Policy may kill the UK scooter market, before it is born
Will companies behind the electric scooter rental phenomenon like Bird, Lime and Spin succeed in London? Some of the obvious determinants…
Will companies behind the electric scooter rental phenomenon like Bird, Lime and Spin succeed in London? Some of the obvious determinants of this are pricing, product, and even British consumer preferences. One of the more overlooked — but fundamental — factors, will be their ability to navigate public policy — the way that the British government and local rule-makers decide to regulate scooters. Currently they are not allowed anywhere apart from on private property, meaning that UK cities are legally off-limits.
When Uber entered London and encountered a regulatory framework run by Transport for London, their problem was one of regulatory ambiguity. They were disrupting a centuries old market in a regulatory context that was not designed for a ride-hailing platform. The subsequent years have seen a torturous process of move and counter-move between Uber and TfL which came to a form of resolution earlier this summer. What value has been lost in the meantime?
For Bird, Lime and co, the problem is not one of ambiguity, but one of clarity. The law must change before they can operate. The Department for Transport must reclassify electric scooters as fit for road or, less likely, pavement (‘sidewalk’) use. This is binary for the market as a whole, but doesn’t tell us much about which of the would-be entrants might succeed.
Where regulation will get really interesting is when it collides with different proposed business models. Once the legal framework is changed, individual city authorities like TfL will take a view on how to regulate their use, charging, storage and (possibly) pricing in their specific local contexts. In London, for example, scooters will compete for passengers and space with the cabs, free bike scheme, and TfL’s Oyster network of tubes, busses and boats. The scooter companies will have work to do, either by shaping the policy framework through savvy engagement with regulators, or even adjusting their business model to effectively “localise” their business for the UK. They should be wary of running into the same roadblocks as Mobike, who had 130 bikes confiscated by Wandsworth council, when the council just wasn’t on side with Mobike’s model.
This is where individual companies must succeed in managing regulations, and regulators, with slick skill — something which Uber did not do. Some of the most groundbreaking startups are creating value exactly by being at the leading edge of what is allowed, or creating new markets — before regulation has caught up. It’s not about avoiding pushing the boundaries. It’s about being regulation-friendly where possible, while taking risks where necessary to deliver rocket-ship growth.
For scooters, several well-funded competitors will arrive in London at once. The company that best manages regulation could well gain a huge advantage — getting a license to operate before anyone else, and beginning to build that crucial network effect that could shut out the market for others.
A whole range of questions follow, but one is this: where will Bird, Lime and co go for their advice on how to win this regulatory battle, both at the national level (to open the market) and at the local level (to get licensed, and then scale?). I wrote recently about whether early stage start-ups attempting to disrupt markets where government plays a major role (either as buyer or regulator) should have access to that sort of expertise and experience via one of the VCs on their term sheet. At least in the case of scooters, the answer would seem to be ‘yes’. It’s certainly telling that Bird has had Tusk Ventures — a US policy-focused fund — on their term sheet since series A.