The business of bike sharing


Vladimir Bukalo rolls away from Capital Bikeshare location at Dupont Circle. (Jeffrey MacMillan/JEFFREY MACMILLAN)

To understand the mechanics of the sharing economy, it helps to spend a weekday morning near Dupont Circle.

There, hundreds of residents, tourists and commuters pick up or drop off one of the many distinctive red bikes available through the District’s Capital Bikeshare program each day. The 40-bike rack near 20th Street and Massachusetts Avenue NW is the busiest stop in the biggest bike-sharing program in the United States, and the comings and goings at Dupont are a microcosm of the supply-and-demand logistics of running a modern bike-sharing system.

To function efficiently, there needs to be enough bikes to borrow, and enough spaces in the rack to receive returned bikes. Capital Bikeshare has a staff of 25 that tries to keep that delicate balance in order by redistributing bikes around the city.

But at 11 a.m. one recent weekday, the system broke down.

“This is a little embarrassing,” Joseph Parez, a Portuguese tourist, said as he circled the station, searching for an available dock.

He’d bought a 24-hour membership that morning, and the terms required he return a bike after a 30-minute ride or face an overtime charge.

After taking a bike from 24th and N streets NW and biking to Dupont, he hoped to take a short break from sightseeing. Instead, Parez said he felt under pressure to find a space in 15 minutes.

A few minutes later, Chris Merriam biked up, on his way to a haircut from his office at the Justice Department. Though Merriam had checked online to make sure there were spaces available when he left his office about 10 minutes before, there were none by the time he reached Dupont Circle.

He was more fortunate. A Capital Bikeshare team arrived just then to begin redistributing bikes. Merriam handed his two-wheeler over to them. If he had waited a little longer, he might have been able to take advantage of the space vacated by George Washington University freshman Adam Starkman, who planned to bike back to campus after his own haircut in Dupont.

It is a dance repeated all over town, everyday. At another station near the corner of New Hampshire Avenue NW and T Street NW, Nick Hritz, a Capital Bikeshare employee, was redistributing about 20 bikes he’d picked up near the State Department and the Transportation Department. A dispatcher had alerted him that the New Hampshire station was empty — Hritz planned to leave a few there and a few more at a station near 17th and Corcoran streets NW.

Hritz usually drives a Capital Bikeshare van around the city from about 5 a.m. to 3:30 p.m., based on when and where bikes are needed.

“We can improve performance with more docks and stations, but we may never meet all demand at all locations. This is why many members buy/use their own bike if they know they are going to work and back, or on a similar round trip. This is unique, but you can’t always get the bus when you want, or find a seat when it comes,” said James R. Sebastian in an e-mail. He helps oversee the bike-sharing program for the District Department of Transportation.

4 million rides so far

Between networks in Arlington, Alexandria and the District, Capital Bikeshare has more shared bikes in circulation than any other region in the nation, with about 1,890 bikes and 22,000 annual members, according to the District Department of Transportation. Since its founding, hundreds of thousands of users have taken more than 4 million rides, averaging, among members on annual contracts, about 12 minutes a ride.

With the rise of car-sharing service Zipcar; Airbnb, which lets people rent bedrooms for short periods to travelers; and shared office spaces, Capital Bikeshare is hardly the first to break into Washington’s sharing economy. But it is the one easiest to spot, with its distinctive red bikes.

It is also a service that has proven popular with the city’s transient young professionals looking to cut costs and hesitant to make big buys such as cars or houses.

Capital Bikeshare user Jorge Delgado is one such young professional, who uses the system to commute to work every morning, and sometimes on weekends for personal trips. The 25-year-old has relied on an annual membership since September of 2011, having joined about a year after he moved to Washington.

Every morning around 8:40, Delgado checks his smartphone to see which of the stations closest to his apartment — First Street and Rhode Island Avenue NW or Florida Avenue and R Street NW — have available bikes. “If I’m not outside by 8:40 or 8:45, it’s highly likely I won’t find a bike,” he said.

If he finds one, he reaches a station at 21st and I streets NW in about 17 minutes, and can be at his desk at the George Washington University admissions office by 9 a.m. If he’s late and there are no bikes, Delgado rides the Metro from Shaw-Howard to Foggy Bottom, which takes him 45 minutes — he said he hasn’t taken the Metro at all since the presidential inauguration in January.

Annual membership costs him $75 a year, a tenth of what he might spend on Metro fares during the work week if he commuted twice a day. But for Delgado, the decision is more than an economic one.

“It does keep me active. I’m not a morning person. It helps get me awake, and it’s helping the environment.”

