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Business Rx: Bike-sharing without a home base

Monday, February 21, 2011; 20

The entrepreneur

When Allie Armitage, Vlad Tchompalov, Brad Eisenberg and Yasha Portnoy partnered together for a class project three years ago at the University of Maryland, they never thought their idea would turn into their own business. As part of the Quality Enhancement Systems & Teams honors program, the group came up with weBike, a bike-sharing program for small communities, to enhance transportation on and around university campuses.

The pitch

Armitage

"WeBike is a bike-sharing program that is stationless and uses an SMS Text Messaging platform to enable registered riders to check bikes in and out. It is the first stationless bike sharing system to be implemented in the country, and is easy to install, cost-effective to maintain and a fraction of the up-front investment required by station-based models. Our target market is small communities and colleges, who tend to lack a deep budget for bike transportation, making weBike the perfect solution for flexible, budget-friendly bike sharing.

"To use the system, riders monitor bike locations online or via text to find the nearest one to them. Bikes can be at a centralized checkpoint, such as an apartment building, or at dispersed locations, like across a campus or throughout a city. Riders check out a bike using their phone, ride the bike wherever they need to go, then drop it off at their final location, sending a text to weBike to check it in.

"WeBike launched a 15-bike pilot system at the University of Maryland last fall, and currently the team is operating its first revenue-generating system for the Mazza GrandMarc apartment complex in College Park. Since the September launch at Mazza, weBike has registered 85 users, logged more than 350 rides, and exchanged 2,500 text messages with their user base. We are working out kinks with our locks, because combinations aren't always changed and some people have been able to use bikes without our knowledge.

"We are also looking at charging riders some small fee to reduce the cost for the providers, who currently pay for everything. We think this could make the program more affordable to implement on more campuses.

"Recently, we've had a variety of communities contacting us about weBike, and we've been struggling to determine who our next ideal client is. While we are hesitant to say no to any sales leads, we also don't want to lose our internal focus or lead ourselves astray from our core. What's the best way we can grow the company, while also being strategic about our internal product and team development?"

The advice

David Kirsch, associate professor of management and entrepreneurship

"I think charging the rider a small fee could be a great way to incentivize them to behave the way you want. For example, if you are finding that a lot of bikes are ending up in unpopular locations at the end of a ride, because weBike is stationless, maybe waive a fee if riders bring the bikes to a more popular check-in/check-out spot.

"Another thing I recommend for weBike is, to the extent you can, build a community with your riders. Figure out what they love about the program and build on that. Use your working site as a learning laboratory to refine the value weBike is able to deliver. In addition, host social events for the weBike community. I've seen similar programs, such as Zipcar, host social events with great success. Riders will be more sympathetic to changes if there is a great program with a tight-knit community, so it will be easier for you to implement fees or other changes if you decide to.

"With regard to growth strategy, you have identified a common problem for start-up companies: how to sequence market building once you have created a new and exciting product or service. I suggest sitting down with your partners and deciding on the market or markets that you want to focus on. Identify a handful of ideal next-round partners and go get them. Of course, if someone slightly outside the bull's-eye calls out of the blue, talk to them. Their interest may compensate for the seeming lack of fit. What you don't want to do is to try to be all things to all people. I expect it may be hard to stay focused. The challenge is to keep learning and improving your service while also expanding it. In that sense, you might not have enough information right now to make the decision of who your ideal partner is, so figure out what information you need to make that decision and go about collecting it."

The reaction

Armitage

"One thing I really want to do is offer our service to customers who are passionate about the cause, and not just because it would be a nice amenity to provide residents. Going with that could help us pinpoint our target market.

"Your suggestion about hosting a social event is great, too. One of my biggest complaints right now is that there is a lack of community among weBike riders. It is hard for us to communicate to them as a community because we do have to go through an apartment complex. That is definitely something I want to work on for the future."

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