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Biketown says users will get multiple chances to protect their jury-trial rights

Biketown says users will get multiple chances to protect their jury-trial rights

New public plaza on SW 3rd and Ankeny-2.jpg

The new Biketown station at SW 3rd and Oak.
(Photo: J.Maus/BikePortland)

Anyone who acts to protect themselves from a clause buried in the Biketown contract that prompts users to waive their jury-trial rights is protecting themselves permanently, the bike share operator says.

At issue is a “binding arbitration” clause in section 15 of the long rental agreement to which people must agree in order to use the public system. Such clauses, which are designed to prevent class actions and other customer lawsuits, are increasingly common for credit card companies and other corporations but are rare among public bike share systems.

But as we reported Thursday, the contract includes a way for Biketown users to protect themselves: you have to send an email with a particular subject line to a particular email address mentioned in the contract.

In a pair of emails to BikePortland Thursday and Friday, a spokeswoman for Biketown’s New York-based operator Motivate offered two clarifications:

1) Permanent protection: If someone uses Biketown — whether for a single trip, a single day, or as part of an annual membership — and then sends the necessary email within 30 days, they’ll be protecting their jury rights for anything that might go wrong on all future rides. “If an individual opts out once we will honor that individual’s opt-out for future pass purchases,” Motivate Director of Communications & External Affairs Dani Simons wrote.

2) Multiple chances to act: If someone fails to send the required email within 30 days of their first use and then uses the system again, they get another 30-day chance to send the email and permanently protect their rights. “If someone lapses and then rejoins they will have an additional 30 days to decide if they want to opt-out,” Simons wrote.

It’s worth noting that though these promises come from a Motivate executive, they’re not actually written into the contract that Biketown continues to force users to agree to. Motivate might someday argue that Simons’ commitments in the media now aren’t legally binding.







Here’s the section in question:

You have the right to opt out and not be bound by the arbitration and class action waiver provisions set forth above by sending written notice of Your decision to opt out to legal@motivateco.com with the subject line, “ARBITRATION AND CLASS ACTION WAIVER OPT-OUT.” The notice must be sent within thirty (30) days of Your first use of the Services, otherwise you shall be bound to arbitrate disputes in accordance with the terms of those paragraphs.

Mark Ginsberg, a Portland plaintiff’s attorney who specializes in biking issues, noticed the clause on Wednesday. After our coverage Thursday morning, Oregonlive and Willamette Week have followed up. Ginsberg said Friday that KATU-TV is running a piece of its own Friday evening.

On Thursday we did a scan of various public bike-sharing user agreements around the United States and found that the systems in New York City, Chicago, Washington D.C., Boston, Philadelphia, the San Francisco Bay and Los Angeles all lack binding arbitration clauses. The only ones we could find that do have them are in Portland, Seattle and Phoenix.

— Michael Andersen, (503) 333-7824 – michael@bikeportland.org

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The post Biketown says users will get multiple chances to protect their jury-trial rights appeared first on BikePortland.org.

Biketown contract forces users to waive their legal rights – unless they act quickly

Biketown contract forces users to waive their legal rights – unless they act quickly

Biketown users on the Hawthorne Bridge yesterday.(Photos: J. Maus/BikePortland)

Biketown users on the Hawthorne Bridge yesterday.
(Photos: J. Maus/BikePortland)

Buried in the “miscellaneous” section of the user agreement for Portland’s new bike-sharing system is a notice that Biketown users are waiving their rights to a jury trial.

Unless, that is, they sent a one-line email to the company that operates Biketown within 30 days of first using the system. If they don’t, a prominent Portland bike lawyer says, their chances of winning any future legal claim against Biketown are slim.

The requirement was spotted on Wednesday, one day after the system launched, by Mark Ginsberg, a Portland attorney who specializes in “bicycle legal needs.” He shared his discovery in a post to friends on his Facebook page:

hey Portland friends who got BikeTown memberships, you read the contract right?
In Section 15, they force you into arbitration, unless you take action within the first 30 days (clarification- within 30 days of first use) to opt out of arbitration.
As your lawyer friend, I’m here to tell you that you should opt out.
don’t say I didn’t warn you.

Though Ginsberg referred to people who buy memberships, the terms apply to all users of Biketown, including people who buy rides $2.50 at a time.

“Unfortunately this is very standard pro-corporate anti-consumer language.”
— Mark Ginsberg, lawyer

What’s “arbitration” in this context? As reported in depth last year by the New York Times, it’s an increasingly common system that was designed to reduce the chance that companies will lose lawsuits brought by their customers. By including requirements like these in their terms of service or user agreements, the Times reported, consumer complaints are heard by a corporate lawyer rather than a government judge.

“The arbitrators are paid for by the bad guys,” summarized Ginsberg, the plaintiff’s attorney.

Like many similar contracts, Biketown’s binding arbitration clause also prevents bike-share users by default from joining class action lawsuits, which are a primary tool consumer attorneys use to penalize companies for wrongdoing.

“If you have a claim against them for $5, you can’t bring that claim,” Ginsberg said, explaining the concept behind class actions. “But if 1,000 people have a claim against them for $5, then they can bring that together.”

Because class actions can be costly to businesses and are more lucrative for plaintiff’s attorneys than for most plaintiffs, they are controversial. But they also undeniably create an incentive for companies to beware of defrauding or mistreating customers.

How Biketown users can protect their jury trial rights

Fortunately for Biketown users who happen to know the secret, the Biketown contract makes it easy a member to retain those legal rights.

Within 30 days of first using Biketown, the contract says, they have to send an email to legal@motivateco.com with the subject line “ARBITRATION AND CLASS ACTION WAIVER OPT-OUT.”

That’s it.

Here are the relevant instructions from the rental agreement for opting out of the restriction:

You have the right to opt out and not be bound by the arbitration and class action waiver provisions set forth above by sending written notice of Your decision to opt out to legal@motivateco.com with the subject line, “ARBITRATION AND CLASS ACTION WAIVER OPT-OUT.” The notice must be sent within thirty (30) days of Your first use of the Services, otherwise you shall be bound to arbitrate disputes in accordance with the terms of those paragraphs.

