E-bike as a service - microbility business model breakdown

The Soundcloud founders - Alexander Ljung, Eric Quidenus-Wahlforss - made public their new startup: an e-bike subscription service named Dance. 59 euro per month all inclusive.

E-bikes is probably going to be the next hot microbility vertical that a lot of venture money will be invested in - the manufacturing end of the value chain is already heavily invested.

Micromobility, especially in Europe, is in its first inning of emerging development, at the intersection of the adoption of the electric-based vehicles, car banning in most of the capitals centers and a sense of urgency of using tech for climate change purposes. The scooters today are just a tease of what the public infrastructure will look like.

E-bikes have the advantages of being a cheaper asset than a car and a more comfortable, practical and reliable mean of transport than a scooter. It is a sweet spot for consumers.

In time, an e-bike will arguably become a commodity, when DTC competition will pick up. Manufacturers still need to get at economies of scale for a decent unit economic - fwiw, the global e-bike market is expected to grow from $17 billion in 2017 to $27 billion by 2025.

A subscription operation looks like an interesting opportunity to build a biz based on the right product, at the right time and by leveraging product and distribution network effects and virality. It is a much better model than the on-demand scooters preponderantly use nowadays, as it mitigates risks such as client stickiness, vandalism and city regulations.

Dance needs to solve for the consumer frictions and hidden costs associated with buying (i.e. choosing a suitable one and setup) and the total costs of ownership (i.e. maintenance, theft, gears and consumables etc) providing an outstanding experience and support.

The defensibility should come from strong brand and community around the business which can translate into a revenue line (just look at what Rapha did with their club). As Dance solves this, the lock-in, up-sell, and after market will be some of the main upside drivers. It's a strong marketing play, with the brand and its values aligned with the consumer proposition.


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