The Rise and Fall of Bird
Bird, a trailblazer in the electric scooter industry, has recently filed for Chapter 11 bankruptcy. This move marks a significant downturn for the company, which only a few years ago was a shining example of innovative urban transport solutions. Established in 2017 by Travis VanderZanden, an alumnus of Lyft and Uber, Bird rapidly gained popularity with its dockless scooters and bikes, providing an eco-friendly and convenient travel option for city residents.
Despite its early success and a public listing in late 2021 through a SPAC merger, Bird’s journey has been anything but smooth. The company’s value plummeted from over $2 billion at its New York Stock Exchange debut to a mere $70 million within a year. The dwindling stock price led to a warning from the NYSE and eventually resulted in Bird’s delisting in September. This financial turmoil was accompanied by significant leadership changes, including the departure of CEO VanderZanden in June.
Restructuring Under Chapter 11
Chapter 11 bankruptcy allows Bird to restructure its finances while maintaining normal operations. With a $25 million financial lifeline from MidCap Financial, a division of Apollo Global Management, Bird aims to stabilize and eventually sell its assets. The process involves a “stalking horse” agreement, setting a base price for Bird’s assets and inviting external bids over the next four months. During this period, interim CEO Michael Washinushi will lead the company, focusing on steering it towards profitability and fulfilling its mission of reducing urban car usage, traffic, and carbon emissions. It’s important to note that Bird’s operations in Canada and Europe are not affected by this bankruptcy filing.
A Wider Micromobility Crisis
Bird’s story is reflective of a broader crisis in the micromobility sector. Just a day before Bird’s announcement, Micromobility.com faced delisting from Nasdaq due to its failing stock price. Meanwhile, in Europe, the dockless scooter company Tier recently laid off a significant portion of its workforce, and the Dutch e-bike startup VanMoof entered bankruptcy proceedings.
Challenges Facing the Micromobility Industry
The micromobility industry, while revolutionary, has faced several hurdles. The business model, often based on optimism rather than solid economics, has struggled under the weight of operational costs, regulatory challenges, and market saturation. Companies like Bird initially thrived on the novelty of their services and the growing environmental consciousness among urban dwellers. However, maintaining a fleet of scooters or bikes is costly, and the revenue generated per ride often doesn’t cover these expenses.
Regulatory hurdles are another significant issue. Cities around the world have grappled with how to integrate these services into their urban landscapes. Concerns over safety, parking, and pedestrian rights have led to stringent regulations in some areas, limiting the operational scope of these companies.
Moreover, the micromobility market has become saturated with numerous players, leading to fierce competition and reducing the profitability for each company. The COVID-19 pandemic further exacerbated these challenges, as lockdowns and social distancing measures led to a dramatic reduction in the use of shared transportation modes.
As Bird navigates through its bankruptcy and restructuring, the future of micromobility hangs in the balance. While the vision of a less car-dependent, more sustainable urban transport system remains appealing, the path to achieving it is fraught with financial and regulatory challenges. The fate of Bird and its peers in the coming months will be a telling indicator of whether the micromobility industry can adapt and survive or if it will become a cautionary tale of innovation outpacing practicality.