Popular with visitors

Capital Bikeshare might be useful to residents, but it’s also great for Washington’s image outside the region, a key ingredient to attracting even more people to the nation’s capital, according to Elliot Ferguson, president and chief executive of Destination D.C., an organization marketing the city as a tourist destination.

“It’s a big deal, especially as we go after international visitors from Montreal, Dublin, London. People are very interested in getting out, but not necessarily getting on buses,” said Ferguson, who is himself a Bikeshare user.

He said he noticed European and Asian tourists, who often are used to biking around their home cities, are particularly enthusiastic about Capital Bikeshare when they visit.

The presence of Capital Bikeshare could also make a city more attractive to potential residents, said Richard Bradley, executive director of the Downtown D.C. Business Improvement District.

A sharing economy allows individuals and companies to “free up capital for other kinds of purposes,” Bradley said. “Young people can now afford to come into the city because maybe they’re sharing apartments, sharing transportation and reducing what would have been the costs.”

A culture of sharing can contribute to a city’s creativity, he added. “We’re learning sharing has to do also with ideas, and the willingness to work collaboratively. It brings that creativity applied to service to entre­pre­neur­ship, and [sharers] will bring that kind of value to society.”

But he noted a generational difference between sharers and non-sharers. “I think older people are still thinking we need two houses, three cars and have to still own everything. That was the culture we inherited.”

For Chris Hamilton, Arlington’s transportation chief for commuter services, Capital Bikeshare is a calculated investment in an area’s economic development. He said he finds more millennials and baby boomers moving back to cities, “wanting a sense of place, wanting to walk to places and having a bike share complements that.”

“When we’re able to build in more [population] density, we can get a more diverse business culture that attracts the kinds of people [who want to live] where you can walk around and go to bars and restaurants without having to get in your car,” he said.

Downside of sharing

A soon-to-be master’s student in urban and regional planning, 26-year-old Aaron Ordower said he loved the concept of Capital Bikeshare, but it didn’t work for his daily commute. The system’s supply-and-demand equilibrium broke down a few too many times, and he ended his membership.

“I threw up my arms. I’m all about urban planning and sustainability. In terms of my demographic, you don’t have to sell me on this,” Ordower said, adding, “it’s a shame it didn’t work.”

It’s not for a lack of trying. A couple years ago, his employer, the World Bank, offered to cover annual membership for a handful of employees, and Ordower was among the first to sign up. He quickly grew frustrated when he tried to commute from his apartment near 16th and U streets NW.

“Let’s say I need to be at a meeting at 9 o’clock at the office,” he said, meaning he would want to grab a bike around 8:30 a.m. “I could check on my phone to see if there’s a bike available. By the time I get there, there’s no bike, and I’m stuck carrying a helmet. I have to get on a bus or hustle my way downtown. A scenario like that played out too many times,” said Ordower, who now walks to work.

Capital Bikeshare also has raised concerns among some in Washington’s biking community. Simon Pak, manager of Bike Rack, a bike shop in Northwest Washington, expressed concern about novice bikers on the roads — he said he’s witnessed several accidents.

“Since Capital Bikeshare started, any incident [I’ve witnessed] in bike-to-bike collisions have been with Capital Bikeshare riders. They’re the most inexperienced riders emulating more experienced riders,” he said.

Capital Bikeshare prompted a 15 percent boost in helmet sales at Bike Rack immediately after it opened, though the bump has since tapered off, especially after the city-subsidized program started selling its own helmets with membership, Pak said.

“I can’t say it’s been great,” Pak said, though he mentioned that about one in 10 customers come into the store looking for a sleeker alternative to the heavier bikes Capital Bikeshare provides.

The costs of the program

Capital Bikeshare is comprised of partnerships between local governments and Portland, Ore.-based Alta Bicycle Share. Alta operates a bike share in Boston (among other places), with 100 stations and 1,000 bikes, and has plans to start similar programs in New York in Chicago. New York’s version, named CitiBike after its title sponsor Citibank, could overtake Capital Bikeshare as the largest in the nation with more than 6,000 bikes planned. Alta provides the maintenance, installation, bikes and other equipment for the system — any revenue Capital Bikeshare generates is collected by the jurisdiction, which then pays a fee to Alta.

Operating costs vary by area — while one Capital Bikeshare programs is approaching profitability, the others aren’t. Operational costs do not include station installation and purchase of the bikes.