In a 2014 post, the website Consumerist (which is published by the magazine Consumer Reports) offered a post titled “Why You Should Opt Out Of Forced Arbitration, In 3 Sentences.” Among the points it made was that even after opting out, someone “can still agree to arbitrate, if you would prefer that option.”

In an email to BikePortland Thursday, Motivate spokeswoman Dani Simons said that any given bike-share user only has to opt out once for all future memberships: “If an individual opts out once we will honor that individual’s opt-out for future pass purchases.” In a second email Friday, she said that “if someone lapses and then rejoins they will have an additional 30 days to decide if they want to opt-out.”







Binding arbitration is uncommon among bike-share user agreements

Capital Bikeshare-2

Capital Bikeshare in Washington DC is one of many that doesn’t require users to waive their jury trial rights if something goes wrong.

A review of several other user agreements at U.S. bike sharing systems shows that some include a binding arbitration provision and others don’t.

One that does is Pronto in Seattle, which like Biketown is operated by Motivate, the New York City-based firm that was launched in Portland before its owners sold it amid financial trouble in 2014. Another that does is Grid Bikes in Phoenix, operated by Cyclehop.

Unlike Biketown, Pronto and Grid Bikes don’t seem to offer the “opt out” that lets users retain their jury rights.

New York City’s Citi Bike, Motivate’s flagship system, includes no arbitration clause. Neither do Motivate’s other largest U.S. systems, Capital Bikeshare in Washington DC, Divvy in Chicago, Hubway in Boston or Bay Area Bike Share in San Francisco. Neither does Metro Bike Share in Los Angeles, which launched this month, or Indego, the year-old system in Philadelphia. Those two are operated by Bicycle Transit Systems, a competing firm that was founded by ex-Alta Bike Share employees.

Denver B-Cycle, which is operated by a local nonprofit, also has no binding aribtration clause.

BTA's Alice Awards and Auction

Lawyer Mark Ginsberg at the Bicycle Transportation Alliance Alice Awards in 2007.

Ginsberg looked over the Seattle, Los Angeles and New York City contracts and said that “all these contracts are not very consumer friendly.” He singled out the binding arbitration in Portland, Seattle and Phoenix as “not fair,” but also said it’s not unusual for corporate user agreements.

“Unfortunately this is very standard pro-corporate anti-consumer language,” Ginsberg said. “I don’t think it’s intentional on the part of the City of Portland, but I think they could have done a much better job of having an evenhanded contract, not one that’s so lopsided.”

Ginsberg also called attention to what he called the “loser pays” attorney fee provisions, which he said created a disincentive for individuals to bring lawsuits, and to the indemnification clause, which force the user to assume full legal responsibility for anything they do with the bike sharing company’s equipment.

City transportation spokesman John Brady said in an email Thursday that the city wouldn’t comment on whether it ever discussed these issues with Motivate.

Throughout the process of launching BIKETOWN, we have been careful not to discuss the ins and outs of the contract negotiations. We feel this is important in order to preserve the integrity of both past and future negotiations.

I asked Ginsberg if, knowing what he does now, he would use Biketown.

“I support bike share programs,” Ginsberg said. “I don’t know. I currently am able to get around just fine without it.”

Ginsberg added one other thing: Biketown’s 30-day opt-out clause for binding arbitration is the same one used by Pokémon Go.

— Michael Andersen, (503) 333-7824 – michael@bikeportland.org

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Four ways Portland’s new bike share plan could flop

Four ways Portland’s new bike share plan could flop

portland-bike-share-bike

It’s coming. Finally. But will it work?
(Renderings via City of Portland)

Third in a four-post series today about bike sharing in Portland.

Earlier today, we wrote about why Portland’s three-year bike share delay could accidentally make its system one of the smartest in the country.

Now, let’s look at the biggest ways the system could, if approved next week, totally fail.

1) Social Bicycles could collapse

justin with bike

Justin Wiley, Social Bicycles’ VP of Launch
and Operations, at Velo Cult in
Northeast Portland in March.
(Photo: Lizbon Grav)

The New York-based startup Social Bicycles was founded in 2010 and received $1.3 million in angel funding in 2013, followed by undisclosed venture funding later that year.

How much money is SoBi making now that it’s scored contracts in Phoenix, Santa Monica, Tampa, Topeka, Boise, Orlando, Ottawa, and Hamilton? The public doesn’t know. But if SoBi’s growth slows, it runs out of cash and it shuts down, then Portland and its operator, Motivate, could be left with a bunch of obsolete equipment and unsupported software.

With all those systems up and running, it’s likely that someone would swoop in to buy the company’s assets, as a pair of New York City companies did when Motivate was struggling last year. But there’s no guarantee.

City staff make a strong case that a wandering fleet of “smart bikes” is best for Portland. But why didn’t they go with Nextbike, a firm with similar technology that’s already well-established in Europe?

In part, city project manager Steve Hoyt-McBeth said, because Social Bicycles was “the only [potential] partner that seems to have a functioning smartphone app.” And in part, city Active Transportation Manager Margi Bradway said, because Social Bicycles’ bike was more fun to ride.

“It was really important to us that we rode the bike and felt the bike,” said Bradway, who said she and her husband own 20 bikes between them. “People from the mayor’s staff, Commissioner Novick’s staff, our staff, all rode the bikes. … They’re the best of what’s available for bike share. Are they carbon racers? No. But they ride really well, they handle really well, and they’ve got the smart-bike technology.”

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For what it’s worth, I too rode a SoBi bike earlier this year, and I agree. They’re noticeably better to ride than the ones in most U.S. cities.

Bradway called SoBi “a pretty small but fairly successful company” and said that Motivate did a 100-page report “on the whole chain and production line” used by SoBi, to make sure it wouldn’t repeat Motivate’s previous supply-chain problems.

