On the latest episode of Recode Decode, Kraus says the rocky debuts of the ride-hailing giants on Wall Street have not scared Lime away from an eventual IPO.
Since their respective IPOs in March and May, Lyft and Uber have had a tough time on Wall Street: The ride-hailing companies’ share prices have been slumping throughout most of August, closing on Thursday more than 20 percent below where they were on Day 1.
But Lime’s Joe Kraus isn’t bothered by those numbers. In fact, the president of the scooter-rental company says they actually underscore why electric scooters (a transportation category that Lyft and Uber are also in) may be a more solid transportation business than cars, and he expects Lime to be a “standalone public company” someday.
“The scooter companies and Lime, the foremost among them, will be much more capital-efficient than the ride-sharing companies, despite the fact that we have to buy scooters,” Kraus said on the latest episode of Recode Decode with Kara Swisher. “I know the fixed price of this scooter in terms of pay for it, and I know how long it lasts as I get better at it, and I’m not having to constantly subsidize that side of the business. The second piece is, Wall Street’s pressure on Lyft and Uber for earnings has made for just a better environment in terms of how all the players are looking at the business.”
Kraus said e-scooters went through the Gartner Hype Cycle quickly, with scooters going from “the answer to cancer” to “a fool’s errand” in skeptics’ minds in under two years. But the roadblocks that made many give up are both a challenge and a “moat” protecting Lime from some of its competitors, he said.
“We can build a world-changing business that allows a world-changing service to be durable,” Kraus said. “That has come through grinding out the details on how you make this business work. Because it’s complicated, right? We have a supply chain that starts in China, gets scooters into a local market … a warehouse, people that operate, maintain, repair, deploy, prevent scooters from being stolen, collect them from the field, organize a group of people that can charge them every night. It is a lot of moving parts. Logistically difficult business, but the interesting part is that’s also the moat.”
Below, we’ve shared a lightly edited full transcript of Kara’s conversation with Joe.
Kara Swisher: Hi, I’m Kara Swisher, editor-at-large of Recode. You may know me as someone who thinks if President Trump is really serious about climate change, he’d hereby order everyone onto a scooter, but in my spare time, I talk tech and you’re listening to Recode Decode from the Vox Media Podcast Network.
Today in the red chair is Joe Kraus, the president of Lime. This is, of course, the company that used to be known as LimeBike but is now one of the key players in the scooter wars. Joe was previously Lime’s first COO and was named president in May. He also is someone I have known for a very long time.
Joe Kraus: Indeed.
I think from the beginning there. Disclosure, I was actually in his wedding a long time ago, 100, 120 years ago.
I think, yeah, I’ve had my 120th anniversary.
120th anniversary. But he has a lot of interesting — we’re going to talk about that and more. We’re going to talk about Lime and where it’s going. But first, talk a little bit about your background. You’re not just any president of Lime. You’ve had a long history of an early internet person.
Well, that’s how we met.
That’s right. So you ran … Explain who you are.
All right, so I have been in the Valley about 25 years. Graduated Stanford in ’93.
Won, really, a birth lottery, truthfully, because the internet was just getting commercialized with the web in ’94, and friends of mine and I coming out of Stanford didn’t want to work for anybody else. We started an early internet search engine that was called Excite, took it public in ’96. That’s how we met.
That’s right. We met at a dinner. I had dinner with … There was one search engine with two guys, but that was later. When was Excite? That was …
’93, we started. That was basically Yahoo time as well.
Yeah, Yahoo. There was Jerry Yang and Dave Filo.
And then 10 of you guys, or whatever.
Yeah, right, exactly. We just got a larger and larger band.
And I had a dinner with 10 dudes at a restaurant in Palo Alto, and you were the only person I found interesting, you and Graham. I don’t know who the rest of those people were or what happened to them whatsoever. There was a big … search engine wars, essentially.
Yeah, for sure, back in those days. It was a fight for dominance.
Obviously Google ultimately won.
At first it was Excite and Yahoo. Right, and Yahoo was dominant.
Yeah. Yahoo did the whole browsing thing. We were doing the search thing.
But that was back in the day when search was viewed as, like, a means to an end. You would gather traffic but couldn’t monetize it directly.
And then there was the innovation about essentially including in search results ads and then Google really took it, obviously, further with their bidding system and separating the ads on the right-hand side.
Right, right. But Google was a newcomer, when you guys …
Yeah they were in ’99.
I believe, or something like that. Yeah, there was AltaVista in there, which had a big run for a while as well.
Very short run.
Having been in those, everything feels like a compressed period of time.
But you would start this search engine and you had a really cool headquarters.
With a slide.
With this slide, this is the famous slide that Joe tried to get me to go down and I declined to ride the slide and everybody, everybody was like, “You have to go down the slide.”
You know, the problem with that slide is it actually generated a tremendous amount of static electricity. So as you went down you were being constantly shocked.
Well, that’s not why I didn’t go down it. I didn’t go down because it was inane for someone who’s above 40 to go down a slide.
Oh, you should really give it a try.
No, I really, no, no. I just wanted to talk about your business. But anyway, they ran Excite and then it merged with At Home, which was a …
Cable internet access company.
Goat rodeo, is what I was thinking.
And so we took Excite public in ’96 and then we sold it in ’99 to At Home and then I left in April of 2000 and took some time off and traveled a bit.
Were you involved in the Blue Mountain Arts buy?
I was involved in the Blue Mountain Arts buy.
Yeah, this was the card thing.
Yeah, this was back in the day when eyeballs were the hottest thing to try to grab, and there was a greeting cards company, an E-greeting cards company called Blue Mountain Arts, which we bought. And that was certainly a mistake, although now isn’t he the governor?
He’s the governor of Colorado. Yeah, he’s the son. Jared.
He’s a great guy. It was interesting because the husband and wife, his parents, who had started companies were kind of hippies. Did you know they called me during that? Everyone was like, “How’d you get that scoop?” I’m like, “They called me to ask my advice and I said, ‘Take the cash, don’t take any of that stock, and run for the hills.’”
Oh so you’re responsible for the poor deal structure that we ultimately did.
Thank you very little.
No problem. It was really funny. I was like, I said, “You know I’m a reporter. I’m going to write about this now.” She’s like, “Yeah, but I just want the best deal.” I said, “Take the cash. Run so far.”
Well, you were pressured in terms of …
They got $600 million in cash, right?
I don’t remember what the price was, but it’s on that order of magnitude for sure. It was a lot.
It was a lot. So then you took time off, then you were sort of …
I took time off. I did some traveling, ultimately did some political work. Joined the board of the Electronic Frontier Foundation and then started a second company in 2004, a small Wiki collaborative group editing company called JotSpot. And we sold that in 2006 to Google.
Which is how I ended up at Google. And then I was starting …
Explain JotSpot. I like to keep all this at this memorialized, what you did.
Yeah, sure. This was right as Wikipedia was getting going. I think Wikipedia was probably ’03? Something like that. But the basic premise was, back in 2003, I don’t know, we were on like Word or Microsoft Office 11, and so one thought was the whole office suite was really around making an individual more productive. But at least Graham — my co-founder in both Excite and JotSpot — we were thinking how much more productive can an individual get in Office 12 versus Office 11? But the internet had been around for about a decade.