The District Department of Transportation and Arlington County pioneered Capital Bikeshare in 2010, beginning with 100 stations in the District and 14 in Arlington. In September, the city of Alexandria joined with eight stations — today, between the three jurisdictions, there are more than 200 stations. Within CapitalBikeshare, each jurisdiction operates the same way — bikers sign up for various plans including a 24-hour membership for $7, three days for $15, monthly for $25, and annual for $75.

In the past year, 24-hour memberships have grown by almost 100,000 users system-wide, with annual and three-day members increasing gradually. While the District, Arlington and Alexandria are all looking into expanding their own networks of stations, new jurisdictions are joining the system — last month Montgomery County announced its plans to roll out its own Capital Bikeshare program later this year, starting with 50 stations.

So far, the District’s system is closest to covering its day-to-day costs completely, recovering almost 100 percent in revenue. On average, Bikeshare stations in the District cost about $54,000 to install, including space, dock equipment and the bikes, according to Chris Holben, the District Department of Transportation’s bike-sharing project manager. After installation, stations require on average about $24,000 a year for maintenance — redistributing bikes from station to station, operating a call center and Web hosting. Since 2012, each station generally brings in about $20,000 in revenue, Holben said, though at its peak, when Capital Bikeshare offered a deal through LivingSocial, they were bringing in about $23,000.

In Arlington, the system in total brought in about $411,000 in revenue in 2012 — more than twice as much as it did in 2011. Its total costs were $643,000, meaning it recovered about 64 percent of the expense. During that time, Arlington’s Bikeshare grew to 41 stations, and now has 286 bikes circulating.

Alexandria began its program eight months ago, so it does not have cost-recovery figures yet.

Each program is taking a different approach to cost-recovery.

Last month, the District issued a request for bids for advertisers for docking stations — the minimum bid is a $1 million upfront payment for five years, which the city hopes will be implemented in the spring or summer, Holben said. Arlington, on the other hand, is on the lookout for large sponsors — Virginia laws affecting outdoor advertising might prevent the county from participating in certain ad campaigns, Hamilton said.

Despite their efforts to recover costs, Capital Bikeshare’s managers see the service as a public good.

“Transit systems typically do not make money and cover costs — we’re probably one of the most successful transit systems in that respect,” Holben said.

Mohana Ravindranath covers IT and small business for the Washington Post and its weekly Capital Business publication.
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Vladimir Bukalo rolls away from Capital Bikeshare location at Dupont Circle. (Jeffrey MacMillan/JEFFREY MACMILLAN)

To understand the mechanics of the sharing economy, it helps to spend a weekday morning near Dupont Circle.

There, hundreds of residents, tourists and commuters pick up or drop off one of the many distinctive red bikes available through the District’s Capital Bikeshare program each day. The 40-bike rack near 20th Street and Massachusetts Avenue NW is the busiest stop in the biggest bike-sharing program in the United States, and the comings and goings at Dupont are a microcosm of the supply-and-demand logistics of running a modern bike-sharing system.

To function efficiently, there needs to be enough bikes to borrow, and enough spaces in the rack to receive returned bikes. Capital Bikeshare has a staff of 25 that tries to keep that delicate balance in order by redistributing bikes around the city.

But at 11 a.m. one recent weekday, the system broke down.

“This is a little embarrassing,” Joseph Parez, a Portuguese tourist, said as he circled the station, searching for an available dock.

He’d bought a 24-hour membership that morning, and the terms required he return a bike after a 30-minute ride or face an overtime charge.

After taking a bike from 24th and N streets NW and biking to Dupont, he hoped to take a short break from sightseeing. Instead, Parez said he felt under pressure to find a space in 15 minutes.

A few minutes later, Chris Merriam biked up, on his way to a haircut from his office at the Justice Department. Though Merriam had checked online to make sure there were spaces available when he left his office about 10 minutes before, there were none by the time he reached Dupont Circle.

He was more fortunate. A Capital Bikeshare team arrived just then to begin redistributing bikes. Merriam handed his two-wheeler over to them. If he had waited a little longer, he might have been able to take advantage of the space vacated by George Washington University freshman Adam Starkman, who planned to bike back to campus after his own haircut in Dupont.

It is a dance repeated all over town, everyday. At another station near the corner of New Hampshire Avenue NW and T Street NW, Nick Hritz, a Capital Bikeshare employee, was redistributing about 20 bikes he’d picked up near the State Department and the Transportation Department. A dispatcher had alerted him that the New Hampshire station was empty — Hritz planned to leave a few there and a few more at a station near 17th and Corcoran streets NW.

Hritz usually drives a Capital Bikeshare van around the city from about 5 a.m. to 3:30 p.m., based on when and where bikes are needed.

