Bird's Impossible Path to Profitability

Jon York

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Nov 30, 2018
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A good article on Ridester showing that it is going to be impossible for these companies to make any money.

Here's the key financial information. And once you understand this, you'll see it is simply not possible for these companies to make anything.

Bird's Impossible Path to Profitability

The bottom line looks like this:
  • Bird is currently paying $551 per scooter, which includes the GPS device, shipping, assembly and Bird branding. Bird’s original projections of scooter costs were $360 per scooter. (But even at $360 they’d still be losing money as we’ll show in a minute).
  • The scooters are generating $3.65 in revenue per ride
  • It’s costing Bird $1.72 per ride to charge the scooter batteries
  • Repairs are costing on average $0.51 per ride
  • Credit card fees come to $0.41 per ride
  • Permitting fees are $0.20 per ride
  • Customer support equals $0.06 per ride
  • Insurance equals $0.05 per ride.
That means Bird is making a grand profit of $0.70 per ride. It’s now starting to look like Uber and Lyft had a better idea – use vehicles that somebody else owns and pays for!

$551 doesn’t sound like much to purchase one unit of a mode of transportation. But when you’re only making $0.70 per ride and you’re only doing five rides per day and the vehicle only lasts for one to two months, then suddenly that $551 is a huge cost to overcome.

In fact, it’s so huge that it can’t be overcome. If you break down the math it comes out like this:

Scooter costs $551

Scooter earns $3.50 per day ($0.70 per ride, five times a day)

It would therefore take 157 days to pay for each scooter.

However, 157 days is much longer than the scooters have proven to last. They’re only lasting one to two months at most. And 157 days is 5 and a quarter months!

Bird Skating Dangerously Close to the Line Between Profitability and Loss
Even if they were able to get their scooter costs down to their originally-projected $360, and if they were doing six rides per day per scooter, rather than five, it would still take 103 days to recoup their costs and that’s almost three and a half months. But the scooters don’t last more than two months and many give out after just a month!

They are losing big money on each scooter they put on the streets. And that doesn’t begin to account for stolen, damaged and abused scooters that will last far less time than a month.

After all, people aren’t exactly treating them nicely…
 

McCrank

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Jan 5, 2019
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Those numbers are truly stunning. It's like Bird is a great idea on paper only. It's hard to believe so many smart investors are pouring BILLIONS of dollars into these companies. Not just millions - but bilions.
 

Graham

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Feb 4, 2019
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Those numbers are truly stunning. It's like Bird is a great idea on paper only. It's hard to believe so many smart investors are pouring BILLIONS of dollars into these companies. Not just millions - but bilions.
Not very surprising, considering the way tech investors have been using their money over the last 6 years or so.
 

Mr. Gig

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Dec 6, 2018
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Ain't that t truth! It's really hard to fathom what these investors are thinking (if anything). It seems like just a cursory glance almost would be all you'd need to know this is going to be a very tough way to make a successful business. And if you looked at what happened in China with these things that should give you some very strong warnings to proceed with caution.
 

McCrank

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Jan 5, 2019
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It's easy to know what they're thinking. They're thinking - let's pull the wool over their eyes just long enough that we can sell out and make a billion dollars.
 

Graham

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Feb 4, 2019
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It's easy to know what they're thinking. They're thinking - let's pull the wool over their eyes just long enough that we can sell out and make a billion dollars.
And there it is. "If we can just get bought by Google we'll be rich!"