Email was clearly a way that people were communicating and more and more groups were needing to work together over long distances. And so the idea was, well, actually it’s about group productivity is what’s going to be more important. And wikis were starting to come out as a group editing tool. And so we commercialized, basically, technology for allowing people to spin up wikis. It was a SaaS company, which was new at the time, and group editing was new, again at the time. Obviously Notes, Lotus Notes way back in the day was something that had existed.
And ultimately Google looked at it as they were building out their doc suite.
Docs, if it’s in Docs then it’s Slack in a lot of ways.
Yeah, I mean it’s amazing. It’s amazing how the extension of that, if I look today, Atlassian, a very successful company that has obviously things like Jira for bugs, but they had Confluence, which was a competitive product at the time. And what I think Slack really took to the next level was that same trend about working together and getting off of email. But I think they really figured out that it was about messaging.
Better than we ever did.
Right, absolutely. So then you were at Google and you moved into the investing space.
So I was … Two guys had gotten Google Ventures off the ground and then I, along with several others, joined. As really kind of the founding general partners as Google moved from investing $100 million a year up to now about $1 billion a year. So I was there for a decade as a general partner focused on marketplaces, but also transportation. So it turns out Lime was my second-to-last investment at Google Ventures and I got so excited about what I saw in terms of the growth, the megatrends, that I just wanted to get back in operating.
I was surprised when you became a VC because you had been such an operator, you were such an entrepreneur, versus moving inside. It seems like that’s the disease everybody gets, they become a venture capitalist.
You know, for me, I really thought about starting a third company. That’s what I thought I would do. When I got to Google, I started a list the first day I got to Google of great product managers, engineers, designers, biz dev people that I was meeting. And once a quarter, I would stack rank the top five people, just thinking, this is a group of people that I’d want to recruit. The reality is when I got to Google, I had one kid and when my kind of earn-out was done at Google, I had three. And so I just felt like I wasn’t cut out for operations at that time in my life.
So I basically took a decade and invested and I loved it in terms of the intellectual variety, but what I missed was the relationships you form with people when you struggle to do the impossible, that’s just incredibly rewarding at a personal level.
All right, so we’ll get to Lime in a second. So you working at Google Ventures. Google has two venture arms now.
They have kind of a venture group called Google Ventures and a private equity-style later-stage — bigger checks — called Capital G.
Capital G, which does different things, competing things sometimes.
Sometimes we work together.
Yeah. What was that experience like, being a VC? Because it got you to Lime. Why did you suddenly focus on … You had been in content, really, forever.
Yeah. I’d say the first wave was around kind of consumer with search engine. JotSpot was really around small to midsize businesses and dealing with customer acquisition and business problems, about longterm value versus cost of customer acquisition.
I don’t know. I found transportation really, really interesting in general because I think maybe one of the things that I yearned for is the ability to affect people’s real lives, like nondigital lives. There’s always an interesting business going on with some new digital thing.
What were some of the others you invested in there?
In the transportation category?
In general there?
Oh, let’s see. Kind of looking back, Turo is one company that’s a peer-to-peer car rental company, obviously still going and doing quite well. In the trucking space, I invested in a company called Keep Trucking, which is basically in bringing technology to this huge segment of the American economy that not many people address.
I was an investor in a company that’s not related to transportation, but in the marketplace space, which is the other spot, called Stock X. It’s a market that’s kind of hidden in plain sight. It’s a secondary market like StubHub is to tickets, Stock X is to these hard-to-get sneakers and t-shirts and it’s actually a much bigger business than people realize.
Oh I think it’s big. I have teenage boys.
Yeah. You know it exactly.
I know all about it. I’ve been buying things.
You know like Supreme and Collaborations.
That’s not cool, just so you know.
Supreme is no longer cool. I understand the bloom is off the rose. If somebody like me is talking about Supreme, it is definitely not cool. So that’s another example of a company that was in the kind of sweet spot for me investing.
But this one, Lime, what did you see when you were in as an investor? They had started as a bike company.
Yeah. They had started in the bike-sharing space, starting with pedal bikes and they had just introduced e-bikes. And by the time I was looking at it, they had started introducing scooters, their own scooters.
So one of the things that I thought was interesting about them is they didn’t use other people’s scooters like a Ninebot/Segway, but they were instead using scooters that they had built themselves. So what did I see at that time? And that was back, now, in April of 2018.
Back, way back when.
Way back when in Lime time.
Less than a year and a half.
The main thing I saw was just incredible growth. You know, any investor is really looking for, especially an early to midstage investor, they’re looking for evidence of product market fit. And what was incredible is it was clear that scooters were something people loved, not just, like, liked and used. But you would just watch, you’d stand on a street corner and you’d see people try to figure out, what is this thing? How do I ride it? What do you mean it’s for rent? Because this kind of sharing model, dockless sharing mobility, was something that was really novel in the United States. It was common in China, but it was novel in the United States back 18, 20 months ago. And so first watching people figure out what this is.
But then the second is, literally the smile they would have on their face when they took off on one of these scooters. I argued that this is the closest thing humanity has devised to a magic carpet. People smile and then they figured out how useful it was. How much time it saved them. And you saw that in the numbers: Basically you saw incredible growth in terms of trips, revenue, users. And that was kind of the first signal. And then the question we had to ask ourselves was, is this a fad or a durable trend?
If it’s a durable trend, can you make money from it?
And then how does the competitive landscape emerge? And so going through those questions was really the diligence process we did, and to say, should we invest in any company?
Any of them. Which there were several.
Any of them and there were several. And then the question was, what’s the one we’re looking at? And ultimately, we came to the conclusion that Lime was the best company for that. Once we answered yes it’s a durable trend, yes you can make money, and yes we think the competitive landscape will allow independent companies to exist, we picked Lime for several reasons. One, we love the executional prowess of the team. They were not first in the market in scooters, but they were gaining share. They were still behind, in that case, Bird at that time, but they were gaining ground.
Second is, that they had built their own supply chain and we felt like hardware was going to be a critical component of the business.
And the third is we thought that their approach to government relations was really just plain better in the way that they interacted and worked with cities. You know, the old model was this kind of Uber combative model, but our view at GV, looking at the whole space was …
Which was an investor in Uber, by the way.
Which was an investor in Uber.
Was it both of you? Both GV was and also …
No. Capital G is in Lyft.
That’s right. Okay. Right, that’s right.
So Alphabet has plays in both.
Was that, you know, in the scooter business, Uber’s hidden in plain sight. Like Uber X, you can’t tell if that vehicle’s an Uber or not, but scooters are on the street visible so you have to be a good partner with cities. You can’t just kind of slip under the radar. It’s impossible.
We’re going to get into that next when we talk about safety and all kinds of issues because it’s a really challenging operational business.
But they had been in bikes, which hadn’t worked. When you were looking at these sectors, a lot of these companies had tried bikes. There’s obviously been CitiBikes and those companies, Lyft and the others have gotten into those. Talk a little bit about the shift, because it was called LimeBike and that was, it was not disastrous, but felt semi disastrous. There were too many. There were those pictures in China, bikes on top of bikes. That one photo was just fantastic.
Yeah, I would say if you look at the history of bike share in China, it is a story of unbridled competition to basically win market share with no spend efficiency. Like they basically just dumped bikes everywhere.
Now the good news is that for the US, Europe, Australia, New Zealand, basically any market but for China — and even China, though, today — nobody wants that. And so cities are looking at how do we integrate micro mobility, which they think is a good thing.
