The monetary factor of the Bounce

Building the electric scooter is step one.

“We were forced to. There is no electric scooter that’s built for sharing. We tested every scooter in the market,” says Hallekere. Scooters used for ride-sharing or deliveries must survive India’s rough driving conditions, and their range often falls short of what’s advertised. Bounce even went international with their queries, tapping Taiwan-based electric ride-sharing service Gogoro and China-based manufacturer NIU to source. Ultimately they decided that a self-made scooter would “ensure more control over the vehicle.”

Bounce has always marched to its own beat. It has eschewed running hub-to-hub operations, unlike its rival Vogo. Instead, Bounce is an evangelist for the dockless model; users can pick-up and drop-off their petrol scooters anywhere.

This has been pivotal to growth. In Indian cities like Bengaluru and Hyderabad, Bounce has become a popular way to get around, especially in areas where public transport options for last mile mobility are sparse; its partnerships with metro train networks have given it a leg up over other similar services.

On the back of its rapid scale—Bounce claims close to a 100,000 rides a day in Bengaluru—the company raised $177 million between June 2019 and January 2020. With a valuation of $500 million, Bounce is a unicorn in waiting. But the growth hasn’t been painless.

It’s model has contributed significantly to its losses on account of fuel theft and vandalism. While revenues grew 3X, from Rs 5.4 crore ($751,000) to Rs 16.4 crore ($2.28 million) between March 2018 and March 2019, losses ballooned 9X—to Rs 71.7 crore ($9.9 million) from Rs 7.7 crore ($1.07 million) in the same time period—according to company research platform Tofler.

Bounce desperately wants to reduce its burn and bring this phase of reckless growth to an end. Over 2019, the company attempted a series of tweaks to its operations. The project, nicknamed “Cheetah” internally, made design changes on the scooter fleet to reduce theft and vandalism. These tweaks “nudged” users to refuel scooters, instead of Bounce deploying a vast on-ground operational team.

This may have a short-term impact. But it’s not enough. As one investor points out, a dockless model run on petrol scooters isn’t sustainable in the long run. “Electric mobility isn’t just about going green. It makes business sense too,” says the investor, who wished not to be identified.

This is a crucial turn in Bounce’s growth story. It has to choose well to chart a better path to profitability. And switching to electric scooters can, arguably, help it get there. The company’s already been running a pilot with 1,000 Ampere Plus scooters in Bengaluru, and will officially launch its own scooter—the one from the video—in April 2020.

The big win, claims Hallekere, will come from saving on fuel, and fewer maintenance issues. He claims the benefits are already visible. “We see an improvement of Rs 2.5-3 ($0.03-0.04) per ride on the operational costs,” he says. That is about 3X the Rs 0.8 Bounce makes per ride currently.

“It will reduce our pain,” says Hallekere hopefully.

The silver bullet

Launching a new electric scooter called for a whole new entity. In 2018, Bounce carved out a subsidiary called Zuink Smart Mobility Solutions. “We want Zuink to have its own bosses and investors. Even [lithium-ion] battery procurement is under this entity,” says Hallekere.

The scooter is a step-through model, hooked up to the Internet-of-things (IoT) gadgetry that helps Bounce unlock scooters, keep track of their location, and determine pick-up and drop-off zones. “There’s a seat sensor, monitors to check tyre pressure, and even the brake lever can be fixed remotely. This scooter is built to last,” Hallekere says confidently.

The existing Bounce scooter—a pop of bright red and yellow—is a very common sight on the streets of Bengaluru. The dockless models mean these scooters are often abandoned on flyovers, on sidewalks, and even inside deep gutters. They are also vandalised; their engines are ripped from their frames; helmets, rearview mirrors, and tyres stripped from the body.

But the vandalism is small beer compared to the fuel pilferage by customers.

“There was a time that Bounce was spending lakhs every month in fuel charges and parking fines,” says Sameer Jaiswal, co-founder of FAE bikes, an electric fleet service in Bengaluru. According to its financials, Bounce spent Rs 5.7 crore ($792,000) on fuel costs in 2019. Even though Bounce encourages its users to park in legal, accessible spots, it’s not uncommon “to find Bounce guys running after the tow trucks when their scooters are impounded,” says the investor mentioned above.