After completing a costly renovation less than a year ago, the once high-flying e-scooter unicorn Bird Rides has put its airy and sleek Santa Monica offices up for sublease, dot.LA has learned. Prior to the pandemic, Bird was looking at tripling its local footprint, but now with a local workforce numbering less than half what it was before the pandemic and those who remain working from home indefinitely, the company is dramatically downscaling.
The move comes as Fidelity Investments filed a disclosure Friday with the SEC revealing it has marked down the value of its Bird investment by 17% since the beginning of the year.
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Bird would not respond to questions sent by dot.LA, including whether it was attempting to unload its entire headquarters. But, the 79,019 square feet being offered appears to represent most — if not all — of the company's Santa Monica footprint. Former employees say it would be difficult to imagine splitting up two-story space, which could not be less suited to social distancing requirements.
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"Bird had finished a massive expansion of that office space back in November of last year, which only doubled down on the 'openness' of the office," said the former employee who asked not to be named because they had to sign a nondisclosure agreement. "I don't see a conceivable way where they'd only be able to sublease a part of it and not all of it."
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Bird spent several million dollars on network infrastructure and over a million dollars on furniture alone in last year's expansion, according to another former employee. The renovation opened up new desks, a number of new conference rooms, and a large kitchen with two buffet-style central islands where the company brought in daily catered lunches for employees from Halal Guys, Fresh Corn Grill and My Taco Guy on Taco Tuesday. </p><p>"Overall it was a really nice space," remembers a business operations employee who was laid off in March. "It kind of sucks things went down the way they did and remote work became mandatory."</p><p>
Bird <a href="https://www.inc.com/magazine/201902/will-yakowicz/bird-electric-scooter-travis-vanderzanden-2018-company-of-the-year.html" rel="noopener noreferrer" target="_blank">became the fastest company in history</a> to reach unicorn status in 2018. Shortly after that, it achieved a $2 billion valuation in less than a year. But in March, it abruptly laid off 406 employees <a href="https://dot.la/bird-layoffs-meeting-story-2645612465.html" target="_self">via a Zoom call that former employees described as dystopian</a>. Headquarters was particularly hard hit, with the layoffs reducing the staff by more than half.
</p><p>"Given the pandemic, Bird employees are currently working from home and the company is not currently utilizing the space," said a source at the company not authorized to talk on the record but who is close to the matter. The source portrayed the move as a reaction to the pandemic rather than indicative of anything about the company's financial performance.</p><div id="c0124" class="rm-shortcode" data-rm-shortcode-id="89746299600013857310569d177f914b"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1313693418023841792" data-partner="rebelmouse"><div style="margin:1em 0">Lime and Bird offices https://t.co/NgB5I2VbPE</div> — EB (@EB)<a href="https://twitter.com/EllliotttB/statuses/1313693418023841792">1602043892.0</a></blockquote></div><h2>Pandemic Hits E-Scooters</h2><p>
The pandemic occurred at the worst possible time for e-scooter companies. They typically bring in little revenue in the cold winter months, recouping their investment in warmer weather. But in March, they had to pull their fleets and close down operations just as they would normally be returning to city streets. Cash-starved Lime, a Bird competitor that has also put up its offices for sublease, <a href="https://electrek.co/2020/05/06/lime-valuation-drops-uber-investment-electric-scooters/" rel="noopener noreferrer" target="_blank">was forced to raise new capital at 79% discount from its last round in May.</a>
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Bird has the fortune of being better capitalized and in late January, the company raised another $75 million of Series D2 funding at a $2.77 billion valuation. But Dan Hoffer, managing director of Autotech Ventures, an early-stage venture firm focused on transportation, thinks Bird also might eventually be forced to raise a down round. He has long been skeptical that the company's unit economics can justify its lofty valuation.
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"Our position is being validated right now as investors get wiped out and their companies recapped," Hoffer said. "In an environment in which multiples are retracting, having raised at a very high valuation is not always a good thing."
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As a private company, Bird does not have to share its financials, which is why Fidelity's markdown is revealing. But the company has maintained that in many ways, <a href="https://www.bird.co/blog/empty-streets-effect-pandemic-unexpected-lesson-life-after-cars/" rel="noopener noreferrer" target="_blank">the pandemic has been a positive</a> as people eschew crowded buses and subways and cities use the crisis as a way to rethink city streets and prioritize scooters over automobiles. <a href="https://www.bird.co/blog/scooter-riders-making-comeback-riding-longer-than-ever/" rel="noopener noreferrer" target="_blank">It is seeing riders take longer trips</a> than they did before the pandemic and consolidation in the industry could be good for Bird, which is the market leader.
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Early investors including Mark Suster, Upfront Ventures managing partner, say they remain bullish on Bird and that the company has done a good job of reducing expenses.
