How CitiBike is like Ecuador
Joyce Park stashed this in Tech biz
How can a system be wildly popular, a great public benefit, and a government monopoly -- and yet still be losing money and defaulting on its contract -- and yet impossible to get rid of? Bad UI and bad data! Read and weep, New Yorkers.
I had to re-read just to see how bad the design fail was:
But as CitiBike celebrates its first birthday, much deeper, and much more intractable, problems are easily apparent. The biggest is the reason why CitiBike is losing money: there aren’t nearly enough daily and weekly renters.
CitiBike was designed from the start to operate on a cross-subsidy model: the annual memberships would be underpriced, at $95 per year, with all the profits coming from the daily and weekly renters. Certainly CitiBike is losing money on me: I’ve taken over 250 trips in the past year, which works out to roughly 37 cents per trip.
Annual membership also makes it very easy to rent a bike (when the system is working): you just slide your key into the slot, and out comes the bike. I have lots of rides in the five-minute range: journeys I would otherwise have walked without any difficulty, but which are that much quicker and easier if I can just hop on a bike. Once you’re a member, the marginal cost of renting a bike is zero, which encourages one of the most common use cases — taking a CitiBike to a slightly further-away subway station which will get you to your destination more quickly. (“Instead of walking to the local, CitiBike to the express.”)
Daily and weekly rentals, by contrast, have none of that convenience. The docking stations come with tiny screens attached to unreliable credit card readers, and becoming a short-term CitiBike member is really hard work. Putting in your information takes loads of time and involves multiple screens; and even if you’ve managed to get to the end of that process, renting a bike then requires a whole separate set of steps, involving your credit card, dock numbers, and three-digit codes.
None of this is convenient; none of this is easy — even when it works, which, a lot of the time, it doesn’t. (CitiBike has been plagued with reports of failed credit-card transactions.) In most private-sector systems, the most profitable customers get the best service; in this one, they get the worst, with predictable results. I know some people who have actually bought spare annual CitiBike memberships for houseguests, just because they’ve learned that visitors will almost never jump through all the hoops necessary to take out a short-term rental.
The real problem, then, is not the pricing structure itself, so much as it is the station design, the user interface, and the general ease of use of the system. All of which was Alta’s problem to solve.