New Zagster CEO on Bike, Scooter Fleets: Don’t Rock the Boat

Xconomy Boston — 

For transportation veteran Dan Grossman, the “move fast and break things” startup ethos has never really translated to the micro-mobility world of app-enabled motorized scooters and bike sharing.

Grossman last week took the helm of Zagster, a startup that sets up and runs micro-mobility programs for towns, cities, colleges, and businesses. The company launches programs in small- to medium-size markets, deploying and maintaining fleets of scooters or bicycles that number in the hundreds in some cases.

While other companies have different philosophies, he thinks abiding by a no-surprise rule is good business.

“Even when I didn’t need to, I went to a transportation department or mayor to let them know I’m coming. It’s not helpful for them to see [scooters or bikes] for the first time on the sidewalk or in the paper,” Grossman says, sitting in his new office at the startup’s headquarters in Boston’s Chinatown neighborhood.

Yes, he admits, governments are probably going to create rules or restrictions for his industry, regardless of what he does. “Why not get ahead of it instead of being reactive to it?” he says. “When you’re ahead of it, you can help craft the right kind of regulations that benefit the type of vehicles you are deploying.”

The other way of doing things played out last summer across the river in Cambridge. In July, Bird, which offers shared, dockless, motorized scooter services, dropped its scooters off on the city’s blocks without warning. Users rejoiced, but city officials recoiled. They were gone the next month after the city pressured the companies to remove them, and they still haven’t returned. The nearby town of Brookline ended up being the first in Massachusetts to roll out the rides from Bird and another scooter company Lime

Grossman came to Zagster with more than a decade of work in transportation. He headed up Ford’s Chariot shuttle service and was chief operations officer of General Motor’s Maven car-sharing service. He also spent six years as a vice president at Zipcar, launching the car-sharing service in new markets. In some cities, he’s returning with Zagster after having introduced Zipcar, Maven, and Chariot.

“Some places have every business card I’ve ever had,” Grossman says.

He says the benefit to working with local officials city hall is the company doesn’t lose valuable time if it gets shuts down for a period if the city decides to require permission to have the scooters on its public ways, like in Cambridge.

“If you can launch successfully from the beginning you don’t have to pause the city,” he says. “For us, it’s the right philosophy. Every company has their own philosophy. Not everybody follows this sort of protocol. We do it as a company that’s been operating more than 10 years, and there aren’t a lot of companies who can say that in this space.”

A Zagster bike (Photo courtesy Zagster)

Some mobility companies have taken a more aggressive approach and successfully built huge businesses. In their early years, ride-hailing app services Uber and Lyft (NASDAQ: LYFT) often established operations in new cities without asking permission, building up a loyal customer base that they could then wield as unofficial lobbyists when regulators started to scrutinize the sector. Both companies are now valued in the billions of dollars, although it’s unclear when or if either will reach profitability.

Even as many of the bike- and scooter-share companies are still in their diapers (figuratively speaking), some of them wield $1 billion-plus valuations as private investors bet the trend will not quickly fade. Designed for shorter trips, bikes and scooters also become economically viable quicker—on the order of four months—than say, a Zipcar, according to a report from McKinsey. The report pegs the US market for shared micro-mobility services will reach $200 billion to $300 billion by 2030.

Zagster, which has about 250 employees and offices in Boston and San Francisco, is looking to capitalize on that potential. Its technology aims to help cities, businesses, and schools run bike or scooter programs more efficiently, working to better distribute them within a service area and picking them up at night or in bad weather conditions to avoid costly damage or vandalism. Zagster last raised capital in early 2018 with a $15 million round led by Edison Partners. The sum pushed the startup’s total capital raised to $32.2 million.

The biggest obstacle micro-mobility faces, Grossman says, is the sector gets more than its fair share of bad press. Criticisms range from dockless scooters and bikes littering sidewalks, to scooters taking over sidewalks and blasting past pedestrians and ignoring traffic rules when they take to the street. Helmet use is low for these short trips, and when injuries occur, they are most often head injuries and fractures, according to a study of scooter-related hospital visits in southern California.

“A lot of the headlines are focused on what’s not working,” Grossman says. But that overlooks what he says are “millions of happy riders who have no issues at all, who have very good behaviors, and they start and stop these trips where they are supposed to.”