Bird, one of the first companies to introduce dockless electric scooter rentals in cities around the world, filed for Chapter 11 bankruptcy protection this week. The move caps a dramatic reversal of fortune for the once high-flying startup.
Founded in 2017, Bird was a pioneer in the market for micromobility – renting out electric scooters and bikes for short trips around congested cities. Its vision was to offer an environmentally friendly alternative to cars for urban transportation.
Within a year, Bird’s scooters were zooming along sidewalks from Santa Monica to San Diego. Flush with venture capital, the company expanded rapidly across the United States and into Europe. At its peak in late 2021, Bird went public through a merger with a special acquisition company at a valuation of over $2 billion.
Behind the bankruptcy filing, however, is a story of lofty ambitions colliding with challenging economics. While Bird helped to popularize scooter shares, profits have proven elusive in the highly competitive market.
Struggles with Unit Economics
At the heart of Bird’s struggles were the difficult unit economics of its business. Customers could rent scooters for as little as $1 plus a per minute fee. While popular with riders, the costs to purchase, maintain and redistribute the scooters consumed a large share of revenues.
As one bankruptcy expert told the New York Times, “Their unit economics never really worked. They lose money on every ride.”
Scaling up also brought new complexities of managing vehicle fleets and safety issues across hundreds of cities globally. Bird poured tremendous resources into solving problems like vandalism and proper parking of scooters on busy sidewalks, eating further into margins.
Intensifying Competition
Bird also faced intensifying competition, especially in Europe. Well-funded startups like Tier, Voi and Dott fought for market share in lucrative markets like Paris and London. The battle for riders led companies to offer generous promotional incentives that put further downward pressure on prices.
The economic fallout from the pandemic likely didn’t help either. But the long-term outlook remains challenging despite ridership recovering in major cities.
Fall From Grace
After going public in late 2021, Bird’s fortunes deteriorated rapidly. Its stock price plunged as it struggled to convince investors of its path to profitability. After peaking above $10 per share, the stock drifted below $1 within a year. In September 2022, Bird was delisted from the New York Stock Exchange.
Its cash reserves dwindling, Bird undertook two emergency capital raises to stay afloat. Hundreds of employees were laid off in attempts to cut costs. In June, founder and CEO Travis VanderZanden was replaced by interim CEO Michael Washinushi.
But despite the efforts, Bird continued to burn through $15 million a month, according to bankruptcy filings. Hence this week’s Chapter 11 bankruptcy protection in a last ditch move to restructure its finances.
What Happens Next
The Chapter 11 filing sets in motion a restructuring plan aimed at reviving Bird’s fortunes. The company secured $25 million in bankruptcy financing to maintain day-to-day operations during the proceedings. Meanwhile, its assets are set to be put up for sale within the next four months.
Bird’s lenders will submit an initial bid designed to attract competing offers for Bird’s global assets. Ultimately, the goal is to find new owners who can turn around the troubled company. Washingtushi will continue to lead Bird through the transition period.
The bankruptcy filing does not cover Bird’s operations in Canada and Europe. These units will continue normal operations as the restructuring plan focuses on the core US business. But across the industry, other struggling scooter startups are likely watching closely to see if Bird emerges in a stronger position.
Bird’s bankruptcy highlights the difficulties of making shared micromobility a viable business, especially with profit margins getting competed away. While the convenience of renting e-scooters and bikes remains popular with urban residents, significant innovation may be needed to make the economics work for providers.
The coming year promises to bring further shakeouts across the micromobility landscape. Bird’s ability to use bankruptcy to right its ship will offer an important test case. For the pioneers of scooter sharing, survival may require learning to fly again.
