Lime swallowed Jump. Now what?

Plus, the UK speeds up scooter tests, Sidewalk Labs scraps Quayside, and Instacart delivers profits.

May 12, 2020

Hello and welcome to the Micromobility Newsletter, a weekly missive about mobility, mostly mobility in cities by small vehicles like bikes and scooters. The reason you’re reading this email is that you signed up on our website or came to one of our events.

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Thank you for reading.

In case you missed it, Founder Shield has put together the key takeaways from its Micromobility Panel and made the recording available on-demand. 

There were some great discussions covering key growth factors, managing relationships with stakeholders, what the micromobility industry is doing to help during the COVID-19 crisis, and how the industry is positioned to succeed.

Data dive.

What pandemic? The war over micromobility data—who should have access to it, how much of it, and when—continues to rage against the backdrop of Covid-19.

On the next member-only webinar, David Zipper, visiting fellow at the Harvard Kennedy School, Regina Clewlow, co-founder and CEO of Populus, and Nick Lucius, chief data officer for the city of Chicago, will discuss how cities, micromobility operators, and other stakeholders are seeing the future of mobility privacy and data.

Join the conversation at 9a PT / 12p ET on May 13 by signing up for Triple M.

From now until June 1, Triple M is free to try for 30 days. Becoming a member unlocks access to exclusive webinars, a private Slack workspace for peer-to-peer knowledge-sharing with industry insiders, and other great perks.

P.S. To give you a taste of what you’re missing, we just made one of our best Triple M webinars—featuring top tech journalists Kara Swisher and Felix Salmon talking about the endgame of car ownership—publicly available as a podcast episode. Listen here.

Untangling the Uber/Lime deal.

In case you missed it, last week Lime acquired Jump as part of a $170-million emergency funding deal led by Uber. The deal represents one of the most important micromobility mergers to date as well as a major strategic pivot for Uber, which bought the ebike startup Jump for $200 million less than two years ago.

Back up. What happened?

Uber and Lime deepened their financial intertwinement, with Lime raising $170 million from Uber and other existing investors, including Alphabet, Bain Capital Ventures, and GV. As part of the deal, Lime also absorbed Uber’s micromobility unit, Jump, including its staff and assets (i.e. fleet). In less fortunate news for Lime, the terms valued the scooter company at $510 million, or nearly 80% less than its previous valuation.

What’s in it for Lime?

Lime gets to live to fight another day.

The scooter startup, which claimed to be on the verge of profitability before the Covid-19 outbreak, instead found itself on the brink of financial ruin in recent weeks as worldwide shelter-in-place orders shriveled the demand for last-mile transportation to almost nothing. This desperately needed cash infusion could give the company the runway it needs to survive the coronavirus crisis. As a bonus, by acquiring Jump, Lime eliminated one of its main competitors and swallowed up its lucrative city permits.

What’s in it for Uber?

Uber gets to have its cake and eat it too.

The terms of the deal allow the ride-hail giant to unload money-losing Jump from its balance sheet, while also giving it the option to purchase Lime for a fixed price in the near future if things turn around. Wall Street reacted favorably to the news, driving Uber’s stock price up 10%.

So it’s a win-win for everybody?

No. There are a lot of people who lose out under this arrangement, including the roughly half of Jump employees who were just laid off.

Another group that probably isn’t too pleased are Lime’s 40 existing investors. Together these VCs (among which Uber was previously only a small stakeholder) have poured hundreds of millions of dollars into Lime since 2017, only to see the value of their investments fall sharply. As The Information reported last week, before the funding agreement was finalized:

The potential new round would catapult Uber to the top of Lime’s cap table, meaning Uber would get paid back first in the event of a sale. Other investors who participate in the round would get junior preferred stock. If they don’t participate in the round, their stock would convert to common stock, at a 3-to-2 ratio. A new employee stock ownership plan is expected to further dilute existing investors.

Who’s in charge now?

Wayne Ting, Lime’s global head of operations, is taking over as CEO. Notably, Ting used to be chief of staff to Uber CEO Dara Khosrowshahi. He replaces Lime co-founder Brad Bao, who is transitioning to a new role as chairman of the board. Joe Kraus will continue as president. Ting is Lime’s third CEO in as many years.

What happens to the Jump bikes?

For now, Lime will offer both brands in its app. That’s good news for Jump enthusiasts who view the former Uber subsidiary’s hardware as superior to Lime’s. Among those enthusiasts is apparently Ting, who says the red Jump ebikes are his favorite modal.

But Jump users shouldn’t get their hopes up just yet. Lime has spent over a year sunsetting its bike-rental operations in favor of scooters, so keeping the Jump bikes in circulation would be a strategic reversal. Also, right after the deal was inked last week, Lime pulled Jump’s fleet from Seattle for maintenance and repair.

What does all this mean for micromobility’s long-term prospects?

At first glance, Uber ditching Jump after almost two years of trying and failing to make it profitable would not seem to bode well for the future of shared scooters and bikes. However, the investment could be a sign that Uber believes micromobility’s role will actually grow during the next stage of the pandemic.

As the economy starts to reopen, coronavirus-wary commuters are avoiding for-hire vehicles that put them in close proximity to strangers. Point and case, Uber’s core ride-hail business is hurting badly right now.

People may be more willing to venture out on scooters and bikes, which are less risky than other shared modes. Indeed, there are already tentative signs that Lime’s customers are returning. In Seoul, the company’s ridership is at an all-time high, and in Columbus, Ohio and other markets, average trip lengths are up. With many city-dwellers steering clear of mass transit and ride-hail for the foreseeable future, Uber is maybe banking on the possibility that shared micromobility will emerge as one of the more attractive options for commuters post-lockdown.

Lastly, the Uber/Lime deal could be a harbinger of more consolidation to come. Bird, Spin, Tier, Skip, Dott, and Voi are all in a similar boat to Lime, in that they need to find a way to hold on financially until demand for scooters recovers. Another interesting case is Lyft. Like Uber, Lyft’s ride-hailing business is being challenged by Covid-19 and it has a money-losing micromobility division that it may want to offload. Could a deal between Lyft and one of Lime’s scooter rivals be next?

What you need to know this week.

  • The UK approved a £2 billion package to promote active mobility, like walking and cycling, and fast-tracked its electric scooter trial from 2021 to next month. The goal of these initiatives is to “relieve pressure on public transport” as the country prepares to return to work.

  • London Mayor Sadiq Khan’s open streets plan could result in a tenfold increase in cycling.

  • Lyft’s shares rallied 14% after solid Q1 revenue growth.

  • Meanwhile, Uber lost $3 billion during in Q1, but experts say it may have the funds to weather Covid-19 anyway.

  • New research from Vanderbilt shows that, if even a fraction of transit riders were to switch to driving after the pandemic ends, traffic in urban centers would slow to an interminable crawl.

  • Google’s Sidewalk Labs abandoned Quayside, its high-concept “smart city” development in Toronto.

  • Rush hour traffic is trending upward in many countries, buoying oil prices after historic lows.

  • Instacart turned profitable due to the coronavirus lockdown.

  • Seattle is permanently closing 20 miles of streets to cars.

  • According to a new Dutch survey, 55% of people who ordinarily drove to work before Covid-19 do not miss commuting at all, while 91% of those who formerly biked miss some aspect of commuting.

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