Editor’s note: This op-ed was contributed by Tay Choon Chong, Managing partner of Vertex Ventures. Vertex Ventures China invests in high-growth internet and technology start-ups across mainland China and provides funding support and value-add services to portfolio companies in their growth stage.
With Mobike launching in Singapore, it’s first market outside of China, we thought we’d take a look at how we at Vertex Ventures China ended up embarking on this bicycle ride.
In 2014, we had our annual Vertex network conference. It’s our change for partners, associates, and teams from all of our five funds get together to share updates, methodologies, and insights from across the world. That year, it was in California, the golden state. And as most know, who’ve pilgrimaged to the holiest site of the tech world, the Bay Area is a beautiful place. Despite being the tech capital of the world, where cement, bits, and technocracy supposedly rule, San Francisco and the Silicon Valley stretch across endless green.
Since it was our first time there, we thought we’d take a bike ride from San Francisco to Sausalito, we’d heard recommendations about its wine country, and figured what more romantic or scenic a way than to go by bike. Buses, cars, and trains were either too confined or too cramped or just nonexistent. Bikes were the best option. So we jumped over to the nearest Citibike stand and grabbed 10 bikes for our 10 team members. Our Beijing and Shanghai natives, who grew up in China’s era of bicycle empire, were titillated. After we got to Sausalito, we were pretty exhausted.
The problem for us was not only was the pricing quite exorbitant, but we also had to return the bikes back to the exact location that we got it, or at least, to find another specific rack. We were quite tired, but we still had to bike it back to a rack, instead of discarding it where we were.
This made no sense. How was it that a bike excursion could cost so much and be so inconvenient? That’s when we started thinking about models that could solve this problem: making bike rides cheaper and more immediately available to travelers and residents. What we really wanted was to pick up a bike wherever we were and drop it off at our destination.
When we returned to China after this trip, we hunted for a bike sharing site. And we were lucky enough to stumble upon Mobike. At the time, Mobike was still nascent. It didn’t have much for numbers. It had just 300 to 400 bikes deployed across a campus in Shanghai. They were fundraising just a little. We saw that this opportunity was large.
Besides the obvious pricing discrepancies, we saw that Mobike had a potential for China. After all, it was just a few decades ago that you walked the streets of China and saw bikes as far as the eye could see. But as China progressed, the cost of maintaining and owning a bike, next to the opportunity cost of owning a car and commuting in China’s burgeoning new industrializing working class, reached an impasse. Public transit, cars, and motorbikes slowly killed the need and wont of having a bike.
And don’t forget, as studies have begun to show, even with self-driving cars and car booking services, they’re actually bringing more congestion onto the streets. For a country approaching 1.5 billion, this is an increasing problem. The prospect of traffic jams is only increasing. Shared bikes come into this space as potentially adding another option that limits congestion as well as being good for the environment (not to mention good exercise for the biker). Bikes can actually be more convenient than a car.
Mobike tackles these problems with a holistic solution. Since it uses a QR code, and your account linked to your mobile, you can pay with either Alipay or WeChat Pay (or as is the case with Singapore, you can pay with credit card). With China’s high penetration of mobiles and online payment methods, virtually everyone can use a Mobike. You can also return the bikes to any location, and usually find bikes at almost any location. This means that it unlocks bike usage for a whole new middle ground. If you need to travel for more than 5 kilometers, public transit, taxi, or the Didi car booking app make sense. But below that, Mobike carries you to your destination.
Since Mobike’s explosive growth, we’ve seen unique use cases for the platform that convince us that this is still a long and exciting journey. In the wee hours of the morning, around 2 to 3 am, we see a spike in usage for Mobike, this coincides with the time that public transport (trains and buses turn off). We’ve also seen a large amount of usage for factory workers, who find Mobike to be an affordable way to get home and around, in place of owning their own car or motorbike. We’ve even seen some users go on “Mobike dates”, renting Mobikes for a romantic date around the city. It’s these use cases that show us that having a bike sharing platform unlocks new activities for people that were before not possible. Users are making Mobike their own.
No doubt, as Mobike proceeds to new cities and countries, we again see unique usage of bikes we didn’t anticipate. And it’s heartwarming to know that the solution is fulfilling a social and environmental impact wherever it goes. It’s this unique proposition that makes Mobike such an exciting opportunity for the infrastructure of cities. As Mobike moves outside of its comfort zone of China, it’s keen to partner with cities throughout the world to unlock the potential of their moving people.
The innovation riding out from China
For the past few decades, we’ve seen various shifts in the perception of Chinese innovation. As China rose as a manufacturing juggernaut, it came to be seen as the place where cheap plastic products are manufactured for the world. But as China watchers know, China has been able to leverage its massive talent pool, diaspora, and Chinese speaking neighbors to move up the chain of the industrial ecosystem. In the past decade, China has become the backbone of the great innovators of the world. And in the age of the internet, mobile, and more, China has again shifted its image, producing the likes of Baidu, Alibaba, and Tencent. And although these companies, special as they are, might resemble counterparts in the Valley and elsewhere, are innovators in their own right. Indeed, there’s considerable literature that the Valley is watching China for new ideas now.
In light of this, I believe we are at the cusp of a new wave of innovation where altogether new business models, companies, and strategies will find their starting point in China. The Chinese consumer is waking up and its companies are sometimes waking up with them or nudging them awake. But the world is still daunting, despite local success with its advantages of a big market and a walled garden, Chinese companies are finding a new humility as they push out to the world. Mobike is one of these companies. With only a few years of operation under its belt, it’s pushing into Singapore. Young Chinese companies want to be global sooner. And at Vertex, we’re happy to be along for that ride.
Edited by Anh-Minh Do.
TechNode does not necessarily endorse the commentary made in this opinion piece.