A Zagster shared bike in action.
By David Z. Morris
August 11, 2015

Tim Ericson was studying in Paris in July of 2007 when the Vélib’ public bike-sharing system was unveiled. Vélib’ lets citizens and tourists check out bikes from electronic docking stations and cruise around the City of Light.

“I don’t own a car, I still don’t own a car,” says Ericson. “So I was fascinated by this concept.”

Ericson would go on to launch CityRyde (now Zagster), one of the first U.S.-based bike share companies, even as others in the U.S. were having similarly eye-opening experiences. Chicago Mayor Richard Daley also hopped on a Vélib’, and thousands of riders enjoyed pop-up bike shares at the Democratic and Republican National Conventions in 2008, in Denver and Minneapolis respectively.

Those two cities became the first to deploy large-scale permanent systems. Now, the floodgates are open—dozens of U.S. bike sharing systems have launched in the past three years.

“It’s hard to keep up, there are so many new systems being developed,” says Time Blumenthal, president of the advocacy group People for Bikes. “And a lot of them are in unlikely places.”

Unlikely places like sweltering McAllen, Texas; Tampa, one of the most dangerous places to cycle in America; and, maybe most remarkable of all, a General Motors office park in Warren, Mich.

The systems—even Tampa’s—are proving hugely popular, adding riders, bikes and stations.

 

Companies installing and servicing those systems include Ericson’s Zagster; B-Cycle, which runs 32 systems in the U.S. and South America; and Motivate, which runs systems in Chattanooga, Tenn., Chicago, and New York, among others.

Groups like People for Bikes have been advocating for more cycle-friendly cities for decades, but pushback from drivers has been so intense it’s been characterized as the “Bike Wars.” The surge in bike sharing, despite that tension, is a response to undeniable trends.

Motivate’s Dani Simons says New York hopes CitiBike will help its transportation infrastructure deal with the million new inhabitants it expects by 2030, and other booming urban centers face similar pressures. Bike sharing is also a way for cities to cater to young, educated workers, who are less interested in car ownership than accessibility and quality of life. The systems may also lower healthcare costs by giving citizens more exercise—B-Cycle was co-founded by the insurer Humana (HUM).

Bikes can also increase efficiency for private companies—Ericson says the system Zagster installed for GM in Warren saves employees up to 30 minutes a day travelling between far-flung buildings.

Those ancillary benefits are important, because, as Ericson bluntly points out, “There’s no bikeshare in the world that’s profitable on rider revenue.” Cities and companies are experimenting with funding models that include sponsorships, grants, and local government funding. New York’s CitiBike, which relies on no public funds, is expected by most to be the exception going forward.

“I wouldn’t go so far as to say it’s a stunning business, with huge net profit upside for the private sector,” says Blumenthal.

Bicycle manufacturers may be the big winners. They’ll supply hardware for the expanding systems, but more importantly, sharing is re-introducing biking to adults who may decide they want their own rides. The manufacturer Trek has taken over full ownership of B-Cycle, and shared bikes in some locations bear its branding.

 

Another benefit may also constitute a risk. Researchers at McGill University found, in a study of Montreal after the founding of a bike-sharing system there in 2009, that property values near stations increased by an average of 2.7% over five years. Major investors in Motivate include real estate developers with large holdings in New York, according to Simons, which could create conflicts of interest.

Bike sharing does face challenges. The bankruptcy of the Public Bike System Co. last year left systems like Boston’s scrambling for new suppliers, and New York’s CitiBike rollout was notoriously glitch-plagued.

Most systems require payment by credit card, which may limit usage by the low-income people most in need of mobility. Philadelphia’s Indego, operated by Bicycle Transit Systems, is experimenting with allowing cash payments through the service PayNearMe.

Finally, Blumenthal points out that providing bikes isn’t enough. He says protected bike lanes, which fully separate riders from car traffic, are crucial to making new riders feel safe.

Theft, however, has turned out to be a surprisingly minor problem. In addition to credit-card requirements, safeguards include GPS tracking, custom construction, and robust station locks. Brian Conger, director of operations for B-Cycle, says no B-Cycle bike has ever been stolen from a docking station.

Simons, who has spent more than a decade working in cycling advocacy, is thrilled by what she sees as a ride that’s barely begun.

“This company started . . . five years ago,” she says of Motivate. “That’s nothing.”

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