“If Sobi totally goes away, obviously we would start the process again and do a new purchase order,” Hoyt-McBeth said. “In the end of the day, it’s just like if anything else breaks, what do you do? There’s your legal remedies and then there are some practical considerations. … We feel good about the SoBi product and we feel good about their growth and where they’re going.”

2) Motivate could be incompetent

Portland’s chosen operator doesn’t inspire huge confidence; it nearly collapsed last year, after all, due largely to its bad deal with its struggling supplier in Montreal. Just before those troubles hit, a few of the staffers who built it jumped ship to form their own company. Though the firm bought into an existing SoBi system in Providence last year, this is the first time it’s agreed to operate largely unfamiliar equipment.

Why do Portland staffers think the company has turned a corner? Mostly because the team that bought Motivate last year has things its previous owners didn’t.

One is a CEO with a golden resume in transit operations: Jay Walder, former head of the subway systems in New York, London and Hong Kong. Motivate’s previous bosses, the founders of Portland-based Alta Planning + Design, were gifted … planners and designers.

The other is deep pockets. Motivate’s new owners are Related Partners, a New York real estate firm, and Equinox, a high-end chain of gyms.

Within months of the company’s sale, Motivate swapped out its faulty software and announced a 100-station expansion in New York and a tenfold expansion in San Francisco Bay. If they’re incompetent, they’ve got a lot of people fooled.

3) No sponsor might appear

sponsor logo

Phoenix’ 500-bike system, launched last November, continues to solicit a lead sponsor.
(Image: Grid Bikes)

A company gets less good PR for sponsoring something that already exists than for sponsoring something that doesn’t yet exist. Today’s announcement will take some of the oomph out of a sponsorship deal. Launching without a lead sponsor would further reduce the oomph.

No company might decide Portland’s system is worth their while.

City staff’s response: they’ve already tried for years to find a sponsor for a prospective system. Didn’t work.

“It’s a lot easier to sell something people can see on the ground as opposed to selling pixie dust,” Hoyt-McBeth said.

Motivate, he says, has sophisticated connections and dedicated sales staff. And maybe most importantly, the private operator stands to lose hundreds of thousands of dollars over the next three years if it doesn’t find a sponsor. The city thinks this will force the company to prioritize the task.

Though some U.S. cities have signed sponsors before they launch, others have landed them after, or in the immediate lead-up.

“Almost every city with a bike share system of our size has secured a title sponsor or a family of large sponsors in the first year,” Hoyt-McBeth wrote Wednesday.

4) Portland might not have enough good bike infrastructure downtown

Conditions on Lovejoy-2

NW Lovejoy and 13th in 2011. (The bike symbol
has since been removed.)
(Photo: J.Maus/BikePortland)

SoBi’s bikes are nice compared to other bike-share bikes, but no bike that big would be comfortable for a beginner to ride in a door-zone lane like the one on upper Southwest Broadway.

From DC to Minneapolis to Seattle to Pittsburgh, cities launching bike share have accompanied their systems with buffered or protected bike lanes near the core of their service area, to make it not just possible but comfortable to ride a bike. Portland’s central city has terrific transit and walking, but probably the sparsest downtown bike infrastructure of any comparable American bike city. (It’s working on this on multiple fronts, but it’s not there yet.)

As BikePortland reader Maccoinnich observed this morning, the bike infrastructure in the Pearl and inner Northwest — probably the densest residential area included in this system and home to the most low-income residents — is even worse.

There are many who argue, not unreasonably, that with such great walking and transit already, downtown shouldn’t be the first neighborhood to get great bike infrastructure too. But the truth is that to work as a business, Portland bike share will need to be focused downtown. The rest of the city just isn’t dense enough yet.

Maybe you think Portland bike share should make decisions based on the public good rather than business viability. In that case you’d better get behind a public subsidy for it. The plan the city announced today perfectly illustrates the limits of what a system can do with almost zero local tax dollars.

— Learn more about today’s big announcement here. And stay tuned for the final part of today’s series, when we’ll look into how PBOT is handling bike share competition from a private company in their own backyard.


The post Four ways Portland’s new bike share plan could flop appeared first on BikePortland.org.

Portland overhauls bike share plan, braces to launch with or without a sponsor

Portland overhauls bike share plan, braces to launch with or without a sponsor

Buddysbike

Next week, Portland will consider a contract to put 600 “smart bikes” like this one (from Orlando’s Juice system) on the street by next July at no cost to the city.
(Photo: City of Orlando)

First in a four-post series today about bike sharing in Portland.

Nine years after being one of the first U.S. cities to float the concept, the City of Portland plans to announce today that it’s finally ready to launch a public bike sharing system.

The key to the plan, which would be required to launch by July 2016: the city is planning to skip a generation of bike-sharing technology and launch a system that uses “smart bikes” with built-in GPS and self-locking mechanisms. The revised system would be 20 percent smaller but about 55 percent cheaper than the one the city originally planned.

A revised contract with Motivate Inc., formerly known as Alta Bicycle Share, is scheduled for review by Portland’s city council next Wednesday.

For occasional users and tourists, the price will be $2.50 for up to 30 minutes. Heavy users will be able to sign 12-month contracts at $10 to $15 per month.

If approved, the deal will bring 600 45-pound “smart bikes” to the streets of central Portland by next summer — with or without a corporate sponsor.

For occasional users and tourists, the price to ride will be $2.50 for a ride of up to 30 minutes. Heavy users will be able to sign 12-month contracts at $10 to $15 per month to get a free daily allowance of 90 minutes.

Month-to-month memberships will be more expensive. Their exact price is yet to be determined.

The city says that if a corporate sponsor is not found, the system will probably lose money. But New York-based Motivate has agreed to eat any losses itself for the first three years — a shift in responsibility intended to light a fire under Motivate to recruit a sponsor.

City’s goal: lowering the barrier for trying bike transportation

Mia Birk at bike share event

Former Motivate co-owner Mia Birk pitches possible sponsors of a Portland Bike Share. The city’s old contract essentially split sales duties between Motivate and the city; the new one puts them squarely on Motivate.