“We can improve performance with more docks and stations, but we may never meet all demand at all locations. This is why many members buy/use their own bike if they know they are going to work and back, or on a similar round trip. This is unique, but you can’t always get the bus when you want, or find a seat when it comes,” said James R. Sebastian in an e-mail. He helps oversee the bike-sharing program for the District Department of Transportation.

4 million rides so far

Between networks in Arlington, Alexandria and the District, Capital Bikeshare has more shared bikes in circulation than any other region in the nation, with about 1,890 bikes and 22,000 annual members, according to the District Department of Transportation. Since its founding, hundreds of thousands of users have taken more than 4 million rides, averaging, among members on annual contracts, about 12 minutes a ride.

With the rise of car-sharing service Zipcar; Airbnb, which lets people rent bedrooms for short periods to travelers; and shared office spaces, Capital Bikeshare is hardly the first to break into Washington’s sharing economy. But it is the one easiest to spot, with its distinctive red bikes.

It is also a service that has proven popular with the city’s transient young professionals looking to cut costs and hesitant to make big buys such as cars or houses.

Capital Bikeshare user Jorge Delgado is one such young professional, who uses the system to commute to work every morning, and sometimes on weekends for personal trips. The 25-year-old has relied on an annual membership since September of 2011, having joined about a year after he moved to Washington.

Every morning around 8:40, Delgado checks his smartphone to see which of the stations closest to his apartment — First Street and Rhode Island Avenue NW or Florida Avenue and R Street NW — have available bikes. “If I’m not outside by 8:40 or 8:45, it’s highly likely I won’t find a bike,” he said.

If he finds one, he reaches a station at 21st and I streets NW in about 17 minutes, and can be at his desk at the George Washington University admissions office by 9 a.m. If he’s late and there are no bikes, Delgado rides the Metro from Shaw-Howard to Foggy Bottom, which takes him 45 minutes — he said he hasn’t taken the Metro at all since the presidential inauguration in January.

Annual membership costs him $75 a year, a tenth of what he might spend on Metro fares during the work week if he commuted twice a day. But for Delgado, the decision is more than an economic one.

“It does keep me active. I’m not a morning person. It helps get me awake, and it’s helping the environment.”

Popular with visitors

Capital Bikeshare might be useful to residents, but it’s also great for Washington’s image outside the region, a key ingredient to attracting even more people to the nation’s capital, according to Elliot Ferguson, president and chief executive of Destination D.C., an organization marketing the city as a tourist destination.

“It’s a big deal, especially as we go after international visitors from Montreal, Dublin, London. People are very interested in getting out, but not necessarily getting on buses,” said Ferguson, who is himself a Bikeshare user.

He said he noticed European and Asian tourists, who often are used to biking around their home cities, are particularly enthusiastic about Capital Bikeshare when they visit.

The presence of Capital Bikeshare could also make a city more attractive to potential residents, said Richard Bradley, executive director of the Downtown D.C. Business Improvement District.

A sharing economy allows individuals and companies to “free up capital for other kinds of purposes,” Bradley said. “Young people can now afford to come into the city because maybe they’re sharing apartments, sharing transportation and reducing what would have been the costs.”

A culture of sharing can contribute to a city’s creativity, he added. “We’re learning sharing has to do also with ideas, and the willingness to work collaboratively. It brings that creativity applied to service to entre­pre­neur­ship, and [sharers] will bring that kind of value to society.”

But he noted a generational difference between sharers and non-sharers. “I think older people are still thinking we need two houses, three cars and have to still own everything. That was the culture we inherited.”

For Chris Hamilton, Arlington’s transportation chief for commuter services, Capital Bikeshare is a calculated investment in an area’s economic development. He said he finds more millennials and baby boomers moving back to cities, “wanting a sense of place, wanting to walk to places and having a bike share complements that.”

“When we’re able to build in more [population] density, we can get a more diverse business culture that attracts the kinds of people [who want to live] where you can walk around and go to bars and restaurants without having to get in your car,” he said.

Downside of sharing

A soon-to-be master’s student in urban and regional planning, 26-year-old Aaron Ordower said he loved the concept of Capital Bikeshare, but it didn’t work for his daily commute. The system’s supply-and-demand equilibrium broke down a few too many times, and he ended his membership.

“I threw up my arms. I’m all about urban planning and sustainability. In terms of my demographic, you don’t have to sell me on this,” Ordower said, adding, “it’s a shame it didn’t work.”

