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Testing times for second wave scooter startups

Investors are still pouring millions into scooter startups, albeit sometimes at flat valuations. At the same time a little cash is flowing the other way, in cases where cities have realized the importance of prioritizing the needs of the local environment and its citizens, over and above the ambitions of VCs for a swift and lucrative exit.

Scooter startups affected by such regulatory bumps in the road are, unsurprisingly, rather less keen to shout about this sort of policy friction and the negative cash and ride flow it generates.

In one recent incident in Spain, in the Catalan capital of Barcelona, El Pais reported that the town hall fined a local scooter startup, called Reby, for contravening urban mobility rules.

The startup is so new it doesn’t even have scooters available for public hire yet. But it’s already had some of its ‘test’ rides removed by police and been fined for breaking scooter sharing rules.

If it was hoping to copy-paste from an Uber 1.0 playbook, things aren’t looking good for Reby. (Indeed, that’s a very tatty manual in most places these days.)

Spain’s capital city Madrid also forced a temporary suspension on scooter sharing startups recently, as we reported last month, after changes to mobility laws that tighten the screw on scooter sharing — requiring already operational startups to tweak how their rides operate in order to come into compliance.

While Madrid authorities haven’t banned scooter sharing entirely, they have imposed more limits on where and how they can be used, thereby injecting fresh friction into the business model.

But compared to Barcelona that’s actually a free ride. Things aren’t so much bumpy as roadblocked entirely for scooter sharing in the latter city where regulations adopted by Barcelona town hall in 2017 essentially ban the on-demand scooter model, at least as startups prefer to operate it.

These rules require companies that wanting to offer scooters for hire must provide a guide with the ride (one guide per maximum two people), as well as a helmet. They must also verify that the person to whom the vehicle is hired has the ability to ride it properly.

Rides might scale if you’re able to litter enough cheap and easy scooters all over the urban place but a (human) guide per two rides definitely does not.

Yet, as we’ve written before, there’s no shortage of patinetes electronics weaving around Barcelona’s often narrow and crowded streets. Most of these are locally owned though. And the town hall appears to prefer it that way. After all, people who own high tech scooters aren’t usually in a rush to ditch them in stupid places.

In its 2017 by-law regulating various personal mobility vehicles (PMVs) — including, but not limited to, two-wheeled electric scooters — the city council said it wanted to foster safer and sustainable usage of scooters and other PMVs, pointing to “the growing presence of this new mobility which is taking up more and more road space”.

“Barcelona City Council is committed to a sustainable city mobility model which gives priority to journeys on foot, by bicycle or on public transport,” it added, setting out what it dubbed a “pioneering regulation” that forbids e-scooter use on pavements; imposes various speed restrictions; and gives priority to pedestrians at all times.

Scooters can also only be parked in authorized parking places, with the council emphasizing: “It is forbidden to tie them to trees, traffic lights, benches or other items of urban furniture when this could affect their use or intended purpose; in front of loading or unloading zones, or in places reserved for other users, such as persons with reduced mobility; in service areas or where parking is prohibited, such as emergency exits, hospitals, clinics or health centres, Bicing [the local city bike hire scheme] zones and on pavements where this might block the path of pedestrians.”

There’s more though: The regulation also targets scooter sharing startups seeking to exploit PMVs as a commercial opportunity — with “special conditions for economic activities”.

These include the aforementioned guide, helmet and minimum skill level rule. There’s also a registration scheme for PMVs being used for economic activity which allows city police to scan a QR code that must be displayed on the ride to check it conforms to the regulation’s technical requirements. How’s that for a smart use of tech?

“There may be specific restrictions in specific areas and districts where there is a lot of pressure from these kinds of vehicles or they pose a specific problem,” the council also warns, giving itself further leeway to control PMVs and ensure they don’t become a concentrated nuisance.

Despite what are clear, strict and freshly imposed controls on scooter sharing, that hasn’t stopped a couple of smaller European startups from trying their luck at getting rentable rubber on Catalan carrers anywayperhaps encouraged by demonstrable local appetite to scoot (that and the lack of any big Birds).

The opportunity probably looks tantalizing; a dense urban environment that’s also a tourist hotspot with clement weather, lots of two-wheel-loving locals and a small but vibrant tech scene.

In Reby’s case, the very early stage Catalan startup, whose co-founders’ LinkedIn profiles suggests the business was founded last July, has a website and not much else at this point, aside from its ambitions to follow in the wheeltracks of Bird, Lime et al.

Nonetheless it has racked up fines worth €5,300 (just over $6,000), according to town hall sources, after being deemed to have breached the city’s PMV rules.

