Why Scooter Company Bird Is Worth $2.5 Billion—Data Sheet

(Update: In May, 2021, Bird agreed to merge with a special purpose acquisition company called Switchback II in a deal valuing the scooter startup at $2.3 billion.)

Tech-industry entrepreneurs say such ridiculous things in real life that achieving comedic verisimilitude on shows like Silicon Valley is a cinch.

Travis VanderZanden, in a statement reported by TechCrunch, said some time last year his scooter-service company Bird “recognized the world was changing,” a euphemism for the loss of patience by investors with money-losing startups. “Gone are the days when top line growth was the leading KPI for emerging companies,” he continued, a KPI being startup blather for “key performance indicator” (known in the real world as business goals for which managers will be held accountable) and “emerging companies” being a fancy name for venture-backed startups that lose money. He kept going: “Positive unit economics is the new goal line. As a result, we pivoted from growth to unit economics as the top priority for the company.” This mélange of clichés checks all the boxes: VanderZanden presents charging more money than each trip costs his company as a radical business concept while congratulating himself for shifting gears from unprofitable growth to potentially profitable something else. (He contrasts a focus on unit economics with growth, but I’m guessing he still expects Bird to grow.)

This all comes in the context of Bird announcing it has raised $275 million from reputable investors at a “pre-money” valuation, or not counting the $275 million, of $2.5 billion. A friend wrote to ask how a scooter service possibly could be worth $2.5 billion and wondered what he was missing.

Here’s my best answer.

First, as with many such startups, a game of the greater fool is at work. Investors reckon that a greater fool—in this case the bigger transportation services Uber or Lyft—will buy Bird to augment their services. Also, investors see what they want: Bird says it has positive unit economics on some scooters in some markets in some weather (summer). Alright then.

Valuation and an overabundance of competitors aside, “last-mile” urban transportation hardly is a dumb idea. I haven’t ridden electric scooters, but I ride manual and pedal-assist share bikes every day. In decent weather, I’d rather take 15 minutes longer to get somewhere on a bike than be stuck in traffic in a car any day. (A few weeks ago I carried my helmet to New York where I rode Lyft’s (Citibike) bikes everywhere I went. Takeaway: New York has serious work to do to catch up to San Francisco’s bike lanes.) As we become more urbanized, as our cities become smarter, as climate change drives more infrastructure decisions, and as city centers become more congested, commuters will be more and more willing to pay for alternatives.

Who knows, the pivot to unit economics might even become an awesome KPI.

Adam Lashinsky

On Twitter: @adamlashinsky

Email: adam_lashinsky@fortune.com

NEWSWORTHY

Less gig, more economy. The  new co-chief executive officers of the company formerly known as WeWork Artie Minson and Sebastian Gunningham had bad news for their employees, saying required cost cutting would lead to layoffs. Bloomberg reports the cuts could total 2,000 people, or 16% of the company's workforce. Meanwhile at HP, the PC and printer maker's new CEO, Enrique Lores, is also looking at cutting about 16% of the company's workforce, or 9,000 jobs.

Peering over your shoulder. U.S. Attorney General William Barr and officials from Australia and the United Kingdom asked Facebook to end a plan for adding end-to-end encryption to its messaging applications unless it also adds backdoors to allow law enforcement to decode all messages. Facebook pushed back, saying it would not.  

Have I got a job for you. Adding to its driving and delivery businesses, Uber unveiled a service called Uber Works to help match temporary workers with potential jobs and employers. The new service is available only in Chicago, so far.

Chill out. Payments processor Square says it will accept retailers selling marijuana derivative CBD as customers. CBD is sold as a wellness and relaxation agent, but does not have the psychoactive properties of THC.

Minimalist. Fans of small(er) phones may get what they wanted from Apple. The iPhone maker is rumored to be working on a revision of its SE model that will include the latest chips and cameras packaged with a 4.7-inch screen.

Criminal responsibility. Six men who were part of an illegal drug ring called Mike’s Candyshop were indicted this week for their involvement in the death by overdose of Colin Kroll, co-founder of the HQ Trivia game app.

FOR YOUR WEEKEND READING PLEASURE

A few longer reads that I came across this week that may be appealing for your weekend reading pleasure:

The Closet Chronicles: How I Buy and Sell $1,000 of Clothing a Month (Wall Street Journal)

Grailed, a marketplace for men’s clothing, has radically changed how our reporter thinks of his wardrobe.

Tech’s Most Controversial Startup Now Makes Drone-Killing Robots (Bloomberg Businessweek)

Founded by Palmer Luckey and backed by Peter Thiel, Anduril is rekindling the connection between the American military and Silicon Valley.

The Shaw Family Admission Plan (New York Magazine)

One Wall Street billionaire and the ultimate college hedge.

The Best New Hotels Around the World (Surface Magazine)

From Mexico to Macau, micro to massive, the Surface Travel Awards finalists in the hotel and resort categories reveal an industry awash in creativity.

FOOD FOR THOUGHT

Genetic genealogists—who use consumer DNA tests to build family trees—had been a close-knit community. Many began as volunteers. The tools they use were created by volunteers. GEDmatch was originally created by volunteers. None of it was meant for criminal investigations. As the genealogist Shannon Christmas puts it, “It was built for finding ancestors. It was built for reuniting families, and now it is being used essentially to get families to put their members in jail.”

IN CASE YOU MISSED IT

OpenAI Will Need More Capital Than Any Non-Profit Has Ever Raised By Jonathan Vanian

Instagram’s New Messaging App Can Use Your Phone’s Sensors To Auto-Update Your Status By Danielle Abril

Twitter Took a Trump Tweet Down, but Should It Have? And Is Nickelback to Blame? By Jeff John Roberts

Why Your Cable TV Bill Is Much Higher Than Advertised By Aaron Pressman

Europe’s Incoming Internet Tax Czar Is Also an Amazon Shareholder By Eric J. Lyman

M. Night Shyamalan Says Apple TV+ Series ‘Servant’ Presented New Opportunities By Radhika Marya

Domino’s Delivers a Dilemma to the Supreme Court: A Website Accessibility Case That Could Impact Thousands of Companies By Jeff John Roberts

BEFORE YOU GO

Need help putting your phone down? Perhaps the Forest app can help. Open the app and a forest begins to grow. The longer you keep the app open, the more your forest thrives. But switch to any other app–say, to check your Insta feed or watch a few TikTok videos–and the forest withers. That's a lot of (virtual) responsibility.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.