triangle bike share - new venture plan

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! Prepared by Josh Bielick 954-552-4965 [email protected] TriangleBikeShare.com April 9, 2012 e Triangle, NC’s premier bike share operator and authority. We design, equip, install and operate world-class bike share systems. new venture concept © 2012 Josh Bielick

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New venture plan for 501(c)3 bike share operator for the Triangle, NC. Written for North Carolina State University MIE 413 and NCSU Lulu eGames 2012. TBS branding and design by http://mattyow.com

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Page 1: Triangle Bike Share - New Venture Plan

!

Prepared by

Josh Bielick

954-552-4965 [email protected]

TriangleBikeShare.com

April 9, 2012

�e Triangle, NC’s premier bike share operator and authority. We design, equip, install and operate world-class bike share

systems.

n e w v e n t u r e c o n c e p t

© 2012 Josh Bielick

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O U R M I S S I O N

O U R V I S I O N

T H E O R G A N I Z A T I O N

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C O N T E N T S executive summary. ............................................................................................................................................................ 4  

company description .......................................................................................................................................................... 6  background .................................................................................................................................................................... 6  mission........................................................................................................................................................................... 6  current state ................................................................................................................................................................... 7  

industry analysis ................................................................................................................................................................. 7  revenue .......................................................................................................................................................................... 7  

Figure 1 - Public Transportation Industry Revenue Trend .............................................................................................. 8  

Figure 2 — Industry Revenues........................................................................................................................................... 8  participants .................................................................................................................................................................... 9  life cycle ......................................................................................................................................................................... 9  concentration ................................................................................................................................................................ 9  

Figure 3 – Growth in Federal Funding for Transportation............................................................................................... 9  key success factors ......................................................................................................................................................... 9  industry trends ............................................................................................................................................................10  

Figure 4 - US Urban Population Growth .........................................................................................................................10  

market analysis .................................................................................................................................................................11  geographic target markets — primary factors ............................................................................................................11  

Figure 5 - Population Density Comparison.....................................................................................................................11  geographic target markets — secondary factors ........................................................................................................12  

Figure 6 - Cycling Commuter Rates.................................................................................................................................13  

Figure 7 — Cycling Rates by Block Group in Raleigh.....................................................................................................13  geographic market competition..................................................................................................................................14  end-user target market ................................................................................................................................................14  

Table 1 — Target Market Characteristics .......................................................................................................................15  motivation ...................................................................................................................................................................15  

marketing plan..................................................................................................................................................................16  initiatives and organizations .......................................................................................................................................16  special events ...............................................................................................................................................................16  partnerships.................................................................................................................................................................16  sales and distribution ..................................................................................................................................................17  

management team and company structure......................................................................................................................17  

operations plan .................................................................................................................................................................18  equipment supplier .....................................................................................................................................................18  operational models......................................................................................................................................................19  

Figure 8 — Bike Share Operational Schemes..................................................................................................................19  

product description..........................................................................................................................................................19  what is bike sharing?....................................................................................................................................................19  

Figure 9 — Bike Sharing: Visually explained ..................................................................................................................20  service ..........................................................................................................................................................................20  

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Table 2 — Memberships and Sales Volume ....................................................................................................................21  

financial projections.........................................................................................................................................................21  start-up costs................................................................................................................................................................21  

Table 3 — Startup costs for Raleigh System ....................................................................................................................22  operational costs .........................................................................................................................................................22  revenue sources ...........................................................................................................................................................22  

appendix ...........................................................................................................................................................................24  

sources ..............................................................................................................................................................................25  

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E X E C U T I V E S U M M A R Y . Description

Triangle Bike Share is a next-generation bike share system operator. We will consult, assess, design, seek funding, implement and finally operate public bike share systems. These systems install stations spanning the targeted service area and offers an autonomous, environmentally conscious, and affordable transportation option at the utmost convenience to its users. Our product is an affordable commuting and recreational transportation alternative with the customers’ needs in mind.

Market

The city of Raleigh, North Carolina has seen population growth of almost 50% in the last decade. 8This growth has been almost matched by neighboring cities in the Triangle and the population density increase paired with favorable cycling conditions and supportive cycling communities makes it an ideal location for a public bike share system. The transportation infrastructure in these cities is overburdened. Additionally, neighbor cities, Chapel Hill and Carrboro, have a cycling commuter rate much higher than the national average (5.2% and 2.4%, respectively).1 These cycling commuter rates rival that of Washington, D.C. (6.52%)13, which is home to the nation’s first bike share operation and indicate a demand for the service. Much like Raleigh, these NC cities lack a unified, affordable, flexible public transportation system design for urban mobility that meets the needs of its downtown-living and commuter habitants. Adoption of public transit has also risen in the triangle; Capital Area Transit bus boarding and alighting has grown 24% since 2008.9

Triangle Bike Share has focused its research and market penetration on Raleigh, NC as an initial market and location to set up operations because of its fast growth, favorable demographics and proximity to other secondary markets.