A “yes” vote from city council next week would advance a longtime goal of Portland biking advocates and fulfill one of city Transportation Director Leah Treat’s four major goals for 2015: to set a bike share launch date in 2016.

The point of a bike sharing system, the city says, is to let people decide to start biking midday without having to plan ahead.

City bike share project manager Steve Hoyt-McBeth said in an interview Friday that a bike share system will help the city crack a nut it’s been working on for many years: making it easy for more Portlanders to ease their way into bike transportation gradually rather than making it a major life decision.

“When you wake up in the morning on a work day, you decide whether you’re going to ride a bike for the rest of the day,” Hoyt-McBeth said. “You make that decision in the morning, at a time when you’re the most stressed, when you’re most pressed for time and when the weather is unlikely to be very nice.”

The point of a bike sharing system is to let people decide to start biking midday, without having to plan ahead.

“At any time during the day, no matter how you came to that bike share station, bike share is there to go to a meeting, back home or simply for a ride,” he said.

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New plan is much revised from 2012 plan

BikeShare area map 9-8

The planned bike share system map. Bikes could be parked anywhere in this area for a small fee, or near the official docks for free.
(Image: City of Portland. Click here for full map.)

The bike sharing system being announced today is very different from the one the city anticipated in 2012, when it accepted a proposal from Motivate for a “smart dock” system that would have been modeled on Motivate’s successful one in Washington D.C.

Here are some of the many changes:

• Portland might launch bike sharing without a primary corporate sponsor. After years of delays related to unease among potential sponsors, the city has found a new solution: plan to launch with or without one, and aim to get one later on if possible. (This tactic was successfully used by Chicago, Treat’s previous employer, among other cities.)

• Motivate is shouldering the risk for the first three years. If a sponsor isn’t recruited to subsidize the system’s cost, the operating losses will go to Motivate. Unlike the old system, this gives the company a powerful incentive to recruit a sponsor.

If no sponsor is found or the expenses are higher than expected, Motivate’s commitment will expire in 2019 and Portland will be left with a better system than it can afford to operate.

Here’s the catch: the city’s bike share grant, which originated with the federal government, requires it to operate a system for at least five years. If no sponsor is found or the expenses are higher than expected, Motivate’s commitment will expire in 2019 and Portland will be left with a better system than it can afford to operate. If that happens, it’d have to scale the system down.

On the other hand, the system might turn out to operate profitably within a year or two, as Phoenix says its system will. If that happens, Motivate would pocket 60 percent of the proceeds for the first three years but the city would be in a strong position to get a slice of the profits starting in 2019.

City Active Transportation Manager Margi Bradway, a former insurance lawyer for Stoel Rives who has helped represent the city in its recent negotiations with Motivate, said Friday that this agreement — for Motivate to assume both the risk and most of the reward for a few years — was the key to resurrecting Portland bike share.

ubike

Close-up of the locking system on a Social Bicycles bike at the University of Virginia. The city expects to let the bikes be locked for free anywhere on a city block that has an official dock; the bikes’ GPS can sense whether they’re close enough to the dock.

• The equipment will be much cheaper. In 2012, Motivate (then known as Alta Bicycle Share) nearly tanked. This was because it had signed an exclusive contract with Montreal-based firm PBSC, and the latest version of PBSC’s software turned out to be a lemon. Over the year that followed, bike share launches were delayed across the country. Portland’s was one.

Today’s proposal sweeps that away. For the first time, city staff said, Motivate has agreed to operate a new system — both hardware and software — that doesn’t come from PBSC.

Instead, the system will come from Social Bicycles, a young, fast-growing bike share company that provides equipment to the bike share systems in Phoenix, Santa Monica, Tampa, Topeka, Boise, Orlando, Ottawa, and Hamilton.

The smart-bike system’s 44 percent savings per bike is the main reason the city will be able to launch without a sponsor.

The key to Social Bicycles’ equipment: instead of using sophisticated computerized “smart docks” like the ones developed by PBSC and B-Cycle for cities like D.C., New York, Seattle, San Francisco, Denver and Minneapolis, its systems put the computer on the bicycle itself.

This approach turns out to be much cheaper, Hoyt-McBeth says. The city’s old plan was to spend $4.5 million for 750 bikes and 75 stations. Its new plan is to spend about $2 million for 600 bikes and 60 stations. That 44 percent savings per bike is the main reason the city will be able to launch without a sponsor. (We’ll explore this further in another post later this morning.)

• The stations will be less dense. The 60-station, eight-square-mile service area will be approximately the same as previously expected, running northwest to 24th Avenue, southwest to I-405 plus the South Waterfront, southeast to Powell and 12th and northeast to the Lloyd District, plus inner North/Northeast Portland between Interstate and MLK as far north as Killingsworth. But the stations themselves will be less densely packed than under the old system: every few blocks downtown, every more than a few blocks elsewhere.

• The local matching funds will come from the public after all. When Portland City Council agreed in 2011 to apply for a bike sharing grant, bike share was pitted against freight and sidewalk projects for scarce city dollars. At the time, Commissioner Dan Saltzman said he would support it only if the city didn’t provide any operating subsidy for the system. (His comments are on p. 39 of the minutes from that meeting.)

In a sense, nothing has changed; the city still isn’t planning to hand Motivate an operating subsidy for its system. But the city is planning (as it would have under the 2012 scenario) to continue assigning Hoyt-McBeth to be bike share’s half-time project manager, overseeing the contract on the city’s behalf. And because there’s no sponsor yet, the city is planning to designate about half of Hoyt-McBeth’s $86,000 salary (over the last three years and the next three) as the 10 percent “local match” required by the federal grant.

This is just a procedural change, not a reallocation of money. But it’s also an acknowledgment that yes, local taxpayers are, and already have been, spending something (about $40,000 a year) to have a public bike-sharing system.

On Wednesday, Saltzman policy manager Matt Grumm said PBOT’s time overseeing the contract isn’t a problem for the commissioner as long as the city doesn’t send money directly to Motivate.

