Zagster is not your average bike share operator. While other companies like B-cycle and Alta pursue seven-figure government contracts, Zagster has been going after much smaller, but more numerous fish. Hotels, business campuses, universities, residential buildings and transit destinations are just a few of Zagster’s current clients. Using a low-cost, pragmatic, and intuitive equipment, Zagster stations can be deployed almost anywhere.
It’s a no-brainer why an operator would pursue such a market: the opportunities to generate revenue are nearly limitless. But as Timothy Ericson, Zagster’s CEO and co-founder explains below, he didn’t find the market; instead, the market found him.
Matt Christensen: How did you first get involved with bike share?
Timothy Ericson: My business partner Jason Meinzer and I were living in London at the time, and I happened to be in Paris the weekend they launched Vélib’, which, as you know, was one of the first bike share programs that caught worldwide attention back in 2007. I was completely fascinated by the concept. I never owned a car growing up in New York City–I used to ride my bike around everywhere and the fact that you could now pop in your credit card and explore the sights of Paris completely fascinated me.
I came back to Philadelphia and, at the time, there were no real bike share programs set up in the United States. I thought that it would be perfect for Philadelphia, where I was living at the time, and we started our company to try to figure out how to get a bike share program in Philadelphia.
MC: When did you guys found your company?
Timothy Ericson: 2007. Basically, right when we got back from Paris, we wanted to figure out what to do to get bike share in the United States and how to do it. And, through some connections here in Philadelphia, I was fortunate enough to be able to spend a week in Paris again with the people who launched the Velib’ program. I learned the ins-and-outs of the system and its problems, which is what led to us working with private companies and universities to start bike sharing programs.
MC: So, you went from examining a massive municipal system to working on launching programs at a much smaller scale. Can you describe that transition?
TE: As we were consulting and looking at these business models, we were finding that the models needed to be heavily subsidized by the government or a lot of outside private capital–and we weren’t able to find a path to make a profitable company working within the municipal sector. We found that we were being approached by apartment complexes, hotels, and universities who all said, “We love the idea of bike share, but we don’t want to pay the expensive price tag of Bixi and B-cycle’s product.” After getting a lot of those calls, we set out to try to capitalize on that market.
MC: Do you see your bike share product competing with municipal bike share programs?
TE: No, I see them working in tandem. In fact, we do better and have more interest in cities that have bike share programs because the mentality is there–it’s a huge and obvious presence in the city that people are aware of. Our model is that we partner with private communities and were focused on a much different use case. In Boston, for example, you would use Hubway when you get off at South Station and go up to North End where you’d drop off your bike there. What we’re really focused on is putting bike share in private communities where people are interested in having a bike for a few hours as opposed to thirty minutes.
With our most recent launch with Related Management in New York, we ride in tandem with New York. We view it as complimentary and we know most of the people in the industry and most of them view it the same way.
MC: If I want to use a Zagster bike, what do I have to do?
TE: We have two use cases: one is our membership model, which we have at Yale and our apartment complexes, and then there’s the hotel model. For our membership model, you sign up online where you enter all your standard personal information. Once you become a member you can reserve a bike online or walk up to a bike and use your mobile phone by texting or using our mobile app to generate a code which gets you access to the bike. So, you enter that code into the lock box and there’s a key inside the lock box for the bike’s U-lock.
MC: Do you see the Zagster technology changing anytime soon?
TE: I think what we have now works really well. It’s really simple and easy to use–but we are in the process of developing a custom version of our technology, which we’re not ready to talk about publicly. But we do want to follow the same model around the same price point, keeping it low-cost but high-functioning. Our view on the bike share industry in general is that if the technology you’re putting on the bike is more expensive than the bike itself, you’re doing something wrong. We’re looking at how we can streamline access to the bicycle without putting ourselves within the same price point as the bigger systems around the US.
MC: How would you differentiate your product from other similar products on the market like ViaCycle and Social Bicycles?
TE: The cost is the biggest difference. Where I see SoBi and ViaCycle working is the smaller communities that aren’t going to be able to spend the money for a Bixi or B-cycle type of system, but needs something more robust than what we’re able to offer. What we’re going after is really honing in on the private sector and locations where you have ten or fifteen bikes in an area or at an apartment complex. By using off-the-shelf bikes and standard bike racks, we really fall into that price point attractive to the smaller markets.
MC: Hotels, apartment complexes, universities, and business campuses make up a huge, potentially lucrative market for Zagster’s product. Was the size of the market the reason you decided to go after it?
TE: There were a few reasons. First, the market came to us. We believe we differ from other bike sharing companies because we want the customer to tell us what they want. While our customers think the bells and whistles are cool, they simply want to provide bikes that are always operational, look nice, and take little to no maintenance. Everything we’ve done to date, including the technology we’ve chosen and what we’re redeveloping, is all because our customers are telling us that.
MC: What are your thoughts on the future of bike share–what’s next?
TE: I don’t see city-wide programs going away; however, I do see a lot of complimentary services, like Zagster, popping up throughout the US. We really want our hardware to be the brand name for bike share in the United States. Even though there is the same equipment and operator in New York, Boston, and DC, there’s no interoperability between the systems. Zagster offers that interoperability, which can make it very attractive to the user.
MC: In your interview with Xconomy back in November of 2012, you discussed the sharing economy. Can you elaborate on how you see the sharing economy developing in the future?
TE: The twenty to forty year-olds are really shifting into the sharing economy. I, for one, don’t want to own anything. I think that people are moving away from buying expensive things. We’re seeing it in a lot of different industries. In transportation, I see bike sharing being a key part of the overall trend of people moving back into the urban core, not owning a car, and utilizing public transit.