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Tech SCOOTER WARS: 3 startups are raising hundreds of millions to speed up your commute — but they're annoying everyone in San Francisco

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Electric scooters are taking over San Francisco. We talked with the founders of Spin and Bird about their bumpy rides.

Electric scooters are taking over San Francisco. play

Electric scooters are taking over San Francisco.

(LimeBike)

  • Electric scooters for grown-ups are taking over San Francisco.
  • Three startups — Bird, Spin, and LimeBike — have raised a combined $225 million in venture capital funding and rolled out hundreds of vehicles.
  • On Monday, San Francisco's city attorney issued a cease-and-desist order for the unlawful operation of scooters in the city, after receiving complaints.
  • We talked with the founders of two electric scooter sharing startups about their bumpy rides in San Francisco, and how they're trying to work with cities moving forward.

Imagine tech workers dressed in hoodies and Allbirds sneakers cruising down the streets of San Francisco on electric scooters — like Razor scooters for grown-ups. At the end of their journey, riders discard their vehicles on the sidewalk with little regard for the pedestrians behind them.

"San Francisco, I give you your mascot," said a local artist on Twitter after such a spotting.

Since March, three startups have rolled out hundreds of electric scooters in downtown San Francisco. Their vehicles appeared suddenly, without much warning, and have since covered the sidewalks.

On Monday, San Francisco's city attorney issued a cease-and-desist order against Bird, Spin, and LimeBike for the unlawful operation of scooters in the city, ABC7 News is reporting.

These startups let people reserve a local scooter from a smartphone app, ride for a small fee, and, at the end of the journey, leave the scooter wherever to be claimed by the next rider. Unlike existing bike-sharing programs, there's no dock, so the scooters can be left anywhere.

Now, like Uber and Lyft in the ride-hailing market before them, electric scooter sharing startups are warring for the hearts and minds of customers and investors alike — while also battling with local authorities to be recognized as a legitimate mode of transport. Scooter startup Bird has already gotten into hot water with city officials in the Los Angeles area.

Between them, Bird, Spin, and LimeBike have raised $255 million in venture capital funding to expand across the US. Spin and LimeBike, which started off by renting out electric bikes, expanded into scooters in February of this year, thanks to an influx of investment cash.

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(Melia Robinson/Business Insider)

The clash isn't limited to San Francisco: Spin and LimeBike cover dozens of US cities from coast to coast, while Bird operates in six cities, mostly in Southern California, as well as Washington, DC.

But San Francisco has become the key battleground, as some people living there find the proliferation of electric scooters has turned the city into a "petri dish for transit innovation." The grand scooter experiment makes commutes trickier and headaches plentiful.

"A few weeks ago, I had not noticed any electric scooters in SF. Now you can't exit a building without tripping over one," said M.G. Siegler, a general partner at GV, the venture arm of Google's parent company, in a tweet earlier this month, echoing the sentiments of many.

Amid the controversy, the scooter startups are starting to clash with authority. On Friday, San Francisco seized 66 electric scooters after receiving complaints. The day before, city officials were forced to deny an accusation from Bird that San Francisco was trying to shut it down.

Now, San Francisco's city attorney, Dennis Herrara, is threatening to pull the plug on scooter sharing. His office sent cease-and-desist letters to Bird, Spin, and LimeBike on Monday, saying that their "unlawful" business practices have created a "public nuisance" that must be corrected.

The city attorney's office has given these startups until April 30 to provide a written report showing that they have taken steps to stop users from illegally riding and parking scooters on sidewalks.

"The bottom line is our sidewalks need to be safe for pedestrians," Herrera told Business Insider in a statement last week. "They are not dumping grounds for commercial scooters."

The state of the scooter wars

Data from analytics firm App Annie shows that the market for these scooters is booming. Bird saw its biggest week of iOS and Android downloads to date in the first week of April, up 15% over the previous week. It's now been downloaded over 250,000 times. LimeBike, which has been around longer, is closer to one million downloads. App Annie didn't offer data for Spin.

Founded in 2016, bike-sharing startup Spin is the oldest startup of the trio that includes Bird and LimeBike. It's the only one based in San Francisco, and it has the least amount of funding. Spin raised $8 million in a Series A investment in 2017 to get its bikes on the road, and launched its scooters in February.

LimeBike, based in Silicon Valley, was founded in 2017. It, too, expanded from bikes to scooters in February, around the same time that it closed a $70 million funding round — an influx that brought its total funding to $132 million.

The newest competitor, Bird, landed in San Francisco about a week after Spin and LimeBike.

Bird has raised $115 million in venture capital funding, so far. Bird CEO Travis VanderZanden, a former Uber and Lyft executive, told Business Insider that because his company skipped bikes and went straight to scooters, it deserves credit for pioneering the market.

"We invented the electric scooter sharing industry," VanderZanden told Business Insider.

As for why scooters at all, VanderZanden said that it's pretty straightfoward: "Not only is it the most functional way to get around, but people are reminded of being a kid," he said.

Getting ahead of controversy

Bird came to San Francisco in the wake of a controversial launch in the Los Angeles are. Not long after launching in Santa Monica, California, the city filed a criminal complaint against the startup over its failure to obtain a permit for operation.

Eager not to repeat history, Bird started a "dialogue with the city" of San Francisco in January ahead of its launch, and waited to see how the city responded to Spin and LimeBike before delivering 175 scooters. It's also committed to cleaning up its scooters nightly and paying $1 per vehicle every day to improve local transit infrastructure, though those donations have not started.

"Ahead of regulations, we said, 'Look we want to work with you,'" VanderZanden said.

Bird CEO Travis VanderZanden. play

Bird CEO Travis VanderZanden.

(Bird)

All three startups say that they're keen to work with city authorities, even as regulations loom.

"We've always been on the side of working with cities and being the ones that have been leading the way on policy front, and we continue to keep doing that," Euwyn Poon, cofounder and president of Spin, told Business Insider.

The Board of Supervisors is expected to consider legislation on Monday to create a permitting process that will allow the city to regulate electric scooter sharing. It could potentially designate areas for leaving scooters or cap the number of vehicles that each startup is allowed to deploy in each neighborhood.

The scooter wars are far from over

Still, while the electric scooter sharing startups say they want to be part of the solution for crowded roads and congested public transit, many in San Francisco still find them to be a problem.

Critics argue that the avalanche of scooters is a product of Silicon Valley's arrogance. People have claimed on Twitter that these startups set out to disrupt transportation, but they acted without sufficient input from the city or the people who have to share San Francisco's streets and sidewalks.

"Silicon Valley has a long history of looking at a real problem and seeing an opportunity to exploit vs [sic] solving an issue," Alan Graham, cofounder of a cryptocurrency-related startup, said on Twitter. The London resident added: "It's one of the reasons I left and moved overseas."

Carol Scott, a web developer, fired off a tweet addressed to city officials, saying that she watched an elderly couple sidle their way around a Bird scooter turned over on a sidewalk.

"Our sidewalks should be for walkers, joggers and wheelchair users," she said on Twitter.

Chris Kosek, a graphic designer, described the scooters as "a cool idea with flawed execution" on Twitter. He said it's ironic that startups would preach empathy for users and design-centered thinking and "throw a tantrum when an entire city gives negative feedback."

He added: "They prefer to design for hypothetical personas over real people."