Ever since China started drinking the capitalist Kool-Aid in 1978, cars have been as viral as opium, with bikes cast aside as Mao-era relics. But communal super bikes hooked with the internet of things are back, and leading the charge is Mobike, founded by 36-year-old buzz-cut Joe Xia. Since its start in 2015, Mobike has flooded China with millions of dockless bikes — and will roll into Europe with its U.K. launch on June 29.
With more than $925 million from leading Silicon Valley, Wall Street and Shenzhen investors — including $600 million raised in June — Mobike will be able to double its production capacity to 10 million bikes a year. Why is the world greasing the company in cash? According to strategy consulting firm Roland Berger’s 2015 report, bike sharing will become a $5 billion industry by 2020. Before Mobike and Ofo — its nemesis, with more than $580 million in backing — hit the streets, there were fewer than 700,000 shared bikes in more than 500 bike-sharing systems.
“Mobike was an important innovator in its launch of large public systems in China,” says Karl Ulrich, vice dean of entrepreneurship and innovation at the Wharton School of Business. Although Ulrich was initially “skeptical” about Mobike’s prospects — speculating its conspicuous orange bikes would get stolen and daily usage would be low — he now admits he was “just wrong.”
Others continue to doubt the profitability of a venture charging 15 cents for half an hour of service. “Mobike has to be careful, because it’s costly to win market. Look what happened to Uber in China,” says Rebecca Fannin, founder of Silicon Dragon Ventures. After a protracted price war, Uber China bled $2 billion and was absorbed by local rival Didi Chuxing, which has injected $130 million into Ofo. Uber, Didi and Ofo did not respond to requests for comments about Mobike’s claim that it’s the world’s largest shared transportation firm, with 20 million daily trips.
"I DECIDED THAT BIKES ARE MORE FUN. IT’S MORE THAN PROFIT. IT INVOLVES EMOTIONS."
Unlike earlier bike-sharing systems, such as Citi Bike in New York City, Mobike does not have docking stations, so users can pick up and park self-locking bikes anywhere by scanning the QR code on their app. The result is smiles for commuters in congested city centers — and nightmares for city authorities dealing with shared bikes strewn across roads and pedestrian paths. Many municipalities, including Beijing and Shanghai, have cracked down on shared bikes, and Mobike has created a point system to freeze irresponsible users’ subscriptions.
A younger Joe Xia might’ve been one of Mobike’s less responsible patrons. “My parents were not typical Chinese parents,” he recalls. “They gave me a lot of freedom and allowed me to make a lot of mistakes.” When Xia was 8, he bought plastic guns with pocket money he was supposed to deposit at the bank. He was quickly stripped of the privilege to manage his finances.