“That’s not something Dan has brought up,” Grumm said. “For Motivate to operate it on their own with no city dollars going there is exactly what he wanted to see. … So far, what it looks, it looks pretty good to him.”

Will this bike share plan work?

gridbikes

If the council approves a contract next week — and based on this process so far, we’ll reserve judgment on how likely that is — it’ll be a big day for biking in Portland.

At that point, the question will become: will the system work?

Stay tuned. Still to come this morning, we’ve got three more posts that will analyze the factors that could make Portland bike sharing fly or flop.

Corrections 6:25 a.m.: A previous version of this post contained three errors. It said credit card readers will be built into the bikes; the bikes only receive PIN numbers after purchases have been made via web, mobile app or one of 11 wired stations. The post overstated the amount of profit that Motivate would take home; the company stands to get 60 percent of the upside, not all of it. Finally, it incorrectly suggested that Hoyt-McBeth had spoken with Commissioner Saltzman about the subsidy issue. He hasn’t.


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NYC investment company buys Alta Bicycle Share, hires former transit CEO

NYC investment company buys Alta Bicycle Share, hires former transit CEO

Bike share ride with Oregon team-1

DC’s Capital Bikeshare system was a hit – a bigger one, it turned out, than an independently owned Alta Bicycle Share had the capacity to capitalize on.
(Photos by J. Maus/BikePortland)

You might have heard by now: A local bike business that bootstrapped its way to the national stage, and then suffered a dizzying series of problems, has sold.

Alta Bicycle Share, a startup that unexpectedly became much larger than the bike planning company that birthed it after launching popular and successful systems in Boston and Washington DC, announced Tuesday that it has been purchased by New York City real estate developer REQX Ventures.

Terms of the deal haven’t been disclosed. In July, the Wall Street Journal pegged the deal at $40 million, but it’s not clear whether any of that money went to Alta’s founders or will be invested directly into the company. It’s also not clear whether Alta’s six cofounders (including local executive and former Portland bicycle coordinator Mia Birk) retain any ownership in the firm.

In July, Capital New York (the first to report on this deal) reported that 51 percent of the company was in talks to be sold. This came after news that NYC’s Citi Bike system had been operating in the red despite its popularity.

Whatever the case, the cofounders of Alta Bicycle Share still own and operate their separate company, Alta Planning + Design. That company has 150 employees worldwide and remains headquartered in Portland.

Tuesday’s announcement will have no immediate effect on Portland’s theoretical deal with Alta to launch a similar 750-bike system in Portland. As we reported this spring, Portland had reached verbal agreements with a private sponsor and was days away from a launch announcement before backing off amid concerns that Alta wouldn’t come up with working equipment for a local system.

Mia Birk -2

Former VP of Alta Bicycle Share Mia Birk, shown
here outside her southeast Portland office in
September 2013, one day after the company signed
a $60 million contract with New York City.

Those hardware and software problems, in turn, emerged from the privately owned Alta’s lack of working capital and from the fact that Alta’s exclusive supplier, Montreal-based PBSC, wasn’t able to operate profitably.

It’s possible that the entrance of REQX into the bike share business will inject money into a company that has been treading water for the last year despite rising demand for its service among U.S. cities and their residents. It’s also possible that REQX, a major New York developer, will invest only enough to hold on to Alta’s existing contracts without making efforts to further evolve the business.

On that front, the most hopeful news Tuesday might be the selection of Jay Walder to take over leadership of Alta Bicycle Share. Walder was a successful executive at Transport for London before coming to New York City to run that city’s transit agency, the country’s largest.

As CEO of the MTA, Walder earned $350,000 a year. In 2011, he moved to a job running Hong Kong’s private transit system, where he earned the equivalent of $950,000. So it’s likely that Walder’s hire is a major investment by REQX and a vote of confidence in his ability to grow the bike sharing business.

“It sounds like they’re going to be making more investment into the company, which is great,” said Paul DeMaio of MetroBike, a bikesharing consultant and contractor for Arlington County, Virginia, which co-owns Alta affiliate Capital Bikeshare, in an interview. “They’re getting quality candidates to take some of the corporate roles. … I just hope that they continue to evolve and make improvements.”

Here are some interesting tidbits from the recent flurry of media coverage.

From the New York Daily News:

Alta, the troubled operator of Citi Bike, sold its stake in the bike share company to REQX Ventures, a real estate company. Prices for an annual membership are expected to jump from $95 a year to $145.

Alta had struggled to make a profit with Citi Bike, the largest bike share program in the country. City officials had refused to greenlight hikes in the program unless new management was brought in.

The company is also benefiting from a whopping $70.5 million cash infusion from its prime corporate sponsor Citi Bank. That added capital brings the financial company’s investment in the program – which costs tax payers nothing – up to $111.5 million.

The Portland Mercury, which last Friday was the first local outlet to share news that a deal was nigh:

Internal Portland Bureau of Transportation documents obtained by the Mercury show Mia Birk, Portland’s former bike coordinator and vice president of Alta Bicycle Share, presented details about the acquisition by REQX in early August. Birk’s presentation apparently touted millions in “upfront new investment” to the company once REQX held the reins, but it appears that’s largely focused on New York’s CitiBike system. Birk’s presentation also mentioned the “building of a sales and marketing team to drive additional corporate sponsorships,” which could be great, if it means someone can find Portland sponsors.

Portland Business Journal, writing today:

Mia Birk said Tuesday that selling the bicycle share business will allow the company [Alta Planning + Design] to refocus on its original mission — facilitating bicycling by creating paths and corridors.

The 150-person company operates from 27 offices, with Portland as its headquarters. Its current projects include bike paths, projects to create protected bike lanes on city streets and sustainable transportation campaigns.

Birk said she loved working on bicycle sharing projects but it’s time to turn the reigns over to a well-funded organization with the connections needed to make the systems work. The 10 bicycle share systems now operating in the U.S. depend on sponsors to foot much of the cost.

