In the weeks leading to its abrupt shutdown this spring, van-pooling service Bridj was planning a major expansion in the District. The pop-up bus service, then limited to a few neighborhoods, would have offered pickups anywhere in Washington, according to founder Matt George. The announcement was slated for the week after the April shutdown, he said.
But in the rough-and-tumble world of ride sharing, where launches are frequent and shutdowns even more so, long-term plans can turn on a dime.
Case in point: Bridj, where a deal with a large automaker (reported to be Toyota) fell through and the pop-up bus service was suddenly forced to reckon with a financial free fall. The Boston-based company raised $11 million in investor capital over four years and transported tens of thousands of passengers in the District, but by late spring — despite successes along some popular routes — its losses were piling up too fast.
“The thing I equate it to is if you’re in a fighter jet and you’re three inches away from the refueling tanker, you’re gonna drop out of the sky no matter how close you are to the fueling tank,” George said.
And so Bridj went the way of Split, Sidecar and other shared-ride services that have launched in the District, gained a following among thousands, but failed to find a sustainable financial model.
Sidecar arrived in 2013 but was the first to go in late 2015. Split launched in May 2015 but halted service in October 2016. Bridj fell in April, two years after it arrived. And now Via, a New York-based ride-sharing service, has taken over as the resident alternative to Uber and Lyft — albeit with exponentially more financial resources than its predecessors.
For smaller firms such as homegrown Split, which raised $12.5 million by the time it disbanded last fall, keeping up with the ride-sharing bigwigs proved difficult — if not impossible.
[D.C.-based Split will discontinue ride-share service, citing market ‘saturation’]
Steep discounts and subsidized fares from the giants made Washington a tough market, said Ario Keshani, co-founder of the now-defunct Split. Split folded its service in October, months after Uber and Lyft began offering $3 rides and discounts up to 75 percent, respectively, to attract riders during Metro’s year-long SafeTrack program.
“What has happened with Uber and Lyft is it’s become a strategic tool — spending money as a tool to get something done,” Keshani said. “And that makes it difficult to compete if you don’t have the same resources.”
Which begs the question: Why bother to try to break into a market where there are already deep-pocket competitors with billions in capital and who are willing to spend vast sums of it to crush the competition? (Uber lost $2.8 billion overall last year, while Lyft lost $600 million, according to Bloomberg.)
Via chief executive Daniel Ramot said the ride-share business is a difficult one, requiring economies of scale, and significant investments are needed to build a customer base. Via, which has raised $137 million to date, has exponentially more cash than the other apps ever did, he said.
Much like ride-splitting services such as UberPOOL and Lyft Line, Via takes passengers headed in the same direction on shared rides. But service isn’t door-to-door.
“Think of Via as a bus that’s smart enough to come when you want it and where you want it,” the company says on its website.
Passengers choose their pickup and drop-off points, and Via’s algorithm chooses a nearby corner for a pickup and selects a drops-off point near a passenger’s destination — at most a couple of blocks away.
“I think it is possible to turn a profit — it’s hard and it takes a long time and a lot of investment,” Ramot said.
[With looming Metro disruptions, transportation companies ready their pitches to commuters]
So far, Ramot said, Washington is the smallest market for his app, which also operates in New York and Chicago. But profit isn’t the focus in the District, he said, pointing to Via’s discounted local fares of $2.95 per ride. The company is just trying to build ridership here. In New York, where rides start at $5, “we really are trying to turning a profit — in a mature market where we’re achieving scale,” he said.
Via’s D.C. coverage area extends from Georgetown to Cleveland Park, and from Columbia Heights to NoMa and Capitol Hill. The company, which is focused on its existing routes and has made a point of not biting off more than it can chew. But the service has a “mini-expansion” planned that would extend the line to the H Street NE corridor beginning Monday.
“In any case, I really hope we’ll be around [for the foreseeable future],” Ramot said. “I really believe we will be.”
So what happens to the start-ups that do shutter? It’s generally not the end of the line. George, of Bridj, said he’s shopping his technology platform to various companies, including some Fortune 500 and Fortune 50 firms, and values the software in the millions of dollars.
Company officials say their routing algorithms can prove lucrative in a market where automakers are shopping for tech to power their ride-pooling services and, eventually, self-driving cars.
“They see it as a way to make sure they’ve got chips on the table,” Keshani said. “If you believe that people’s behavior of getting around is changing dramatically, and you’re an automaker, then you have to believe that your core business is gonna be impacted so you’re going to want to be . . . on the side of the people that are actually impacting.”
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Keshani knows firsthand automakers’ thinking in buying up the remnants of disbanded ride-sharing start-ups.
Last week , the Finland-based tech division of Split, which includes about a dozen engineers, was acquired by MOIA, a mobility-focused company under the Volkswagen umbrella, for an undisclosed amount thought to be in the millions. The automaker wants to launch a pooled-ride service in Europe relying partially on the software pioneered by Split.
Automakers have increasingly moved to acquire the remaining assets of disbanded ride-share companies, a practice that Ramot likened to “fire sale” acquisitions. General Motors acquired the remnants of Sidecar last year.
GM also invested $500 million in Lyft in January 2016, eyeing an eventual self-driving vehicle network. And later last year, Ford announced that it was acquiring Chariot as it aimed to introduce the San Francisco-based minibus service to cities nationwide.
In some ways, the District served as a testing ground for the routing software Volkswagen will use for MOIA, which computes the most efficient route for multiple trips, grouping passengers headed in the same direction into one vehicle. That’s a point of pride for Keshani, who will be bought out of the company he headed.
[New to D.C., ride-sharing service Via wants to replace the Red Line during SafeTrack]
“When we started Split we weren’t dreaming of getting acquired a few years down the line. Obviously we considered it a very real and reasonable possibility,” he said. “I think we built a truly revolutionary start-up and service that for a good amount of time offered a totally different way for people to get around town — offered a way for people to get around town that was a little more ecological, a lot more economical. That in itself was a big success for us.”