Target

The end-user target market is comprised mostly of professionals in the age group 25-64 whom are downtown dwellers and urban commuters, hold a bachelor degree or higher, earn above median income, and own or have access to a vehicle. Worldwide, subscribers of this system seem to match similar demographics to most public transportation services, but in US models subscribers tend to be more educated and have at or above median income. These systems provide short-trip urban mobility and are of value to those living in downtown and dense, urban quarters.

Industry

Triangle Bike Share is a player in the public transportation industry—a $38.1 billion industry expected to grow at an average of 2.3% for the next five years.6 It falls into the smallest category within this industry—Other urban transportation.

Bike share systems and operators are fairly new the in the US. The first 3rd-generation system (smart card swiping) in the world was implemented in 1996 at an English University.2 However, the most recent system comparable to those of today was implemented in 2005. Bike share systems are a very new subsector of the public transportation industry and show a promising future.

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Operations

The majority of bike share operations in the U.S. generate revenue from membership sales and user fees, while sponsorships and sometimes ad revenues contribute sizable portions of operating revenue. Memberships are sold from automated station kiosks or from the system’s website. Current pricing models seem to meet the expectations of customers, but should be assessed on a case-by-case basis and innovated.

Triangle Bike Share will consult with municipalities looking to assess a market’s feasibility, develop plans for implementation and phasing, assist in seeking grants or private funding for the system, facilitate the vendor order and installation of equipment and finally operate the bike share system.

Triangle Bike Share will operate as an NC corporation, contracting services to local transit and municipal authorities. The system upfront costs will rely heavily on transportation subsidies and/or grants and private donations. Memberships, usage fees and sponsorships will generate the revenue to recover operating costs and the system is expected to break even in year three. Ownership of the system will belong to the city or municipality for which it is installed.

Transportation and infrastructure development is on the front burner of city and downtown development and the triangle, NC and abroad. This type of environmentally friendly, healthy, convenient and long-term solution will be the perfect augmentation to the city and county public transportation systems here in Raleigh and abroad. It’s an innovative approach to urban mobility and its benefits are yielded almost immediately. Bike share systems are growing fast; the Triangle will be the next region to see these systems implemented and Triangle Bike Share will be their operator.

“We know that bicycles are more than a toy. Some of us believe that bicycles are a means to reclaim our urban environments and streets for people;

others simply know that bikes are a fun way to promote exercise. Some of us feel that bikes are a simple action that can collectively help address climate

change and peak oil. Some believe all of this is true. There is no better example of true sustainability than public bike sharing - a simple solution that simultaneously addresses environmental, economic and community

challenges.”

-Parry Burnap, Executive Director of Denver Bike Share

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C O M P A N Y D E S C R I P T I O N

Triangle Bike Share will be the first North Carolina-based, next-generation bike share operator. TBS will establish operations and a base office out of Raleigh, North Carolina—the location of the first proposed bike share system and market penetration—and establish systems in several other targeted North Carolina markets. As a bike share system operator, TBS will seek the grant monies and funding to install the system, perform thorough feasibility studies, contract with the appropriate equipment vendor and finally administrate, maintain and execute all on-the-ground tasks and day-to-day functions of the system. TBS will form a partnership with local municipalities to form a hybrid owner/operator business model in which the city or transit authority owns the system itself, and TBS is contracted to operate it.

Bike share systems are emerging at a growing rate in US markets and worldwide, but are only served by 3 major operators. TBS will pioneer bike share operations and installations in the relatively untouched market of the southeast US. As of the submission of this plan, Charlotte, NC is the only market in North Carolina to begin a 3rd-generation bike share pilot program and feasibility study.3 Interest has been state in other NC markets by an international bike share operator, but no feasibility study or request for proposal has been made for the Triangle, NC. Bike share has been a topic of discussion in the triangle, NC in the last two years, but has lacked a properly funded, strategic, actionable plan and feasibility study to materialize.

