If you want to be the “Zipcar for bikes,” Boston is not a bad place to be—and Zagster isn’t a bad name.
I first saw Zagster co-founder and CEO Tim Ericson speak at a TechStars Boston demo day in May. The Cambridge, MA-based bicycle-sharing startup has been around since late 2007 (fka CityRyde, based in Philadelphia) and is ramping up operations now, thanks to a $1 million financing round from angels and VCs last month.
Indeed, bike sharing might be an idea whose time has come in the U.S., what with the rise of the broader “sharing economy.” These days you can rent a car on-demand, couch-surf with strangers, and try to obtain any manner of goods or services through online companies such as Airbnb, TaskRabbit, RelayRides, Rentabilities, and Zaarly. Gas prices, urban planning, and sustainability issues also have swung in Zagster’s favor.
“People will use things others are using if it’s made ridiculously easy,” says Ericson, who was inspired by the bike-sharing programs he saw while living in Europe.
Interestingly, Zagster doesn’t think in terms of city-wide rollouts, which it ruled out for cost reasons. Instead it targets hotel chains (Hyatt), corporate campuses (Cisco), universities (Yale), and nationwide apartment-rental companies. Zagster also sells its service to property managers who want to provide residents or employees with a convenient way to get around. (A pilot is going on now at University Park at MIT.)
To use a Zagster bike, you sign up for the service, receive a code by text on your phone, and enter the code to unlock the bike (which can be locked up anywhere). On the back end, Zagster has software that manages the logistics of bike fleets. It buys the bikes wholesale but is working toward partnerships with providers, Ericson says.
That’s all nifty, but I wondered how big a market opportunity this really is. Ericson says each of Zagster’s major segments (hotels, corporate, and apartments) are “far above a billion-dollar market annually.” He adds, “A lot of brands are realizing this could be a differentiator for them.”
Perhaps the bigger question is how a company like Zagster might affect our transportation habits. Will U.S. cities ever become as bike-friendly as those in Europe? “We’ll come close in the next five years,” Ericson says. “There’s a push for people to get out of their cars. Every major city has investments in alternative transportation systems. We’ll be part of the transportation mix.”
And in terms of his business, Ericson emphasizes that while he’s bullish on bike sharing, the real goal here is to become a “bigger piece of the sharing economy.”