But make sure it’s not this crazy unbridled war on the streets where hardware gets dumped and basically …
Thrown into the, you know, the stories are easy. It’s easy for the media to pick on, including scooters. We’ll get into that, but it’s less so with scooters than bikes. Bikes really didn’t work as well, although they did when they were docked. It’s a really interesting …
From the city’s point of view, but not from the customers’ point of view.
Right, right, exactly, because you can pick them up anywhere.
In my view what’s happening, broadly speaking, is that you’re seeing this unbundling of the car and the trend went … It first started with Uber. So Uber taught people that I don’t need to own a car, I can have access to a car, and if that access is reliable enough …
You know that’s my brand, and I’ve written about this a lot, like, that you’re not going to own one.
Right. You have access over ownership.
And that itself was playing on the back of like the sharing economy that was coming up with Airbnb and others. But I think what Uber really showed is that it’s sufficient liquidity, it’s sufficient availability, it’s a substitute for ownership.
And you can mediate that through your phone. You can summon a car on your phone. I think the next wave that’s happening is to ask the question, why is the car the right vehicle for all trips? You know, since Henry Ford in 1908 with the introduction of the Model T, we’ve really had this notion of one car to rule them all. I take short and long trips with it, day trips and night trips with it, trips to the mountains, trips to the store. I do everything in my car. But if you look at an urban environment in particular …
Where most people are moving.
Yeah, I mean, 55 percent of the world’s population is in a city today; that’s expected to be 68 percent in 2050, which is about two-and-a-half billion people moving to cities. The trend towards cities is inexorable. It begs the question, cars aren’t really the greatest vehicle for short trips. And so this unbundling of the car, which I think boils down to small vehicles for small trips, and the car is great for going long distances where you want to go point to point. But inside a city under five miles, I strongly believe cars are not the right vehicle type.
Right. And you know, people are talking about this, but what’s interesting about the bike thing, the first time I ever heard of the notion of this, of all things, I was walking with Sergey Brin and he said, “I’m going to dump 100,000 bicycles in New York. That’s my new idea.” This was a decade ago. It was weird. I was like, “What?” And he goes, “Yes.” Because they had them around Google, if you remember, the colored bikes.
And I always wanted to steal one, like, or drive into them or something.
You wouldn’t be the first.
You know, not just steal them, but I was like, oh they just annoyed me for some reason. But I also saw the genius in them.
I think you’re easily annoyed.
I know that’s true, but it’s just they were multicolored and like as if you’re on a beach in the summer. I just was like, you people wake up …
Happy Googlers. So he had a lot of them. He said, “I’m going to drop 100,000 on New York and I figure this many gets stolen.” He had an exact number that would get stolen and damaged. And then he said, “Then I’m going to drop 100,000 more, then I’m going to drop 100,000 more.” And he had a point where you couldn’t drop enough, like that it became useful, that it would hit every section in the city. And he had the algorithm.
It was crazy at the time. And I thought that was … that’s brilliant. In a weird way like that you could do this, the idea of dropping micromobility onto a city … Could you replicate what was happening on the Google campus, which I thought was super interesting. But it was also, as usual, typically not thinking of life in the city, like dumping 100,000 bikes on a city — okay, you know, billionaire, that’s good for you and your experimentation. So it was a really great idea that was initially, especially on bikes, executed totally wrong. I remember being in Seattle and being overwhelmed by bikes there, which I don’t think are there now, or cities not being …
No, we still have … Lime still has a bike operation there. But the thing I would say, though, is this about bikes versus scooters, right? We offer both. 98 percent of our business is scooters.
And the reason is scooters are a better form factor for a mile and a half to two miles. They just are. And I think it’s really for a couple of reasons. The first is people know what a bike is … So I’ll say this, an e-bike, if you haven’t been on one, is no work at all. But when you look at it, it still looks like work because you’ve ridden a bike before and you think you have to pedal this and it’s going to be work and maybe you’re going to be a little sweaty. Also the act of getting on a bike is meaningfully different than a slight step up to get on a scooter.
Right, it is.
And lastly, scooters are just more manageable as a vehicle. They’re lighter, less cumbersome, smaller, and so for this subtle group of reasons, scooters took off in terms of utilization in a way that bikes have not.
Yeah, there’s some tinier — in Los Angeles, there’s these teeny little bikes. Are they new?
It’s a company called Wheels puts those out and yeah, they’re interesting. I do think, my own view is that scooters are great for like a mile and a half to two miles and under. There’s a vehicle type that I think has yet to be discovered between two and five miles. Some people are trying it with mopeds, like Revel in Brooklyn, and Washington, DC.
Right, I just was on one the other day.
Okay. Yep. And that itself is a clone of a company called Gogo Row in Taiwan. There’s the wheels form factor, which is a small bike.
Teeny, like a clown one.
Adults look ridiculous on them, but they’re fun to ride.
I’m going to get a picture of you on one. I feel it.
There is one existing. I’m not going to show it to you.
Okay. And then I think we have yet to discover what that ideal form factor is for the US market, in particular in that two- to five-mile range. I think that — my own personal bias, I think Americans have always had an uncertain relationship with a moped. It’s bigger, certainly bigger in East Asia. It’s modestly sized in Europe, but mopeds have been around for a long time so I’m not fully convinced that an electric moped … And I would point to Scoot’s moped operation in San Francisco. It’s been around quite a while.
Yeah, I haven’t ridden one.
You probably haven’t ridden one.
I had a moped all through high school. We’ll talk about that when we get back.
We’re here with Joe Kraus. He’s the president of Lime. We’ve been talking about various … the micromobility, is that right?
That is the term.
So you guys leaned really heavily into scooters, this idea. You’re right, there’s all kinds of different ways of people getting around. I was thinking vertical lift and take-off things. Drones. Would I get in a drone? I probably would get in a drone. Like those kinds of things, which I think are super interesting. I know Uber has some experiment they’ve kept going for some unknown reason.
Whatever. Sure. Okay. Maybe it’ll happen. Probably not for 30 years or something like that. And you know, they’ll drop like three or four people into the Bay and then we’ll see how that goes.
Have you talked to Joby Aviation?
No, what’s that?
They’re the most interesting company in eVTOL. I don’t want to get over …
That’s what they do with Joby?
Joby Aviation, j-o-b-y.
Okay. All right. And then there’s hoverboards, which are hovercraft, which is Larry Page’s thing over there at Kitty Hawk and things like that. So I want to talk first about the big one, then about Lime. Because what’s happened with Lime is you are in a really competitive landscape, not unlike your experience in search.
You know what I mean? Like here you are again with several different companies. But first I want to finish with micromobility. So there’s going to be lots of answers, in that you don’t know what the answers are for the various problems.
Clearly, scooters right now are what people love. Like we’ve done six, we operate today in 100 cities, 26 countries, five continents. We’ve done over 65 million rides. The business has grown tremendously. And I don’t see any signs of that abating. Like 11 percent, to give you an example, like 11 percent of Parisians use a scooter.
Well, we can talk about Paris because I just wrote a column about that. The idea of it. Okay. So good. 11 percent use the scooters that are available there.
That’s right. Which is amazing. They’ve been available in Paris for a year. The amount of people who have shifted their behaviors from cars to scooters is …
So the shift is from cars? It’s not from public transportation or walking or what?
