Uber bets on bikes, scoot­ers for fu­ture

Pitch pre­cedes its ini­tial pub­lic of­fer­ing

Arkansas Democrat-Gazette - - BUSINESS & FARM - ERIC NEW­COMER

Uber Tech­nolo­gies Inc. is more than just ride-hail­ing. That’s a key part of the pitch it’s mak­ing to in­vestors as the com­pany pre­pares for an ini­tial pub­lic of­fer­ing this year. In fact, some of Uber’s new lines of busi­ness will ac­tively dis­suade peo­ple from call­ing its cars.

Rachel Holt, head of the New Mo­bil­ity di­vi­sion, says that cus­tomers who use Uber’s scoot­ers and bikes hire 10 per­cent fewer cars through the app. And in at least one mar­ket on cer­tain days — the core of Sacra­mento, Calif. — more peo­ple took Uber’s elec­tric bikes than used its cars. Last week the com­pany re­leased 100 scoot­ers into the city.

Uber says that can­ni­bal­iza­tion of its ride-hail­ing busi­ness is part of its mas­ter plan. Just as the startup dis­rupted its black car ser­vice years ago by of­fer­ing lower-mar­gin UberX rides, it now hopes to help forge the next shift in trans­porta­tion. At the same time, growth is slow­ing in Uber’s main busi­ness — mean­ing that as an ini­tial pub­lic of­fer­ing looms, its other ven­tures are be­com­ing more im­por­tant.

Be­sides in­vest­ments in ar­eas such as food de­liv­ery and truck­ing, Uber is bet­ting big on bikes and scoot­ers. In April, it pur­chased Jump Bikes for $200 mil­lion. The com­pany has also con­sid­ered buy­ing scooter front-run­ners Lime and Bird Rides Inc., hold­ing talks with each, peo­ple fa­mil­iar with the mat­ter have said, but so far hasn’t done a deal. In­stead, in the past few months, Uber has been crank­ing out its own prod­uct — pro­duc­ing nearly 1,000 Jump-branded elec­tric bikes a day. This year, the com­pany has a $1 bil­lion bud­get for scoot­ers, bikes and other mo­bil­ity ini­tia­tives, Holt said.

“Be­tween Jan. 1 and March 1 you will see tens of thou­sands of Jump bikes and scoot­ers hit­ting the road in the U.S.,” she said.

The com­pany’s long-term goal is to let users book all tran­sit within its app. It’s not the only startup with a vi­sion of a fully tech-en­abled trans­porta­tion fu­ture. Other com­pa­nies, in­clud­ing com­peti­tor Lyft Inc., are also work­ing to in­te­grate pub­lic tran­sit op­tions. Lyft rid­ers in Santa Mon­ica, Calif., for ex­am­ple, can now use the app to look up route in­for­ma­tion for lo­cal trans­porta­tion.

“It’s part of them sub­scrib­ing to a vi­sion that in a few years there will be one or two apps through which we ac­cess all of our trans­porta­tion modes,” said Arun Sun­darara­jan, a pro­fes­sor at New York Univer­sity’s busi­ness school. That could mean, for ex­am­ple, us­ing one app to co­or­di­nate tak­ing a bike to the train and then a car to the of­fice, in­stead of just tak­ing a car.

If ur­ban tran­sit does even­tu­ally shift marginally away from cars to bikes or scoot­ers, Uber aims to stay com­pet­i­tive. In at least one mar­ket, the com­pany has al­ready seen a de­crease in ride-hail­ing. “If we look at our early San Fran­cisco data, we’re see­ing a de­cline in Uber rides,” Holt said. “But the in­crease we are see­ing in bike trips vastly out­weighs it.”

Still, bike trips are much cheaper than car rides, and Uber’s path to di­ver­si­fi­ca­tion prom­ises to be an ex­pen­sive one. As the com­pany dab­bles in an in­creas­ingly wide ar­ray of busi­nesses, it’s spend­ing quickly. Uber lost $1.1 bil­lion in the third quar­ter of last year alone.

It’s now in the phase of “build­ing mind share and chang­ing be­hav­iors,” Sun­darara­jan said, “and that is fre­quently ac­com­pa­nied by los­ing money.”

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