</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<a href="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzMyNzAxMS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTY0OTMzNjIzNX0.NAVwcRDJBrWm4AJUqXsQjBBHW_sXwPVq0naKKYCiReU/img.png?width=980" target="_blank"><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzMyNzAxMS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTY0OTMzNjIzNX0.NAVwcRDJBrWm4AJUqXsQjBBHW_sXwPVq0naKKYCiReU/img.png?width=980" id="382f5" class="rm-shortcode" data-rm-shortcode-id="f3218d1b9b09140bdcc19bd0bf3d52e2" data-rm-shortcode-name="rebelmouse-image" /></a>
<small class="image-media media-caption" placeholder="Add Photo Caption...">How Bird Could Benefit From a Post-COVID World</small>
<small class="image-media media-photo-credit" placeholder="add photo credit...">
<a href="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzMyNzAxMS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTY0OTMzNjIzNX0.NAVwcRDJBrWm4AJUqXsQjBBHW_sXwPVq0naKKYCiReU/img.png?width=980" target="_blank">assets.rebelmouse.io</a>
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"The unit economics are already very positive," Suster said before headquarters was listed. "We have narrowed our losses because capital is harder to raise right now in the micro-mobility market."
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Inside Bird, the latest move to get rid of headquarters is seen by some as a way to further trim expenses and prepare the company for an IPO or exit. The company has been able to continually improve its unit economics – each scooter model is less expensive and more durable – so cutting administrative costs is crucial.
</p><h2>Expansion Plans Halted</h2><p>
Before the pandemic, Bird was said to be on the hunt for up to 300,000 square feet of office space for a new corporate headquarters - more than tripling its current size, according to Michael Soto, research director at Savills, a commercial real estate advisory firm.
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Soto says Bird is certainly not alone in trying to unload costly unused office space. The company's neighbor, Edmunds.com, has been attempting to sublease 195,000 square feet at the headquarters it opened <a href="https://www.edmunds.com/car-news/edmunds-coms-new-headquarters-makes-a-splash-on-silicon-beach.html" rel="noopener noreferrer" target="_blank">to great fanfare in 2016</a> and Beachbody, a provider of fitness and weight-loss programs, is trying to shed 135,000 square feet in Santa Monica. (Beachbody did not respond to a request for comment. An Edmunds spokeswoman said the company has more square footage than it needs and noted that it was considering a sublease before the pandemic.)
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"It's tough right now," said Soto. "There's just too much uncertainty in the economy so most companies are putting off signing deals unless they have to. And for those companies who are signing deals, there's a lot of kick-the-can-down-the-road short-term deals because a lot of companies aren't comfortable locking in a long-term financial commitment right now, especially since they don't know what they'll look like post-COVID or even if they'll keep their employees working from home."
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One exception is Netflix, a major beneficiary of the stay-at-home economy, <a href="https://therealdeal.com/la/2020/09/22/netflix-inks-giant-lease-in-burbank-for-first-dedicated-animation-studio/" rel="noopener noreferrer" target="_blank">which signed a lease last month</a> for 171,000 square feet to house its first dedicated animation studio in Burbank. LegalZoom also recently extended its 50,000 square feet lease in Glendale. But overall, just 1.6 million square feet of office space was leased in the third quarter in Los Angeles, a decline of 18% from the previous quarter and a 61% dropoff year over year, according to Savills.
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"As long as uncertainty over COVID remains, overall leasing activity will continue to be low," Soto said. "That doesn't mean there aren't or won't be larger leases being signed over the short-term, but I really think those will continue to be the exception rather than the rule."
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Bird moved into its current headquarters at the Colorado Center in 2018, <a href="https://therealdeal.com/la/2018/08/07/spreading-its-wings-e-scooter-startup-bird-inks-lease-at-colorado-center/" rel="noopener noreferrer" target="_blank">signing a lease for 58,000 square feet,</a> which it later expanded to 72,019 square feet. Other tenants include Hulu, Goop, and EHarmony.
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Bird's<a href="https://pbs.twimg.com/media/EjstMVqVoAAWd7f.jpg" rel="noopener noreferrer" target="_blank"> listing</a> says renters can occupy the space until either the end of 2023 or until next September, which is around the time Bird can execute a lease termination option, according to a source familiar with the matter.</p>
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As Santa Monica prepares to shutdown its five-year-old, city-run shared bike service, Lyft will roll out a fleet of hundreds of electric bikes, beginning Tuesday.
The new e-bikes will be docked at the city's existing 80 bike rental stations and cost $1 to unlock plus 34 cents per minute to ride. That compares to the city's Breeze Bike Share program started in 2015, which cost 12 cents a minute after a $1 initial drop.