There’s a few shifts. So when you look at data from, let’s say, Portland’s Department of Transportation, which I think has done the best study on this that doesn’t involve us. I’ll use their data. We have data that basically confirms this, but their independent data was: In Portland, at least 40 percent of people were replacing a car trip. About half of that was replacing an independent car trip. About half of that was replacing an Uber or Lyft trip, a ride-share trip. The remainder was replacing walking, primarily. They weren’t replacing public transit. What was essentially happening was our data shows about 40 percent of rides start or end at public transit.
To be able to ride to public transit.
Getting people the last mile. So they might take the subway and then from the subway they take the scooter to their work. Our business in general and our view is that micromobility works much better in Europe than the United States. Those cities were made for … they’re much denser, they’re old. They were made for horses and humans, not cars. Cars were always a retrofit into those cities. They’ve invested …
Though, cobblestones, thank you very much in Paris.
Cobblestones make it difficult. They make it difficult to … Well, even worse is Prague. Prague is a really interesting market for us. I’m shocked people ride scooters because it is so cobblestone-y there. It’s difficult.
Regardless, they’re denser, older, cars were always a retrofit. They invested in public transportation earlier so their networks are better, and that’s actually better for micromobility because of this positive relationship between micromobility and public transit.
Then, lastly, they invested in bike lanes early. The infrastructure, there’s this great website called Copenhagenize that looks at the biking infrastructure. Top 20 cities are not in the US, they’re in Europe. That’s why the micromobility business, scooters in particular, is a much better business in Europe than it is in the United States.
Bike lanes are critical.
They are absolutely critical for usage and safety both.
Right. We’ll get into those in a minute. Let’s first talk about the competition. You came over from Google because you just wanted … This is the company you wanted to work for or what?
Because what I saw was a company that was growing incredibly fast, was global in scale, and was riding two durable trends: Urbanization and all the unintended problems. More urbanization is more traffic, more pollution, more congestion. Truthfully, I think certainly in the United States, I think there’s also this epidemic of loneliness with the decline in religious institutions, the decline in civil organizations. Lions clubs, rotary clubs. People are lonelier. All of those trends, I think, have some interface with transit. So I don’t think cars are the answer, as two-and-a-half billion more people go into cities. I felt very confident of that. That trend, coupled with the great execution of Lime and the growth of Lime and the global nature of the business, got me really attracted about jumping in. Again, so that’s why.
Then why Lime in particular was, again, they made their own scooters from the very beginning, had a great government relations team to get into these cities. Competitively what I think is interesting is that it was a much less clear picture a year and a half ago. Today, I think it’s meaningfully clear. We’re pretty much 2X bigger than our nearest competitor. I would say, in the United States we’re 50/50, 55/45, depending on the metrics, one way or another, with Bird. If we look globally, we’re 2:1 almost bigger than anybody else.
There’s a ton of them in Paris. I wrote this column about Paris. It was again, it’s interesting because it’s the same story that Uber played out. Like, what? It’s this “what?” by government, which allowed it to happen and at the same time then was pulling back from it. I think there were at least 12 scooter companies.
There’s 16. That I could count.
Actually, maybe by the time you’d gone there, five had retired from the market.
Whatever, there were a lot. They were names I never heard of, for the most part. Then there was Lime and Bird. Some that are maybe owned by Lyft that are getting rebranded Lyft. I don’t recall seeing them in Paris. But I don’t remember. I see all of these things. Now what I see is Bird, you, a lot of you. Bird, whatever Lyft is switched from. Is that Uber or Scoot?
Are you thinking about Jump in particular?
Jump. Jump is Uber.
Jump is Uber.
And Lyft has changed whatever they bought to their name.
Lyft I don’t believe is in Paris, mainly because …
Not in Paris, but in the US. I’m saying anywhere.
In the US, yes. They have Lyft scooters in the US.
Yes, but they were called something else powered by Lyft. Then they became … They had a different name. They bought something or whatever. Those two have gotten into the market. Those two mobility companies, Lyft and Uber. Then whatever local one pops up, it seems like. I’m trying to think of who else is existing.
In the European theater, they’re essentially all one-syllable names: Tier, Voy, Wind, Circ.
Right, right, right.
Everybody seems to love one-syllable names in this space.
Right. But the two ones that are dominating are independent companies.
With the Uber and Lyft versions pushing forward pretty heavily. In Washington I ride a lot of Lyft ones because they were available in my neighborhood. I don’t see Scoot as much, but I suddenly started to see them. I take whatever is … I’m not brand loyal to you all. I like Lime once, but I’m not … Talk about that competitive environment when you’re like that, when there isn’t a brand loyalty, necessarily.
What I would say is …
As there is with Lyft and Uber, for sure.
It really, really depends on the market, truthfully. We’ve got data all over the place on these topics. If I look at — Germany is a really important market right now, mainly because it opened somewhat recently, middle of June. The whole country opened at once. As I already mentioned, Europe, the micromobility business there is meaningfully better.
And in cities like Berlin, we have 47 percent of the total fleet in Berlin of all available scooters, but we have 62 percent of the rides. Or in Cologne, another German city, we have 56 percent of the fleet and 71 percent of the rides. So we think there is evidence of at least some portion of users expressing preference, but it’s the biggest thing we’re working to develop. I think truthfully, preference comes from a few things. One is, do people like your hardware.
Do they feel comfortable on it? Do they like the features in your app? So it’s a product piece.
Another piece is, are we deploying where people need them?
That deployment is really all I care about.
Deployment matters a ton.
What’s near the coffee shop, and I’ll grab it.
That’s right. Then the last piece is a long-term investment. When I look at how do you create preference in a world of abundance, I think the models to look at here are things like coffee and premium alcohols. Where like you’re willing to walk to get a Starbucks and not a …
Nobody is willing to walk to get a Starbucks. That’s why there’s one on every corner.
You don’t have to walk. There’s one on every corner.
That’s their strategy.
You’re certainly willing to pay …
Shitty coffee, but it’s right there.
I’m sorry, Howard, but it’s true.
Every time you buy a $3 cup of Starbucks instead of a 50 cent piece of somebody else’s coffee, you’re expressing preference in a world of abundance. Or when you ask for a Grey Goose and soda for a spirit that is supposed to taste like nothing, you are expressing preference in a world of abundance.
Right. It’s a brand.
There is the way these brands are built, in my opinion, is that they marry world-class product with elevating a sense of purpose. I think one of the things that we need to continue to do is talk to our users about the sense of purpose. Our view, our mission is that we believe a city life is a great life. Our mission is making cities connected with other people, making them better for you to get around in, and fundamentally, over time, making them more human. I know that sounds like a big reach. I get it.
You sound like WeWork right now.
I know, I know. I’m sorry.
They’re just renting office space.
If I just look at, again …
I like that you caught yourself, at least.
I did. I caught it before you caught me, which is what I appreciate.
Because I was like, oh come on.
You were about to blast me. I know that.
“Search is a way to connect people across the globe.” Go ahead.
I just think if you don’t have that, if you don’t try to raise emotional stakes, it’s very tough …
You want people to like Lime versus Bird versus …
Of course. I think that’s an important part of the mission. But I think it starts with world-class product. We have to make the best hardware. Then it starts with great placement. Then we have to continually raise the emotional stakes.
Of those, I would imagine placement is probably the most important. Right? If there’s two there, if there’s one there, people will just take one. Like whatever is available.
Yeah. I think there’s also something to habit. If you look at first app open …
That’s true. I do take a Lime.
It makes a difference for people.
