Welcome to Scaled and Failed! My nameโs Amil Naik and Iโm an aspiring VC and founder at The University of Texas at Austin currently working at Decibel. I write about startups that scaled and startups that failed to draw insights about the patterns of startup failure and how to avoid them. Everything is clearer in hindsight, so itโs worth looking back.
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TLDR
Todayโs Topic ๐: Microtransit
Scaled ๐: Via; Leveraged direct consumer service in small markets to improve infrastructure technology it could partner with cities to use as the backbone of public transportation services.ย ย ย ย ย
Failed ๐: Bridj; Developed dynamic pop-up bus routing technology and piloted with Kansas City and Ford, though a major financing deal with an automotive company fell through and the partnership had poor rider numbers. Has been revived in Australia since its initial shut down.
Lessons Learned ๐ก: On-demand availability and reliability are central to the value of microtransit and are critical to the product offering even early on.
Todayโs Topic: Microtransit ๐
It is painfully obvious to anyone who has ever needed to commute that public transportation infrastructure is not equal across cities in the United States and is incomparable to the stellar networks in several other nations (when will we get bullet trains like Japan?). The monotony of long bus, train, and car travel to work has been alleviated for some who have gained the ability to work remotely indefinitely due to the pandemic, but for many, it remains a real pain. Many different kinds of startups have risen to solve specific problems in the space: ridesharing companies like Uber and Lyft, Blade laying the foundations of urban taxis, and electric bike and scooter companies helping with the last-mile of movement in urban environments. Despite all of these solutions, the core of public transit remains tough to access given the infrequency of stations and difficulty getting to them in the first place. Luckily, solutions specifically for enabling access to public transit infrastructure and better urban mobility have sprung up. Enter microtransit!
Via is a startup that that started with the provision of on-demand microtransit shuttle services in cities before leveraging that experience to create microtransit infrastructure technology it partners with cities to deploy. Bridj had a similar mission in helping alleviate strained public transit with on-demand microtransit routing. Unfortunately, the company folded in a few years after a funding deal with an automotive company fell through. What separated these two startups? Letโs dive in.
Scale: Via ๐
Via was founded in 2012, launching in Manhattan in 2013 when Uber and ridesharing as a whole were more novel and UberPool had yet to be unveiled. Private cars were expensive and didnโt solve congestion, and city buses left gaps in transport that Via hoped to fill using on-demand shuttles that pooled people traveling in the same general direction together. CEO and co-founder Daniel Ramot was inspired to build Via by the โSherutโ transport service he saw often in his home country of Israel. Via operated by directing users to nearby areas for pickup and dropping them off reasonably close to their destinations with routing determined by an algorithm. Passengers would flow in and out with the algorithm adjusting routing so nobody was ever being driven out of their way to accommodate other riders. It was a neat idea to serve a market that both the city and ridesharing services at the time were underserving, and flat pricing kept it affordable for the average person though it wasnโt available at all hours of the day and night.
Via stuck to New York in its early days, focusing on developing its software platform and gathering data with its consumer service. The potential of leveraging Viaโs technology for city partnerships was understood back then, but the founders couldnโt get any cities to bite with such a new product that hadnโt seen plenty of testing with consumers. With that goal in the mind for the future, Via set about building a robust foundation and iterating on its algorithm.
A Series A funding came in 2014, followed by a Series B in early 2015 as plans for moving into new markets were coming together. Performance in Manhattan had proven fruitful, with 500 drivers, 300,000 shared rides, and 40,000 different users on the platform. Chicago and Washington D.C. were next up on the target list. By the end of 2013, Via was tackling Chicago and engaged in a pilot project with Mercedes-Benz to offer service in a part of Orange County using Mercedes-Benz passenger vans. Not D.C like it had planned for., but Daimlerโs interest would bode well for Viaโs growth going forward.