It’s not for a lack of trying. A couple years ago, his employer, the World Bank, offered to cover annual membership for a handful of employees, and Ordower was among the first to sign up. He quickly grew frustrated when he tried to commute from his apartment near 16th and U streets NW.

“Let’s say I need to be at a meeting at 9 o’clock at the office,” he said, meaning he would want to grab a bike around 8:30 a.m. “I could check on my phone to see if there’s a bike available. By the time I get there, there’s no bike, and I’m stuck carrying a helmet. I have to get on a bus or hustle my way downtown. A scenario like that played out too many times,” said Ordower, who now walks to work.

Capital Bikeshare also has raised concerns among some in Washington’s biking community. Simon Pak, manager of Bike Rack, a bike shop in Northwest Washington, expressed concern about novice bikers on the roads — he said he’s witnessed several accidents.

“Since Capital Bikeshare started, any incident [I’ve witnessed] in bike-to-bike collisions have been with Capital Bikeshare riders. They’re the most inexperienced riders emulating more experienced riders,” he said.

Capital Bikeshare prompted a 15 percent boost in helmet sales at Bike Rack immediately after it opened, though the bump has since tapered off, especially after the city-subsidized program started selling its own helmets with membership, Pak said.

“I can’t say it’s been great,” Pak said, though he mentioned that about one in 10 customers come into the store looking for a sleeker alternative to the heavier bikes Capital Bikeshare provides.

The costs of the program

Capital Bikeshare is comprised of partnerships between local governments and Portland, Ore.-based Alta Bicycle Share. Alta operates a bike share in Boston (among other places), with 100 stations and 1,000 bikes, and has plans to start similar programs in New York in Chicago. New York’s version, named CitiBike after its title sponsor Citibank, could overtake Capital Bikeshare as the largest in the nation with more than 6,000 bikes planned. Alta provides the maintenance, installation, bikes and other equipment for the system — any revenue Capital Bikeshare generates is collected by the jurisdiction, which then pays a fee to Alta.

Operating costs vary by area — while one Capital Bikeshare programs is approaching profitability, the others aren’t. Operational costs do not include station installation and purchase of the bikes.

The District Department of Transportation and Arlington County pioneered Capital Bikeshare in 2010, beginning with 100 stations in the District and 14 in Arlington. In September, the city of Alexandria joined with eight stations — today, between the three jurisdictions, there are more than 200 stations. Within CapitalBikeshare, each jurisdiction operates the same way — bikers sign up for various plans including a 24-hour membership for $7, three days for $15, monthly for $25, and annual for $75.

In the past year, 24-hour memberships have grown by almost 100,000 users system-wide, with annual and three-day members increasing gradually. While the District, Arlington and Alexandria are all looking into expanding their own networks of stations, new jurisdictions are joining the system — last month Montgomery County announced its plans to roll out its own Capital Bikeshare program later this year, starting with 50 stations.

So far, the District’s system is closest to covering its day-to-day costs completely, recovering almost 100 percent in revenue. On average, Bikeshare stations in the District cost about $54,000 to install, including space, dock equipment and the bikes, according to Chris Holben, the District Department of Transportation’s bike-sharing project manager. After installation, stations require on average about $24,000 a year for maintenance — redistributing bikes from station to station, operating a call center and Web hosting. Since 2012, each station generally brings in about $20,000 in revenue, Holben said, though at its peak, when Capital Bikeshare offered a deal through LivingSocial, they were bringing in about $23,000.

In Arlington, the system in total brought in about $411,000 in revenue in 2012 — more than twice as much as it did in 2011. Its total costs were $643,000, meaning it recovered about 64 percent of the expense. During that time, Arlington’s Bikeshare grew to 41 stations, and now has 286 bikes circulating.

Alexandria began its program eight months ago, so it does not have cost-recovery figures yet.

Each program is taking a different approach to cost-recovery.

Last month, the District issued a request for bids for advertisers for docking stations — the minimum bid is a $1 million upfront payment for five years, which the city hopes will be implemented in the spring or summer, Holben said. Arlington, on the other hand, is on the lookout for large sponsors — Virginia laws affecting outdoor advertising might prevent the county from participating in certain ad campaigns, Hamilton said.

Despite their efforts to recover costs, Capital Bikeshare’s managers see the service as a public good.

“Transit systems typically do not make money and cover costs — we’re probably one of the most successful transit systems in that respect,” Holben said.

Mohana Ravindranath covers IT and small business for the Washington Post and its weekly Capital Business publication.
SECTION: {section=business, subsection=capitalbusiness}!!!
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SECTION: {section=business, subsection=capitalbusiness}!!!
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