Venture: Lime and Bird Miss Out On San Francisco Scooter Permit

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Over the past decade, ridesharing has changed the way millions of people worldwide get from one destination to another. As an industry, it has helped millions of people worldwide gain employment at companies like Uber and Lyft, as well as offering services to their subscribed users on all six continents. However, ridesharing companies have also faced criticisms from many groups include taxicab companies that have significant income to the ridesharing industry, negative reactions to the test of self-driving cars, and being faced with an abundance of lawsuits and bans in certain cities because of violations that the ridesharing companies had accrued.

One of these bans was implanted by the city government of San Francisco and it’s a ban on numerous ridesharing companies, namely Uber, Lime, Lyft and Bird, from receiving scooter permits. The main scooter companies that were found to have the most faults were Lime, Bird, and Spin as hundreds of their electric scooters were found to be scattered throughout San Francisco back in March amidst complaints from pedestrians that they had to adjust their path since the scooters were left freely on the sidewalks.

The situation with the electric scooters being parked freely on San Francisco sidewalks had led to City Attorney Dennis Herrera to issue a cease-and-desist letter to the aforementioned scooter companies to design plans on how the scooters should be parked in public areas and not risk the possibility of being impounded. Herrera also mentioned in his letter that people who operate on the scooters should have a driver’s license, a bike helmet, and should only drive off of sidewalks.

However, not all scooter rental businesses are banned as SFMTA, San Francisco Municipal Transportation Authority, had given authorization to two scooter startup, Scoot and Skip, to possess a one-year rental permit for them to place their scooters on the street. Scoot and Skip are allowed a maximum of 625 scooters in the first six months and both companies were selected among the twelve companies who submitted a combined total of over 800 pages.

As mentioned prior, the main ridesharing companies weren’t given permits to place the scooters in San Francisco due to residential complaints about how they were placed. As the SFMTA received nearly 1,900 complaints about scooters, ranging from obstructing pedestrian walk paths to riders not using scooters while riding on them, the companies were also accused of not notifying San Francisco’s City Hall that they were releasing the scooters in a large-scale capacity.

Back in May, the SFMTA had proposed a two-year permitting test program that would limit San Francisco to five e-scooter permits, which means no more than 2,500 e-scooters at the same time. SFMTA’s proposal listed a set of guidelines for e-scooter companies to adhere to such as only operating in service areas they submit for approval and pay a maintenance fund of $10,000 to cover public property damage and improperly parked e-scooters.

Scoot and Skip being given the approval to place their scooters on San Francisco streets through a one-year limited pilot program gives the ridesharing industry a second chance to respect the city’s environment and the rights of pedestrians who will share their walk paths with electric scooters again. The two startups were chosen by the SFMTA because they had unveiled strong safety and community outreach proposals, which are enhanced by Skip proposing a community advisory board and Scoot’s relationship with SFMTA through its shared moped network.

Executives from the main ridesharing companies, Uber and Lyft, had expressed concerns that letting the program set a two-company limit cannot give the public more options to choose, regardless of the complaints they had about illegally parked e-scooters in April. According to USA Today, Uber spokeswoman, Kaitlin Durkosh, stated that the program “unnecessarily limit mobility options” and they would have to follow up with SFMTA to share their concerns while Lyft’s bike and scooter lead, Caroline Samponaro, said that she’s still hopeful that there will be Lyft scooters offered in San Francisco one day.

The battle between the ridesharing industry, particularly those that have created electric-scooter subsidiaries, and city residents were escalated by the placement of the scooters in March and was seen as an example of the growing gap between the tech companies and the public. Although the e-scooters were seen by corporate leaders as a transportation method that would reduce air pollution, many citizens see the scooters as another way for tech companies to treat San Francisco like “a petri dish”, something that they can experiment or play around without these companies realizing that they are disrupting local businesses.

Venture firms have also contributed to the electric scooter trend with firms like Sequoia Capital having led Bird’s Series A round, with assistance by Accel and other investors, by investing $300 million in Bird. Quartz, however, had reported that the $300 million that Bird raised would lead to Bird having a $2 billion valuation, especially since it already became the fastest startup to reach a $1 billion valuation after it raised a $150 million Sequoia Capital-led Series C funding.

Uber’s venture into the electric scooter scene had taken shape after it acquired Jump Bikes for $250 million back in April, a company that had already invested $24 million in venture funding. Before the acquisition, Uber had partnered up with Jump Bikes in February of the same year in which Uber gave its San Francisco-based subscribers an opportunity to rent a Jump Bikes-branded electric bicycle through the Uber app, though they still have to pre-register for the program first.

Giving Scoot and Skip the permits for the one-year pilot program gives the electric scooter industry a lifeline in the city given the fact that Lime and Bird had not followed San Francisco’s street regulations by placing their e-scooters in various areas of the city and allowing riders to leave them anywhere after they’re done. Since both Scoot and Skip are two emerging startups, the electric scooter industry will be given a chance to prove to community residents that these companies are doing their best to ensure that the scooters are being placed in areas that won’t interfere with the residents’ businesses and daily lives.