Photo: Bikeshare Museum
In 2018, taxi service Uber bought an electric scooter rental startup Jump for $ 200 million. However, after just two years, the project is not doing well. Jump's creator and key team members left Uber back in January, and most of the staff were laid off when Uber sold Jump to its Lime competitors. Soon after, a video of a huge storage vault appeared on the Internet, containing thousands of no longer needed red e-bikes.
In our new article, we recall the history of this project and try to understand the reasons for the fall of the startup by $ 200 million.
Jump history
Inspired by the history of the Paris bike rental service Velib, Ryan Rzepecki founded Social Bicycles in 2010. The company planned to offer city administrations to purchase their e-bikes and docking stations.
The bicycles were equipped with a GPS system and a built-in lock, and this allowed users to complete the lease using both the docking station and regular bike parking. This has become a distinctive feature of the project.
The company had a mission - to make electric transport accessible to everyone - the employees believed in it, but not everything went smoothly with technology. In the early years, Social Bicycles was constantly faced with problems and complaints from customers. So in 2012 the company signed a contract for the supply of electric bicycles for the San Francisco airport, but they never really worked.
However, by 2016, the company had become profitable and participated in the Biketown project - sponsored by Nike and deployed thousands of e-bikes in Portland, Oregon as part of the initiative.
Rapid development
If the first years were spent in hard work and gradual progress, then starting in 2016 the niche of bike rental has become very popular. A large number of different startups have appeared here, including the Chinese Mobike and the American Lime.
Investors were heavily invested in such projects, many of which used the “free lock” model, allowing customers to drop bicycles and scooters right on the streets. It soon became difficult to walk on sidewalks in many cities due to abandoned electric vehicles. Startups Lime, Spin and Bird did this in San Francisco, which led to conflicts with city officials.
Ryan Rzhepetski did not want to follow this path. Instead of marketing gimmicks, the founder and team focused on refining the technology. As a result, they managed to create an electric bike, which many analysts recognized as the most convenient on the market.
“It was like using an iPhone for the first time - just magic,” said one Uber executive who tested it before buying a startup.
In 2018, Social Bicycles rebranded to take on the name Jump. The $ 200 million deal with Uber soon followed. For the company, this was the first takeover of a startup that leased some other form of transport than a car. Uber's top management envisioned scooter and bike rentals for short rides to help grow its user base.
At the time of the takeover, Jump bikes were available in Washington DC and San Francisco, and Uber planned to start renting them to users in cities around the world.
When the problems started
In May 2019, Uber conducted an IPO, which was the largest to date. The initial valuation of the company was $ 75.5 billion.
Uber was never profitable, and after the IPO, pressure on top management increased - managers had to think about how to show profit. All of this affected Jump as well - she was forced to start raising prices for e-bike rentals.
Influenced the project and the general atmosphere inside Uber. At the time of the Jump takeover, one scandal after another thundered around the founder of the taxi service, Travis Kalanick. The experience, skills and ability to manage a team of many leaders were questioned.
In particular, Jump's Uber Mobility division was run by people with no experience in e-bike rental. Unlike the taxi segment, this is practically a business built around hardware, but the leaders did not understand this. Among them is the head of the Mobility Unit Rachel Holt, about whom former employees of Jump said that she had no idea how to run a hardware company.
At some point, Uber ordered "thousands of thousands" of bicycles, which were simply gathering dust in warehouses in anticipation of deliveries to local markets abroad. A huge amount of money was spent on this. Also in 2019, Jump released a new bike lock - it turned out to be not very reliable, and as a result, hundreds of e-bikes were stolen. Uber decided to hire security guards for the docking stations, but this also led to problems, such as when one of them hit a young African American woman trying to use a bicycle.
In the winter of 2020, journalists found out that Rzhepetskiy and part of the Jump core team were leaving Uber. In early May, there was also news that Uber would be one of the main participants in the investment round of the Lime electric scooter rental startup. One of the terms of the deal was Uber's right to purchase Lime between 2022 and 2024. The Jump business is now part of Lime, and Wayne Ting, who has served as Uber's top manager for many years, became the CEO of the company.
During the reorganization, many of Jump's employees were laid off - amid the coronavirus pandemic, Uber faced financial difficulties. Lime only needs bicycles that have not yet been delivered to cities. All the rest went to the dump.
In late May, a video emerged showing thousands of unwanted red e-bikes and scooters going for recycling.
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