The Rise of the Electric Scooter Industry


The dramatic transformation of the American western frontier, from rural farmland to a sprawling urban landscape, is a testament to the capacity of technology to allow us to change our surrounding environment. This trend continues today in places like California, where individuals and corporations continue the historical pursuit of technological advancement through the creation of innovative and bold ideas. However, with so many inventions fading out of popularity, how do we know when a new creation can avoid falling into the abyss of tech one-hit-wonders?

This brings us to Bird, an electric scooter sharing platform—similar in concept to Citibike and car-pool sharing companies–that offers people a fast way to travel short distances.[1]  This platform was created by former Uber and Lyft executive Travis VanderZanden.The basic concept of Bird is simple: appeal to a growing(and profitable) customer base, plagued by daily city congestion, by offering an alternate transportation medium to reduce travel time. Bird allows users, who pay up to $1 per minute via an app,[2] access to a fleet of scooters placed in strategic locations around certain cities in California.[3]  This innovative business model caught on with consumers almost instantaneously. Since its start, Bird has also has garnered considerable attention in the media.[4]  Investors soon took notice of Bird.[5]  In fact, at the end of the company’s financing campaign, it amassed a whopping $418 million from investors and venture capitalists in just over a year after being formed—a huge deal, even by Silicon Valley standards.[6]  As the excitement has grown, investors have clamored to take advantage of new investment opportunities in Bird, especially since the company was recently valued at $2 billion.[7]

Despite the excitement surrounding Bird, many city-dwellers are burdened by the hazards brought on by the increased usage of scooters.[8]  Specifically, critics of Bird point to the ugly sight of scooters cluttering the streets and how it adversely affects pedestrians.[9]  These critics view Bird as a nuisance.[10]  So much so, that in response to public outcry, San Francisco has banned Bird—presumably because Bird operated a launch first, permission later approach.[11]  In contrast, the city of Santa Monica took a more moderate regulatory approach towards Bird by controlling the amount of scooters deployed, mandating that helmets be worn, and requiring the scooter drivers to have a drivers’ license.[12]  Taking a similar stance, other U.S. cities, such as Atlanta, also want to address safety concerns brought on my Bird scooters.[13]

Despite these regulatory hurdles, the industry of electric scooters remains a lucrative business opportunity that has drawn competition to the field.[14]  For example, a leading competitor of Bird is another scooter company called Lime.[15]  Created just two months after Bird, Lime has been a formidable opponent—fundraising about $333 million in just over a year after creation,[16] and is currently valued at $1.1 billion.[17]  Accordingly, there seems to be room for other companies to surface and attain a profitable return before the electric scooter market plateaus.[18]

But what makes these companies so attractive to investors?[19]  Bird and Lime are identical in one critical respect to other successful companies, like Apple or Toyota—their unit economics (i.e. single transactions) are lucrative.[20]  Generally, unit economics refer to the return or loss a company incurs on a single transaction—here being the amount made or loss on each scooter ride.[21]  Allowing for certain assumptions as to the length and speed of a trip, a typical scooter generates approximately $16 each day in income.[22]  This, combined with Bird’s announcement in passing 10 million in scooter rides, shows the potential for Bird to generate substantial revenue– over $58 Billion.[23]  Lime, in comparison, is running second with 11 million in combined scooter and bike uses but also stands to generate substantial revenues.[24]  Despite substantial revenues, the costs of scooter maintenance and increase regulation stand can hurt profits and stagnate long-term growth.[25]  Nevertheless, Bird has a bright future as it continues to expand across the U.S. and internationally.[26]  It will be interesting to see if Bird, and its competition, will lead to a material shift in transportation, or if it will be displaced by other innovations seeking to increase mobility in the urban environment.

[1] Trefis Team, What Drives Value At Electric Scooter Sharing Startups Like Bird?, Forbes (May 1, 2018),

[2] To Live and Scoot In LA, Bloomberg (Sep. 18, 2018),

[3] Tom Huddleston Jr., Uber and Alphabet Just Invested $335 Million In Lime — Here’s Why Scooter Start-Ups Are Suddenly Worth Billions, CNBC (July 13, 2018),

[4] Andrew J. Hawkins, The Electric Scooter Craze Is Officially One Year Old — What’s Next?, The Verge (Sep. 20, 2018),

[5] Eric Newcomer, Bird CEO Explains Why His Scooter Startup Needed $300 Million, Bloomberg (June 28, 2018),

[6] Id.

[7] Samuel Burke & Michael Kaplan, The Product Is Banned In Some Cities. The Company Is Valued At $2 Billion, CNN (July 9, 2018),

[8] Ford Vox, Doctor: Do Something About The Dangers Of E-Scooters, CNN (Aug. 16, 2018),

[9] Peter Holley, Scooter Use Is Rising In Major Cities. So Are Trips To The Emergency Room, Wash. Post (Sep. 6, 2018),

[10] Id.

[11] Ben Jose, SFMTA Offers Two Permits for One-Year Powered Scooter Pilot, SFMTA Blog (Aug. 30. 2018),

[12] City of Santa Monica, Planning & Community Development, Scooter and Bike Share Services, (accessed Nov. 3, 2018).

[13] Sean Keenan, Atlanta Leaders To Discuss Tighter Rules For Shareable Scooters, Bikes, Atlanta Curbed (Nov. 13, 2018),

[14] Ari Levy, Investors Explain Why They’re Racing To Get Into Scooter Companies Like Lime And Bird, Driving Valuations Into The Billions, CNBC (June 14, 2018),

[15] Newcomer, supra note 5.

[16] Toby Sun, Lime’s Next Chapter In Smart Mobility Backed By GV And Uber, Lime Blog (July 9, 2018),

[17] Huddleston, supra note 3.

[18] Hawkins, supra note 4.

[19] Newcomer, supra note 5.

[20] Alison Griswold, Simple Math Shows How Scooters Could Make Big Money, Quartz (July 11, 2018),

[21] Id.

[22] Id.

[23] Annlee Ellingson, Year-Old Bird Surpasses 10 Million Rides, The Bus. J. (Sep. 20, 2018),

[24] Hawkins, supra note 4.

[25] Id.

[26] Shona Ghosh, Scooters Are Now In Brussels As It Speeds Up Its International Expansion, Bus. Insider (Sep. 18, 2018),


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Fordham Journal of Corporate & Financial Law