Prominent Scooter Startups Locked Out of San Francisco

(Bloomberg) -- San Francisco chose startups Scoot Networks and Skip from the pool of 12 companies hoping to participate in the city’s scooter-sharing pilot program, bypassing Bird Rides Inc. and Lime, the two better-known operators most responsible for the trend of the electric vehicles buzzing along nation’s streets and sidewalks. Those companies had more luck, though, in Santa Monica, California, which also announced the parameters of its own scooter program on Thursday.

In San Francisco, both Scoot and Skip will be authorized to put as many as 625 scooters on the road for six months starting Oct. 15, the city’s Municipal Transportation Agency said Thursday in a statement. The agency may let the companies put out as many as 2,500 scooters after the first six months of the one-year test, it said.

Toby Sun, the chief executive officer of Lime, said the outcome was "disappointing," and called the two relatively small scooter operators "inexperienced." He also asked that the mayor’s office review the agency’s handling of the permitting process, and promised to appeal the decision. Bird pledged to "continue to work with San Francisco officials," and noted that its users have sent nearly 30,000 emails to the city protesting the scooter ban.

Ride-hailing giants Uber Technologies Inc. and Lyft Inc. were also among the companies rejected by the transportation authority for the scooter-sharing program. Both companies have revealed plans in recent months to add bike- and scooter-sharing services to their ride-hailing apps, but have not yet launched scooters in any cities. Bloomberg News reported Thursday that Uber has begun work to engineer its own scooter to distinguish itself from competitors who mostly use white-labeled units from Chinese manufacturers.

The rejection from their hometown was a blow, especially for Uber, which already operates a bike-sharing service in San Francisco through Jump Bikes, a startup it bought in April.

Also on Thursday, officials in Santa Monica, California, announced that Bird, Lime, Uber and Lyft would be given permits to operate in that city’s scooter-share pilot project. Bird and Lime each will be allowed to distribute 750 scooters, while Uber and Lyft can each distribute 250, beginning Sept. 17.

Santa Monica also granted permits to Uber and Lyft to put 500 bikes on the streets as part of a bike-sharing service also beginning that same day.

The fortunes of any scooter company don’t rest completely on the decision of a single city. Bird operates scooter services in about 40 cities, and Lime is in about two dozen. But local officials across the country and the world are currently weighing their approach to alternate forms of transportation, and could adopt the strategies of the cities that go first.

There’s a lot of hype -- and cash -- on the line. Bird kicked off the frenzy about a year ago, with its wildly popular service that allows customers to locate scooters on city sidewalks, rent them for a short ride and then leave them anywhere. Lime, which was initially focused on bicycles, soon followed. Both companies launched in San Francisco early this year along with a third, named Spin.

While the scooter companies all said they wanted to work with local governments, they were too impatient to coordinate their introductions with officials in most cities. That meant the ensuing blowback was all but inevitable. Santa Monica sued Bird, which settled and agreed to plead guilty to one local infraction. San Francisco’s city attorney sent cease-and-desist letters to all three companies operating there in April.

The San Francisco Municipal Transportation Agency held those earlier disputes against the companies. In an itemized scorecard outlining the city’s reasoning, Bird, Lime and Spin were given the lowest score for their history of complying with city regulations.

Earlier in this month it looked as if Santa Monica was likely to reject Bird and Lime, as well. The city’s selection committee rated Uber and Lyft’s plans as far superior to all their competitors. Bird was rated 10th of 12 applications.

But in a memo explaining his decision, David Martin, the city’s director of planning and community development, said that Bird and Lime’s existing operations actually counted as a positive, because they would avoid gaps in service. Martin also echoed a point made by Bird after the initial assessments were released: that there was a risk in granting control of the city’s nascent scooter operations to companies that derived most of their revenue from automotive travel. Giving Uber and Lyft the only permits, he wrote, "would limit the potential of the program by selecting two operators with a similar focus and an emphasis on ride-share."

©2018 Bloomberg L.P.