background This bike share operator concept is the product of a senior (soon graduate) of North Carolina State University’s Poole College of Management’s entrepreneurship program named Josh Bielick. Bielick, age 25, is originally from Pompano Beach, FL, where he spent his adolescence using a bicycle for daily transportation. Geographic characteristics and a high population density made commuting by bicycle easy, convenient and economically rewarding. After moving to Raleigh, North Carolina and attending NCSU for undergraduate studies, Bielick continued to use his bicycle for daily transportation and saw that a significant number of other people did the same. Further research and analysis of the area yielded some very striking characteristics and after hearing about the success of this European concept manifesting in Miami Beach, FL, Bielick began compiling data and starting a feasibility study for the area. Since the beginnings of this research in June of 2010, Bielick has been consulting with bike share and transportation experts, engaging in the local cycling community events, seeking the ideal urban planner and technical expertise to augment the team while keeping a finger on the pulse of bike share worldwide. Josh can be reached via phone at 954-552-4965 or by email: [email protected].

mission Triangle Bike Share will become the premier, first-choice operator and industry experts for bike share systems in North Carolina and eventually—the Southeast. It will poise itself to become the premier next-gen bike share operator in North Carolina and quickly establish efficiencies and the expertise to dominate the southeast market.

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Bikes have a bigger place in our cities’ futures and Triangle Bike Share will address the growing need transportation options in the city's metropolitan areas. TBS connects residents with destinations—offering an affordable, accessible, healthy, convenient and innovative form of mobility.

current state Triangle bike share is in the startup phase. TBS is seeking seed funding to incorporate, begin market research, hire the necessary personnel to augment the team, begin consultation and pitching to city council, and complete a feasibility study for several NC markets.

As of the writing of this plan, the following milestones have been met:

• Initial market screenings • Research and beginning of feasibility study • Written the business plan • Begun search for management team

The following milestones will be met in the next 6-8 months:

• Acquire startup capital • Incorporate • Augment team • Begin primary data collection for feasibility study • Begin consulting with local municipalities and propose implementation plan • Establishing systems management infrastructure

I N D U S T R Y A N A L Y S I S Triangle Bike Share falls in the industry classification “Other Urban Transit System” (NAICS 485119, SIC 4111). Bike share systems are a relatively new concept to US markets and thus have not been adequately recognized and benchmarked by national studies and transportation authorities. A bike share operator more or less fits into the NAICS five-digit category “Public Transportation in the US” (NAICS 48511), which includes bus, commuter, heavy and light rail, cable car, and other urban transit systems.

revenue Since revenues from public transportation operators come from operating revenue (fees, subscriptions, advertising) and fluctuating non-operating revenue (federal, state, local grants and subsidies), income is determined mostly from operating costs.

This $38.1 billion industry has seen growth of 0.8% from `06-11 and is projected to grow 2.3% in the next five years. Additionally, the number of operators in this industry is also expected to grow at an average annual rate of 2.6%.1

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Figure 1 - Public Transportation Industry Revenue Trend

Buyers of these bike share systems are mostly cities, their transit municipalities, and large universities. The first US cities to purchase bike share systems and contract operators were Minneapolis, MN; Arlington, VA and Washington D.C., but as many as 15 US cities have implemented systems and established or contracted operators since 2009. Revenues for mid-size operators (60 station, 600 bikes) such as Denver Bike Share in Colorado generated revenues of $2.8 Million in its second operating year (including capital contributions and grants) and a net income of $1.54M4. Cost recovery rates for these systems in initial years range from 53% (Arlington’s 18 station, 113 bike

system as of 2011) to 149% 4significantly higher than its US rail and bus counterparts.5

Furthermore, some players in this industry rely on external drivers such as government funding for a significant share of income. While Triangle Bike Share will apply for federal or state grants on behalf of the system to meet upfront equipment and installation costs, it is expected to operate sustainably through user subscriptions, trip fees, sponsorships and (contingent on city policy and statutes) advertising revenue. Figure 3 – Growth in Federal Funding for Transportation — depicts the trend in federal funding for transportation from 2004 to 2016 (projected).

 30,000    

 35,000    

 40,000    

 45,000    

2000   2002   2004   2006   2008   2010   2012   2014   2016   2018  

Industry  Revenue  ($millions)  

Industry  Revenue  ($Millions)  

Figure 2 — Industry Revenues

Figure 3 – Growth in Federal Funding for Transportation

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participants This industry is comprised mostly of bus transit operators (59.6%) with the previously mentioned “Other” categorization contributing the second smallest share of the industry at 1.2%6. The largest market-share holders in this industry include New York City Transit Authority and Los Angeles County Metropolitan Transportation Authority—holding 33.3% and 8.7% respectively.1

In a more bike-share-specific area, contenders such as Alta Bicycle Share, Inc. and B-Cycle operate the largest share of systems in the US while BIXI of Montréal operates the largest in Canada. Other systems are operated privately by advertising companies (Miami DecoBike) and non-profit entities created specifically for the task. The competition at the end-user level could include other public transit options, but the design and implementation of bike share systems have been targeted at fulfilling the short trips niche and bridging the first and last mile gap in public transit design.

life cycle This industry is very mature, but innovative transit systems and technologies have created new opportunities for operators and manufacturers. As this industry grows, it is still expected to remain in its mature state. Demand and growth in this industry will be driven from environmental and social factors such as changes in demographics, urban population growth, concerns for environmental impact and employment rates.

