If you're celebrating the end of oBikes, be prepared for something much worse

VICTORY! Australia has won a decisive battle against the invasion.

oBike, the Singaporean bicycle sharing company whose yellow bicycles appeared in Sydney Adelaide and especially Melbourne in the past 12 months, has waved the white flag in the Victorian captial and surrendered. It will retreat from the city, bitter and bruised.

Melburnians decided the bicycles were the enemy, and fought an insurgent war against them. They threw oBikes into the river and the bay, or hung them from trees. People will generally treat public property with less respect than private property, but this went beyond that. Many Melburnians resented the bicycles — many of which fell over when parked — cluttering footpaths. Too often the bikes were in a state of disrepair and resembled little more than rubbish.

oBike is slinking away. But the war is far from over. Some company will come along, having learned the lessons of oBike, and make a stronger, more powerful bike-sharing company.

Think of this as like a war movie. We are only about 30 minutes in and you know there’s a lot more to come. But unlike a war movie, don’t expect the plucky local heroes to win in the end.

WHAT UBER AND FACEBOOK HAVE IN COMMON

Bike share companies are learning from Uber. Uber needs lots of drivers all over the place to be useful to customers. Meanwhile, the more customers it has, the more drivers want to work for it.

We call this a network effect. The most classic example of the network effect is the telephone. As you can imagine, it was hard to sell the very first one — there was nobody to call. But as the network of people with a telephone got bigger and bigger, having a telephone became more and more useful.

Network effects explain facebook too. Nobody wants to join a social network that nobody else is using, so we pile into Mark Zuckerberg’s social network, whether we like it or not. The more people in the network, the higher the value of the network.

Share bike companies also have a network effect — they need lots of users to have lots of bikes out there. Users want there to be lots of bikes so there is always one nearby. So share bike companies need to be able to get big. Then they make big money.

Companies in an industry with network effects can hope to make huge money, by dominating that industry. Facebook made $5 billion in its most recent three month period.

This expectation of big money is why oBike brought so many thousands of bicycles to Melbourne. It also explains why lots of venture capital companies are very willing to fund the next bike share company and the one after that.

FLIP TO THE BIRD

The next share bike invasion may not be a share bike at all. In the USA, electric scooters have come out of nowhere in the last few months. The companies are backed by hundreds of millions of dollars of venture capital money and the scooters are suddenly all over big American cities.

Two companies — Bird and Lime — are vying to be the dominant network. Lime charges $US1 to unlock the scooter (through an app) and 15 cents a minute to ride it (in the bike lane).

The scooters’ top speed is 24km/h, so you could in theory go almost 4km in ten minutes and pay $US2.50. (Even if you can only manage 10km/h in traffic, a 4km trip will take 24 minutes and cost $US3.60. Not bad!)

I suspect the electric scooter is more than a fad. It has some major strengths the shared bike does not, and not arriving all sweaty is only one of them.

• Standing is better than sitting for people in skirts or suits (modesty/ pedalling could erode your nice trousers.)

• Scooters are lighter and easier to lift up steps or over the kerb if needed. Lower weight also means less battery-power is needed.

• Easier to mount/dismount: feels safer in traffic if you want to leap off.

One big problem with the electric scooter business is making sure the scooters get charged. For now, the company pays a bounty of about $10 to $20 every time someone takes a scooter back to their house and plugs it in. That can lead to some weird behaviour, as in this next video.

The other problem is regulations. So far, many of these bike sharing companies have followed the principle of “ask for forgiveness, not permission.” That has led to bikes and scooters all over the place and made cities furious, banning them.

That’s a good thing, because the next invasion of sharebikes is probably just over the horizon. Perhaps it will be cheap, and useful, and keep the regulators happy. If not, another wave will follow. And another one.

Ultimately, we are almost certain to lose the war against these invaders. But when that happens it will not feel like losing. We will ignore or repel every bike share company that is no good until we welcome our eventual conqueror. The invasions will only stop once a share bike company arrives that actually wins our hearts. It should be a win-win. It get a big market, and we get to glide along in delight.

Jason Murphy is an economist. He runs the blog Thomas the Think Engine.

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