Bixi bankruptcy closely followed in U.S.
Problems with software that runs bike-sharing systems frustrated users and delayed introduction in New York
OTTAWA — The bankruptcy protection filing of the Montreal company that has supplied the bicycles and the technology behind most of the bike-sharing programs in major U.S. cities is revealing a complicated and messy financial foundation.
No one anticipates that systems like Chicago’s Divvy or New York’s Citi Bike will collapse because of Monday’s filing by the Société de vélo en libre-service, more colloquially known as Bixi. But its roots inside Montreal’s municipal parking authority led to the creation of a company whose product, while quickly proving popular with riders, was doomed never to make money.
Court documents and interviews with suppliers, customers and politicians show that Bixi’s acumen with technology and design has been undermined by an often ad hoc approach to business and a lack of a clear mandate. One of the Bixi mysteries is its relationship with its agent in the U.S. Unlike the three Canadian cities with Bixi systems, Ottawa, Toronto and Montreal, U.S. municipalities have generally not dealt directly with the Canadian company. Instead, Alta Bike Share, a relatively small company in Portland, Ore., sells the Bixi system and operates it.
Michel Philibert, the acting chief executive of Bixi, declined to discuss the relationship between the two companies, citing contract confidentiality. In court filings, however, Bixi has repeatedly described Alta as a “partner.” Officials at Alta and its parent company, Alta Planning & Design, did not respond to several interview requests about its contractual relationship with Bixi.
In an email, Mia Birk, president of Alta Planning and Design, said the filing had no effect on the operation of existing systems, nor had it altered Alta’s relationship with Bixi’s bicycle supplier, and that it should not delay a coming introduction in Portland. “Ultimately,” she said, “we are confident that this will be a positive result.”
Another mystery concerns the dispute over the software than runs the bike-sharing systems. At first, systems installed in the U.S. — those in Boston, Washington and Minneapolis — mirrored Montreal’s original Bixi system and relied on payment terminals and software de-
“Ultimately, we are confident that this will be a positive result.”
MIA BIRK, PRESIDENT OF ALTA PLANNING AND DESIGN
veloped by 8D Technologies, a Montreal company and one of Bixi’s creditors. When a rider borrows a bike, the software in the kiosks handles the credit card payment and memberships and tracks how long it is used and where it is checked in and out.
In what seems to have become something of a pattern at Bixi, Isabelle Bettez, the president and chief executive of 8D, said her company’s involvement began with “a very casual conservation” at Montreal’s semi-autonomous parking authority, which initially ran Bixi. The parking authority asked if her company could modify the solarpowered, wireless-payment terminals and financialprocessing software 8D had developed for street parking to handle bike-sharing. The parking authority, through contractors, designed and built the bicycles and docking stations.
At first, according to Bettez and court filings from Bixi, all went well, and 8D supplied the software and terminals used in London and Melbourne as well as the other Canadian cities. But the documents indicate that as Alta was bidding on operating what would become Citi Bike in New York, things turned very sour.
Bettez said she was told in January 2012 by Bixi that it was ending a contract that was supposed to run until the end of 2013 and that it would develop its own software and terminals. Philibert said in an interview that he was unable to explain the decision. But in court documents, Bixi argued that 8D was overcharging for both its terminals and software, making it impossible to bid competitively in New York — an accusation Bettez denies.
Whatever the cause, Bixi’s designing its own software took customers by surprise. Philip Pugliese, the program co-ordinator for the Chattanooga, Tenn., bike-sharing system, said that it was only after his city decided to go ahead that it learned it would be the test bed for the new software and terminal system.
The change was not without consequences. It delayed the introduction in New York, and during that system’s early days, software problems often frustrated users by either not releasing or refusing to accept bikes at docking stations. Philibert said that the problems for consumers had been resolved, but that the portion of the software that handles payments and system management was still not working properly. As result, Alta, Bixi’s erstwhile partner, is withholding 5.6 million Canadian dollars in payments related to Chi- cago and New York’s systems.
“You don’t change the recipe when you have a successful product, but they did,” said Bettez, who is suing Bixi for 26 million Canadian dollars over the contract cancellation. Her company, however, is continuing to service cities that rely on 8D’s software.
Bixi’s woes may at least delay decisions by other cities to adopt bike-sharing systems. Vancouver has a tentative deal with Alta for a system. But Heather Deal, the member of the City Council responsible for bike-sharing, said that the city was now going back to Alta for further information about Bixi as well as sponsorships.