With over half of the world’s population now living near cities and urban areas, Andreessen Horowitz is banking on the need to solve the “last-mile” problem through a $12 million infusion into startup LimeBike.
Why It Matters – Biking?
Biking is a proven green, efficient and ubiquitous transportation utility as well as a proven source of happiness for humanity. It’s also a proven way to reduce anxiety stress, depression, pain, weight (Fit&Me).
Today, there are more than 1 billion bicycles in the world, with nearly half of them in China. Over 100 million bicycles are produced every year. China, India, the European Union, Japan and Taiwan manufacture 87 million, or 87%, of the total amount.
Biking does not consume gas, is carbon-free, is good exercise, and is also the most efficient way to move or be transported, according to a 1973 Scientific American locomotion efficiency study. Apple’s Steve Jobs, who loved bicycling and was a big fan of Cinelli bikes, once famously cited “computers are the equivalent of bicycles for our minds.”
In the words of the study – “… when one compares the energy consumed in moving a certain distance as a function of body weight for a variety of animals and machines, one finds that an unaided walking man does fairly well (consuming about .75 calorie per gram per kilometer), but he is not as efficient as a horse, a salmon or a jet transport. With the aid of a bicycle, however, the man’s energy consumption for a given distance is reduced to about a fifth (roughly .15 calorie per gram per kilometer).
The Last Mile Problem
Despite these compelling reasons, bike-sharing in most US cities, even in dense urban areas where biking is popular like in San Francisco, Seattle, New York and Portland, cities whose populations are projected to grow by 75% by 2050, is hampered by the so-called “last mile problem.” It is cost-prohibitive and often fraught with city politics as Seattle has experienced. Commuters often take to walking, an inefficient way to move compared to biking, to reach their destinations after taking buses and trains.
This need for better, more impactful forms of transit to travel that last mile is what got Andreesen partner’s Jeff Jordan interested in LimeBike, a “smart” bike-sharing and bike-rental startup based in San Mateo, California. Andreesen is investing $12 million in the startup, and Mr. Jordan recently shared his reasons why.
“Smart bikes cost a whole lot less to provision than their docked predecessors, in both capital and operations. And because the bikes are far more affordable (and cost cities nothing), they become far more ubiquitous and convenient. This in turn has the potential to change user behavior, in much the same way that people who would never have paid for a taxi or gotten into other strangers’ cars now use ride-hailing and ride-pooling everywhere. Or in much the same way that people who would never have previously even ridden a bike might now consider riding one. What all this means for consumers is that:
- There can finally be a large supply of bikes to meet demand (including unmanifested demand). Currently, the biggest docked bike-sharing program in the U.S., Citi Bike in NYC, only has 8,000 active bikes — which is actually quite low.
- Bikes are available wherever they’re needed, including areas of the city whose needs are currently unmet. Because bikes are freed from needing to be picked up and dropped off at a docking station, they’re better distributed throughout and even across cities (which isn’t possible with docked programs due to specific cities paying for the bikes in the first place).
- On-the-ground operators ensure that smart bikes are distributed and are well maintained; and GPS ensures that bikes are not carelessly blocking important areas like storefronts or off-limit areas designated by the city.
- Renting a smart bike is more affordable and convenient — it’s the same type of user-friendly mobile experience we have come to expect due to car ride-sharing apps — and there’s no need to lug heavy equipment around or even have to bike both ways.
- The opportunities to create other businesses for consumers based on this platform are very exciting.
For cities, the smart bike approach:
- Doesn’t require any subsidies. In fact, there is no cost to the city let alone maintenance fees;
- Allows the operator to provide best-in-class services to the city and end users, given visibility into the exact location and status of each bike;
- Enables cities to customize programs for underserved areas and even provision them for high-traffic special events;
- Can supplement existing citywide docked programs to increase supply and coverage overall;
- Can increase utilization of existing public transportation infrastructure.
We believe that LimeBike is uniquely positioned to take the best insights and lessons learned from the China bike phenomenon to develop a sustainable solution befitting the U.S. market, working closely with the cities.”