Bluegogo Suspends Bay Area Service: Five Observations

After much initial hubub and curiosity, Bluegogo, a venture Chinese bikeshare start-up, announced it would suspend operations in the Bay Area market. The move comes amid heavy scrutiny from city officials, bike advocates and public space managers, especially with regard to the company’s somewhat notorious operational model, which consists of unloading tens of thousands of bikes into the urban streetscape, with little regard for how they’re organized or maintained.

Though company officials are maintaining a brave public face, this development can only be viewed as a substantial setback. San Francisco, with its bike-friendly and tech- forward culture, was viewed as one of the most promising locations for this new breed of bikeshare start-ups, and these early setbacks don’t bode well for future competitiveness in the market.

Here are five observations:

Discarded Bikes Are Kryptonite

Bluegogo, and similar companies like Spin, were continuously haunted by images of thousands of discarded bicycles on the streets of Chinese cities. It’s a public space manager’s worst nightmare; thousands of broken bicycles cluttering public bike racks. Around the country, municipalities have invested millions in organized and harmonious streets, with rigid design standards and even design review boards for new street furniture. The prospect of such chaos was always bound to encounter stiff resistance.

So when images of discarded bikes first appeared, the condemnation was swift and harsh. Though the company pledged to quickly remove the bikes, the damage was already done.

If the public is going to be hypersensitive to this issue, it’s hard to see how Bluegogo’s model remains viable in the US. The Bluegogo way of doing business only works with an overwhelming number of super cheap bicycles on the streetscape. This allows them to ensure that their bikes are everywhere, and also allows them to maintain an incredibly lean operational infrastructure; the cheap bikes are considered expendable. As a result, cluttered broken bikes are left on the street, uncollected by company agents.

Bikeshare Franchisees Will Fight Hard

According to the San Francisco Examiner, Motivate, the New York based firm that operates the region’s official bikeshare scheme, lobbied hard against the Bluegogo with city officials. It’s difficult to guage how much of a role this played in the hostile posture adopted towards bikeshare startups, but I would wager it was substantial.

Motivate, which has invested significant capital and operational resources into the revamped system, stands to lose if a significant share of its riders turn to competitors. For their part, public officials know that competition will diminish the value of the franchise and may scare away sponsors and operators, causing a “death spiral” of the municipal scheme.

City Officials May Have an Uber type Problem

With the rapid growth of cycling, Bluegogo won’t be the last company to challenge the traditional bikeshare model. In fact, other startups are already laying plans to launch in the Bay Area. This leaves public officials with an interesting quandary.

Bluegogo’s position isn’t completely unreasonable, they’re seeking to use sidewalks, much like taxis use streets. If the company can keep it’s bikes from becoming an eyesore (a big if), then I don’t see how Bay Area officials can keep them out.

This challenge is reminiscent of the carsharing predicament that many cities face today. Uber and Lyft, which are largely unregulated, were introduced to the detriment and dismay of traditional taxi services, many of whom enjoyed official agreements with municipalities. In New York, competition from carsharing services has led to a rapid plunge in the value of medallions, the city’s official yellow cab franchise system. The private interests that own the medallions have lobbied hard against carsharing, and the city’s mayor even tried to limit their growth, but taxis continue to struggle.

It’s possible that similar battle lines are being drawn today.

Public Opinion Matters

If Twitter and media coverage are any indication, public opinion was decidedly against Bluegogo, making their tenuous position even more difficult. Even bike advocates, often a natural ally of bicycle enterprises, were ambivalent.

The fact that these companies have not invested more in community relations and lobbying is perplexing, especially given the existing pervasive narratives at work. Blugogo, which has raised over $35 million in funding, can easily afford a targeted local campaign, as well as a community affairs liaison to round up support from advocacy groups and neighborhood leaders.

My experience tells me that such an investment could easily deliver a substantial return either by softening opposition or by cultivating grassroots support.

Other Cities are Watching

Over the past three weeks, I’ve heard directly from three senior people in New York’s civil society express serious reservations about services like Bluegogo, based entirely on what’s happening in the Bay Area, and fears that New York could be next.

It would probably be advisable for these bikeshare startups worked together to develop and fund a government relations strategy for the purpose of cultivating relationships with local elected officials and community leaders. The cost would be a minuscule relative to the benefit of better relationships with urban leaders, whose cooperation is required for their success.

Other industries have well organized trade groups, one would seem to be appropriate here.

I’m not aware of anyone in the public space field that has had contact with any agents representing these companies, and opinions are solidifying fast.

Featured Image via Yomar Lopez on Flickr

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