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Hit the Ground Pedaling

Student entrepreneurs tout bike-share for Boston

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BikeNow principals Jeff Dang (SMG’09) (from left), Amy Trus (SMG’09), and James Sinclair (SMG’09) outside Myles Standish Hall.

It’s a bold move to start a company in this economy, especially when you’re undergraduates with no business track record. But Amy Trus (SMG’09), James Sinclair (SMG’09), and Jeff Dang (SMG’09) have a vision, albeit still just a business plan, that matches their ambition: they want to change the way we get from here to there.

Their proposed company, BikeNow, would blanket the city with bikes that could be rented with a swipe card, then returned to any of 100 or so drop-off stations. The idea, a bicycle version of Zipcar, is known as bike-share. It’s already a hit in Europe. Boston is one of several American cities, among them Minneapolis, Chicago, and Philadelphia, talking about following suit. BikeNow is in the running to become the bike-share service for Boston, which issued a request for proposals, due in May, for a service to begin next spring. The company is also a finalist in tomorrow’s $50,000 business plan competition sponsored by BU’s Institute for Technology Entrepreneurship and Commercialization (ITEC).

“We all ride bikes, but we’re not avid cyclists wearing lime green spandex,” says Trus, describing BikeNow’s cofounders. The whole idea of the company is to cajole those who would normally drive, take the T, or hike on city treks to hop on a bike instead. An annual or daily subscription ($40 and $1.25, respectively) would get you a swipe card to unlock one of about 1,000 bikes stationed in racks on college campuses, outside subway stations, and along busy commercial strips.

Trus and company developed that premise last spring in a course taught by Erik Molander, a School of Management lecturer in strategy and innovation and a managing director at Mentor Capital Partners, LLC, a Pennsylvania firm that invests in early-stage companies.

“We knew we wanted to do a sustainable project,” says Trus. They’d heard of bike-shares operating in Europe, most notably Paris’ Velib, launched in July 2007. Then came the hard part — copious research, unexpected puzzles, and the daunting price of turning a bright idea into something real.

Start with a key core question: what to charge? BikeNow’s business plan says the first half hour will be free, accounting for an anticipated 75 percent of all bike trips. Every subsequent half hour would cost more — $9 for three hours, for example, and $16 for four hours.

“We want you to bring that bike back quickly,” Trus says, explaining the price escalation.

Then there’s the question of where to put drop-off stations. Sinclair pored over maps of the region’s transportation patterns to find optimal spots; each will require a negotiated deal with the city or a private property owner. And no matter how well planned, BikeNow will need to reposition bikes from one station to another: they’ll need staff in roving vans to move bikes around or to help riders with flat tires or sticky gears.

Need a helmet? They’ll be available for a few bucks from a nearby vending machine.

“It was a much harder process than we thought,” says Trus. “You start with a basic premise. Pretty soon you see there are problems. And then those problems lead to other problems.”

“Many students get excited by the prospect of starting a business, and then stop when they hit the first bump in the road,” says Molander, who is a member of BikeNow’s advisory board. “But these guys aren’t quitters. They have the tenacity to overcome significant obstacles.”

Mark Williams, an SMG executive-in-residence, who bikes to work from Newton and sits on BikeNow’s advisory board, agrees. “You could tell this was never just about creating and building a business plan for class,” he says. “It was about creating and building a real business.”

BikeNow’s cofounders believe bike-share programs could turn two-wheeled travel into a mainstream option for famously bike-phobic, car-crazy Americans. They have a ways to go: fewer than one percent of us commute by bike, according to the U.S. census, despite our increasingly traffic-choked roads. According to a 2006 study by the city of Boston and the Metropolitan Area Planning Council, more than 356,000 vehicles were registered in Boston in 2005, up 45 percent from a decade earlier, creating traffic headaches and a parking shortage.

To get people out of their SUVs and onto a bike, says Trus, BikeNow’s CEO, you need a lot of bikes and a lot of convenient places to pick them up and drop them off. The city’s bike-share RFP estimates the optimal number of bikes at 1,500, spread across 150 stations. This is in contrast to the only metropolitan bike-share program up and running in the United States, SmartBike DC, in Washington, D.C., which has only 10 bike stations.

“Density is what makes a service like this work,” agrees Nicole Freedman, Boston’s director of bicycle programs (also known as the city’s “bike czar”). “That’s the real value of it — convenience.”

The city’s bike-share ambitions are part of the 18-month old Boston Bikes initiative of Mayor Thomas M. Menino (Hon.’01), which aims to “change culture — to establish cycling as a mainstream activity and a form of transportation that is welcoming to the general public.” Boston Bikes has led to the installation of 250 additional bike racks, a bike map (to be released this spring), and a few miles of new bike lanes. The first new bike lane opened on Commonwealth Ave last summer.

Some are skeptical about Boston’s big plans for bicycles, because the city has a mixed record of follow-through. A previous effort to make Boston a world-class cycling city foundered in 2003 when a former “bike czar” was laid off and a bicycle advisory committee disbanded.

