Mobike Dies in a Million Ways from Innovation

During the turbulent times of the subsidy war, Wang Xiaofeng, a former senior executive of Uber China, completed the entrepreneurial transformation from four wheels to two wheels with Mobike. This may be because he was tired of the previous bloody competition, or he may be optimistic about the market that Didi has not yet touched, hoping that as Feng Jicai said in his novel "The Divine Whip", this transformation will be a unique skill!

Original observations on Mobike-style innovation

When Wang Xiaofeng was asked about his future, he vaguely said, "I hope to provide services to tens of millions of people at a price that everyone can afford." In hindsight, this particularly colloquial vision sets the tone for Mobike and is also his observation on the increasingly compressed space for short-distance travel in cities.

But the decision cost of this innovation is actually very low:

First of all, travel O2O has been proven to be a big business. Behind the high-frequency demand is abundant cash flow that is sufficient to nourish the business model. Uber, valued at US$50 billion, and Didi, valued at US$34 billion, are examples of this.

Secondly, as capital becomes increasingly cautious today, investors are particularly tolerant of this industry. This is the motivation for Uber and Didi to burn money despite their inability to make profits.

At the same time, there is still room for the Internetization of short-distance travel in cities. The operation of public bicycles still relies on the old system that lacks vitality. Mobike and other companies have the opportunity to subvert it with efficiency and experience.

Finally, it is a market with relatively little competition. Unlike the semi-public welfare Citibike in the United States, which is frequently updated and Ford and Nike have entered the market in a big way, China is still a battle between Mobike and OFO for the orange and yellow.

Obviously, the entrepreneurial philosophy of Mobike is not to compete with Didi in the red ocean, but to strike a light blow at the soft belly of travel innovation. This business that connects tens of millions of needs could not be done before, simply because it was restricted by offline bottlenecks. Mobike and OFO thought they had found a way out, that is, to balance risks through a series of excessive innovations and seek a compromise between experience and safety.

This is actually the bicycle version of time-sharing rental.

The rules of car-sharing were laid by Zipcar in 2000, such as the decentralized configuration of vehicles, the ability to rent and return at any time, and flexibility and convenience. When the company went public in 2011, it had a 31% premium and its market value soared to US$1.1 billion.

But problems arise when the wild innovation becomes a well-behaved business model.

First of all, Zipcar started in Boston, which is known as the Athens of the United States. There are famous universities such as Harvard and MIT. The quality of users ensures operational efficiency, but the company failed to prove its ability to move from campus to the general public in a timely manner.

Secondly, competitors followed suit. Enterprise's clone WeCar targeted large corporate campuses, and Hertz's Connect focused on communities, which quickly eliminated Zipcar's incremental space. By the time Zipcar was acquired by AVIS for $500 million in cash in 2010, it had already lost $50 million.

Other C2C car-sharing models are not developing well either. For example, RelayRides, which changed its name to Turo and was founded almost at the same time as Uber, is now unknown; Grtaround is struggling to survive; Flightcar suddenly closed down in July this year; the ones that have really survived are those projects that rely on large car companies or government funds, such as Mercedes-Benz Car2go, Volkswagen Quicar, BMW DriveNow and France's Autolib.

In theory, shared bicycles have lower barriers to entry and higher frequency of demand, but after many years, Mobike has still not surpassed Zipcar's technology. All it has is Chinese society's enthusiasm for innovation and the spirit of trying new things. Entrepreneurs still have to prove their ability to control both online and offline, and there is still a series of business logic that needs to be self-verified.

Mobike’s current strategy can only be summarized as using excessive innovation to cover up the breakpoints in service and operations.

Eight questions about Mobike

1 How to serve the last mile with artificial limitations?

On the surface, Mobike has eliminated parking piles and allows vehicles to be locked and returned at any legal location, which seems to make up for the shortcomings of public bicycles. However, as a tool for short-distance travel, Mobike still does not allow vehicles to enter closed urban spaces such as residential areas, office buildings, and large corporate parks, and tends to be conservative in the key trade-off between efficiency and convenience.

This may not cause fatal damage when the model becomes popular, but it is a bit boring that the innovation that claims to serve the last mile loses in the last 500 meters due to human blockage.

2. There are many uncontrollable factors and credit pricing is unreliable

Mobike invented the idea of ​​using credit points to link price leverage. The purpose is to control risks, but the effect is limited because:

(1) Short-distance travel in China’s big cities has always been a pain point. Last year, the “Free Cycling Map” campaign launched by the public welfare organization “Public Cities” showed that there was an average of one bicycle travel breakpoint every 2 kilometers within Beijing’s Third Ring Road. In such a bad traffic environment, Mobike’s violation penalty points and price increase mechanism may not be convincing enough.

(2) The Mobike system still has some problems such as inaccurate map positioning, network delays, low code scanning recognition rate, and long unlocking time. The so-called seamless connection is only an ideal state. It is impossible for Mobike to transfer risks to consumers through unilateral rules.

Mobike's cooperation with Qianhai Credit or Sesame Credit in this low-threshold, high-frequency business can only lead to more disputes, especially when the responsible party is not clear.

3 What to do if we leave the basic audience?

The earliest travel innovations all chose campuses because they relied on the contractual spirit and self-discipline of users, but they were not as popular as Uber outside of campus. Turo later launched a "face-to-face car collection" service, which was euphemistically called creating a social scene, but in fact it was a helpless move to avoid risks.

Shared bicycles have lowered the threshold for users, but as the user base expands, the offline gameplay that requires no one to participate, stays hidden behind the scenes, and only throws out various rules will inevitably be strongly impacted.

