- Sponsorships from Citigroup and MasterCard, leading to no government subsidies
- Average of 8.3 rides per bike per day (very high)
- Expansion plans (roughly 20% in 2015, including 90 new stations, to an eventual 2017 total of 700 stations and 12,000 bikes)
- Software replacement for central site and docking stations.
- Hint of new bike type
Citi Bike turnaround: so much promise, so many problems
We ride with new boss Jay Walder as he plots the bike share’s comeback. Crain’s New york
Citi Bike turnaround: so much promise, so many problems We ride with new boss Jay Walder as he plots the bike share’s comeback. Crain’s New york One sunny morning in April, Jay Walder was steering his bulky Citi Bike through a busy Brooklyn intersection, trying not to get flattened by a city bus. His hand outstretched in the universal gesture for “please don’t run me over,” the 6-foot-6 president and CEO of Motivate, the company that operates bike shares in New York and nine other cities, squeezed between the bus’ bumper and the fender of a red Toyota.
“Isn’t this fun?” he crowed shortly after navigating the vehicular crucible. Wearing a dark suit with no tie and a black bike helmet, the transit-system-boss-turned-bike-sharesavior hadn’t even broken a sweat.
For the past several weeks, Mr. Walder, 56, has hosted reporters at Motivate’s Brooklyn office and visited editorial boards touting his efforts to turn around Citi Bike. Better software, bikes and customer service are being rolled out, with territorial expansion and hundreds more bicycles on the horizon.
The system has enjoyed immense popularity since its launch in 2013 but has been plagued by problems that led to a corporate rebranding and the October hiring of Mr. Walder, who has an international reputation in the transportation world for big ideas.
His immediate goal is to make Citi Bike better for dedicated and casual users alike. Ultimately, he must make it profitable, presumably while maintaining its status as the only large-city bike-share system that doesn’t get government subsidies. In the face of shrinking revenue and eroding customer confidence, both will be uphill battles.
“A lot of Citi Bike’s short history was dominated by drama and glitches,” said Veronica Vanterpool, executive director of the Tri-State Transportation Campaign, an advocacy group. “So this overhaul was definitely needed.”
Many of Citi Bike’s problems were detailed in a recent audit by the city comptroller: poor maintenance, buggy software, defective stations and a failure by the system’s operators to regularly inspect all 6,000 bikes and 332 stations. High usage—more than 34,000 trips are made each day— and punishing winters also took their toll on revenue.
Citi Bike last month grossed $405,878, down 4% from March 2014, and annual membership purchases plunged 42%, to 1,589. Annual subscriptions increased last November to $149 from $95, while daily and weekly passes remain $9.95 and $25, respectively. Still, total membership is down 12%, year over year, although the system’s executives hope to see increases as the weather improves. Mr. Walder said that will happen only when he has finished ripping the tangled guts out of the system and installing more nimble software and better-designed equipment.
The new software, developed by 8D Technologies, should result in a marked improvement for users, Mr. Walder said. It will enable real-time updates on Citi Bike’s app and website as well as provide a foundation for future enhancements. Docking stations are already getting new software. Mr. Walder receives a nightly email from maintenance crews with a list of the nine or 10 stations that will receive overnight overhauls. In the morning, he gets a follow-up message on which stations are operating with the new software.
About 90 stations had been updated as of last week. Meanwhile, maintenance crews have overhauled 4,200 bikes and plan to get to the remaining 1,800 before the summer high season.
On average, each bike is ridden 8.3 times a day, making Citi Bike the busiest such system in the world. (Paris’ bike share, Vélib’, is second, with 6.7 daily trips per bike.) Cracked seats, worn tires, loose brakes and graffiti removal are the top targets of the fix-up, which Mr. Walder described as a “monumental effort.”
The work seems to be paying off: Only 1,702 bike-maintenance issues were reported in March 2015, compared with 3,545 in the same month last year.