“Basically, the streets of Boston are still pretty bike-unfriendly,” says Doug Mink, vice chair of the Boston chapter of the bicycle advocacy organization MassBike. He wonders whether the city is ready for a comprehensive bike-share program. Still, Freedman’s efforts give him hope. “Over the last few months, I’ve seen that Nicole is making the city change really fast,” Mink says.

BikeNow’s cofounders are confident change is coming. They anticipate getting nearly 18,000 annual subscribers in the first year and more than 70,000 subscribers by year five. “Simply put,” they write in their business plan, “we think people will be more willing to ride if they see others doing it.”

But there’s a lot of work still to do before subscriber number one puts foot to pedal. They need to raise between $3 million and $5.5 million to buy bikes and locks, plus hire 40 or so employees. Much of that money will be raised from vendor financing and contracts for ads to be placed on BikeNow bikes and stations. They could get a bit more in prize money tomorrow at the ITEC business plan competition, but they’re competing against three worthy business ideas — a new means of combating drug-resistant bacteria, an innovative chemical tool for pharmaceutical and biotechnology companies, and a novel therapeutic approach to treating asthma.

Dang says he’s ready to do what it takes to make BikeNow a reality. After graduation, he’s heading back to Oakland, Calif., for the summer, but will return to the mean streets of Boston. “I’ll come back to work on the bike-share program and find some kind of job just to keep me alive in the meantime,” he says.

The ITEC 2009 $50K Business Plan Competition is being held on the fourth floor of the School of Management at 5:30 p.m. on Tuesday, April 7, and is open to the public. All finalists will make a 20-minute presentation followed by 10 minutes of questions from the judges. The winning team will be selected immediately thereafter.

Chris Berdik can be reached at cberdik@bu.edu.

3 Comments

3 Comments on Hit the Ground Pedaling

  • stuggitger on 04.06.2009 at 3:27 pm

    Best of luck!

    Hi,
    I live in Germany, in Stuttgart, where such a scheme is now coming into its third year. It has been very well accepted and I use it during the warmer months of the year about once or twice a week.
    Her in Germany it has the big financial backing of DB (Deutsche Bahn), then national rail carrier. I have no idea whether it is making or losing money, but it is a big image booster for DB and has found a good following amongst the inhabitants of Stuttgart.
    Here in Stuttgar, as opposed to similar bike-share schemes operated by DB in other major cities in Germany, the first half hour is free, after that the rate is calculated minute by minute. This makes it quite costly, almost impossibly if you choose to use it for a leisure ride. But from my own observation, people use it to commute, and the distances within Stuttgart are such that one can manage them all within 30 minutes.
    the only hassle, at least initially, is getting to terms with the hiring and returning procedure, which has to be done by a registered cell phone. So, even if your hire is less than 30 minutes, you still have the cost of two local calls on your cell phone.
    One issue here, too, is the quality of the bikes. Here, a very sturdy, rather heavy bike was chosen, which also has a rack at the back. Also, theft and demolition prevention is an issue. No easily accessible screws, etc !
    A portion of the bikes has now also been avialable for hire over the winter months. But I don’t know, whether that has been a success. The weather hasn’t been good for cycling at all since December.

    So, to sum it up: I hope you have done your good bit of research and wish you well.
    Perhaps I might be able to use the service in the near future on my next visit to Boston?

    Patrick,
    from Stuttgart, Germany

  • Anonymous on 04.07.2009 at 11:13 am

    This is a great idea. Unfortunately, Boston traffic is just too dangerous. Until there are more, wider bike lanes and city officials do more to calm aggressive drivers I just can’t take the risk.

  • Mexicano Malo on 04.17.2009 at 7:08 am

    It does work in Saragossa, Aragon, Spain

    Well, ClearChannel, the people behind SmartBikeDC, put this scheme at work last year in the northern Spanish city of Saragossa, Aragon, and it has been a massive success. However, it started with 30 stations, instead of 10, and now it’s expanding up to 70. By the start of 2010 they are expecting 100 stations spread across the whole 700,000 people city.

    At first, the common saying was that “traffic is too dangerous here, drivers are wreckless”. However, a clever expansion of bike lanes together with the massive use of the system and legal backing of bike driver’s rights and musts has meant that drivers have no option but to calm down their driving… It has worked. Bikes are slowly taking over the city, even in the cold, windy winter days when windchill gets close to freezing point.

    Here you pay a 20 euro annual fee, and then the first 30 minutes are free. Then you can drop the bike in a station and wait for another 10 minutes for the time to start again from zero, or else keep on using it, in which case you get charged 50 eurocents per extra half an hour, the limit being 2 hours.

    I think the common belief is that “they can only do that in this xxxx foreign city because drivers are more polite / they don’t have vandalism / there is a culture of public transport. In my honest opinion, this is only a partial truth.

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