Biz Students See Ripe Market for Bike-Share in NYC
With bike-share systems launching in three major American cities this year, the question naturally arises: Does New York have an appetite for bike-sharing?
Patricia Bayley and Martin Mazza say yes. Students at Barcelona’s IESE, one of Europe’s top business schools, Bayley and Mazza intend to open a bike-sharing company in New York City.
Along with a third student, Adrian Lui, Bayley and Mazza were recently selected as finalists in the "NYC Next Idea" business model competition. Sponsored by the NYC Economic Development Corporation, the competition invited graduate students from around the world to compete for seed money and free space in one of the city’s business incubators.
Though their team didn’t win the competition, the feedback they received encouraged Bayley and Mazza to pursue their plan. If they can secure venture capital for the project, they’re ready to start working on it full-time come graduation day.
At this point, they aren’t ready to tip their hand about many details, such as where bike stations would be located. They do intend to use a subscription model fairly similar to those in other cities, and their submission called for eventually installing 40,000 bikes across all five boroughs, an ambition they will scale back. "One of the critiques from the judges was to start smaller and see how the consumer reacts," said Bayley.
Both Mazza and Bayley are veteran New York City cyclists. While studying in Barcelona, they’ve had ample time to observe Bicing, Barcelona’s bike-share program. They think they can do better. "We can learn from their mistakes," said Mazza. Added Bayley, "One of the big problems here in Barcelona is that the city is on a hill. People are renting them at the top and dumping them at the bottom." Inspired by both the success and the shortcomings of Bicing, they see a market in American cities, especially in flat, tightly-knit New York.
Paul DeMaio, the consultant who writes the Bike-Sharing Blog, thinks that Bayley and Mazza’s
idea has potential. "For-profit bike-sharing services exist in Europe," he said, "so the U.S. could be ripe for entrepreneurs to introduce
this model of bike-sharing here." DeMaio noted that even
private-sector bike-sharing firms have to work with local governments,
particularly on station placement.
Whether Bayley and Mazza’s idea takes off or sputters out, bike-share models are proliferating. SmartBike, D.C.’s first-in-the-nation bike-share program, uses an advertiser-based model like in Barcelona or Paris, giving Clear Channel responsibility for running the system in exchange for rights to outdoor ad space. As the city considers expanding its bike-share network, the deal has proven problematic.
Other American cities are experimenting with different models. When Boston’s 1,000-bike system opens this summer, it will use the same company that runs Montreal’s Bixi system, which relies on high-quality service for revenue, not advertising. Minneapolis and Denver, also planning 2010 launches, will have systems run by independent non-profits in cooperation with city governments, without depending on outdoor advertising firms.
Bayley and Mazza see a privately run bike-share program as one more response to the shortcomings of relying on companies like Clear Channel and JCDecaux to operate bike-share services. "Their core business is advertising," said Mazza. "Ours would be bikes." An extensive study released by the Department of City Planning last year suggests that a system with as many as 10,500 bikes can be built without relying on advertising revenue, while recommending that New York partner with an advertiser as the system expands in order to bring bike-sharing to less dense locations.
Among the many unanswered questions for Bayley and Mazza is how their business model would fit with the city’s bike-sharing plans. NYCDOT put out a Request for Expressions of Interest for bike-share operators in 2008, which was followed up by the City Planning bike-sharing study. "You can smell something is going to happen," said Bayley.
Bayley and Mazza are still in the earliest stages of planning, so there are a lot of steps between their ambitions and their first cyclist. But their willingness to throw themselves into this venture sends one more signal that New York City is ready for bike-sharing.