The Oregonian, today:

[Portand Bureau of Transportation Spokesman Dylan] Rivera declined to comment about when – or if – the city hopes to launch a bike-share program that is supposed to be funded with a $2 million federal grant and $2 million from local sponsors.

“We’re still involved in an ongoing process to monitor other bike-share programs to see what makes them more successful and less successful,” he said. “We’re continuing to do our due diligence.”

Three years ago, as Alta celebrated the news of their big contract with New York City, Birk called it a “game-changer.” It turns out that was true — although probably not completely in the way she envisioned.

Here at BikePortland, we’re hoping that the willingness of two major New York companies is (like the entry of new companies into the bike share marketplace) a sign that the bike share business model in the United States is on its way out of an endearing but awkward adolescence.

Correction 10/29: An earlier version of this post incorrectly described Paul DeMaio’s relationship to Alta Bicycle Share.

The post NYC investment company buys Alta Bicycle Share, hires former transit CEO appeared first on BikePortland.org.

First look at locally made ‘Truck Trike’ headed for NYC

First look at locally made ‘Truck Trike’ headed for NYC

Truck Trike by Stites Design-3

This custom ‘Truck Trike’, made in southeast Portland by Stites Design, will soon be on the streets of Manhattan hauling Citi Bike bikes between rental stations.
(Photos J. Maus/BikePortland)

When a local bike company toils on cool projects for many years, then finally breaks through to something big, we get really excited. Such is the case with Stites Design, the southeast Portland company that has sold a custom version of their electric-assist Truck Trike to Alta Bicycle Share for use in the Citi Bike bike share system in New York City.

Truck Trike by Stites Design-1

Stites (right) and his employee Brian Hall in their shop today.

Bill Stites has spent the last two decades building custom, one-off human-powered vehicles (and at least one artistic bike parking structure). About five years ago he started R & D on a cargo trike that had enough power and payload that it could legitimately replace a truck. He called it the “Trucker Trike” and we first reported on it in 2010 when he debuted it at the Pedal National Bicycle Show. A few months later we caught up with Bill and took a more in-depth look at his creation.

Since then, Stites’ business — and the trike — have gone through a lot of changes. He now has an equity investor, a full-time employee (mechanical engineer Brian Hall), and he’s got several trikes in use around the country (including one on the campus of UC Berkeley where it’s used in their recycling program). Since 2010, the trike has been refined and re-engineered in many significant ways and Stites told me at his shop this afternoon that they are now ready for mass production.

On Monday, the Truck Trike will be in the spotlight as Alta Bicycle Share hosts a media event and launch party prior to sending it off to New York City. As a new tool in the Citi Bike operational arsenal, the Truck Trike will focus on the task of rebalancing — which means it will ferry bicycles between kiosks so that bike share users won’t confront an empty (or full) stations. (For a look at how rebalancing is usually done, check out our behind-the-scenes visit to Capital Bikeshare in D.C.)

The Truck Trike has several advantages over the mid-sized “Sprinter” van currently used by New York City Bike Share employees. It has a much smaller footprint, which means it can roll in bike lanes when traffic backs up. With an operational speed of about 12-14 miles an hour, and the ability to use the carfree bikeways, the Truck Trike can potentially get around Manhattan at about twice the average speed of a truck or van (average traffic speed in Manhattan being about 7 mph). It also boasts a much narrower turning radius than a van. Stites says it can turn around within the width of a standard vehicle lane. It’s also, obviously, much more environmentally-friendly than a vehicle that burns fossil fuels. It’s cost effective too: At a price of about $8,000, a company could buy several of them for the price of one new van or truck.

The Truck Trike that will be used by Citi Bike is powered by two motors — the operator’s legs which power an 8-speed internal front hub, and a 500 watt electric battery that drives one of the rear wheels (a motor for the other rear wheel can be added if necessary, thus doubling the power). Because the rear wheels of the trike are driven independently by separate motors, there’s no pesky transmission system or chain-line that has to be considered. This lack of needing to connect the rear wheels to the cranks means Stites can create custom rear trailer designs.

In the case of the Citi Bike Truck Trike, they’ve designed a long (96-inches) and wide (54-inches) trailer with a low cargo bed to make it easy for workers to roll off the 42 pound bikes. The trailer can currently hold up to five bikes. That’s a load of just 210 pounds; child’s play for the Truck Trike which boasts a payload capacity of 600 pounds. The trike itself weights about 275 pounds.

The trike also comes with turn signals, running board lights, dual motorcycle rear disc-brakes, brake lights and a powerful headlight.

Check out a few more photos below…

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Truck Trike by Stites Design-7

Truck Trike by Stites Design-8

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Good luck Bill! We rooting for the trike to do great in New York City and hopefully orders start coming in from cities across the globe!

Truck Trike by Stites Design-12

Startup by former Alta executives scores Philadelphia bike share contract

Startup by former Alta executives scores Philadelphia bike share contract

Former Alta Bicycle Share president Alison Cohen, CEO
of Bicycle Transit Systems, spoke in Philadelphia Thursday.
(Photo: Bicycle Transit Systems)

A bike share operations startup founded by five ex-Alta Bicycle Share employees, three of them based in Portland, scored a major new contract Thursday.

Bicycle Transit Systems, which like its CEO Alison Cohen is headquartered in Philadelphia, will operate that city’s bike share system, which is scheduled to launch in spring 2015 with at least 600 stations.

It’s the first time in years that Portland-based Alta Bicycle Share, the market leader and operator of the popular systems in Washington DC, Boston, New York City and Chicago, has missed out on such a big new contract.

With 2.3 percent of residents’ commutes by bike, Philadelphia is sometimes cited as the bike-friendliest American city that’s larger than Portland.

Cohen, who joined Alta Bicycle Share in 2009 and served as its president, left the company in early 2013 and joined Toole Design Group, a major bike planning firm and rival of Portland-based Alta Planning and Design.

