If you haven’t heard about it…ISOTeam is joining the bike-sharing craze.
- ISOTeam jumps on bike-sharing bandwagon | The Edge Markets (read here)
My initial reaction seems to be that the move appears to be ‘de-worsification’. What has a firm specializing in the maintenance and upgrading of public housing estates got to do with bike-sharing?
My original reason as to why I invested in ISOTeam, is due to its boring and stable business (which is maintenance and upgrading of public housing estates). I hoped that the company can build upon its strength in providing a strong recurring income.
However, bike-sharing to me isn’t boring and stable. And I have no idea if such venture is profitable at all – I have no access to the balance sheets or income statements from the numerous bike sharing companies here or aboard.
Yes, these bike sharing start-up companies are a favorite among the many high net worth investors and venture capital firms. However, it doesn’t mean that they have a stable recurring income.
In fact, judging from what I have read in the forums, not many are for the move. The bike sharing system appears to be saturated (or abused) in Singapore. And I hope that the situation will not worsen to what happened in some cities in China. There is only so many empty ‘spaces’ here eg. clear pathways, bicycle stands, void decks….the bikes are starting to invade roads, vehicle parking lots, traffic islands, drains, etc.
- Virtual Docking Stations that taps on both GPS and geo station technology.
- Users have to return the bikes by parking them in designated areas which are 5m to 20m grid of geo stations to complete their journey or face paying a fine.
- Users can also unlock the bikes by tapping a prepaid contactless card such as an EZ-Link or NETS FlashPay card at the lock.
- The bikes are installed with alarms which sound a loud warning should there be attempts to vandalize or steal the bikes.
Basically, we can foresee what Singapore will become if bike sharing continues to ‘grow’ and go unregulated.
- Bikeshare cycles dumped en masse in China (read here)
- People are dumping shared bikes in horrible piles (read here)
The proliferation of dockless bike-sharing has resulted in widespread indiscriminate parking as well as theft and vandalism of the shared bicycles.
The government in China and Taipei are starting to grabble with the issues.
- China issues bike-sharing guidelines as complaints rise (read here)
- Taipei and New Taipei writing up rules for oBike (read here)
1. SG Bike (First 2 Points)
Which brings me to the first 2 points proposed by SG Bike, namely: Users have to return the bikes by parking them in designated areas which are 5m to 20m grid of geo stations to complete their journey or face paying a fine.
Conceptually, it appears to be a good solution. I did mention in my earlier post (See below), that the solution to indiscriminate parking seems to be imposing a fine. Well, after all, I reckon Singapore invented the ‘Fine’ culture.. just joking!
- oBike (Bike sharing, the good, the bad) (read here)
The question is who will impose the fine. The government (eg. LTA, Town Councils, Nparks, HDB….) or the bike sharing companies themselves.
For the latter, it is counter-intuitive. The more and higher the fine, the less number of potential users. It might only work if all bike sharing companies adhere to a standard set of ‘fine’ system. No point SG Bike imposing fines, while oBike, Mobike and ofo do not have such stringent system. People will just continue ‘dumping’ oBike, Mobike and ofo anywhere…. while ignoring SG Bike.
Both oBike and Mobike have rolled out carrot-and-stick, community policing schemes which award or deduct credits from users based on their behaviour, which may in turn affect how much they need to pay for the service. ofo has also taken to social media to warn users against abusing their bikes, saying that the firm “would not hesitate to report to (the) police or take legal actions” against such conduct.
But none ( oBike, Mobike and ofo) has used the word “Fine”.
And bike sharing (as much as venture capital investors love them), are actually a very capital intensive enterprise. Theoretically, the bike sharing companies need to maintain/repair the bikes, move the bikes to ‘popular locations’, retrieve impounded bikes, etc. Some wonder how these companies actually make any money (other than the first deposit amounts that users pay). So can they afford to ‘fine’ the users?
For each bike that is not utilized, is a bike that might be left in the open rusting away. The bike, after all, has a limited lifespan, and is subject to wear and tear (even if it is not used).
So basically, it is not something that a single bike sharing company (unless it is the only one in the city) can resolve. It might need a top down solution, with the government intervening in a big way.
2. SG Bike (3rd Point)
Pertaining to the 3rd point proposed by SG Bike, namely: Users can also unlock the bikes by tapping a prepaid contactless card such as an EZ-Link or NETS FlashPay card at the lock.
From a financial point of view, it seems like a good idea. With easier access, there will be more customers and with more customers, more income.
But wait….
In China, where children under 12 years old are banned from riding bicycles on public roads, bike-sharing companies are mulling over ways to prevent under-aged kids from using their bikes – after an 11-year-old rider in Shanghai was hit by a tourist bus and died.
- Chinese bike-share firm vows to stop child riders after death (read here)
- Ofo added to lawsuit in 11-year-old’s death (read here)
- Death of 11-Year-Old Boy Puts Shared-Bike Operators in Hot Seat (read here)
Quote from 3rd article above:
“Kids fool around on these yellow bikes all the time, picking up bikes people forgot to lock. It’s time Ofo upgraded its registration system instead of being obsessed with user numbers,” said another Weibo user, Lucky_gjy.
I don’t think an incident like the above mentioned has happened in Singapore, and I am not aware if 12 years old children here are banned from riding bicycles on public roads. However, why wait for such things to happen?
dents in Singapore below 21 years of age who are attending government or government-aided schools and pursuing full-time courses, are each given a school smart-card/ITE student concession card to use for travel on buses, the MRT and LRT (read here). Which I believe function like an EZ-Link card.
Even if a child who is less than 12 years old does not have a School Smartcard… it is also easy for him or her to get hold of a prepaid contact-less card. I don’t think there is any regulation banning any kid from buying one.
So that brings me to my question: What is stopping the kids who are 12 years old and below from riding a SG Bike (and getting into an accident) or abusing it?
- New Video of Boys Abusing An ofo Bike Could Have Killed Someone (read here)
Yes, I have seen kids riding obikes, mobike, and ofo (mainly) – without any adult supervision. However, I reckon it is harder for kids (who are 12 years old and below) to get hold of a Visa card/Mastercard and a smart phone so as to sign up and use the bikes.
3. SG Bike (4th point)
4th point proposed by SG Bike: The bikes are installed with alarms which sound a loud warning should there be attempts to vandalize or steal the bikes.
I think the above is a good move. Bikes, after all, can’t defend themselves. And judging by the numerous reports of abuse. It might help (though not eradicate the abuse).
- Bike-sharing firm ofo lodges police report over boy throwing bike down from Whampoa HDB block (read here)
In gist
With a paid up capital of SGD 1 million, and with ISOTeam holding a majority stake of 51%, ISOTeam’s investment isn’t much (yet).
However, being a listed company, there are pros and cons.
- Pros being having access to funding.
- Cons being under the scrutiny of the investors (who may be impatient for results).
If the venture proves to be unprofitable for a prolonged period of time, more investors may start questioning why funds are directed to such risky & unprofitable ventures.
A Pen Quotes 