2016 saw Viaโs Series C and further steps towards becoming a โpublic transit systemโ rather than just an affordable rideshare company between private cars and city buses. Daily rides crossed 30,000, nearly doubling from the start of the year to July. Washington D.C. joined the roster of cities Via was operating its consumer service in as well. The next year saw the vision of city partnerships fulfilled, with a pilot secured with the city of Austin, Texas (Hook โEm!) to test Viaโs software as the backbone of one of the cityโs services. Though it was offered for free, the proof of concept was the successful case study Via needed to hit the accelerator. Arlington, Texas and West Sacramento, California were next up in partnerships before the end of the year (Arlington didnโt have other public transit options either; talk about all in!). Things were going well already, but 2017 had more big news in store for Via.
The startup raised a $250M financing led by Daimler to begin its push into Europe. Striking deals with two European mass-transit companies to license its operating system, Via would be in London and other cities by the end of the year. 2018 and 2019 continued the pattern of global expansion; Singapore, Germany, New Zealand, Brazil Australia, and more cities in the US were all getting Via service in one form or another. A company based in Tokyo also tapped Via to provide service to its employees in a new type of partnership. In total, Via was operating in 50 different deployments in 15 countries in the early months of 2019. Many of the city pilots Via was running were now converting to larger launches like in Sacramento in early 2020. Things were looking bright until the pandemic began hammering the public transportation sector.
Just kidding; Via did well even at the onset of restrictions and drastic drops in transportation use. Its funding round of $400M in March 2020 valued the company at over $2B even with drops in ridership as it closed its consumer services in many cities to combat infections. Viaโs software helped many cities to adapt their solutions to the effects of the pandemic, such as Berlinโs effort to provide free travel for healthcare workers. 70 cities, 20 countries, over 70M rides, and even trials with autonomous vehicles had been achieved by this point, and Covid wasnโt going to slow things down.
2021 has been a great year for Via too. In March, the startup acquired a mapping software company called Remix to boost its offering to customers. At this point, Via was running in over 200 cities in 24 countries; growth was still going strong! Plans for an IPO were revealed over this summer, and Via is working with Goldman Sachs right now to go public. This article from 2018 asks when there would be a microtransit success story; well here it is.
Fail: Bridj ๐
Bridj launched in 2014 in Boston, targeting the same niche between current public transit and private rideshare services. ย The goal was to use many different streams of data from census records to Facebook check-ins to create dynamic transportation routes for a faster, luxury bus service for users:
โFrom a user point of view, customers sign up, identify their origin and destination points, and then Bridj tells them where to go to meet one of its minibuses. Rather than use the same static routes as your usual city bus routes, Bridj dynamically designs routes that aggregate commuter pickups where demand is highest.โ
The company raised $4M and saw early success with faster pickups, commutes, and many sold-out routes during its beta testing. Capital would be used to deploy more routes as the company grew in Boston and develop an app (released early in 2015) rather than stick to its original website platform. With time, Bridj hoped to move towards a service like Viaโs:
The service is still in the early phases. But if thereโs enough demand from commuters, Bridj hopes to eventually build a kind of alternative transit service that could alter its routes, and even its pickup and dropoff locations, in response to real-time demand from its riders.
Evening service was soon rolled out in addition to its existing morning commute routes, and Bridj began serving Washington D.C. early in 2015. Bridjโs big partnership was established with Kansas Cityโs public transit agency along with Ford in 2016; few people were currently using the public transit system, and the year-long pilot would help Bridj determine if it could fill existing gaps and get more people on existing bus and streetcar routes. The city would set fare prices and Ford would locally build the vehicles for the pilot. Late-night service was also on the table for Boston; growth in the startupโs hometown was still going strong.
Things fell apart early in 2017 as the founder announced the company would be shutting down. Bridj had been working on a deal with a large automotive company for funding, but the exclusive deal collapsed, leaving Bridj with no options. The pilot in Kansas City didnโt have promising results: around 1,500 rides with many users only taking the first 10 free rides provided. While researchers and public transit officials still found it useful to learn about consumer demands for a transportation system, it wasnโt a winner for Bridj. Without a clear path to get the funding it needed to scale and push forward, Bridj winded down.
While that iteration of Bridj ended up shutting down, only a few months later the company was revived an ocean away in the Land Down Under. An Australian transport agency acquired Bridjโs assets and relaunched the company with several other offerings related to supporting transportation infrastructure rather than being the service provider. Right now, new-Bridj is operating in a few cities in Australia and Singapore. Iโve never gotten the chance to cover a resurrected company, but itโs great to see more solutions that help keep more cars off the road still up and running.
