In June 22nd, less than 5 months ago, Lime launched operations in Paris. It was the first of many e-scooter landings across Europe. Bird followed suit a few months later, and the phenomen doesn’t seem to be stopping any time soon.
Wind Mobility, a Berlin-based e-scooters startup has raised $22 million in seed funding, aiming to compete with Bird and Lime (which are US-based, but have received substantial investment from Index, Accel, and Atomico).
It follows recent raises by Sweden’s VOI ($50 million Series A led by Balderton), Germany’s Tier (€25 million Series A led by Northzone), Taxify’s move with Bolt and Delivery Hero founder Lukasz Gadowski’s plans to enter the space with GoFlash.
Is the scooter market a zero-sum game?
At those insane valuations, venture capitalists are expecting a huge return, and those returns don’t come when seven players co-exist peacefully in one market.
Now, how do you assess the TAM of e-scooters? Sizing the market of a disruptor by sizing the market of the incumbent (whatever that might be) is inaccurate.
You could make the case that when a company significantly improves an offering, and creates new features, functions, experiences, price points, and even enable new use cases, it expands the market in the process.
As Bill Gurley said it: “The past can be a poor guide for the future if the future offering is materially different than the past.”
This take might look like something that would allow players to co-exist: since the market is growing, there will be enough room for everyone. In my Paris experience, Bird and Lime were functioning as a happy couple, offering the same service, at the same exact price.
Now, this might me a simplistic point of view (and I’d love your take on this), but this drives me to believe that it is, even though the market will expand as e-scooter companies get better, this will playout as a zero-sum game, in a similar fashion to the Uber-Lyft craze.
How will this happen?
To deliver the expected, one company will be forced come up with a new innovation, feature or use case to differentiate themselves, or lower prices enough to drive competitors out of the market so they can, eventually, reap the benefits of a new, expanding market by themselves.
Is this a viable strategy? How will cities react to the all out guerrilla war that might occur? Will Parisians enjoy an e-scooter graveyard next to La Madeleine.