Ride-sharing and mobility are creating new ways to move

Colin Gillis

Free candy in a stranger’s car

If a stranger offered you a ride in a car, with some free candy, likely you’d say no. It’s a lesson we learn from childhood: Don’t get in a stranger’s car—especially if they offer free candy. Fast-forward to 2017, and the company that’s raised the largest amount of private capital this year is one whose business model is “Hop in a stranger’s car”. That’s right, ridesharing company Didi Chuxing raised an eye-popping bundle of new capital—approximately USD $6 billion—to fund the global expansion of its mobility service, which is already serving 400 million users in China. The new funding places Didi’s valuation at USD $50 billion, making it the second most valuable private company in the world. So which private company is the most valuable in the world? Why, it’s Uber! The U.S.-based ride-sharing competitor is valued at a whopping USD $68 billion. And here’s where candy comes in: Drivers for Uber and Didi who provide free candy to passengers are rewarded with the highest satisfaction ratings. Free candy in a stranger’s car: A brand and business model worth over USD $100 billion.

 

Move me

There is a red thread of investments that tie billions of dollars in fresh capital to entrepreneurs seeking to reimagine the transportation landscape. One may wonder: “Why now?” The Answer: People across the world finally have PCs.

Before you say, “But the PC has been around for 46 years and sales peaked back in 2011,” realize that I am talking about the truly personal computer—the one you look at first thing in the morning, the one that Americans check eight billion times per day. That’s right—the true personal computer is your smartphone.

In fact, over five times as many smartphones were sold in 2016 compared to the traditional PC—that’s almost 1.5 billion phones. To place this staggering number in perspective, that is a new smartphone for one out of five people across the globe produced in a single year. This wave of affordable mobile computing, combined with more accurate geolocation systems, is unlocking asset value, fueling the sharing economy, and changing the way that we deliver goods and services.

 

“Honk Honk”

Mobility company Didi Chuxing is using its massive capital raise to break through to new markets across the globe. The brand, whose name roughly translates to “honk honk”, generated an explosion of recognition when it acquired Uber’s China operations—winning a battle that was piling up losses exceeding USD $1 billion per year for Uber. The transaction was considered a rare defeat for Uber, a company that earned its chart-topping valuation by being fast, brash, and unafraid of any scandals along the way.

While companies such as Didi, Uber, and Lyft have allowed people to use their cars to make money driving other people, we also see the asset value of the personal car being unlocked in other ways.

While the car sharing economy is nascent, Europe-focused Drivy is breaking out by providing a robust marketplace that allows car owners to rent their vehicles through a peer-to-peer model, even solving the sticking point of insurance by partnering with Allianz SE.

 

Last-mile logistics

While moving people is clearly a big business, moving parcels is also a massive opportunity. Last-mile logistics is a barrier for many services seeking to get goods into the hands of consumers in a timely manner. Ninja Van is expanding beyond its Singapore roots to bring its cloud-based logistics solution to countries across Southeast Asia, going beyond the major cities to provide more regional service.

One key to Ninja Van’s success and an element of success in many of the companies discussed here is the ability to have elastic capacity combined with computational and logistical prowess to handle the variance in demand. Ride-sharing companies can use surge pricing when demand is high as an incentive to get more drivers on the road. Ninja Van has the ability to source delivery of parcels through a network of partners when its own fleet is fully utilized.

The companies mentioned above have one item in common—a human in the driver seat. Efforts to build automated driving systems are generously backed by companies such as Alphabet spinout Waygo, Uber, Tesla, and others. Proving that there is always room in the marketplace for those who build elegant solutions, Navya has launched a 100% autonomous, driverless, electric shuttle. Targeting the less-regulated landscape of private transportation as its first market, it took the company 10 years of research to be the first to break into the highest level of vehicle autonomy.

 

Auto-alternatives

In many cities, traffic impedes the efficiency of traveling by car—Germany’s Unu builds emission-free electric scooters for those seeking to break through urban congestion. The brand promotes the convenience of electro-mobility by offering the option to have the scooter delivered to customers already insured and with a pre-mounted license plate.

Finally, we’re seeing rising fleets of a form of transportation that was invented 200 years ago: the bicycle. China-based ofo is a bike-sharing company that started a mere two years ago and now has over 3 million of its bright yellow bikes across 50 cities, with plans to break into 20 countries globally. In fact, ofo just partnered with Didi Chuxing to allow users to get a bike directly from the Didi app, providing smart mobility solutions to traditionally crowded cities, and beyond.

These Breakthrough Brands continue to transform the transportation space. They’re partnering, innovating, and inventing to find new ways to move people—and society—forward.

Director of Research and Senior Technology Analyst, BGC Partners