Bike share systems have only recently been widely adopted and installed. Thus, they have not been recognized as a public transportation service in historical research. Their innovative solution to transportation in densely populated areas and low environmental impact poises them as a fruitful and sustainable offering in this industry.

concentration At a global level, this industry—specifically bike share operators—is extremely fragmented. Due to the geographic nature of its services, industry leaders typically do not operate outside of their markets. However, the US is currently seeing a growing number of bike share systems installed and two major companies are responsible for their operations. At the high-end of the spectrum, industry competition has historically been considered low, but the ample number of markets, rising adoption rate of these systems, and growing demand for sustainable transportation options has created an opportunity in many US cities. Significant hurdles in this industry are its capital-intensive nature, heavy regulation, and barriers to entry.

key success factors This industry has many key success factors, but the most important are the following:

• Maintenance of excellent customer relations • Compliance with government regulations • Taking advantage of government subsidies and grants • Establishing and maintaining a good reputation • Attracting patronage/building ridership

Source: IBISWORLD.COM

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• Making the system accessible

Bike share systems must adhere to these factors to achieve performance benchmarks. The nature of bike share is public transportation and though the business models and technologies are new, these KSFs still apply.

industry trends Public transportation ridership and demand is determined by several key macro-level economic factors including the following:

• Employment rates • Price of oil • Urban population density • Income distribution and economic

growth • Consumer preferences • Federal funding • Green movement

Some of these factors contribute very favorable conditions for the growth of bike share systems in the US, such as a growing ‘Cycling Renaissance’7 in the US over the last decade. Cycling trips have increased nearly 300% while bike share of all trips has nearly doubled from 1977-2009.7 This trend is heavily supported by green initiatives, changes in US demographics and the rising cost of fuel.

Furthermore, the population in North Carolina has grown 18.5% since 2000 while Raleigh’s population has grown 48% in the same period.8 Migration towards downtown and city centers has increased urban population densities in several Triangle cities.

Public transportation ridership is also on the rise. Locally, the Capital Area Transit system reports growth in bus boarding and alighting in Raleigh of 24% since 2008.9 At a national level, 10.4 billion trips were taken on public transportation in 2011—the second highest its been since 1957.10

Favorable economic and social trends, industry growth, the high value of these systems’ low environmental impact, the economic savings of public transit ridership and sufficient government funding of public transportation create a very viable window of opportunity for the implementation of a bike share system in appropriate markets.

“US freeways are currently outdated and plagued with traffic issues – and they are only expected to get worse. Americans are moving away from rural areas into

urban centers at increasing rates. As this trend continues, traffic volumes and travel times are expected to increase significantly because many cities are limited in their ability to expand highway systems due to a lack of planning or available space. The only long-term transportation solution is to increase ridership rates

on public transit systems.” --IBIS World

Figure 4 - US Urban Population Growth

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M A R K E T A N A L Y S I S For the purpose of this business plan, two target market types will be outlined. First, as a bike share operator and quasi-government entity, Triangle Bike Share must first win the bid for a city requesting proposals for bike share operators and vendors.

geographic target markets — primary factors At the macro-level, TBS will compete with other bike share system operators for the markets within the Triangle, NC. Raleigh and several other cities in the Triangle have been evaluated against a detailed set of criterion that estimates bike share system feasibility and demand for a market. The following factors are considered the highest indicators of feasibility based on experiences from US cities11 and Raleigh ranks favorably in each:

• Population Density

A significant indicator of the system’s feasibility is most often measured with a city or metropolitan area’s population density. Amongst cities currently operating bike share systems, Raleigh’s population density compares closest to Denver, CO (2,889 per mi2 and 3,995 per mi2 respectively).12 Other triangle cities such as Carrboro, NC are as dense as 3,086/square mi. and Wilmington, NC at 2,614/square mi. meet initial screening for bike share system feasibility starting at this metric. Figure 5 - Population Density Comparison depicts Raleigh, Carrboro and Wilmington’s population densities next to those of Portland, OR and Denver, CO—both home to bike share systems.

