Bird scooters are those electric standup scooters you see littered on sidewalks and street corners in cities across the US. They represent a new trend in urban transportation known as micro-mobility. Users locate and unlock Bird scooters using a mobile app and pay by the minute to ride them. When finished, they leave the scooter wherever they end their trip for the next person to use.
Bird launched the scooter sharing service in 2017 and quickly became one of the largest micro-mobility companies. They currently operate in over 150 cities globally with fleets totaling over 60,000 scooters.
Bird’s scooters have proven extremely popular with urban commuters looking for quicker and cheaper ways to get around congested downtowns. However, Bird has also faced plenty of regulatory hurdles and criticism over cluttered sidewalks and safety concerns.
So how profitable is this viral transportation trend? Can Bird make money off these small electric scooters?
How does Bird make money?
Bird primarily makes money in two ways:
Rider Fees – Bird charges riders a base fee (usually $1) to unlock a scooter plus a per minute fee (around $0.15-$0.25) for the ride. Rides average 10-15 minutes so Bird makes $2-3 per ride.
Fleet Manager Fees – Local small businesses or gig workers can pay to become Fleet Managers that charge and maintain scooter fleets in their city. Bird takes a cut of their rental revenue.
Other secondary revenue streams:
– Advertising: Companies can pay to have their brand prominently displayed on the scooters.
– Data Sales: Bird has valuable data on riding habits and urban transportation patterns they can monetize.
– Government Partnerships: Bird partners with some cities on special programs or to share ridership data. This improves relations and gets Bird favorable regulatory treatment.
So in essence, Bird functions as a platform connecting riders needing quick transportation with a network of self-employed Fleet Managers providing the vehicles to meet this demand. The business scales rapidly because Fleet Managers take on the capital costs of purchasing and maintaining the fleets. Bird just provides the software platform and keeps a cut of all transactions.
What are Bird’s costs?
Bird must cover several key costs:
– Software development and maintenance – To keep improving its app and backend software
– Customer service – Support for riders and Fleet Managers
– Payment processing – Credit card fees to collect rider fees
– General overhead – Office space, HR, legal, accounting etc.
– Marketing – User acquisition and branding campaigns
– Government partnerships – Lobbying and negotiation efforts
– Research and development – Improving scooter models
The biggest cost saver for Bird is its asset-light model. Because Fleet Managers own the vehicles, Bird avoids huge capital costs for purchasing fleets. Maintenance, charging costs, and wear & tear are also outsourced. This keeps Bird’s overhead low and flexible.
Is Bird profitable?
Bird reached unicorn status in 2018 with a $2 billion valuation after raising over $400 million in venture capital. However, there are conflicting reports on whether Bird is currently profitable.
Some key profitability factors:
Number of Rides – More rides means more revenue. Bird needs to hit critical mass in each market.
Average Ride Length – Longer rides equal more revenue per ride. Commuters going a few miles are ideal.
Fleet Utilization % – Keeping scooters in constant use improves unit economics. Idle scooters lose money.
Regulatory Limits – City caps on fleet sizes or stiff fees can squeeze margins.
Competition – Price wars with rival operators like Lime impact revenue.
Overhead Costs – Keeping overhead like software development efficient is key.
While some analysts estimate Bird is losing money on each ride, others calculate the contribution margins are now positive in Bird’s core mature markets. The unit economics likely depend heavily on optimizing utilization rates and minimizing overhead.
Bird has stated its intent to go public in 2023 which would offer the first detailed look at its finances.
Bird’s financial and operating metrics
Here are some key metrics on Bird’s financials and operations:
Revenue
2020 Revenue | $188 million |
2021 Revenue | $400 million (estimate) |
Funding Raised
Total Funding | $1.1 billion |
Investors | Sequoia, Craft Ventures, Goldcrest Capital, others |
Company Valuation
Valuation | $2.5 billion |
Ridership Stats
Lifetime Rides | Over 150 million |
Rides per Day | Approx 190,000 (pre-pandemic) |
Avg Ride Length | 2-3 miles |
Avg Ride Duration | 10-15 minutes |
Market Share
US Scooter Market Share | 25-35% |
Key Competitors | Lime, Spin, Lyft |
Fleet Size
Scooters Worldwide | 60,000 (before pandemic) |
Cities Served | Over 150 |
These metrics indicate the huge scale Bird has achieved. But continued growth depends heavily on winning favorable regulation and proving sustainable unit economics.
Conclusion
Bird has quickly become a leading micro-mobility operator with its asset-light e-scooter model. It makes money by connecting riders to vehicles owned and maintained by a network of Fleet Managers.
While Bird has impressive growth metrics, its profitability and path to sustainability remain uncertain. Optimizing utilization rates and controlling costs in a challenging regulatory environment will determine if Bird’s unicorn valuation is justified. More financial disclosures as Bird reportedly heads towards a 2023 IPO should provide clarity on the unit economics.
In the fast evolving micro-mobility space, Bird’s innovative model has shown the massive potential demand. But it needs to prove e-scooter sharing can work as a profitable large-scale transportation business, not just a viral trend. Bird’s long-term outlook will depend on meeting key challenges around regulation, competition, and most crucially the underlying unit economics.