Breeze was the first shared bike system in L.A. County, but once competitors such as Bird, Lyft, and Lime came to town, Breeze lost marketshare and ran a deficit that city leaders were not keen to subsidize. Last month, the city's bike share coordinator Kyle Kazar said with Santa Monica financially strapped by the pandemic, the city would permanently close Breeze and turn bike sharing over to the private sector.
When stay-at-home orders took effect this year, Santa Monica saw shared mobility ridership plummet by 94% between February and April. Lime and Jump terminated their operations, leaving Lyft and the hometown unicorn, Bird, as the only operators.
Since then demand has increased, especially as riders have favored micro mobility over crowded buses and trains. Bird and Lyft have returned their e-scooter fleet sizes back to 750 each and Lyft will roll out the 500 e-bikes.
Lyft already rents e-bikes in Columbus, Minneapolis, San Francisco, San Jose, New York, Washington D.C., Chicago and Portland.
The electric bikes are available in Santa Monica but can be ridden and left as far away as West Los Angeles, with the option to park at any Breeze station for free. Otherwise, a user can park at any public bike rack for $1.
"I couldn't be more excited to see Lyft launch its new ebike program in Santa Monica," Mayor Pro Tem Terry O'Day said in a statement. "Our future depends on sustainable, active transportation like e-bikes. They reduce our carbon footprint and increase accessibility for the entire community."
For those who still want to try the city's Breeze program, rides are free until the city pulls those bikes off the road November 11. The city's equipment will be sold or recycled in the coming months.
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Santa Monica-based Bird could benefit from a post COVID-19 world where fewer people are using public transportation, especially in urban areas in Europe and Asia where car ownership is more expensive, according to an optimistic new research note published by Pitchbook.
"We believe the thesis for shared mobility remains intact, and expect public aversion to mass transit to drive a $15 billion addressable market expansion for the industry," Asad Hussain, an emerging technology analyst at Pitchbook, wrote late Wednesday . "Anecdotally, we are hearing of an uptick in interest in mobility among investors seeing the light at the end of the tunnel."
<p>As of earlier this month, public transportation ridership was down approximately 70% in the U,S and 80% in Italy and France. <a href="https://thesource.metro.net/2020/05/14/metro-to-pursue-four-phase-plan-to-restore-bus-and-rail-service/" target="_blank">Metro ridership in Los Angeles has fallen</a> from about 1.2 million average weekday boardings to 360,000.</p><p>Scooters have often been billed as a compliment to public transportation, <a href="https://urbanmobilitydaily.com/has-public-transit-finally-found-its-first-mile-last-mile-partner-in-micromobility/" target="_blank">helping riders reach the "last mile."</a> However, Bird is already seeing evidence riders are replacing buses and trains with scooters, a habit the company is optimistic will stick. Bird also hopes that the <a href="https://www.nbclosangeles.com/news/local/las-slow-streets-program-closes-streets-to-provide-space-for-activity/2363020/" target="_blank">closing of city streets during the pandemic</a> could make using scooters more appealing since they have always struggled with being too fast for sidewalks and too slow for weaving in and out of vehicle traffic.</p><p>"Over the past month, we've seen sustained increases in trip duration of more than 50%," wrote Ryan Fujiu, chief product officer at Bird <a href="https://www.bird.co/blog/scooter-riders-making-comeback-riding-longer-than-ever/" target="_blank">in a blog post.</a> "Initially we attributed this to a desire to be back outdoors experiencing fresh air and open space, but we're seeing strong indications that it may be a much longer-term trend related to things like public transit concerns nearly a thousand miles of new open streets and a spike in the construction of protected cycling infrastructure."</p><p>Last month, cash-strapped Lime <a href="https://www.google.com/search?q=lime+raised+funding&oq=lime+raised+funding&aqs=chrome..69i57j69i59j69i60l3j69i61j69i65j69i60.2675j0j9&sourceid=chrome&ie=UTF-8" target="_blank">raised emergency funding at a steep 80% discount</a>, with Uber as the lead investor. Bird had the good fortune to raise new financing this year before the coronavirus slashed valuations but still has tried to preserve cash, <a href="https://dot.la/bird-layoffs-meeting-story-2645612465.html" target="_self">laying off 40% of its workforce in a widely criticized Zoom call at the end of March.</a> More deals and consolidation could likely be ahead. </p><p>"The pandemic will exacerbate a trend that we were already starting to see early signs of, which is consolidation in the industry," said Daniel Hoffer, managing director of Autotech Ventures.</p>Meanwhile, <a href="https://twitter.com/BirdRide/status/1265649858968317953" target="_blank">Bird unveiled its latest new feature Wednesday called Quick Start,</a> which allows riders to activate a nearby scooter via bluetooth on their mobile phone simply by walking towards it instead of scanning a QR code. Bird says early testing shows the new process, which is gradually being rolled out to markets, cuts the time it takes to unlock a scooter in half.
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