4 How to balance security and experience

The first priority of Mobike’s business model is to create a superbike that is difficult to damage even by a user with deep malicious intent.

Mobike uses an aluminum alloy frame to reinforce the body, eliminates the chain and adopts shaft drive instead. To prevent tire blowouts, solid tires are used. The whole vehicle weighs 25 kilograms, and many parts cannot be customized to reduce the possibility of human damage.

The result of such caution is a product with a very bad riding experience, low power transmission efficiency and extremely poor comfort. Users can ride it to exercise or conquer bad roads, but it is not suitable as a short-distance transportation tool.

Mobike has discovered the problems of the public bicycle system, but the means it relies on to solve them have more side effects. The users it quickly won with front-end innovation are being lost due to poor experience.

5 How to optimize inventory scheduling

When Mobike officially entered Beijing on September 1, it deployed more than 3,000 vehicles. This was not a large number compared to Shanghai's 10,000 vehicles, but Beijing's urban area of ​​16,000 square kilometers is 2.5 times that of Shanghai. If Mobike were to deploy one vehicle every 300 meters, the number of vehicles involved would be astronomical.

Therefore, strengthening the inventory scheduling system and optimizing vehicle configuration are inevitable requirements of the business model.

Urban commuting provides a huge fixed demand, but it is obviously not the best choice for Mobike. The average bicycle commuting distance in first-tier cities is at least 5-10 kilometers per day. Considering Mobike's riding experience, this is almost self-abuse. Therefore, the direction of Mobike's data system self-learning is to realize the centralized deployment of vehicles in large residential areas, office buildings, and transportation hubs, while meeting scattered needs.

6 Vehicle preparation

This is a bottleneck that has not been solved by P2P car rentals or shared bikes. Machines made by humans need regular maintenance. Airplanes have pre-flight and post-flight inspections, as well as short-term maintenance stops. Cars need to be serviced every 5,000-10,000 kilometers. The high damage rate of public bicycles is half due to the irresponsibility of users, and the other half is due to the incomplete offline maintenance.

We don’t have data on Mobike’s failures and damages, but there is news that 150 of the more than 10,000 vehicles deployed in Shanghai were damaged by human factors, but this was modified by adding attributives, such as this does not include some minor damage, etc. In fact, anyone who pays a little attention to the conditions of the surrounding public facilities will not have unrealistic confidence in those bicycles that are exposed to wind and rain.

7. Security risks

One of the challenges Mobike faces is compatibility with city management. It often pushes some user instructions semi-compulsively, reminding users what to do and what not to do, which shows its anxiety about the condition of the vehicles. Some people have witnessed Mobike bicycles parked on the street and being towed away by urban management. This cannot be entirely blamed on customers, because most people simply don't know where the legal place to return the bicycle is.

Some problems are caused by excessive innovation, such as the safety of using QR codes to pick up bikes. Fake QR codes can deceive users into giving away important information, and small advertisements all over the bikes are stubborn and difficult to deal with. Sometimes users will lock the bikes themselves. Mobike still lacks a complete and clear service system, a responsive customer service team, and a process for handling difficult and complicated problems.

8 Are all ways of playing a fight against human nature?

If we don’t criticize illegal parking, locking the car, and driving out of the operating range, then there are still some pain points behind it, such as users’ concerns about not having a car to take when they need to run errands, go shopping, or get off work, and their resistance to the 1 yuan per half hour charge with no daily cap.

Mobike's response was to pretend to be accommodating on the one hand, while constantly introducing rules that went against user habits, such as charging an additional 100 yuan operating fee in Beijing. It went too far in fighting against human nature and did less in product innovation.

Is the nature of short-distance travel in cities commercial or public welfare?

This unanswered question is a question that all shared bicycle business models, including Mobike, OFO, and 700bike, must answer.

According to calculations by relevant departments, the life cycle of a public bicycle is 5-6 years, and the vehicle costs more than 900 yuan. Add to that the system, the charging pile, and subsequent maintenance and repairs, and the cost of a vehicle is about 7,000 yuan.

Judging from the configuration of Mobike's vehicles, the founding team is betting on a model of four years of maintenance-free and scrapped once. Although the cost of a bicycle has been reduced from the original 6,000 yuan to around 3,000 yuan, and charged at 1 yuan per half hour, the period to recover the cost is too long. What's more, it is impossible for the vehicle to be fully rented 24 hours a day. In the cold north and mountainous cities like Chongqing, the vehicle utilization rate and riding experience will be greatly reduced.

Mobike’s real innovation is simply removing the parking poles.

Hangzhou, which ranks first in the world's urban public bicycle system as selected by USA Today, relies on auctioning booth (parking pile) advertisements to subsidize operations. After 39 rounds of bidding in February this year, the five-year advertising rights in the main urban area were sold at a high price of 220 million yuan.

In a semi-public welfare market (the free usage rate of 82,000 public bicycles in Hangzhou is as high as 96%), Mobike does provide more convenient services, but has not proved that it has differentiated profit margins.

Therefore, whether Mobike is a substitute or supplement for the city’s public bicycle system is questionable.

A feasible approach is to follow Uber's footsteps and use the scale of the platform to develop some derivative products and services to fill the redundant capacity outside of peak hours and ensure the stickiness and activity of the platform.

The experience of Mobike also proves that in an industry full of uncertainty, trying to make all processes and unsolvable problems online and in the background to avoid all possible hard work is an excessive innovation that disregards the inherent laws of the industry.

The minefield still exists, it's just been bypassed.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.