If I have a bunch of them, I’ll take a Lime or a Bird. Before, because I’m like, “Screw you, Uber and Lyft,” essentially, I don’t know why. It’s just like, I don’t want any of the big companies to win. I like independent companies versus …
Well, I appreciate the focus on the independents.
Well, you’re also ridiculously valued. But that’s all right. I don’t care. You’re an independent.
That doesn’t affect you as a rider.
So how does this competition shake out? Because you’ve got, first of all, the city is putting pressure on. San Francisco is just a few, right? You’re here, right? Or you’re not here?
We’re not here today.
You’re not here.
San Francisco just concluded their RFP process in terms of submissions on Wednesday of last week. I would anticipate that there’s new scooter companies with more fleet here by mid October.
Okay so possibly you will.
Possibly. Right now they just have a few. What do they have?
Scoot and Skip. Scoot is now owned by Bird.
They’re attached to …
San Francisco is the only market that has what’s called a locked-to requirement that requires you to have a lock.
I love it. I love it.
Why do you like it?
Because people aren’t sloppy. People aren’t as sloppy. They don’t leave them.
That is the theory. What I see is a lot of scooters that are locked to themselves and then parked anywhere they want.
Okay. I don’t see that. I see most people behave. Most people feel like they’re going to get fined. I don’t know. I do at least. So it’s interesting. I kind of like it. I like it better than just anywhere. But okay, you may have the statistics on it. So, San Francisco … Talk about that market. That’s a more stringent market. You’ve had the experience with Uber and it certainly has tried to control the scooter situation.
My general view is if you look at most technology businesses, there tend to be two outlier markets, be it Airbnb or Uber or Lime. Those outlier markets are New York City and San Francisco, for different reasons. San Francisco’s RFP had a number of requirements that are definitely stretches relative to what other markets are thinking about. We’ll see how it shakes out. I don’t have any …
And New York? You’re not in New York.
We’re not in New York. There’s a bill on the mayor’s desk that legalizes scooters in New York specifically in the outer boroughs, but not in Manhattan. We certainly hope he signs it. That would allow us to at least bring operations to the outer boroughs.
To Brooklyn, wherever.
We’ve got a small operation in New Jersey right now. It does quite well.
Do you have to be in those big cities, those two, or not?
Truthfully, what I’ve been surprised in in the economics of the business is, if you had asked me 10 months ago when I joined, I would’ve thought, it’s only going to work in midsized cities and above. Truthfully, we have found that … Truthfully, it’s a surprising outcome and a testament to the people that make these businesses happen on the ground in these markets. It’s worked in small markets and midsized markets and large markets. Fleets as small as 500, up to 10,000, 15,000-vehicle fleets. It’s just worked across the board. It’s not easy. This is a tough business, but they’ve made it work.
I want to get into the operational parts of it next. When you have all this competition, how does that … you have been in that situation. Not Google, [which] rolled over everybody, essentially. How does it shake out here? Does there have to be competition or will there be two or one?
At least what I see happening … And this is a prediction. Predictions are vulnerable because … what is it? The Yogi Berra quote, “it’s hard to make predictions, especially about the future.” What I see today is I see Lime as by far the dominant global player. We’re 2:1 bigger than anybody else, approximately. In Europe, we even have a stronger market position, and the competition is more fragmented.
What I see in the Nordics is it’s Lime leading and Voy is the second-place player. In Germany, I see Lime leading and Tier is the second-place player. In France, I see Lime leading. In that case, Bird is the second-place player. I just see a fragmented competitive environment where I think Lime has an opportunity to be half the market in Europe.
You have to be half the market.
No. What I see in the United States is actually quite an interesting competitive environment, where I think it’s really us and Bird fighting it out and providing great service to users. Basically, being 50/50 in the United States.
How do you look at Bird then?
I credit Bird. They started the scooter revolution.
I thought that I have a lot of respect for Travis as an operator. Know several members of that team and think they’ve done some great, innovative work. I think they did personal scooter rentals, they sell scooters, they’ve got the new bike format. Look, my job as their competitor is to serve users by being better. I have a lot of respect for my competitors. Yet every day I wake up and want to be better.
Uber’s and Lyft’s efforts?
So Uber is an investor in Lime. In addition, we have this deal in a number of geographies across the world where, along with Jump, we’re an exclusive provider.
Jump is Uber’s.
Jump is Uber’s, sorry. We have Lime scooters integrated into the Uber app. So you can see that in DC, for example.
I’ve seen them there. I did. I do.
Our general view is that Uber is trying to make a platform. What they want to do is have users get from point A to point B.
Like a subway or whatever that you can pay for the subway that way, or whatever.
Exactly. You want to integrate public transit and ride-sharing, maybe other modalities like vanpooling over time. I don’t have any access to Uber’s product plans. But micromobility is a part of that. I think truthfully, they have a part of their business in Jump which we compete with, and a part of their business in the ride-sharing marketplace, the Uber app, where we’re a partner. That’s kind of normal for these early stages of markets where sometimes your partners are also competing with you. Sometimes your competitors are also partnering you. That’s the state we’re in with Uber.
Does that mean you have to get bought by Uber?
That has to be a …
No. No, no, no. I actually think … I have a lot of respect for the Jump team. At the same time, I look at our global market share. I’m very happy vis a vis our competitive position.
What about the valuations? The enormous … How do you answer that when people go, “That’s ridiculous, Joe Kraus”?
I think if you look at the total addressable market for how big micromobility is, if you rewind the clock a year ago, I think there were legitimate questions about can people make money. I think the whole scooter space — and let’s just call it the scooter space rather than the handful of micromobility — I think if you look at the scooter space, it went through the Gartner hype cycle relatively quickly. There was a period of time, I’d say a full 18 months ago, where the scooter business was viewed as the answer to cancer. It was literally, you put a scooter on the ground, it’s an ATM, it starts throwing off cash, it’s amazing. I would say nine months ago, let’s call it November-December 2018 through January-February 2019, we were in the trough of despair in that Gartner hype cycle.
Too many. All over the place.
Not only that, it’s, “Nobody will ever make money in this business.”
Right. They break down, people throw them.
Scooters last 30 days. Nobody is ever going to make money. This is just a fool’s errand. It’s a great service while the VC money lasts. When the music ends …
There’s a lot of those businesses.
There’s a lot of those businesses.
Many people still think Uber is that.
I understand why skepticism was there. I think we’re in an entirely different position today. We have a large number of markets that are what we would call uni economic, or contribution margin positive. Meaning on a market basis, they’re making money. That doesn’t mean the whole company is making money, but those markets are making money. We’ve been able to demonstrate and prove that this is not just about building a world-changing service. We can build a world-changing business that allows a world-changing service to be durable. That has come through grinding out the details on how you make this business work. Because it’s complicated, right? We have a supply chain that starts in China, gets scooters into a local market.
We’ll get to China in a minute.
A warehouse, people that operate, maintain, repair, deploy, prevent scooters from being stolen, collect them from the field, organize a group of people that can charge them every night. It is a lot of moving parts.
Yes, it’s a logistical nightmare, I’d imagine.
Logistically difficult business, but the interesting part is that’s also the moat. That’s why, truthfully, it’s why at the service this looks like people think it’s very similar to Uber’s business because we’re matching riders and transportation.
I think they have far less moats than you all do. You’re an operation. I think your problem is it’s so difficult.
It’s such an executionally difficult …
It is an executionally difficult business, which is I think the moat and the challenge.
Well, one thing that’s interesting is I find I am very price sensitive to Uber rides, but not to scooters. It’s really interesting.