Citi Bike could soon have a different look, too. Mr. Walder said a new bike is under development and could be announced shortly.
For the moment, red ink is a secondary concern. “My focus one, two and three is just on the product right now,” Mr. Walder said. “I want to make Citi Bike as good as it can be. I want to make it what everyone in New York wants it to be.” He added, “I don’t have any doubt that when we do that, people will come back and say, ‘Gee, this is really wonderful.’ To me, that’s the horse in front of the cart.”
The job is something of a turnaround for Mr. Walder as well. As head of the Metropolitan Transportation Authority from 2009 to 2011 and then Hong Kong’s transit system, he moved several million riders every day. Motivate’s 10 bike-share systems combined serve about 1% as many.
Instead of the Madison Avenue skyscraper owned by the MTA, Mr. Walder works out of a modest, plywood-reinforced space in an industrial area of far-flung Sunset Park, Brooklyn. Yet he seems to be approaching the Motivate challenge with the same enthusiasm he brought to the MTA, where he introduced countdown clocks at stations and closed a yawning budget gap by consolidating departments, eliminating 3,500 positions, reducing overtime and renegotiating vendor contracts. The MTA job appeared to gradually wear down Mr. Walder, who was demonized by the Transport Workers Union during testy contract negotiations that he could not bring to fruition.
Some said his frustration with the chronically underfunded and politicized MTA led him to accept an offer to become CEO of Hong Kong’s Mass Transit Railway Corp., where projects are well capitalized and his salary was a reported $1.6 million, about four times his MTA compensation. But controversy followed him to Asia, where cost overruns on an inherited high-speed rail project linking Hong Kong to mainland China led to his resignation after three years. Mr. Walder received a $2.02 million “golden parachute” upon leaving last August, according to the South China Morning Post.
Mr. Walder acknowledges the problem with the rail project but is coy about exactly why he left with a year remaining on his contract. “I would use the phrase ‘mutual agreement,’ ” he said, adding there were certainly “cultural differences.”
He is trying to import some of Hong Kong’s technical innovations to Citi Bike. Mass-transit users in Hong Kong receive a text message every time their train is more than two minutes late. Now Citi Bike users will get an email at the end of each ride to confirm that their bike has been properly docked so they won’t be on the hook for late charges.
“I’m trying to bring some of that thinking to what we do now,” he said. “I want to achieve a level of operational excellence.”
Most of Citi Bike’s revenue comes from user fees and sponsors. But data assets could enter the mix. Motivate collects an enormous amount of information: Where and when do customers ride? For how long? Who is the typical bike-share user?
Much of it is available free of charge on its website, but the company could decide to monetize that if the demand is there, said Paul Steely White, executive director of Transportation Alternatives. “They have a very loyal and attractive user base,” he said. “In some respects, they’re not so much a transportation company as a data company.”
Citigroup’s original six-year contribution as title sponsor will total $41 million, while MasterCard signed on for $6.5 million. They benefit from having their corporate logos on all 6,000 bikes, 332 docking stations and thousands of key fobs used by annual members. Citi recently renewed its sponsorship through 2024 to the tune of $110 million.
Mr. Walder said the company is also mulling other opportunities. “Some of that might well be … local sponsorship in the community, at individual docking stations and other things of that nature,” he said. “We’re working on that right now.”
Citi Bike’s expansion will kick off later this year. The system is expected to grow by 20% by the end of 2015, with 90 new stations coming to Greenpoint, Williamsburg and Bedford-Stuyvesant in Brooklyn; Long Island City in Queens; and the Upper East Side and Upper West Side in Manhattan. The aim is to have more than 700 stations and 12,000 bikes by the end of 2017.
There will likely be more glitches as Mr. Walder continues his quest for “operational excellence.” As well as more close calls with lumbering city buses.
But the bike-share executive is optimistic. “I’m a pretty big guy on a bicycle,” he said. “I make myself pretty visible.”