Are Dockless Bikes Doomed to Fail?

Many of the startups have pulled out of cities in the past year.
March 2019
Jump bike
(Shutterstock)
By Nicole Gelinas  |  Columnist
An analyst and writer on urban issues

As new mobility options have transformed the urban landscape, one startup sector was supposed to make it easier to rent a bicycle for a short trip. But over the past year, several “dockless” bike companies have given up on major cities, leaving the bike rental industry under the stewardship of older, docked bike companies.

The two business models are very different, and the difference highlights the importance of what one might call slow urban capitalism. Rather than “move fast and break things” -- the familiar tech industry mantra -- it’s better to sometimes move gradually to improve things.

Bikesharing has helped define urban transportation in Europe for more than a decade, but it didn’t come to a big U.S. city until 2013. That year, New York City entered into a public-private partnership to inaugurate Citi Bike, through which New Yorkers could sign up for annual memberships or buy shorter-term passes to access a bike for a short ride. The idea, modeled on Paris’ Vélib, was that a rider could use a smartphone app to unlock a bike from a stationary dock, take a short trip and leave the bike at any other dock. The Citi Bike model has since been adopted in dozens of cities across the country.

Citi Bike, compared to the typical urban startup, was a capitalist dinosaur. Unlike Airbnb and Uber, it didn’t just open for business and dare city officials to address regulatory issues and other challenges. Rather, it worked with officials. It participated in local hearings to decide where to place docks. It agreed to reliability standards. And though Citi Bike must sustain itself financially, it does not face competition; it benefits from a long-term franchise.

The model has drawbacks. The stationary docks don’t meet all commuters’ needs. The cost of an annual pass, $169, is a barrier for some. And when the company has fallen short of standards -- not emptying full docks or filling empty ones, for instance -- no competitor has been there to step in.

Dockless companies like Jump, Lime and Pace promised a more nimble experience. Customers could take or leave a bike wherever they found convenient, paying as little as $1 a ride. In New York, the companies could serve places Citi Bike couldn’t, particularly outlying areas such as Staten Island and the Rockaways in Queens.

Yet these companies are flailing. Last fall, a season into New York’s pilot dockless program, Pace abandoned its project, citing low ridership in the cooler weather. And New York’s leading pro-bike website, Streetsblog, has characterized Lime’s offerings as a “joke,” criticizing its electric bikes as rickety and poorly maintained.

Other cities have experienced a surge and then an evacuation of dockless bikeshare companies. Ofo, for instance, flooded Europe with bikes two years ago. Now, suffering cashflow problems, it has all but abandoned these cities, often leaving bikes to decay in place.

In Paris, meanwhile, the docked Vélib system has endured technical glitches and management problems but remains reliable. New York’s Citi Bike carried an average of 41,000 people a day in December, despite the cool weather. Citi Bike and Vélib aren’t perfect, but because they operate under long-term concessions residents and visitors can generally rely on them.

The reliability is in part a byproduct of their capital investment. It’s harder for investors to abandon a system of docks and sturdy bikes that cost millions of dollars. Dockless startups are cheaper to launch but are also flexible enough to desert cities when things don’t work out, leaving residents without a service that, had it been better conceived, might have provided real public value.