We see that in the data, too.
It’s fascinating because I was like, “That’s too much money today.” But then a scooter was something that was more than I thought and I’m like, “Oh well. It was worth it.” You know what I mean? Because it’s low enough, which is interesting.
Your point is … We survey our users constantly on this kind of topic. What you just said is exactly what is said, broadly speaking.
I just don’t even know what the price is. As long as it’s not 20 bucks, I’m like, “Fine.”
We’re here with Joe Kraus, the president of Lime. We’ve been talking about the business, the difficulty of the competition. You feel like it’s going to shake out? Like most things, there are usually winners in the end.
If you force me to bet, I’d say I think it’ll be a Lime as a dominant player in Europe with a fragmented competitive landscape of different regional players dominating different countries. Then I think in the US, I think it’ll continue to be a market-share battle between Lime and Bird.
You know, right now we’re primarily in Australia and New Zealand. We think that there’s …
I saw you in Australia.
We think that there’s interesting markets in East Asia. We’re much more bearish on Southeast Asia both in terms of …
Well, because you’re banging up against …
You’re banging up against Grab, who’s …
Who’s already been in this space.
And a fundamentally uneconomic competitor. A scorched-earth competitor when we also think that willingness to pay in that market in terms of revenue per trip is more limited. We think that the use case in terms of traffic is very good. But we’re more bearish on those markets.
And then China?
You know, actually, scooters aren’t legal in China today.
But they have all kinds of different micromobility efforts.
They’re classified as a vehicle.
There’s lots of things going on there. And also that market is difficult. Speaking of China, you guys get your stuff made in China.
We have a team of 70 people in China that design the vehicle, that source all the components, that basically do all the engineering. Then we work with three assemblers that take that design and create it on an exclusive basis. So yeah, our supply chain is in China.
So what? Apparently there’s a trade war going on.
I’ve heard tell of this trade war.
I hereby order you to stop doing business with them.
We pay more for our scooters coming into the United States as a result of the Trump tariff — 25 percent more, in fact.
What do you do? What does a company … Because that can really hit a startup hard.
It can. Obviously, the business gets better if the trade war is resolved.
Trade peace, it’s called.
Trade peace is created. But our business is still economical in the United States. We still have many markets where we’re making money even with a 25 percent higher priced scooter.
Is there anything to be done? Can you source them elsewhere? What about the United States?
You know, I think you certainly could. It’s not clear to me that the total cost of the scooter would still be less than …
It was a multimillion dollar scooter.
The truth is that moving a factory is not an easy thing to do. It’s not a short-term commitment. I think we might look at other opportunities for assembling in different areas of the world. Probably the most egregious is Brazil. Brazil has 111 percent import tariffs. That makes that market harder.
To bring anything in.
To bring anything in at all. No matter where it comes from.
How big are you in South America? You’re not, right? You’re not in?
We have operations in, I would say, seven or eight cities. Bogota, Colombia, in Santiago, Chile, in Rio, in Sao Paulo, and several other markets. Actually, there are really good pockets of markets in there. But I would say it’s a more concentrated play in the right cities and in the right places where there’s either a lot of tourist traffic or a lot of congestion.
Also, this equipment, it’s really important to have different goods. You are also making them hardier, right? So that they don’t break quite as easily.
Yeah. I think that the thing that everybody focuses on in the business — rightly so — is how long your scooters last.
How long do they last?
Which is a combination of hardware and it’s a combination of how do you operate it, how do you maintain it, how do you collect it, how do you make sure it doesn’t get stolen, how do you make sure you don’t lose it, how do you make sure you have good mechanics. That game of inches is basically what allows your … That hardware coupled with great operations is what allows your vehicles to last longer and longer and longer.
How long do they last now?
We’re now in the seven-and-a-half months range.
Then what happens to them?
They get anything from recycled to broken down into parts to fix other scooters.
Right. The difficult thing is finding people who can fix them, right?
What we’ve learned is how to train mechanics and how to spread that knowledge and generate standard operating procedures and get them standardized across now 100-plus markets around the world. As we’ve been talking about, this is literally a game of details. That’s one of the details that you’ve got to get right.
What is the biggest problem around deployment and stealing and shrinkage, I guess, essentially?
You can look on a city for hotspots about where scooters go to die, and then you can kind of — anything from contained service areas to making sure that high-alert tickets get sent out for people to retrieve scooters that are in areas that are kind of danger zones in terms of being stolen.
Where do they go when they’re stolen?
You got me.
Well, don’t you have … I’m assuming you have ways to tag them, right? Or to follow them?
We certainly have ways to follow them, but at some point, a scooter could be …
Disassembled, destroyed, something. Here’s the thing. I think most people think it’s a jungle out there. You put your scooters on the street, everybody’s trying to steal them. The reality of the business is far more subtle. There is some theft and vandalism. Don’t get me wrong. You see enough Instagram videos of people driving scooters …
Yeah, they like to …
… off a cliff or doing something with them that … there’s an unintended use. But the reality is that theft and vandalism is a small fraction of what makes the business difficult. What makes the business difficult is when you’re managing a fleet of, I don’t know, 120,000, 150,000, 200,000, 250,000 vehicles that are on the road simultaneously. Actually, managing just that scale is itself the hard part.
It’s not really the bit that gets stolen, although that’s a part of it. It’s just the fact that you have so many vehicles that you’re trying to …
Right. Too many small vehicles.
So many small vehicles that you’re trying to find, maintain, address, update.
That was interesting. I was thinking, it would seem to me that like Hertz and those people haven’t gotten involved in any of this stuff, which I find fascinating.
You know what’s interesting is I do think that the businesses …
Because they do that.
They do. They do fleet management.
What you’re talking about.
They are fleet management companies, fundamentally.
I don’t know what the scale of the Hertz and Enterprise fleets are, but they’ve got to be really large.
It’s huge, right? It’s huge. It’s the same business, really in a lot of ways. I’m fascinated they haven’t even touched it.
The big difference I would say is cars are …
Harder to lose.
Not only that, but the car has been around for over 100 years, and scooters are like three years old.
Right. Well, they’re not. People rode them for years, but just not in this fashion.
That’s true. That is true. There’s pictures of scooter races from 1900.
So let’s get into that issue, and then I want to talk about the company and its funding. So, to finish up, safety is probably your No. 1 problem. That’s the thing I worry about the most, and obviously, I’ve tried out your helmets and you’re designing helmets with Burn, you’re doing all kinds of things. But the fact of the matter is in all these devices, if you put a helmet, say they put them on the Scoot, you worry about people’s heads. Like, do you want to …
Depends on the market. They don’t worry about that in Australia, for some reason. But they do in the United States.
Okay. People don’t want to share helmets, people here. I was just with a micromobility lawyer and she was talking about these things that they blow up on your neck and they cover …
I’ve seen that.
They were loving those. They were fascinated with those because apparently, they’re essentially, it’s like a car safety …
It’s like an airbag for your head.
An airbag for your head. It was like, “Come on,” and then I was like, and then I looked into it. It’s actually quite fascinating. There’s all kinds of things, but getting people to wear helmets … And I got caught on a video. I wear helmets all the time on these things except once when my boss actually got a picture of me at South By Southwest.
I think it was in Austin, Texas, when I saw you there, yeah.
Austin, Texas. And he thought it was on the highway. It was not on the highway riding it like a …
You were on an underpass, doing kind of a U-turn.