But Toole is not an investor in the new company, said Brodie Hylton, Bicycle Transit Systems’ vice president of marketing and business development.

“We’re bootstrapping a startup,” he said.

Brodie with Alta Bicycle Share

Brodie Hylton, now of Bicycle
Transit Systems, in 2013.
(Photo: J.Maus/BikePortland)

The startup’s founding partners include Cohen; Hylton, Alta Bicycle Share’s former operations director; Peter Hoban, Alta’s former director of new launches; Chris Cassard, Alta’s former chief financial officer; and Danny Quarrell, Alta’s former director of technology. Hylton, Cassard and Quarrell all live in Portland, at least for now.

“We feel like we’re the five people who kind of did the most to help Alta become successful,” Hylton said in an interview Thursday.

In the latest sign that the public bike sharing industry may be maturing, or at least continuing to experiment, Bicycle Transit Systems’ business model is different from Alta’s: it doesn’t maintain exclusive contracts with equipment suppliers in the way that Alta has had a longstanding relationship with troubled Montreal-based vendor PBSC, also known as Bixi. In Philadelphia, Bicycle Transit Systems will operate equipment by B-Cycle, a Trek subsidiary that has long competed with Alta for bike sharing contracts but never operated the systems itself. (Instead, it’s handed off systems to independent bike sharing nonprofits.)

“I think for B-Cycle it’s a big win, too,” Hylton said. “This is their first opportunity outside of Denver to do a large-scale bike share program in a U.S. city.”

On Wednesday, the Alta-operated Bay Area Bike Share announced that it’s expanding to Oakland, Berkeley and Emeryville, approximately doubling that system’s size.

Alta rapidly became a national leader in bike sharing but has had a rough couple of years, stemming in large part from its supplier PBSC’s decision to replace a flawed but functioning software system with what turned out to be a significantly less functional one. PBSC has since filed for bankruptcy protection and this month agreed to sell to a private buyer.

Last month, the Wall Street Journal reported that Alta’s flagship Citi Bike program, which uses the less functional software, had been operating in the red. Alta has signed a deal with PBSC’s former software supplier and plans to introduce a next-generation system in Seattle this fall. Here in Portland, Transportation Director Leah Treat used the word “pause” this week to describe the current status of the city’s long-delayed bicycle share system.

Hylton said there are ups and downs to Bicycle Transit Systems’ decision not to align itself, Alta-style, with a single supplier.

“The advantage to a single piece of equipment is the familiarity of the operator with that equipment,” he said. “The disadvantage is that … you’re not able to control the priorities of that partner.”

He hopes that Bicycle Transit Systems will succeed in part by keeping its mission simple. It’s not taking responsibility for recruiting system sponsors, a task Alta has taken on in Portland, for example.

“Right now we want to be experts in bike share operations,” he said. “So that’s it. We’re trying to reestablish ourselves and our new company’s brand as experts in bike share operations. We don’t want to bite off more than we can chew.”

Portland made ‘Truck Trike’ will help haul Citi Bikes in New York

Portland made ‘Truck Trike’ will help haul Citi Bikes in New York

The Truck Trike by Bill Stites-7

Bill Stites on his Truck Trike in 2010.
(Photo J. Maus/BikePortland)

A Portland company has developed a new tool that will help New York City’s Citi Bike bike share system perform the important job of “rebalancing.”

Bill Stites of Stites Design has worked with Citi Bike vendor Alta Bicycle Share to create a prototype “truck trike” that will haul bike share bikes between kiosks in New York City’s crowded streets. (We profiled Stites’ trike back in 2010.) We’re getting a closer look at the trike today and Alta has just sent out the following statement about a media/launch event on Monday:

“You are invited to celebrate a new business success story in the making: the creation of the Portland-made “Truck Trike” prototype, which will be used to haul bikes by the nation’s largest bicycle share system, Citi Bike.

Alta Bicycle Share is working with Stites Design, the designer and manufacturer of the Truck Trike, to develop a prototype human-powered vehicle that will be used to move Citi Bike’s bikes from station to station, to ensure that bikes are where they need to be as users access the bike share system. Called “rebalancing,” this movement of bikes between stations has been performed by trucks in New York–until now. With the introduction of this prototype, Citi Bike will be the first U.S. bike share system to use a human-powered vehicle for rebalancing. If the prototype is successful, it will be the first of many Truck Trikes to be used by Citi Bike. The Truck Trike uses a combination of human and electric power to move, and carries loads of up to 600 lbs.

After the prototype test, Alta Bicycle Share, which manages Citi Bike, will order more Truck Trikes for use at Citi Bike, creating a maneuverable and clean vehicle for New York streets and jobs and economic growth in Portland. The economic impact of bicycles in Portland’s economy has been estimated at more than $100 million to date.

Stay tuned for a first look at the new trike. For more about rebalancing, check out our behind-the-scenes look at how Capital Bike Share workers in Washington D.C. go about it.

3 lessons for Portland as Citi Bike struggles to break even

3 lessons for Portland as Citi Bike struggles to break even

Citi Bike Launch

Citi Bike’s launch last summer.
(Photo: NYCDOT)

A Wall Street Journal report last week that New York City’s wildly popular bike share system has been operating in the red has, understandably, rattled the Portland transportation world as we wait for a similar system here.

I’ll start by rounding up the burst of media coverage, then offer some quick analysis.

The Journal report last Thursday, which we linked to in this week’s Monday Roundup, kicked things off. An Oregonian news roundup followed focused the blame on Alta, the Portland-based company that manages Citi Bike and has the contract for Portland’s future system. A follow-up editorial from the Oregonian called on the city to scrap its plan and put the money to other bike projects, seemingly misreading a recent bike sharing study to draw the conclusion that a Portland system is “almost certain to require a hefty annual operating subsidy from Portland taxpayers.”

On Monday, Alta followed up with a statement of its own adding that it is “talking to investors about expanding our own operations,” which might or might not mean it’s still trying to purchase the bankrupt Montreal-based equipment and software supplier whose problems have been entangled with Alta’s.

