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Bird's Top VC Went From Scooter Skeptic to Convert Ahead of SPAC Deal

Bird's Most Lucrative VC Partnership Survived an Ill-Fated Carwash Startup

When investor David Sacks first heard about an electric scooter startup founded by his former employee, Sacks told him “the idea was crazy,” he recalled in an interview the following year. “And then I tried the product.”

Getting over his skepticism paid off for Sacks, who knew Bird Chief Executive Officer Travis VanderZanden because of a company he had founded a decade earlier. Sacks led a $15 million funding round into Santa Monica, California-based Bird in late 2017 through his new VC firm, Craft Ventures, its first official check to a startup. At the time, Bird was worth about $45 million, according to PitchBook data. The firm continued to invest in some subsequent financings.

On Thursday, Bird listed on the New York Stock Exchange as part of a merger deal with special-purpose acquisition company Switchback II Corp., a deal that initially valued the startup at $2.3 billion. Trading under the ticker BRDS, shares were up about 2% in the company’s first hours of trading.

Craft owns 27 million shares in the post-merger company, roughly 10%, making it the biggest investor after VanderZanden, who owns 34.7 million shares. “It is really gratifying to see that the first Series A check we wrote as a VC is now a public company,” Sacks wrote in an email.

Bird, which rents out electric scooters for short trips, was early to the micromobility trend. Back when Sacks invested, Bird faced overwhelming skepticism about its business model. In 2019 he tried to assuage people’s doubt with a blog post titled “The Other Electric Revolution: Myths and Realities in the E-Scooter Business.” There, Sacks denied, point by point, that scooter riding represented a fad that would evaporate due to poor economics, shoddy equipment and a surfeit of players in the market.

Questions have continued to dog the startup and others like it. A number of injuries have been linked to scooter rides, and some investors have questioned whether scooters will ever be a profitable and durable business. In the three months ending June 30, Bird lost $43.7 million, narrower than the $50 million it lost the previous year.

Sacks and VanderZanden first met when VanderZanden’s enterprise-chat company, QikCom, was an early competitor to Sacks’s own enterprise-chat company, Yammer. Sacks hired VanderZanden, and the two remained on good terms when VanderZanden left in 2011 to launch lackluster carwash app, Cherry, with Sacks investing in the company. At his latest venture, Bird, “Travis has done an amazing job leading the company to this outcome in only four years,” Sacks said.

After it invested in Bird, Craft has bet on other companies. Cryptocurrency startup BitGo and returns and online purchases returns service Returnly both were bought earlier this year. But Bird is one of the firm’s highest-profile wins to date—and its biggest in the consumer space.

Sacks served as chief operating officer at PayPal Holdings Inc. during its early days before going on to create Yammer, which was purchased by Microsoft Corp. for $1.2 billion in 2012. Sacks also stepped in to run Zenefits, a health insurance broker where he was an investor and an executive, in 2016 when it was undergoing a regulatory-compliance crisis.

Sacks told fellow investor Jason Calacanis in the 2018 interview that the best consumer companies “click right away,” a phenomenon he noticed with Bird. Sacks has a home in Los Angeles, where its scooters were ubiquitous. “As one of our earliest investors and board members, David believed in our vision of micro electric vehicles replacing gas-powered car trips from day one,”  VanderZanden said in an email. 

Seeing scooter adoption grow, investors rapidly ratcheted up Bird’s valuation after its founding. Then, when the pandemic hit, ridership nearly collapsed, and Bird cut 30% of its staff. By this past August, the company reported revenue that outstripped pre-pandemic levels, hitting $60 million in the second quarter. 

©2021 Bloomberg L.P.