I was going under, yes. And I was going to dinner with him, and he somehow got behind me and took a video, and everyone gave me a hard time. Justifiably. I shouldn’t have done it. I just was late, and I like …
I love scooters. As you know, I’m a big scooter fan. But I do worry about, yeah, the people, watching people drunk on them, watching people ride them like crazy … People ride them like double and triple. I was in … Where was I? Somewhere I was where they were three or four people on a scooter.
Tandem riding. And there was a guy with a kid riding at his feet, which I was like, I nearly like, I couldn’t stop him. I was like, “What are you doing?” So it was interesting. The whole safety thing is, I think it’s one of your biggest liabilities. The second is insurance liability of people who hurt people on scooters and who get hurt on scooters because apparently, I just gave up my car insurance because I don’t have a car anymore because I’m using scooters, but I don’t have insurance. So how do you deal with that? Is it your homeowner’s insurance? Is it your … It’s a really interesting … I’m looking into it right now.
Let’s talk about safety. Safety, as you rightly point out, is something that we spend a lot of time thinking about, is really important. It’s important to our riders. It’s important to us as a business. I’ll start with what’s our objective. Our objective is to make this as safe as bicycles, or safer. We think that’s a reasonable target. Bicycles go about the same speed as a scooter. In fact, bicycles can go faster. People understand, basically, the risks associated with being on a bike.
Yes, a lot of them.
Yeah, a lot of them. So we do several things as it relates to safety, but that’s our objective.
The first is we try to teach people how to ride, like the Centers for Disease Control looked at when do accidents happen on a scooter. Thirty percent of the accidents, about a third, happen on your first ride. So we run these things called First Ride Academies that basically teach people how to ride. I think it’s strange that the industry can make an assumption that people just know how to ride these things. It’s a brand-new vehicle. A lot of people don’t know how to ride it. And so teaching people how to ride and safe-riding techniques.
Which is part of why we launched a feature called Group Ride. So other than in the United States, you can teach me how to ride a scooter, you can unlock my scooter for me on your account and you can unlock several scooters, and we can go on a group ride. And we’ve found and we believe that that increases safety because you’re teaching me and reducing that risk on that first ride. Sixty percent of accidents happen in the first nine rides. Again, we think it’s about people learning how to ride this vehicle, so we invest in these First Ride Academies.
Like skating or whatever.
Yeah, exactly. The next is how do we deal with drunk riding? In many markets, on Friday and Saturday nights after I think it’s 9 or 10 o’clock, we have a challenge that’s basically an interstitial that makes you enter some information as a challenge. If you can’t complete it, maybe you shouldn’t be riding a scooter.
It won’t unlock it.
That’s right. I can’t remember precisely all the details, but yes, it’s a challenge to say, “Do this and you can unlock the scooter.” We’ve given away, I think it’s on the order of a quarter million helmets as another piece of how do you increase safety by giving people helmets because many, many, many people who want to ride scooters don’t have helmets. And we think that the most effective way to do safety is bike lanes. The reality is that most … There’s a series of injuries that can happen when you alone are on the scooter. Maybe you hit a pothole. But the amount of energy you have there is 15 miles an hour-ish, so …
Some are governed, right?
The scooters in Austin are much faster than the scooters in DC.
Walking is faster in DC.
Certain cities implement certain …
What do you have? Like seven miles … What is it?
I don’t know specifically anymore what the …
It’s a real slow.
It’s real slow. It’s probably 15 in one and 19 in another, something like that, or 13.
Austin is like scary. I was like, “Slow down, scooters.” It was kind of funny.
But the real long-term safety is you separate high-speed traffic, which is cars, from mid-speed traffic, which is bikes and scooters, from slow-speed traffic, which is pedestrians. And you see that in Europe when they invest in that kind of infrastructure, and I would point to the Netherlands as the perfect example: the highest bike ridership on the planet and some of the lowest helmet-wearing on the planet and the least number of injuries because they have better infrastructure. I’m not advocating not wearing a helmet. We always advocate wearing a helmet. But I’m simply saying that the right long-term …
The bike lanes are critical.
Bike lanes are critical.
I’m thrilled in San Francisco riding scooters because of bike lanes.
Yeah, there’s more and more and more of them. For sure.
Right. It’s really interesting.
And I take a scooter every day from the Caltrain station. That Uber ride is 20 minutes to my office. My scooter ride is seven minutes, as I’m saving like four days a year.
So when you think about that, the idea of safety, you’re not going to avoid some injury. But the idea of bike lanes, you also run into people who are riding bikes, and there’s a very strong constituency for that, that you’re in these bike lanes with motorized vehicles.
There’s a lot of e-bikes in those lanes now too, to be honest.
Yeah. Yup. Yeah.
We actually think we’re very much long-term aligned with the biking advocacy groups because we want the same thing. More bike lanes.
No … We want fewer cars, more bike lanes, more pedestrian-friendly cities with less congestion and more alternatives.
Do you imagine there being no cars in cities? There’s all these … Right now, there’s …
I mean, you see in Oslo, there’s no cars in the center of Oslo. Many of those European cities are far more serious about car-free zones, congestion pricing, and making their sustainability goals.
New York has just pushed their congestion pricing in midtown.
I know. I saw the congestion pricing.
Which is really controversial. And on the West Side, they’re making bike lanes, which the rich people on the West Side or on Central Park West are pissed about. But it seems like it’s inevitable that bike lanes are going to …
I think it’s a matter of when.
I think cars take up 75 percent of the street space. They need to go down to 50, if not less.
Look, I think the reality is, cars are all around us, but we don’t see them anymore. We’re totally car blind.
Oh, I see them.
The amount of space we take for parking places, the amount of space we take for the roads, parking structures. I’m amazed but not surprised that somebody sees one scooter tipped over on the sidewalk and that’s a five-alarm fire, and they don’t see …
There’s a lot of them, Joe. Come on. Some of them … Paris was insane. I was walking over, like, it was like dead bodies. Like someone shot a scooter family.
There is a 100 percent, we got to train people on how to do good parking, which in Paris now, by the way, you can’t park on the sidewalk anymore. You have to be on the street. So I think there’s ways to integrate these, and that’s a separate point from the fact that I think we’re just car blind because nobody, very few people that are alive today ever knew a world without cars, from the moment you opened your eyes.
So what about insurance? That’s another thing that I …
Yeah, we certainly offer insurance, and it’s an important part of the business. I think that one of the things to consider is the nature of … Well, so, what specifically do you want to know about insurance?
I don’t have car insurance anymore so if I hit someone on a scooter, I was like, “How am I covered by …” I’ll send you the law blog.
Yeah, we have an insurance policy that covers riders as they ride.
But how will people, when we get in a micromobility world, think of insurance? It’s a really interesting question because you’re often covered by car insurance for a lot of mobility.
Yeah, in this case, Lime has, again, an insurance policy that we cover. I think one of the parts about insurance that’s interesting to consider here, relative to other modalities, is that the speeds are lower and so for an insurance company — again, this is not speaking from the point of view of the rider — from an insurance company, you’re carrying less energy, which means that the range of injuries is actually different.
Got it. But there’s one injury or even a death on a scooter, it’s written about in the media and other places, just like with self-driving, just like with a lot of things.
Because people are new to it.
And again, thus far, all of those deaths have sadly involved contact with a car.
Right, right. Absolutely. All right, so let’s talk a little about the company. How much funding have you guys … how much did you raise?