Figure 5 - Population Density Comparison

 -­‐        

 1,000.00    

 2,000.00    

 3,000.00    

 4,000.00    

 5,000.00    

Carrboro,  NC   Denver,  CO   Portland,  OR   Raleigh,  NC   Wilmington,  NC  

Pop  /  mi^2  

Population  Densities  

“…The City of Raleigh is facing a number of challenges with rapid population and development increases, rising costs including gas prices, and a transportation system that is overburdened.”

- Raleigh Bicycle Transportation Plan 2009

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• Non-Institutionalized Group Quarter Population Density

Population densities in cities containing many universities will also rank high in non-institutionalized group-quarter density; since university students are a secondary target market, added emphasis is placed on markets where these population densities are high.11 Identifying markets with high non-institutionalized group quarter population densities will yield a more accurate picture of a market’s viability outside of its primary target market. In the city of Raleigh, more than 10% of university students (3,925) use a bicycle for daily transportation—forming a significant market segment.14

• Job Density

As the industry analysis mentioned, employment plays a large part in the use of public transportation. Lulls in public transit ridership and revenues were seen largely during the recession period around 2008. High unemployment or low job density would indicate a lack of need/demand for public transit options.

• Tourist Attractions

Because the nature of bike trips in the US are largely recreational (48%), the proximity and number of tourist attractions and park/recreational areas contributes positively to the use and demand for bike share systems.7 Raleigh has an extensive network of attractors centered on the city’s downtown area. It’s the state capitol and thus contains many downtown museums, venues, restaurants and hotels.

• Parks/Recreational Areas

The 2009 Raleigh Bicycle Transportation Plan highlights a list of these attractions and their accessibility and outlines actionable steps to make these networks more bike-friendly. As a city, Raleigh has focused sharply on improving bicycle facilities and networks in the city—making it a viable bike share market.

• Topography • Regional Transit Stations

The addition of Raleigh’s proposed rail transit system will create a substantial amount of downtown public transportation traffic and will be augmented strategically by this system.

• Bicycle Friendly Streets • Streets with Bike Lanes • Local Transit Stops

geographic target markets — secondary factors Many other factors contribute to a somewhat qualitative assessment of the market. There is certainly a growing, positive bicycle culture in the Triangle, attesting to a cycling national renaissance and voicing support for many infrastructure improvements and city planning to make cycling safer, more accessible and a viable transportation option cities. Some of these secondary factors include the following:

• Cycling Commuter Rate

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Figure 6 - Cycling Commuter Rates

While Raleigh’s cycling commuter rate sits very near the national average at 0.43%14, smaller segments of Figure 7 — Cycling Rates by Block Group in Raleigh). Chapel Hill and Carrboro’s cycling rates place them in the top 10 in the state in bicycle mode share and as high as cities like Washington, DC and San Francisco California.14 Although these rates are indicative of a cycle-friendly culture and demand for bikeable cities, the American Community Survey and Census data from which these mode shares are extracted, do not account for trips made for recreation, to school or shopping.

Figure 7 — Cycling Rates by Block Group in Raleigh

• Vehicle Ownership Rates

As a secondary factor, low vehicle ownership translates to higher public transit and walking mode shares, but further analysis of the target market (use) concludes that vehicle ownership is not a highly contributing factor to demand.15

o Public Transit Commuter Rate

0.00%  1.00%  2.00%  3.00%  4.00%  5.00%  6.00%  

Cycling  Commuting  Rates  

Cities with bike share systems denoted with * Source: SimplyMap.com

Source: SimplyMap.com, USDOC 2010

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An in-depth and comprehensive feasibility study (currently in early-stage progress) will assess these variables at a zip code and traffic analysis zone (TAZ) level—offering a clear view of the system’s exact size, phasing, services area and most strategic placement.

Preconditions and initial screening of the targeted NC markets appear very positive. The service areas for these systems are densely populated areas with high transit connectivity and ample infrastructure support. Many markets within the Triangle meet these criteria and thus the triangle should be the next phase of cities to see interest and implementation of bike share systems.

geographic market competition As previously mentioned in the industry analysis section, several large bike share operators exist in the US, but the majority of systems are operated by non-profit or quasi-government companies established on a case-by-case basis. This type of fragmentation leaves room for some markets’ consolidation. Establishing operations and creating efficiencies in one market will create credibility to offer to other markets’ municipalities the service with confidence and a track record.

