Bird CEO Explains Why His Scooter Startup Needed $300 Million
(Bloomberg) -- As word spread that an electric scooter rental company called Bird Rides Inc. was amassing $300 million from investors just months after its first birthday, one question has plagued onlookers in and outside Silicon Valley: Why?
Now that the Los Angeles-based startup has completed the massive financing effort, Bird founder Travis VanderZanden is ready to explain how he plans to spend all that money. Altogether Bird has raised $418 million since it was founded in April 2017. The company, which rents scooters out via a mobile application, has already launched in 15 cities and plans to add seven more in as many days. The company is also hiring a team in Europe for a potential scooter business there.
“This is a huge opportunity right now to have a huge impact on transportation,” VanderZanden said. “We were the innovators on the electric scooter sharing market, and we were the first in the world to do it. We think it’s the right solution to get people out of cars. It’s lightweight. It’s easy to use. It’s affordable.”
Venture capitalists have declared the scooter-ization of American cities to be inevitable, sparking a race among a handful of startups. Bird is an early leader, along with another startup called Lime -- both of which have fed off investors’ cash at a torrid pace. Lyft Inc. and Uber Technologies Inc. are expected to pile on soon.
“Even though there are a lot of clones now that are trying to copy Bird, at the end of the day if they’re successful the industry itself will grow, and that will be a positive thing for the world,” said VanderZanden.
About half of the $300 million Bird raised in recent weeks came at a $1 billion valuation, and the second half valued the startup at $2 billion, people familiar with the deal have said. Sequoia Capital led the investment, with participation from Accel, B Capital Group, Greycroft, CRV and Ashton Kutcher’s Sound Ventures. Roelof Botha, a partner at Sequoia Capital, joined the board.
Botha said Bird has the potential to reshape transit for short trips, echoing what Uber did for longer distances. “It’s rare to see consumers change behavior,” Botha said. “If you had to redesign cities, which people are starting to do, I’d rather have a city with far more scooters and far fewer cars.”
But scattering electric scooters around cities costs money. Lots of it. Botha said the vehicles, fully equipped, cost Bird $500 to $600 a pop. The startup buys them from another Sequoia Capital-backed company: Segway Inc. Today, Segway uses the Chinese brand Ninebot, but the company once offered VCs a similar promise of transforming personal transportation.
Eventually, Botha envisions a city like San Francisco hosting some 10,000 or more scooters from Bird. He estimates the startup could someday generate $70 million a year in revenue in San Francisco alone if everything goes according to plan.
At the moment, though, there isn’t a single Bird scooter on the streets of San Francisco. The company had to retrench after the city ordered all scooters off the road. Officials are currently weighing which companies will get permits to operate. Bird has had some regulatory successes elsewhere. It recently got the green light in Santa Monica, California, with few conditions.
Even by Silicon Valley standards, Bird’s fundraising has been meteoric. Already, VanderZanden has sold millions of dollars worth of his own shares, a transaction he said was necessary to make room for strategic investors. “There’s a top-tier CEO that I really respect as a mentor that, even him, we couldn’t get in the round,” VanderZanden said but declined to name the man. “In order to include him, I sold him a little of my secondary to just get him as a mentor.”
Sequoia Capital and VanderZanden’s fortunes have been long intertwined. The venture capital firm is sometimes mocked for missing out on an early opportunity to make a lucrative bet on Uber after one of its partners, Alfred Lin, made a personal investment at the beginning of the company and Sequoia took a tiny stake through its Scout program. VanderZanden was an executive at Lyft and Uber. Lyft sued him after he defected to its competitor. Sequoia Capital finally bought a more substantial Uber stake early this year as part of a $9 billion transaction led by SoftBank Group Corp.
“As an investor you never make up for one decision by making a boomerang on another decision,” Botha said. “We just want to learn from the mistakes.”
©2018 Bloomberg L.P.