Reby had put out up to a hundred scooters in Barcelona for ten days, according to El Pais, padlocking them to bike anchors (with a digital password for unchaining delivered via app) — presumably in the hopes of locating a grey area in the regulation and unlocking the pile em’ high, rent em’ cheap dockless on-demand scooter model that’s disrupted cities elsewhere.

But the Ayuntamiento de Barcelona was unimpressed. Its new by-law brought in a penalty system with fines of up to €100 for minor infringements, up to €200 for serious infringements and up to €500 for very serious infringements. (We understand Reby received 53 sanctions for minor infringements — costing €100 apiece).

Penalties are levied per infringement, so essentially per scooter deployed on the street. And while a few thousand euros might not sound that much of a big deal, the more scooters you scatter the higher the fine scales. And of course that’s not the kind of scaling these startups are scooting for.

We asked Reby for its version of events but it didn’t want to talk about it. A spokesman told us it’s still very early days for the business, adding: “We are a very small team and haven’t launched yet officially. We are doing some tests in Barcelona.”

A more established European scooter startup, Berlin-based Wind, has also clashed with city hall. El Pais reports it had around 100 scooters seized by police last August, also after abortively trying to put them on the streets for hire.

Town hall sources told us that, in Wind’s case, the company’s rides were removed immediately by police, not even lasting a day — so there wasn’t even the chance for a fine to be issued. (We contacted Wind for comment on the incident but it did not respond.)

The bottom line is legislative hurdles won’t simply vanish because startups wish it.

Where scooters are concerned city authorities aren’t dumb and can also move surprisingly fast. The dumping grounds some urban spaces have become after being flooded with unwanted dockless rides by overfunded startups chasing scale via max disruption (and minimum environmental sensitivity) certainly hasn’t gone unnoticed.

At the same time, keeping streets flowing, uncluttered and safe is the bread and butter business of city councils — naturally pushing PMVs up the regulatory agenda.

You also don’t have to look far for tragic stories vis-a-vis scooters. Last summer a 90-year-old pedestrian was killed in a suburb of Barcelona after she was hit by two men riding an electric scooter. In another incident in a nearby town a 40-year-old scooter rider also reportedly died after falling off her ride and being run over by a truck.

The risks of PMVs mingling with pedestrians and more powerful road vehicles are both clear and also not about to disappear. Not without radical action to expel most non-PMV vehicles from city centers to expand the safe (road) spaces where lower powered, lighter weight PMVs could operate. (And no major cities are proposing anything like that yet).

Add to that, in European cities like Barcelona, where there has already been major investment in public transport infrastructure, there’s a clear incentive to funnel residents along existing tracks, including by tightly controlling new and supplementary forms of micro-mobility.

If the Barcelona city council has one potential blind spot where urban mobility is concerned it’s air pollution. Like most dense urban centers the city often suffers terribly from this. And savvy scooter companies would do well to be pressing on that policy front.

But there’s little doubt that would-be fast-follower scooter clones have their work cut out to scale at all, let alone go the distance and get big enough to attract acquisitive attention from the category’s beefed up early movers.

Even then, for the Birds and Limes of the scooter world, multi-millions in funding may buy runway and the opportunity to scoot for international growth but policy roadblocks aren’t the kind of thing that money alone can shift.

Scooter startups need to sell cities on the potential civic benefits of their technology, by demonstrating how PMVs could replace dirtier alternatives that are already clogging roads and having a deleterious impact on urban air quality, as part of a modern and accessible mobility mix.

But that kind of lobbying, while undoubtedly benefiting from local connections, takes money and time. So there’s no shortage of challenge and complexity in the road ahead for scooter startups, even as — as we wrote last month — the investment opportunity is shrinking, with investors having now placed their big bets.

In some cities, scooter ownership also appears to be growing in popularity which will also eat into any sharing opportunities.

One regional investor from an early stage Madrid-based fund that we spoke to about scooters had no qualms at having passed over the space. “We’ve looked at various companies in the space and in Spain but we’re not very attracted by the market given our fund size, competition and regulation question marks,” KFund‘s Jamie Novoa told us.

So those entrepreneurs still dreaming of fast following the likes of Bird, Lime and Spin may find the race they were hoping to join is already over and park gates being padlocked shut.

Scooter startup Bird tried to silence a journalist. It did not go well.

Cory Doctorow doesn’t like censorship. He especially doesn’t like his own work being censored.

Anyone who knows Doctorow knows his popular tech and culture blog Boing Boing, and anyone who reads Boing Boing knows Doctorow and his cohort of bloggers. The part-blogger, part special advisor at the online rights group Electronic Frontier Foundation, has written for years on topics of technology, hacking, security research, online digital rights, and censorship and its intersection with free speech and expression.

Yet, this week it looked like his own free speech and expression could have been under threat.

