: carbon-free
Mobike is a low-carbon vehicles. But it is not a carbon-free solution. The production of the bikes consumes energy: most likely the dirty power from the grid in China. The operation of the company requires energy. Thinking about the embodied energy will help you understand the concept of carbon-free or carbon-neutral. Mobike doesn’t generate power, which means it will never be carbon-neutral.
Myth 2: reducing carbon emission
Is there any independent data source showing if Mobike is an alternative for high-carbon intensive vehicles, or an additional? Does Mobike only replace walking? Do people keep all their old habits, and use Mobike only for recreational/fitness purpose? The data should include the energy used during the production, O&M of the bike as well as all the office work. Only data can tell if Mobike is lowering carbon emission, rather increasing.
Myth 3: a company strives for environmental benefits as claimed
What Mobike company page on LinkedIn told me they are a 1,001-5,000-employee internet company. Wait a second, what did I just see? Not an environmental services company. A private company does need to think about how to make money for all the stakeholders. Every company can make money in an ethical way under the surveillance and disclose what they are doing with the deposits.
Putting green labels to their business helps them outstanding among other start-ups. But what made me feel uncomfortable is exactly greenwashing. For those who are not familiar with the term “greenwashing”, it is greenwashing when a company or organization claims to be “green” through advertising and marketing than actually implementing business practices that minimize environmental impact. Mobike is marketing in a way, but making revenue in another way.