Moving on from Scooter Bid Debacle, Blue Duck Hunts for Market Share

Print Share on LinkedIn Comments More

Bonnie Arbittier / Rivard Report

Blue Duck CEO Michael Keane (left) and board chairman Paul Bell are looking ahead to operating in new markets, buoyed by an infusion of funding.

Blue Duck Scooters will be taken off San Antonio streets come Jan. 12, when the City’s pilot program is slated to end and contracts with three exclusive scooter-share operators will begin.

The company’s leaders are moving on from the July bungling of its bid to become one of three operators, but Michael Keane, in his first interview since taking over as CEO from founder Eric Bell, declined to reflect on the mishap.

“We’re completely focused on moving forward,” Keane said. “That’s it. Period. End of story.”

Blue Duck has homed in on a business model it believes can help it bounce back from its lost opportunity in San Antonio. Last month, the company secured a $4.2 million investment from Skyway Capital Partners, a private investment firm, and is seeking as much as $30 million as it gears up for its first significant round of venture capital financing.

The scooter-share firm based near the Pearl District is planning to use those funds on expansion throughout the southeastern U.S. but is focusing specifically on smaller cities, colleges, and corporate campuses. The first phase of expansion for Blue Duck 2.0 includes Bryan, a city near the Texas A&M University campus, and Edinburg, the home of the University of Texas-Rio Grande Valley.

Scott Ball / Rivard Report

The Blue Duck headquarters is located along Avenue B near the Pearl and Broadway.

Joey Dunn, the City of Bryan’s deputy city manager, said Bryan began looking at the possibility of testing scooter-share on the direction of its City Council. The city of about 85,000 has worked in recent years to install alternate modes of transportation in its downtown and is even considering unveiling an autonomous trolley developed by researchers at Texas A&M.

So far, Bryan is pleased with the scooter-share pilot program, which authorized Blue Duck exclusively, he said, but there’s no guarantee scooters will stick around beyond the six-month pilot. Though scooters are not allowed on the campus of Texas A&M, which has a preexisting partnership with a bike-share operator, the students at Blinn College in Bryan have begun riding scooters to campus.

“We don’t know if it’ll work here,” Dunn said. “There are some things about being a college town that make it something we’d like to look at.”

Blue Duck believes that by showcasing itself in a neighboring city, it will demonstrate to the City of College Station, where A&M is located, its ability to operate responsibly in the area.

“Bryan’s a great market for us,” Keane said. “We would be interested in Bryan independently of that factor, but the fact that College Station is next door and Texas A&M is next door makes it that much more attractive to us.”

The last time Blue Duck moved into the college market, however, did not work out so well.

In September 2018, the company began deploying scooters in San Marcos where it hoped its scooters would be used by the nearly 40,000 Texas State University pupils. But as soon as the university’s administration caught wind of a scooter company’s presence on campus – without any authorization to be there – the school impounded the vehicles that had ended up there. The company’s scooters haven’t been seen in the city since.

A student walks through the Texas State University campus.

Bonnie Arbittier / Rivard Report

A student walks through the Texas State University campus in San Marcos.

Southwestern University in Georgetown also removed Blue Ducks that ended up on its campus when the company was taking what former CEO Bell called a “forgiveness not permission” approach to rolling out its fleet in targeted markets. That served as a lesson for Blue Duck, said Paul Bell, the company’s co-founder, board chairman, and father of Eric Bell.

“We didn’t have the wherewithal like a Bird, or a Lime, or whatever, that we don’t really care if we lose 500 scooters for six months and it doesn’t make a difference,” Paul Bell said. “That forced the company to think its way through being completely civic-connected … so that we try to work in advance in the cities that we build in.”

Blue Duck also recognizes it is operating in a new phase of the still-fledgling scooter-share market – one that has evolved from the gold-rush days of growth at all costs.

“At first this was treated as a growth opportunity and a land grab, and you saw many companies launching in as many markets as possible,” said Michal Nakashimada, product manager at Ride Report, a software platform that helps cities manage micromobility fleets.

Now the largest companies, such as Bird and Lime, have quietly tamped down expansion efforts with a focus on getting the unit economics right – part of a broader trend in the startup world of emphasizing profitability over dogged growth, Nakashimada said.

Blue Duck’s focus, instead, is on managing its assets – the scooters. Bird’s scooters reportedly had a shelf life of less than one month from August to December 2018, according to data from the City of Louisville’s scooter-share program, with customers often mistreating them. Bell and Keane said their company uses in-house staff, as opposed to contractors like Bird, to collect its scooters at night, recharge them, and then redistribute the next day because it keeps the scooters in better shape and helps them last longer.

Scott Ball / Rivard Report

Blue Duck scooters are arranged at the intersection of Newell and Avenue A at the Pearl.

Months after rentable e-scooters first started to appear in Southern California, Paul and Eric Bell and Paul’s stepson Jeff Mangold, senior director of fleet management at Blue Duck, scribbled on a napkin the business plan for what would become Blue Duck Scooters. Beginning local operations with a fleet of a few dozen in July 2018, the company never established a foothold in a scooter scene largely dominated by Bird and Lime.

Despite its local struggles, Eric Bell made lofty claims about where the company was headed. In September 2018 the former CEO stated his company was set to purchase 40,000 scooters that would be deployed in cities and college towns throughout the Southern United States at a rate of 1,000 per day. The company botched a planned launch in the resort community of Pensacola, Florida, failing to secure the requisite business permits to operate there, and was subsequently sued by a subcontractor.

The July 22 scooter bid debacle that will soon bring about Blue Duck’s San Antonio ouster led to key departures, including the resignation of Vice President Elizabeth Lyons Houston, whose family had been an early investor in the company. Bell was replaced as CEO but retains a seat on the company’s board of directors. Blue Duck also eliminated its software development team and outsourced its software engineering.

San Antonio’s public bidding process was its chance to gain market share in an increasingly competitive industry, and with an automatic 10 points toward its potential selection for being a locally owned business, the company had an advantage no other bidder possessed.

Though the company said it still disagrees with the City’s assertion that Blue Duck’s bid was submitted one minute late, it has come to accept the City’s decision, Paul Bell said.

The company said it looks forward to the next opportunity to work with the City of San Antonio. The City is in the midst of negotiating two-year contracts with Bird, Lime, and Razor but has left open the possibility of bringing in more companies via another public process.

“At some point, whether it’s a year from now, six months from now, or two years from now, we will be operating [in San Antonio]. I’m confident of that,” Keane said. “But ultimately whether we’re in San Antonio or not does not change the trajectory for our company.”

Comments are closed.