We have raised $777 million today.
That’s a lot of money. That’s a lot of simoleons.
That is correct. There’s a lot of simoleons.
And the goal is to what? Go public?
Yeah, I absolutely believe Lime is going to be a public company and a standalone company.
A public company.
That is the path that we’re on.
And profitability. We’ve had experience with Uber and Lyft, which right now, they’re down 20, 30 percent on Wall Street, which is fine. They’ve sort of gone, “No, this is a financially problematic situation.”
I actually think that the scooter companies and Lime, the foremost among them, will be much more capital efficient than the ride-sharing companies, despite the fact that we have to buy scooters. Primary reasons is several fold. One is it costs a lot less to buy a scooter.
They have a driver. As Travis liked to say, “The problem is the driver in the front seat.” Remember Travis Kalanick?
Yeah, I remember that statement.
“The problem is the driver in the front seat. When you get rid of him, it’s a great business.” So you have gotten rid of the driver in the front seat.
The rider is the driver. In this case, we simply buy the scooter. I know the fixed price of this scooter in terms of pay for it, and I know how long it lasts as I get better at it, and I’m not having to constantly subsidize that side of the business. The second piece is Wall Street’s pressure on Lyft and Uber for earnings has made for just a better environment in terms of how all the players are looking at the business.
What they can do.
And what they can do, because we’re tapping into those same capital markets and I think that’s really healthy.
So going public is the thing. Not being owned by a giant car company or a Google or that kind of thing, because you could see Amazon getting into this. You can see all kinds of companies.
Again, with the caveat that you could never predict the future, my view is we absolutely have the growth potential, market size, and profit potential to be a standalone public company.
And you came in, this new, the CEO is now …
Founder and CEO.
Right, there were two co-founders.
And you were brought in why? Many people are talking that you were brought in to take over from them, to be the adult in the room.
That’s happened. It happened in Facebook. It happens in lots of companies.
I think my view is …
It could happen in yours. It happened in yours. George Bell. Hello.
That is true.
What happened to him?
That is true. We all hired George Bell to run Excite.
I love George Bell.
How is George Bell?
The only CEO who used to call me to complain about every single article I wrote in the Wall Street Journal.
No problem. Anyway, but there’s been [adults] brought in. If you’ve been brought in for that?
My view is all startups are like relay races, right? So you have one group of people that are really focused at the beginning on like market discovery. What is this thing and how do we build a supply chain and what’s the business? I was really brought in on the, how do we scale up the precision in our operations as we move from a focus of just about growth to we’ve got to make money out of this business. So my charter has really been about how do you scale global operations in a way that drives towards profit. Not in a way that just is about getting incremental revenue. And that’s what my focus has been.
Where is that pressure coming from? Is it from the investors or is it just a different environment right now?
I would say it’s a different environment.
Because there’s money everywhere. There’s enough rat holes to shove your money.
The thing I say all the time to the company is, it’s not about offering a world-changing service, it’s about how do … The way to make a world-changing service is to make a world-changing business, because if you can make a great business, then your service lasts forever, and it’s not about when the money runs out, the service is gone.
So I would say if you want to make the maximum impact, you’ve got to make a great business that’s durable and sustainable.
So you’re not here to kick the founders out?
That kind of environment?
No, my general view here is, one, I’m a big believer in founder-led companies because I think the data certainly suggests that founder-led companies are better in terms of growth, motivation, mission. And then the second is Brad is really well qualified on being cross-border. I mean, he was born in China, has all those relationships, has seen Ofo and Mobike and the mistakes of those. As we look at so many of these trends actually start in China now and then get brought to the West in a different mode, having that cross-border expertise is incredibly complementary, at least to the skills that I bring. Like, I don’t have any of that.
So what do you, as a pair or as a group, find the most challenging thing? What are you most scared of? It’s interesting, you just said China’s where innovation starts. I was just arguing with someone. I was interviewing someone. They’re like, “You’re too nice. China is going to be … “ I’m like, “China is where innovation is starting now. Even if it’s government-controlled innovation.” Where do you imagine your biggest … Of all the different things we talked about or maybe one I didn’t mention, what do you worry most about?
I am super focused on the operational details of the business. The main things that I think about are how do we continue to be good operators in cities all around the world? Scooters are clearly so useful to people who ride them. But most people aren’t yet riding them. And it’s easy to forget that 99 percent of the world has never ridden one of these things. Being good actors in these cities, paying close attention to the way we handle parking and the way we handle people not riding on sidewalks and educating users on good ridership is key to making this market big.
And how do I get more and more people on these vehicles? Because my general experience has been, once you’ve ridden one, you understand.
Yup, I would agree with you.
And when you see it from afar, you’re like, “This is a bunch of tourists and kids making noise on a scooter.”
Right, like a Segway.
They’re just a Segway.
But you ride it and you realize, “Oh my God, I can make that coffee with a friend that I wouldn’t have been able to make. I can get to work on commute twice as fast as I could via car.” And you kind of can make the leap viscerally to: Cities can be better. Actually, there’s a different way.
And actually, in my opinion, the biggest barrier to Lime’s success and the industry’s success has nothing to do with regulation or supply chain. It’s that lack of imagination. And this is just a human characteristic. It’s the lack of imagination that the future can be any different than the past. And getting people onto a scooter for the first time tends to unlock that imagination.
Well, you also have to get a range of people, not just millennials zipping around.
One hundred percent.
I got a whole new group of old guys on them. I shouldn’t have done that, but I did. I was at a dinner in Austin. I was heading out of the — I think I talked about this — out of the hotel. They were looking around for their Uber app and I’m like, “I’m getting on this.” There were a million scooters in Austin. There’s so many available at any one time. And I got one. “I’m taking a scooter.”
And I had my helmet with me, actually, at this one, and they didn’t. They didn’t. They should’ve, but they didn’t. They took them, and I have to say it was the most enjoyable dinner with a pack of white guys I’ve ever … They were like these old business types, and they got on, they were like children. They were like teenagers. It was interesting. It was an interesting mood elevator in a weird way. But I wouldn’t let them on them afterwards because they drank, and it was really interesting. It was like, “You’re not getting that scooter.”
But that thing you’re tapping into, one of the things that I love about the job is, how many products make people smile? Like literally, there was a joy …
Okay. Fair enough. How many tech products make people smile?
AirPods. Yeah, you’re right. Not very many. Not very many.
And literally, there’s a childlike element, too. I know that sounds hokey, but you saw it with those folks.
Yeah. No, I get it. I get it. I just think there’s too many of them, and it obscures what is a really interesting trend, which is micromobility versus these crazy valuations and the safety issues and the execution issues. And then when they’re piled all around, it’s visually chaotic, I think that’s really what happens.
And I think those are the easy things to talk about, truthfully.
Sure. But that’s what you’re going to have to … You still have to contend with them.
But we got to deal with them. Of course, we have to deal with them.
You know what I mean? It’s just the same thing. Anyway, this is fascinating, Joe. We’ll have you back to talk more. I am a scooter fan, I’m sorry to say, but I am. I love them. And I do think all these kind of micromobility businesses are really interesting going forward. And to my listeners in the Midwest, you can still drive your frigging car or your truck or whatever you want to drive, your SUV. Go right ahead. But there is a significant trend in this area. I think we can see it happening in real time.
You can feel it.
Anyway. Thank you for coming on the show, Joe.
Author: Eric Johnson