Bird
From Invertopedia, the encyclopedia of how things fail
Bird rented dockless electric scooters by the minute in hundreds of cities[4]. It reached a billion-dollar valuation faster than any company before it[3], went public through a SPAC in November 2021 at about $2.3 billion[2][4], and filed for Chapter 11 on December 20, 2023, listing assets and liabilities between $100 million and $500 million[6]. Its lenders bought the business for about $145 million[7].
Contents
The bet
Cheap scooters, dropped on sidewalks and unlocked with a phone, would make money ride by ride and spread from city to city as fast as an app. Bird's Series C pitch projected better margins once charger fraud, mechanic costs and card fees were brought down, and at those margins each scooter would take about three months to pay back its cost, by The Information's reckoning[3].
Investors agreed. The Series C raised $300 million and doubled Bird's valuation from $1 billion to $2 billion, and the company was later talking about $4 billion to $5 billion[3].
What happened
| 2017 | Travis VanderZanden, a former Lyft and Uber executive, founds Bird in Santa Monica. It launches in city after city through 2017 and 2018.[1][2] |
|---|---|
| 2018 | A $300 million Series C values Bird at $2 billion. It passes 10 million rides less than two years after it was founded.[3][1] |
| Early 2019 | Sources tell The Drive that Bird's scooters last fewer than 30 days on average, and that Bird told investors damage, theft and vandalism losses were "underestimated by a serious multiple."[3] |
| Jul 2019 | Bird says its first scooters lasted only a few months, and that its newer model averages 10 months.[9] |
| 2020 | Bird lays off 400 people. It lost $387.5 million in 2019 and $208.2 million in 2020.[5] |
| Nov 5, 2021 | Bird starts trading on the NYSE as BRDS after merging with a SPAC, valued at about $2.3 billion.[4] |
| 2022 | The stock craters within a year. Bird lays off nearly a quarter of its staff, and VanderZanden steps away.[2] |
| 2023 | Bird is delisted from the New York Stock Exchange because its value has fallen too low.[2][1] |
| Dec 20, 2023 | Bird files for Chapter 11 in Miami, with a plan to sell itself to its existing lenders.[6][2] |
| Apr 2024 | Bird leaves bankruptcy as part of Third Lane Mobility, formed by its lenders, after a sale of about $145 million.[7][8] |
The kill shot
Each scooter had to earn back its cost before it broke, got stolen or wore out. Bird's pitch implied about three months, and the early fleet often didn't last that long.
The whole model rested on the life of one vehicle. At the margins in Bird's own pitch, the payback worked out to about three months, while it was spending 14 percent of gross revenue, about 51 cents a ride, on repairs[3]. A Boston Consulting Group report in 2019 put the average e-scooter's life at about three months, and a BCG principal said "the fact that the scooter doesn't last long enough makes them unprofitable"[9].
Bird built sturdier scooters, but by then it had raised and spent on the assumption of fast, cheap growth[3][9]. It still lost $208.2 million in 2020[5], and its target for turning a profit was 2023[5], the year it went bankrupt[6].
Red flags ignored
- Payback longer than the product's life. A three-month payback against scooters that one source said lasted under 30 days.[3]
- Costs nobody had priced in. Vandalism, theft, charger hoarding and city regulation all cost more than the pitch assumed, The Drive reported in 2019.[3]
- Growth before unit economics. Bird lost hundreds of millions of dollars a year while expanding to hundreds of cities.[4][5]
- A SPAC exit at peak hype. Shares were flat on day one and cratered within a year.[4][2]
The cost
Bird lost $387.5 million in 2019 and $208.2 million in 2020[5]. The SPAC deal gave it $414 million in cash and credit before fees[4], and two years later it was in Chapter 11 with assets and liabilities each listed between $100 million and $500 million[6].
Public shareholders who bought into a company valued at about $2.3 billion[2][4] were left with a stock the NYSE delisted[2]. A $25 million loan from Apollo and second-lien lenders kept the scooters running through the case[2], and the lenders' own vehicle, Third Lane Mobility, bought the assets for about $145 million[7].
The inversion
Know how long your asset lasts before you decide how fast to grow. If each unit has to earn back its cost, prove it survives the street for longer than the payback period first.
What survived
The scooters and the name. Bird and Spin, which Bird had bought in September 2023, now run under Third Lane Mobility, a private company that says it serves 350 cities in North America, Europe and the Middle East[8]. Bird Canada and Bird Europe were never part of the filing[2].
References
- ^ “Bird Global”. Wikipedia. Founding in Santa Monica in September 2017 by VanderZanden, the June 2018 Series C, the NYSE delisting in September 2023 (cross-check).
- ^ “Electric scooter rental company Bird files for bankruptcy two years after going public”. Engadget, December 20, 2023. The Chapter 11 filing, the 2021 SPAC at an implied $2.3 billion, the stock cratering, VanderZanden stepping away, the 2022 layoffs, the NYSE delisting, the $25 million loan, Bird Canada and Europe excluded, launches in 2017-18.
- ^ “Investors Cool As Bird's Shared Scooters Hit Speedbumps”. The Drive (Edward Niedermeyer), early 2019, updated July 24, 2019. Fastest to a billion-dollar valuation, the Series C at $2 billion, 10 million rides, the three-month payback, 14 percent repair costs, sources on scooter life under 30 days and underestimated damage, theft and vandalism.
- ^ “Bird's SPAC Deal is Done: First Day on the NYSE Ends Virtually Flat”. dot.LA, November 5, 2021. First trading day as BRDS, the $2.3 billion valuation, $414 million in cash and credit, more than 350 cities.
- ^ “The Station: Exits at Waymo and Bird's SPAC reveals its scooter-nomics”. TechCrunch, May 17, 2021. Losses of $387.5 million (2019) and $208.2 million (2020), 400 layoffs in 2020, the 2023 profitability target.
- ^ “Scooter Company Bird Global Files Bankruptcy to Sell Itself”. Bloomberg Law, December 20, 2023. The Chapter 11 filing in Miami, assets and liabilities of $100 million to $500 million, the plan to sell itself.
- ^ “Cassel Salpeter & Co. Facilitates Sale of Bird Global Inc. Assets to Third Lane Mobility Inc. For $145 Million”. Cassel Salpeter & Co. announcement, April 11, 2024. The sale of about $145 million to Third Lane Mobility, a consortium of Bird's lenders.
- ^ “Bird Successfully Emerges from Bankruptcy as a Stronger Company and Will Operate as the Global Anchor Brand of Newly Established Third Lane Mobility Inc.”. Bird press release (Business Wire), via Silicon UK, April 4, 2024. Emergence from Chapter 11 under Third Lane Mobility, the Spin purchase in September 2023, 350 cities.
- ^ “Reduce, reuse, rescoot? A look at e-scooters' long-term sustainability”. Waste Dive (Katie Pyzyk), July 17, 2019. Bird saying its first scooters lasted a few months and newer ones about 10, the BCG three-month estimate and quote.