Doctorow revealed in a blog post on Friday that scooter startup Bird sent him a legal threat, accusing him of copyright infringement and that his blog post encourages “illegal conduct.”

In its letter to Doctorow, Bird demanded that he “immediately take[s] down this offensive blog.”

Doctorow declined, published the legal threat, and fired back with a rebuttal letter from the EFF accusing the scooter startup of making “baseless legal threats” in an attempt to “suppress coverage that it dislikes.”

The whole debacle started after Doctorow wrote about about how Bird’s many abandoned scooters can be easily converted into a “personal scooter” by swapping out its innards with a plug-and-play converter kit. Citing an initial write-up by Hackaday, these scooters can have “all recovery and payment components permanently disabled” using the converter kit, available for purchase from China on eBay for about $30.

In fact, Doctorow’s blog post was only two paragraphs long and, though didn’t link to the eBay listing directly, did cite the hacker who wrote about it in the first place — bringing interesting things to the masses in bitesize form in in true Boing Boing fashion.

Bird didn’t like this much, and senior counsel Linda Kwak sent the letter — which the EFF published today — claiming that Doctorow’s blog post was “promoting the sale/use of an illegal product that is solely designed to circumvent the copyright protections of Bird’s proprietary technology, as described in greater detail below, as well as promoting illegal activity in general by encouraging the vandalism and misappropriation of Bird property.” The letter also falsely stated that Doctorow’s blog post “provides links to a website where such Infringing Product may be purchased,” given that the post at no point links to the purchasable eBay converter kit.

EFF senior attorney Kit Walsh fired back. “Our client has no obligation to, and will not, comply with your request to remove the article,” she wrote. “Bird may not be pleased that the technology exists to modify the scooters that it deploys, but it should not make baseless legal threats to silence reporting on that technology.”

The three-page rebuttal says Bird used incorrectly cited legal statutes to substantiate its demands for Boing Boing to pull down the blog post. The letter added that unplugging and discarding a motherboard containing unwanted code within the scooter isn’t an act of circumventing as it doesn’t bypass or modify Bird’s code — which copyright law says is illegal.

As Doctorow himself put it in his blog post Friday: “If motherboard swaps were circumvention, then selling someone a screwdriver could be an offense punishable by a five year prison sentence and a $500,000 fine.”

In an email to TechCrunch, Doctorow said that legal threats “are no fun.”

AUSTIN, TX – MARCH 10: Journalist Cory Doctorow speaks onstage at “Snowden 2.0: A Field Report from the NSA Archives” during the 2014 SXSW Music, Film + Interactive Festival at Austin Convention Center on March 10, 2014 in Austin, Texas. (Photo by Travis P Ball/Getty Images for SXSW)

“We’re a small, shoestring operation, and even though this particular threat is one that we have very deep expertise on, it’s still chilling when a company with millions in the bank sends a threat — even a bogus one like this — to you,” he said.

The EFF’s response also said that Doctorow’s freedom of speech “does not in fact impinge on any of Bird’s rights,” adding that Bird should not send takedown notices to journalists using “meritless legal claims,” the letter said.

“So, in a sense, it doesn’t matter whether Bird is right or wrong when it claims that it’s illegal to convert a Bird scooter to a personal scooter,” said Walsh in a separate blog post. “Either way, Boing Boing was free to report on it,” she added.

What’s bizarre is why Bird targeted Doctorow and, apparently nobody else — so far.

TechCrunch reached out to several people who wrote about and were involved with blog posts and write-ups about the Bird converter kit kit. Of those who responded, all said that they had not received a legal demand from Bird.

We asked Bird why it sent the letter, and if this was a one-off letter or if Bird had sent similar legal demands to others. When reached, a Bird spokesperson did not comment on the record.

All too often, companies send legal threats and demands to try to silence work or findings that they find critical, often using misinterpreted, incorrect or vague legal statutes to get things pulled off from the internet. Some companies have been more successful than others, despite an increase in awareness and bug bounties, and a general willingness to fix security issues before they inevitably become public.

Now Bird becomes the latest in a long list of companies that have threatened reporters or security researchers, alongside companies like drone maker DJI, which in 2017 threatened a security researcher trying to report a bug in good faith, and spam operator River City, which sued a security researcher who found the spammer’s exposed servers and a reporter who wrote about it. Most recently, password manager maker Keeper sued a security reporter claiming allegedly defamatory remarks over a security flaw in one of its products. The case was eventually dropped but not before over 50 experts, advocates, and journalist (including this reporter) signed onto a letter calling for companies to stop using legal threats to stifle — and silence security researcher.

That effort resulted in several companies — notably LinkedIn and Tesla — to double down on their protection of security researchers by changing their vulnerability disclosure rules to promise that the companies will not seek to prosecute hackers acting in good-faith.