Lessons Learned ๐ก
People like to call microtransit โUber for busesโ but I think this space is one that doesnโt truly deserve that treatment; thereโs really an underserved market here and real problems that can be solved in a scalable way. Via and Bridj had different approaches for โbridging the gapโ between people and public transportation, and Viaโs was a more differentiated offering than regular bus routes and much closer to the convenience of the Ubers and Lyfts. Bridj aspired to aim for the more dynamic, on-demand nature of Via but didnโt launch like that; Via was doing that in its early days. Perhaps their algorithm wasnโt as refined and there would be a lot of work to do, but their microtransit solution was certainly far more than just shifting bus routes like Bridj launched with. Itโs good to launch with a less refined product, but an MVP demands a viable solution some people will adopt without refinement. If the value proposition is a part of a plan for future refinement, the product isnโt viable yet.
On-demand is a huge part of that viability in microtransit and what makes a clear difference between regular bus routes and a unique solution. The lack of convenience with pop-up bus routes that change week to week would personally push me away from using a service rather than draw me in. Big data can inform the routes created, but the user experience remains just a nicer, more expensive, and perhaps somewhat better-routed bus that I canโt rely on consistently regardless of the great back-end informing the routing. With on-demand solutions and true public transit, I never worry about if Iโll get to where Iโm going. This convenience and peace of mind are lost if I use something like Bridj.
Bridj also saw a lot of success in Boston compared to Kansas City; what happened there? The sprawl of Kansas city and less robust transportation infrastructure seemed to make a good potential fit for the startup to cover the last mile of movement. However, the dynamics that create this also have negative effects. With a smaller, less dense population comes more space; more space makes it easier to drive a car everywhere and park. Public transit numbers are already lower because fewer people need it in a place where they can drive more easily compared to dense metropolitan areas. The transit system has been built with this assumption. People used to driving everywhere arenโt likely to be the ones hopping onboard a startupโs dynamic bus pilot, so the market is already smaller even ignoring a smaller population to begin with. Public transit is slow to adapt, but improvements would be made if Kansas City started looking more like an east coast city quickly; a company would be hard-pressed to change the behavior of people using various modes of transport that already work well enough for them.
What did Via do great? While on-demand may seem less accessible to less wealthy consumers, the software platform it powers city transports systems with was a far better solution for accessibility compared to operating directly to consumers in every city, even if you have municipal backing for the service. Cities have a lot of data, a lot of existing infrastructure, and are likely already serving some people well; theyโve got a foundation, and empowering them is easier than building from scratch. Viaโs eyes were on the goal of city partnerships from early on, and direct consumer service was just a step towards that. Cities and public transit systems donโt need to be working towards hypergrowth and profitability like a private company. Equipping them to provide on-demand dynamic shuttling does more for accessibility; they can set affordable fares and subsidize their services as they see fit. This is a great way to align incentives with concerns about maintaining the core mission of public transit: good transportation for everyone, regardless of income. Bridjโs pilot in Kansas city was mostly used by a younger, wealthier crowd; that isnโt representative of the people who need public transit the most.
Many of the post-mortem news reports cite poor marketing among the right audience and routing that wasnโt serving that audience as evidence that on-demand isnโt a good thing for public transit. I argue that it was just this form of public-private partnership for microtransit that didnโt work out; there are plenty of ideas and possibilities that can actually help people. Itโs also unfair to say Bridj was a total failure, especially given its return in Australia. The data helped Kansas City launch an on-demand paratransit service for those with disabilities, and Bridj did a lot to advance conversations around urban mobility and microtransit. The learnings from their experimentation were valuable to the public and local governments looking to innovate in transit. If every failed startup left us with things of similar importance, weโd probably be living in a utopian society already.
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Thanks for reading! If anyone is based in the Bay Area and would like to grab a coffee/boba/beverage in October, let me know. Iโll be returning there soon! If you found this interesting, consider sharing it with friends and subscribing if you havenโt already!
Cheers,
Amil