The largest competitor for geographic markets and city contracts is Alta Bicycle Share, Inc. ABS describes them as “the only company solely focused on urban bike share operations.” This sister company of Alta Planning and Design is responsible for the implementation and operations of Capital Bikeshare—one of the largest and longest-standing systems in the US. They also operate Chattanooga Bike Share, a system in Melbourne, Australia, the Boston Hubway system and have just been awarded the contract to install and operate New York City and Chicago, IL’s bike share systems in the next year. Alta Bicycle Share, Inc. serves as a consultancy to begin planning for the implementation of a bike share system, partners with equipment manufacturer BIXI for sourcing of all bike share equipment and establishes operations in the city itself to run the system. Furthermore, ABS has begun to evaluate the Triangle and has given presentations on initial system projections, timeline, and costs for a Raleigh system.16

Other bike share consultancies include MetroBike (http://www.metrobike.net/), Zagster (http://zagster.com/ formerly CityRyde), and equipment vendor B-cycle (http://www.bcycle.com/). MetroBike, LLC helped implement the original SmartBike DC program—the first in the nation—while B-cycle has setup systems and delegated operations to city-specific non-profit operators in markets such as Denver, Boulder, Madison, San Antonio, Louisville, Omaha, Des Moines, Spartanburg, and very recently added Broward County (the first county-wide system in the US).

end-user target market An analysis of the public transportation industry and cycling research offers some initial descriptions of a bike share system’s target market, but surveys of current system subscribers in the US have finely tuned the average bike share rider. Based on data from Denver B-cycle4, Minneapolis NiceRide15, and SmartBike DC ridership demographics17 as well as an accurate consideration for economic and social variables in North Carolina, the target market has been defined by the following characteristics: Table 1 — Target Market Characteristics

Variable Methodology

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25-64 years old The largest share of this age range is typically 25-34, but usage in age groups such as 35-54

accounts for almost half of ridership.15

Above median income 62% of NiceRide subscribers, 79.4% of Denver B-cycle subscribers

Healthy 96.6% self-reported excellent, very good or good health in Denver B-cycle,

Typically walk or bike to normal destinations

88% already walk or bike, 45.9% of NiceRide users, 86% of SmartBike DC users

Have access to/Own a vehicle 96% of Denver B-cycle subscribers, 60% of SmartBike DC riders, 65% of NiceRide users

Use other modes of public transit 20% of NiceRide users

Hold a bachelor’s degree or higher 87% in Denver B-cycle, 83% of NiceRide Subscribers15

motivation Public bike share schemes offer value to users in several ways. First, the system membership (service) offers the user a very convenient, autonomous, local transportation option. This type of offering is considered the last mile/first mile bridge between public transportation and users’ destinations. The very local nature and saturated service area enables users to get around very quickly and efficiently within the service area. For example, 89% of respondents of Paris’ Velib system survey stated the bike share system allowed them to move around Paris more easily.18 Furthermore, 59.6% of NiceRide subscriber survey respondents reported that what the like most about the bike share system was its convenience15 while 78% of SmartBike DC subscribers reported the same.17

Second, the service offers a transportation alternative that is emission-free. In fact, a bike share consultancy and fleet management software group, Zagster, has developed software to calculate the carbon offset generated by the use of each bicycle and yield this credit as a cash reward for operator. This software is currently under final development and is expected to deploy worldwide in the near future.19 The green initiative and environmentally friendly nature of the system adds value for commuters in that they are getting around in an environmentally conscious way.

Third, a significant number of bike share subscriber survey respondents stated they had increased the amount that they normally rode a bike.15 Bike share systems abroad have generated an increase in cycling amongst subscribers over 70% in Paris, 44% in Lyon and 66% in Minneapolis.18,15 Bike share systems have increased cycling rates amongst users in many of the cities in which it’s been installed and has also

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increased city and state cycling rates. There is a significant value add to the city to increase cycling rates and public transit usage because of the economic and health benefits that are associated with this trend.

Finally, increased cycling and public transit usage would equate to several economic savings such as less congested streets, less spending on gas, reducing carbon emissions by converting car trip mode share, and general public health benefits from exercise by using the system.

The many facets of value added to the user and city sculpt this service as a unique offering with a similarly unique target market. These target market motivators can help finely tune the service, marketing efforts and efficiencies to meet performance goals and adoption.

M A R K E T I N G P L A N

initiatives and organizations Triangle Bike Share will begin creating awareness and building potential user bases through sponsorships and partnerships with local cycling organizations. North Carolina is home to several cycling-oriented non-profits and cycling advocacy organizations. Each year, several annual events are held to rally advocacy and assemble fundraising and informational purposes. In addition, North Carolina recognizes May as national bike month and maintains a positive relationship with the League of American Bicyclists.

