After sale to Ford, Spin charges ahead with plans to scale up

Electric scooter startup Spin was long considered to be a bit of an underdog in the micromobility space. Before selling to Ford, Spin had raised just $8 million, while competitors Lime and Bird had raised hundreds of millions. Today, the former underdog is backed by one of the world’s largest transportation companies and has set its sights on becoming an industry leader that sets standards for both vehicles and labor practices.

“We’ve gone from the scrappy upstart, the guy who was least-funded, the guys who kept to their principles and always deployed working with cities, who realized that there would be a chance for a long-term kind of business here,” Spin co-founder Euwyn Poon told TechCrunch. “Now, through the Ford acquisition, we can take an even longer-term view.”

When Ford bought Spin in a deal worth about $100 million in November 2018, Spin employed just 24 people. Now, the company has a few hundred staffers across 70 markets. Spin’s blueprint for growth is what brought Ford to the table, Poon said.

“The acquisition happened at a time when Bird and Lime had probably raised about $700 million each, so they were scaling out,” Poon said. “When Ford was looking to get into this space, instead of doing it themselves or acquiring a larger company, they found us as a great partner because we had these great principles and a big blueprint for scaling out. The capital injection they provided to us has put us in our path so, with the addition of Ford, we’ve been able to tap on their capital resources and have acquired a lot of expertise in the hardware side and a lot of expertise on the regulatory side as well.”

Does Spin’s Chariot await?

Back in September 2016, Ford bought commuter shuttle startup Chariot for an undisclosed sum; fast-forward to January 2019, and Ford decided to shut it down.

“In today’s mobility landscape, the wants and needs of customers and cities are changing rapidly,” the company wrote in a blog post at the time.

It made me wonder if Spin had any concerns about selling to Ford, but Poon pointed out that Spin’s founders still run the company. While Chariot co-founder Ali Vahabzadeh led the company within Ford, he left in February 2017.

“One of the things that struck me that has made this whole acquisition work really well in my view, was the fact that Ford, while still in this space of mobility, wasn’t in the business of software or micromobility,” Poon said. “In the same way that if Google or Facebook acquired an app, they’re sort of like in the same business.”

He went on to say that no one at Ford thinks they know how to do micromobility, which is popular with consumers in a way that commuter shuttles were not.

“The core focuses at Ford are manufacturing, planning demand cycles, vehicle design, powertrains — nothing to do with urban mobility or iPhone apps,” Poon said. “I mean, they have apps teams, but it’s not a core thing.”

Although he acknowledged that product-market fit and management issues can pop up after acquisitions, Poon said Spin’s integration with Ford is working well and cited General Motors’ Cruise as a similar example.

“[Ford] is the original mobility company and now they’re trying to make us the next-generation mobility company,” he said.

A supercharged electric scooter

As the majority of scooter operators are all working on in-house vehicles, Spin is doing the same. Given Ford’s expertise with vehicle production, expectations for Spin’s first scooter are high. At the time of acquisition, Spin already had one vehicle in progress, so it will only have about half of Ford’s influence, Poon said. Future generations, however, will have more input.

“The F-150 is a legendary vehicle,” Poon said. “We certainly want to live up to that and they kind of expect us to live up to that.”

Spin’s current fleet relies on Segway’s scooter designed for the sharing economy, but it plans to deploy its first custom vehicle sometime this year. That should also help with Spin’s unit economics, which are not yet positive, but “they’re getting there,” said Poon.

Reasonable permit caps, better infrastructure like charging stations and swappable batteries are a few of the factors driving his confidence, he said. And thanks to new regulations, “everyone is kind of moving in lockstep.”

Integrating with and/or improving existing infrastructure are ways to get in good with local governments, he added. Spin has partnered with startup Swiftmile for branded charging stations as a way to reduce clutter and improve ridership. Down the road, Spin envisions charging stations becoming a core part of its service.

“We want to incorporate these charging stations as a real core part of our product offering,” Poon said. “And so what these charging stations do is they cut down dramatically on operations costs and offer a solution for arranging scooters in busy areas. And I think charging stations will also build a better habit for users because it increases reliability — having the scooter where you need it, in a predefined location, will get users to trust the system more.”

This is the biggest path to growth in the industry, according to Poon.

“Another big step [for unit economics] is the durability of scooters themselves,” he said.

“The first version of shared scooters were personal models co-opted for shared use,” Poon said. Now, companies are starting to come out with more robust versions that are built for sharing and less prone to theft, thanks to heavier parts. Spin is also looking beyond the scooter, as other startups have done. Bird, for example, has already deployed a cruiser, which most closely resembles a bike but doesn’t require pedaling.

“We have one in the works as well,” Poon said. “We’re always toying with different form factors. Anything that can carry one or two passengers up to five miles is a relevant vehicle.”

San Francisco, the coveted market

It’s been a long road for Spin in the heart of Silicon Valley. Prior to deploying about 200 scooters in San Francisco in March 2018, the company said it had been in touch with the city about its rules and regulations.

According to Poon, the city said Spin would not violate any rules if it did a small deployment, so Spin did just that. But when Bird and Lime rolled out a bunch of scooters throughout the city, it “caused a lot of noise,” Poon said.

“It was actually really cool,” he said. “We saw incredible demand. But because they didn’t have permitting at that point, naturally and rightfully, the city got a bit apprehensive about the whole thing and got everyone to stop. In that first round of permitting, I think a lot of things were kind of lost in the shuffle and we sort of got lumped in with both Bird and Lime and I think it affected our initial permit.”

In that first round, just Skip and Scoot were granted operating permits. When round two came around for permitting last year, Spin came prepared to prove to the city it would be a respectful operator that offered more than temporary gigs. Spin does not employ its entire workforce, but about 90% of its workers are W-2 employees and the plan is to push more in that direction. A “small minority” of Spin’s workers in certain markets are 1099 independent contractors, said Poon.

“Apart from the fact that we do want to treat workers well, we’ve found that training and having folks that can incorporate learnings is tremendously beneficial as we move toward this phase where operational efficiencies are becoming key. Everybody is trying to tighten up on unit economics, but if there are a bunch of folks coming and going it’s hard to control things on the ground. So having motivated personnel, having trained and dedicated staff members is becoming a real advantage for us.”

Spin took that a step further and proactively reached out to some of its team members who had experience as labor organizers while working with Chariot, Poon said. Ahead of the permit decision, Spin reached out to the Teamsters and signed a labor peace agreement, which paved the way for about 40 Spin workers to seamlessly join Teamsters Local 665 in San Francisco. These employees include shift leads, maintenance specialists, operations specialists, neighborhood ambassadors and scooter deployers and collectors.

“This is significant because this is an industry that was based on independent contractors with little to no workplace protections and now they’re becoming employees and workers are organizing,” Teamsters Joint Council 7 Political Director Doug Bloch said in a statement at the time. “It’s a model for the tech industry moving forward.”

It’s still early days for workers who joined the union, but Spin says it’s in the process of developing best practices and figuring out how to optimally work with unions.

“But ultimately, we think it’s a good thing to be having the rights of our workers represented,” Poon said. “We haven’t quite negotiated the collective bargaining yet, but that’s sort of the next step. But we do want to figure out a way to have everybody win here. Fair wages and a good environment promotes retention for our business.”