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“The reality now is that operators have to be fiercely, relentlessly focused on efficiency, optimization and profitability or they won’t survive”

4 August 2023

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Not many people have a front row seat to examine how operators are adapting to the rapidly evolving shared micromobility landscape, but Joseph Brennan does. 

Brennan is cofounder of Zoba, a global fleet optimisation platform. Founded in 2016 by experts from Harvard and MIT, Zoba leverages data science to provide shared operators with real-time recommendations that increase ridership and improve operational efficiency.

Today, Zoba stands out as one of the largest shared mobility software companies. Its customers span across the Americas, Europe and APAC and collectively manage more than 250,000 vehicles. 

Zag Daily: You’ve had the benefit of working in the shared mobility space since its inception. How would you describe the current state of the micromobility market?

JB: “The past few quarters have been the most pessimistic I’ve seen. In recent years, many companies focused heavily on accelerating growth and expanding their networks in the hope that this would lead to profitable operations at scale. It has not and investors have gotten nervous. That’s why you’re seeing many operators cutting back, leaving markets, and raising prices, they simply can no longer afford to keep subsidising unprofitable operations.” 

Zag Daily: How has the landscape changed since you started Zoba seven years ago?

JB: “The biggest change has been the pull back in VC investment and the increasingly strict regulatory requirements expected of operators. The convergence of these factors pose serious challenges for the industry and require a new way of thinking about how to run a successful business. 

“For many it requires a shift in mindset, from one focused on growth-at-all-costs to one where the bottom line takes precedence and it’s not an easy shift to make. As a result, many operators won’t survive and we are starting to witness that now.”  

Zag Daily: What trends and shifts have you noticed in the last 6 to 12 months?

JB: “In the beginning, all of these companies were following the Uber approach of act first, ask questions late. The micromobility space was regulated far more quickly than ride-hailing, but even still the intensity of regulation has surprised many. The recent decision to end the shared e-scooters in Paris has brought everyone back down to earth what this industry is going to look like in the future. It’s going to take longer and be more constrained than we thought even a year ago.  

“As a result, growth alone is no longer enough for an operator to fund their business and that is a huge shift from just 12 or 18 months ago. The reality now is that operators have to be fiercely, relentlessly focused on efficiency, optimization and profitability or they won’t survive.”

Zag Daily: What are you observing that is working in shared mobility?

JB: “I firmly believe that shared mobility plays a crucial role in urban areas where space is limited and there are places where it is working well. It is uniquely excellent at providing convenient short rides and complementing existing transit systems, forming essential first and last-mile connections. Users will continue to demand and benefit from these services, especially as we become more aware of the negative impacts of excessive car usage in cities, and many cities continue to invest in infrastructure that will help more people to feel comfortable ditching their cars.”

Zag Daily: What would you say ‘operational excellence’ is?

JB: “At Zoba, we’re always thinking about this question and the answer has changed over time. Today, operational excellence means consistently running operations to be either profitable or moving towards it. This requires three things: 1. the ability to control the fleet, 2. to know what operational levers drive results, and 3. to be able to measure and map those actions to the core drivers of the business be it revenue growth, margin expansion, or lifetime value. If you’re able to do that and do it consistently, I’d say you’re operating with excellence.”

Zag Daily: Who would you say has mastered this? What sets them apart? 

JB: “I’m not sure anyone has mastered it. I think that if you look across the three components of operational excellence I mentioned earlier, no one has mastered them all but some operators are further than others to various degrees across those components.

“You do see operators pulling these together enough to reach profitability, or be close to it—Swing is one customer of ours that is there now. They are profitable and have shown a consistent ability to effectively respond to the evolving landscape and continue to succeed in their markets. In addition, while I can’t speak to specifics, I think some of the other major operators are making real progress and taken steps recently to put them in a much better position going forward.”

Zag Daily: Is the market headed towards a bright or bleak future? 

JB: “Despite the challenges the industry faces today, the future remains bright. There is still a lot of room for growth and development in various modes of transportation, including options like scooters and e-bikes, and I’m confident that in the long term we’ll see adoption grow. In the meantime, one bright spot I see is in the increased adoption of electric cargo bikes and micromobility vehicles by delivery services. You’re seeing this more and more in places like London, New York, and Berlin and with the rise of companies like Hived, Zedify, and Fin built around these new forms of transportation. It’ll be years before these threaten the traditional white van, but I wouldn’t bet against the long term trend towards more active, sustainable, and shared transportation.”

Zag Daily: What are you most excited about for Zoba’s future?

JB: “Long term, I want to see Zoba play an even greater role in helping build cities that are efficient, sustainable and optimized for the people that live in them. Until now, Zoba has been focused on helping people get around cities, partnering with shared mobility operators to optimize fleets so that vehicles are where people need them, when they need them. There’s a lot of work left to be done there and I’m excited to continue helping our current clients optimize their operations and build sustainable businesses. However, urban mobility is a lot bigger than personal mobility and I’m excited to branch out and apply the methods and lessons we’ve learned in shared and apply them to other fast growing areas – such as last mile delivery. 

“I believe we can apply many of the same approaches we’ve used to drive profitability in shared mobility to solve some of the big structural challenges that have plagued urban delivery for years. We’re actively working on this and have partnered with a few 3PL to test this approach and the early results are very promising. While early, we believe for same and next day operators we can cut last mile delivery costs by as much as 20% by leveraging a more predictive, integrated and data-driven approach to labour, order and route planning.”

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