TBS will remain involved with and support local cycling initiatives and organization events within the triangle throughout its life—thereby firming its investment in the local economic and transportation climate and ‘voicing’ its support for a cycle-friendly community.

special events Raleigh and its neighboring cities are vibrant cultural cities with livable streets and many events occurring in downtown areas. Since system stations are easily installed for temporary purposes, Triangle Bike Share can easily accommodate very large downtown festivals and events transportation. By installing temporary stations to meet high demands for downtown mobility to and from parking decks and local businesses, TBS can capture new audiences and user groups by offering discounted 24-hour passes.

partnerships A great deal of value can be added to the system by creating membership perks and partnerships with local businesses. Some systems have experimented with membership clubs and limited discounts to system members. Triangle Bike Share will extend this model to a viable level. The bike share experience should leave the user enthusiastically satisfied and excited about riding again. Therefore, some incentives can be created for members amongst local eateries, metro connections, and popular retail trip destinations.

An innovative model for system balancing by incentivizing users can also be driven through partnerships. To combat an unbalanced system because of a high number of one-way trips via the

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network, redeemable coupons or credits can be offered for those traveling against this current and essentially balancing the system without moving bikes via motor vehicle.

Triangle Bike Share will also partner with local bike shops around the triangle to promote cycling, safety, and bicycle ownership and maintenance workshops as well as voice the benefits of bike sharing to the community. Partnering with local shops will also give members the opportunity to buy a helmet at a lower cost, as TBS will most likely subsidize the cost of helmets to encourage safety amongst riders.

sales and distribution Membership sales will be available at all times through the system’s website at each temporary or annual duration. This gives users instant entrance to the systems membership and a dashboard from which to find stations, map out trips, and keep track of carbon offset, miles ridden, calories burned and similar metrics. Membership smart cards or RFID key fobs will then be mailed to the member to use at the stations.

Additionally, the automated kiosks at each station will be capable of vending temporary or long-term memberships. In this manner, the kiosk will give the member an unlock code to use to unlock the bike from the stations.

Memberships will always be available for purchase in these two mediums, but further research may reveal more convenient/alternative options such as purchasing through a smart phone or in conjunction with other transit passes. The system’s core competency is convenience; TBS will make significant efforts in increasing efficiency and convenience in these regards.

Additionally, should the system be extended and implemented to meet the needs and service area of nearby universities, membership sales may occur in an opt-in fashion for students and eliminate the need for ordering a membership.

M A N A G E M E N T T E A M A N D C O M P A N Y S T R U C T U R E Triangle Bike Share is currently in its early stage. Members to complete management team currently being sought out. The expertise and passion from the appropriate members will establish a well-rounded team that will quickly become bike share operations experts, establishing best practices for the industry and remaining ahead of the curve of innovation and efficiency.

MANAGEMENT TEAM

president Josh Bielick

operations director s e e k i n g

general manager s e e k i n g

urban planner s e e k i ng

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TBS currently seeks

• an operations director with expertise in fleet management or logistics and a keen eye for bicycle transportation and its growing place in city planning.

• A general manager to direct and lead teams in planning implementation and establishing operations

• An urban planner to lead in feasibility studies and program/implementation parameters

BOARD OF DIRECTORS

A preliminary board of directors has been proposed, but is expected to expand. Members of the board of directors have proven track records in industries such as transportation and urban planning. Additionally, the city will appoint members representing its own interests and experience to form a representative board.

Creation of the Board of Advisors is underway.

O P E R A T I O N S P L A N Bike share schemes across the globe offer much the same product, but vary greatly in their implementation, operations, and initial funding. The most successful vendor/operator schemes in the past have been completely private. Early European systems have seen great success in the private vendor/operator and advertising revenue model. In this scheme, advertising agencies provide funding for these systems and are granted restricted advertising and street furniture rights. This model has shown great success in Europe (Paris and Lyons, France), but has only shown strength in the US market in select markets such as Miami Beach (DecoBike). Triangle Bike Share will operate differently.

equipment supplier Triangle Bike Share will provide turnkey systems by establishing operational parameters and structure, purchasing and installing equipment and seeking funding for upfront capital intense costs. The equipment will be purchased through Public Bike Systems in Montréal. PBS is the sole manufacturer of all BIXI bike share systems equipment in Canada and the provider of all equipment for Alta Bicycle Share systems current and planned. PBS is on the cutting-edge of systems and equipment development and currently offers the most modular, robust, equipped, and stylish bike share systems equipment on the market.

