viaCycle

viaCycle business model explained

The early propositions for the viaCycle business model were split into two board categories: viaCycle would set up and own bike share operations and collect revenue directly from the bicycle riders (B2C) OR viaCycle would partner up and offer the platform for a fee to the operators (B2B). It’s the age old question facing many firms: Do we go it alone or do we partner up?

Currently we have decided on a B2B approach as a means of rapidly growing market share and establishing the fledgling company. Note that like any early stage start up, we strive to remain flexible as we attempt to grow and learn. The motivation behind adopting a partner is to conserve our energy and channel it directly into product development rather than operations – something that we might want to explore at a later date.

The viaCycle business model can be summed up in one phrase “Bike Share in a Box.” This phase was coined up to express the notion that, as a prospective entrepreneur looking to start up a bike share program, viaCycle will ship you everything you need. This includes the actual bicycles along with access to a backend management tool that will allow administrators to manage their fleets.

The happy path scenario would be as follows: Bike share operator identifies a new market or wished to modernize and expand existing operations. This “operator” would then approach viaCycle to help roll out the bike share platform. The operator would instantly have all the infrastructure required and would pay a fixed fee to access the entire backend infrastructure. viaCycle would, as part of the agreement, help support and maintain any of the sensitive electronic equipment located on the bike.

These “operators” may come in many forms and may decide to price the bike share accordingly. At the most basic level, an operator would charge for the use of the bike on an hourly basis and recoup his costs that way. Alternatively the operator may wish to charge a flat monthly fee for unlimited use of the bike – e.g. University administrations would charge students a fee for a semester and allow unlimited use, perhaps to compliment the established bus systems on large campuses. A more traditional approach would be to “skin” the bikes and racks to a particular advertising campaign which would pay for the operating costs.

viaCycle hopes that by sticking to B2B model it can grow into a diversified ecosystem that can provide long term stable growth. While it is true that under the B2C model, we can control our “product” better, this trade off is more than justified by the diversity and stability offered by allowing our partners to contribute in shaping of future bike share programs.

We do however realize that this franchising model traditionally works best for established business where there is a latent demand for the good or service. In the case of bike share programs, the market has yet to fully mature. This means that initially we will actively seek out new markets and operators that are willing to showcase the viaCycle product. This initially viaCycle has to “push” and demonstrate to the market that there is demand for modern bicycle sharing programs.

This idea of demonstrating the existence of a market remains the critical next step for viaCycle.

Zach Zacharia

Vice President

Send an email to the author of this post at zach@viacycle.com