Why does dockless scooter company, Bird, launch their service in cities before it is completely legal? I wondered this very question when the company recently launched in my town, Oklahoma City. I did a little research and applied some business sense to come to up with the answer.
Bird's strategy is to be the first dockless scooter company in every city that they enter because the advantage of being the first-to-market outweighs negative consequences from breaking the law. The company mitigates negative consequences by aggressively marketing to consumers and lobbying elected officials.
The Advantage of Being First-to-Market
Bird's service is an entirely new product category, dockless rentable e-scooters. There are multiple providers aggressively competing nationwide. For innovative businesses, introducing a new category of product, there are enormous advantages to being first.
The first-to-market usually enjoys better brand recognition. When you are the only game in town, you get to name the game. In many parts of the United States, a cold, sugary, carbonated beverage is called a "Coke," even if it isn't a Coca-Cola.
Businesses like Bird, when they are first-to-market, benefit from the novelty factor. People like to try new things, if only for curiosity. There is no second place, once the curiosity is satisfied.
The Most Valuable Real Estate Isn't the Sidewalk; It is on Your Smartphone
Most of the controversy regarding Bird's entry into cities has to do with space. Critics say that Bird litters sidewalks and obstructs other transportation. While there may be some truth to that, the piece of real estate that Bird cares about is not on the sidewalk. Its space on your smartphone.
At its core, Bird is a tech company, not a transportation company. They beat the competition when more consumers have their app installed (and take their first paid ride) than the app of their competitors.
By entering the market first, no matter if it is 100% legal, the novelty factor ensures that tens-of-thousands and maybe even hundreds-of-thousands of people download the app on their smartphone and enter payment information.
All Publicity is Good Publicity
When Bird launches in a city without the blessing of city government, they get a lot of publicity. Local news outlets cover the launch on the first day or two. Then they cover the controversy for a longer period of time. Everyone that watches local television news, reads a local news website or uses social media is exposed to Bird's brand name, with a description of the service immediately following the name.
The Company Has the Cash and Isn't Expected to be Profitable, yet
Bird is a startup tech company. It isn't expected to be profitable anytime soon. This is normal for the tech sector. Facebook lost money for its first five years of existence. Amazon.com lost money for seven years. Uber isn't yet profitable, but it is making progress.
At the end of June, reports indicated that Bird received a 300 million dollar investment that would peg the company value around 2 billion dollars.
So, why is a new company, that is not profitable, worth two billion dollars? When assessing the value of a tech company, venture capital investors often place significant weight on the number of subscribers or regular users. This is measured, in part, by number of app installs.
For Bird, right now, the name-of-the-game is rapid growth. They want to get into as many cities as possible, as the first in category, so that more user will install the app, enter their payment information and take their first ride.
If you haven't tried Bird yet, download the app and use cord ZZZWKQ to get a free ride.