On Thursday, Oregon Public Broadcasting did a segment focusing on the subject, and scored a call-in interview with Alta executive Mia Birk, who’d been publicly silent until then. (She avoided saying anything new.) I was a guest, too, and talked about two keys to profitability for bike share systems: dirt-cheap operating costs and lots of tourists.

Readers may be hoping for signal in all this noise. I’ll give it a shot.

1) It is really bad for Alta that Citi Bike is losing money.

Leonardo DiCaprio Citi Bike

A totally random photo of a Citi Bike customer.
(Photo: Inhabitat.)

Some of the NYC system’s huge popularity depends, presumably, on the fact that Alta has been willing to operate the system in the red in order to maintain quality — sending battery-replacement crews around to each bike share station, for example, to make sure they’re fully charged. That’s the sort of thing Alta’s software should be doing, if it worked. This is an example of the ways that it doesn’t.

Read the WSJ piece closely and you’ll see Alta’s software problems elsewhere: in tourists’ struggle to buy the 24-hour passes that are so lucrative to a bike share system; in the failure of the system to expand as anticipated. This is probably why Alta pushed its software supplier toward bankruptcy and later signed a new deal with the maker of the software behind Alta’s real crown jewel: Capital Bikeshare in Washington DC. If Alta can’t get a working prototype out of that deal very soon, it’s likely to start losing bike share contracts — not just Portland’s but the renewals from its existing cities, like Boston.

The New York Times reported yesterday that Alta is in a dispute with the city over whether it has the right to raise annual Citi Bike memberships from $95 to $140. Raising the price of a popular product would be nothing new, but you don’t see 47 percent price hikes every day.

2) Portland Bike Share will sometimes need public money, but probably not much from local budgets.

hi!

Working just fine in Minneapolis.
(Photo: Sharyn Morrow.)

The Oregonian editorial board either misreads or misrepresents a recent study of bike share costs. It quotes the report: “while subscription and user fees provide a stable revenue source, rarely do they provide enough revenue to ensure that the system is financially self-sustaining.”

True. But this doesn’t mean, as the editorial suggests, that Portland’s system will require a “hefty annual operating subsidy from Portland taxpayers.” It means bike share will require private commercial sponsors, which Portland, like so many other cities, has already lined up.

Portland bike share probably won’t have money to add new stations without bursts of public money (federal, state or local). And it’s also possible that Portland’s system will for some reason turn out to operate in the red, unlike the two systems most like ours (Minneapolis and Denver). If that happened, the city could then decide whether to keep the system afloat for a few hundred thousand dollars a year.

It’s 100 percent fair to argue that this money should be spent on other things. But even if Portland bike share someday has a public operating subsidy of $300,000, a new public transit system that provides fast, clean, cheap, healthy circulation for half a million trips a year looks just fine compared to (for example) Portland Streetcar’s operating subsidy of about $6 million a year for about 6 million trips.

Efficiency (not peer pressure, as Oregonian editors like to impishly suggest) is the reason U.S. cities are rapidly adding bike sharing systems.

3) No, Portland is not too bike-friendly for bike sharing to be useful.

B cycle - 19th & Creek Path

Bike sharing in bike-friendly Boulder, Colo.
(Photo: Robert Rowe.)

Yes, most Portlanders already own a bike. And 52 percent of New York taxi passengers already own cars.

There are lots of reasons to have doubts about the particulars of Portland’s bike share plans, but uselessness isn’t one of them.

Correction: An earlier version of this post overstated the size of the Portland Streetcar’s operating subsidy.

Alta Bicycle Share teams up with former PBSC tech provider

Alta Bicycle Share teams up with former PBSC tech provider

In a big move that will impact bike sharing in the United States and beyond, Portland-based Alta Bicycle Share has announced a new “strategic partnership” with 8D Technologies.

8D is the company that formerly worked closely with the Public Bicycle System Company (PBSC, a.k.a. Bixi), the Montreal based company that filed for bankruptcy late last month. Alta uses the PBSC platform in the many bike share systems they operate and manage around the country and some of those systems (in Boston and Washington D.C.) are operated with software developed by 8D Technologies.

But the relationship between 8D and PBSC soured when PBSC began to export their successful Bixi system to the U.S. while allegedly secretly developing their own software and cutting 8D out of the picture. In April 2012 8D sued PBSC for breach of contract.

That lawsuit was one of only several major problems with PBSC as the government of Montreal began to ask hard questions about the business dealings of the company as it branched out far beyond its municipal roots. The 8D lawsuit and other financial problems took their tool and PBSC filed for bankruptcy on January 21st.

With PBSC’s future uncertain and Alta Bicycle Share and 8D in much stronger financial positions, it makes sense that Alta would essentially cut out the middle-man and begin dealing directly with 8D.

In their announcement today, Alta said they’ll work with 8D to “launch and operate the next generation of bike share in 2014.” Here’s more:

“Named “BSSv4”, the next generation of the 8D system has been in development for a few years, and builds upon the award winning “BSSv3” platform developed by 8D and currently deployed successfully in bike share systems in cities such as Washington D.C. / Arlington, Boston, Minneapolis, Melbourne (AUS), London (UK), Toronto, Ottawa, and Montreal (CAN).”

Alta VP Mia Birk said the alliance with 8D would impact “new clients”, which we assume would mean Portland. In another possible reference to Portland in the press statement released today, Alta said they have a goal of launching new systems in the summer of 2014.

With still no word about a financial sponsor, and a six-month lead-time needed between when that contract is finalized and bikes are deployed, Portland is currently looking at an August launch at the earliet.

As for what this mysterious new system would look like, Alta gave us a taste of what to expect:

The new system has a sleek design, merges the electronics boards and screens, and has an improved docking mechanism linking the bikes to the stations. Other BSSv4 system enhancements include:

    – Key distribution from the kiosk
    – Account management and bike reservations through a new mobile application
    – Color screens
    – Enhanced power management solutions
    – Improved docking/undocking mechanism

Stay tuned for more developments.