But some companies have bucked that trend and have taken a more hostile, aggressive — and regressive — approach to security researchers and reporters.

“Bird Scooters and other dockless transport are hugely controversial right now, thanks in large part to a ‘move-fast, break-things’ approach to regulation, and it’s not surprising that they would want to control the debate,” said Doctorow.

“But to my mind, this kind of bullying speaks volumes about the overall character of the company,” he said.

Lyft and Lime are rolling out new scooter models

Mama’s got a new set o’ wheels.

Cities with Lime and Lyft scooter share programs will soon see some new models scootin’ around the city. The companies are rolling out new designs in the coming weeks, which they will integrate into their fleets over time. Both of the models emphasize sturdier designs and company branding.

Lyft’s new scooters are Segway-Ninebot’s Shared Scooter Model Max, which are specifically designed for share scooter programs. They debuted at CES 2019, and Lyft will be the first company to employ the new model — Bird and other competitors also use Segway-Ninebot. 

In addition to longer battery life and a design meant to better withstand a lot of riding under many weather conditions, the wheels — like the Lyft mustache — will be pink.

Pretty cute.

Pretty cute.

Image: lyft

Lime showed off its Generation 3 scooter back in October, with similar features like bigger wheels and fancy upgrades such as the ability see if you’re in a no-parking zone. Now, the scooter company is ready to bring them to the streets, complete with accents of Lime’s signature green.

Scooter vs. Potholes: who wins?

Scooter vs. Potholes: who wins?

Image: Lime-S

With both new designs, there’s a clear emphasis on both safety and differentiation through design. Lyft is also adding scooter docks, so riders will have the option to park scooters in a designated location if they wish. That’s a move Lyft may have imported from the docked bike share company Motivate that it acquired in July 2018.

Neither company has shared what cities the new scooters will be coming to specifically, or when, beyond the coming weeks. Lyft declined to state what it would do with the old scooter models, and we’re still waiting to hear from Lime on that one. Hopefully, the old models won’t just end up on the garbage heap.

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Elon Musk says he’s not joking about that hover car

Gather round, for Elon Musk has made a new Twitter declaration.

The Tesla CEO informed Twitter followers on Wednesday that he is not joking about using rocket thrusters to get his upcoming Tesla Roadster to fly— or at least hover.

As Musk does, he responded on Twitter to a Tesla fan praising the advancements the car has made over the last six years. The fan (perhaps cheekily) included a gif of a flying DeLorean. Musk quote-retweeted the image, adding “The new Roadster will actually do something like this.”

The Roadster is a new super-fast Tesla that Musk has promised for 2020. Previously, he launched a Roadster into space for SpaceX’s Falcon Heavy rocket launch. And though that vehicle became airborne thanks to a rocket, Musk has since floated the idea that one day, it would use rocket launchers to fly.

Musk took that idea one step further Wednesday.

After Musk responded to the fan’s initial tweet, the tech vlogger Marques Brownlee responded to Musk, saying “The thing is I feel like you’re not joking.” And, of course, Musk made it clear — as clear and precise as you can be in 280 characters — that making the Roadster hover was seriously on the road map.

Musk believes that the future of transportation is going vertical, as he told press at a Boring Co. event. Most recently, that’s meant building down. Through work with the Boring Co., Musk thinks the solution to traffic is building dozens of high speed tunnels, one on top of the other, underneath cities. He debuted the test track for this system in December to underwhelming results.

But apparently going higher is in the cards, too. Or maybe, this has less to do with killing traffic than it does with outfitting his car with friggin’ rockets.

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E-scooter startup Bird is raising another $300M

Electric scooter startup Bird is said to be nearing a deal to extend its Series C funding with an additional $300 million led by cross-over investor Fidelity, according to an Axios report. Bird declined to comment.

Fidelity has not previously invested in Bird and is reportedly doing so at a flat pre-money valuation of $2 billion, which Bird earned with a $300 million Sequoia-led financing in June. Santa Monica-based Bird has raised more than $400 million in venture capital funding to date from investors, including Accel, CRV, Greycroft, Index Ventures, Upfront Ventures, Craft Ventures and Tusk Ventures.

The investment comes at a time when many investors are losing faith in scooter startups’ claims to be the solution to the problem of last-mile transportation, as companies in the space display poor unit economics, faulty batteries and a general air of undependability. Lime, Bird’s biggest e-scooter competitor, has at least expanded its suite of micro-mobility offerings from bikes and scooters to LimePods, a line of shareable vehicles available in Seattle, to peak investor interest. San Francisco-based Lime has been seen pitching to investors in Silicon Valley recently, too, with reports indicating it’s looking for a $400 million investment at a $3 billion valuation — more than three times the valuation it garnered with a $335 million round in July.