Today's Opinions, Tomorrow's Reality 

Tomorrow's Yard Sale

By David G. Young

Washington, DC, September 26, 2018 --  

The frantic rise in ride sharing companies has all the signs of a bubble.

The piles of scooters scattered across the sidewalks of America's cities is clear sign that the end of the boom is near.  

The young urbanites taking scooter rides to brunch and happy hour are obviously having fun.  What's far less obvious is how any company thinks they could possibly make money on such a ridiculous endeavor.  Hey, let's use venture capital to buy and maintain a fleet of thousands of unlocked electric scooters in high crime areas, then make money by charging hipsters a buck a ride!  While that may sound like the worst elevator pitch ever, some idiot investors are obviously falling for it.

The manic investment in scooter systems is a symptom of overheating in the sharing economy.  Wide eyed at the successes of Uber, Lyft and similar car ride sharing services, investors are scrambling to get a tiny piece of the action — no matter how ridiculous — and even if it is too little and too late. Scooter leaders Lime and Bird were valued this year at $1 billion and $2 billion, respectively.1

Something similar happened toward the end of thed Dot com boom. Just over 18 years ago, Pet' spent $1.2 million on a super bowl ad telling viewers to order their pet supplies below cost, just months before going out of business.2 hired bicycle couriers to bring $1 candy bars and $5 DVD rentals to consumer doorsteps -- dropped off at no extra charge. This delivery service delighted the same young urban demographic as the scooter companies target today. But reality took its inevitable toll, and Kozmo shut down just a few months after

The coming crash doesn't mean that all ride sharing services will come to an end. Just like Google survived the Dot Com bust of 2000 and Union Pacific survived the Railroad bust of 1893, some shared transportation companies will surely survive.

Taxis have been around since the days of horse drawn carriages, so app-driven ride-hailing services will likely be with us for a long time to come. It remains to be seen whether Uber and Lift will survive with human drivers, switch to self-driving vehicles, or be displaced by Waymo or other competitors.

Similarly, bike sharing services are likely to continue, at least in the form of publicly-subsidized systems that have docks and can cover costs after subsidies. Private, for-profit dockless bike shares may have a harder time surviving against subsidized competitors, even with premium features like electric motors. Time will tell.

But scooters -- the faddish contraptions that max out at 15 miles per hour and lose all their fun once the rain starts to fall, are probably doomed. Once the novelty wears off, it's hard to justify paying to ride on tiny wheels in the rain when you don't have a free hand for your umbrella and it's not much faster than going on foot. Tomorrow's yard sale will probably have dusty old scooters featured as prominently as old Pet Rocks and Beanie Babies.

The real question is whether behaviors will revert to earlier norms once the crash comes. Trends can be fickle beasts, and young people are especially vulnerable to wide swings in behavior when something falls out of fashion. Will traditional centralized public transportation systems like subways, busses and trolleys see a reversal in ridership declines that have accompanied the rise of ride sharing systems? Once the Millennials age out to the suburbs, will the next generation of urban hipsters be as enamored with Uber?

Given the cost and convenience advantages of ride sharing, tranditional public transportation systems have a uphill battle to regain their dominance. But once the ride sharing boom turns to bust, that chance will be firmly upon them.


1. CNBC, Uber and Alphabet Just Invested $335 Million in Lime, July 13, 2018

2. CNN Money, A Startup's Best Friend? Failure, August 4, 2007