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operational models Figure 9 — Bike Share Operational Schemes, depicts the several operational/funding structures for bike share systems. Through much consideration and study, Triangle Bike Share will operate as public operator, contracted by the city or municipality. Additionally, it will purchase equipment through a public vendor, Public Bike Systems of Montréal, and seek funding through federal or state transportation grants. The most similar example of this model is the Boston Hubway system—funded almost entirely through a Federal Transit Authority grant—which now contracts operations from Alta Bicycle Share and uses equipment purchased from Public Bike Systems.20

Figure 9 — Bike Share Operational Schemes

Advantages of this system include the operator’s mission to increase ridership and run the system efficiently, relieving the funding burden from the city itself, and the city can still maintain direct control over implementation and service. Disadvantages of this model include a limited selection of operators with experience and limited availability of funds for the program.20

This business model poises Triangle Bike Share in a strategic and scalable position. Beginning analysis and implementation planning in initial markets will garner the confidence needed to exhibit operational viability and establishing operations in the first Triangle market will bridge the gap to the next geographic markets.

By embracing the ‘fourth-generation’ concept of bike share, TBS will fully utilize and collect vast amounts of usage and trip data. This relatively new concept still has kinks and inefficiencies to work out; early systems struggled with implementation and adoption due to lack of understanding of the target market, needs of its users, and inability or lack of technology to collect GPS trip data for usage of all of the bikes. Focusing on next-generation technologies and identifying key success factors particular to our market and trip and usage trends, we can overcome a steep portion of the learning curve and ramp the company into a bike share operations leader.

P R O D U C T D E S C R I P T I O N

what is bike sharing? Public bike share is a unique offering to urban dwellers. Bike share systems have existed in many forms since 1965 and developments have been substantial and forthcoming. Systems and schemes have mostly

Public  Vendor  

Public  Operator  

Public  Funding   Private  Funding  

Non-­‐ProHit  Operator  

Public/Private  Funding  

Private  Vendor  

Private  Operator  

Advertising  Funding  

Private  Funding   Public  Funding  

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developed in phases. First generation systems were simple; public use bikes were used freely and riders could take them and leave them wherever convenient. This scheme was quickly devastated due to theft and vandalism. Many more systems were attempted in this fashion—most differentiated only in the color of the bicycles. It wasn’t until systems in Europe began utilizing stations and vending kiosks that the systems combated theft and vandalism.

Fast forward to now; 3rd-generation bike share systems offer safe, sturdy aluminum frame bicycles with comfortable one-size-fits-all frames and many mechanical simplicities. Automated kiosks with touch screens facilitate purchases of temporary memberships and are often powered by solar panels and batteries. Stations securely lock the bikes in and register their presence via RFID; bikes are released electronically by the kiosk or by a member’s membership smart card or key FOB. GPS tracking and safety deposits deter theft and vandalism and the automated features of the system have created a substantial convenience for users. These systems are truly technologically advanced and pose a very feasible transportation option for dense, urban areas.

Bike sharing is simple. A member may use his/her membership smartcard to vend a bicycle at any of the system’s stations. The bike is then free to ride for the next thirty minutes (time span dependent on further geographic analysis); if a user holds the bike for longer than thirty minutes, usage fees are incurred at 30-minute intervals past the expiry point. When the user has reached his/her destination, they can then deposit the bike back at the nearest station anywhere in the system. The bike is then available for its next rider.

Figure 10 — Bike Sharing: Visually explained depicts the bike sharing process in four easy steps. Figure 10 — Bike Sharing: Visually explained

service From its beginning to now, the product has remained the same—a bicycle offers efficient, inexpensive, and zero-emissions transportation with high reliability and many health benefits. Triangle Bike share is selling much the same thing—a very affordable, convenient, healthy, and environmentally friendly transportation choice inside the serviceable area.

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More specifically, memberships to the service and user fees are the primary revenue streams for the service (sponsorships could outweigh this dependent on availability). Memberships are broken down into a duration-based category. 24-hour, 7-day and 30-day temporary memberships are sold from the system’s website and automated station kiosks. Table 2 — Memberships and Sales Volume

Membership Type Estimated Price First Year Projected Volume

24-hour temporary $6 3566

7-day temporary $20 40

1-month temporary $30 75

Annual Membership $80 1156

Table 2 — Memberships and Sales Volume projections are based off of preliminary market size estimates, sales potential and first year membership sales performance in similar markets such as Denver, CO and limited sales metrics information in larger markets such as Boston, MA released by operators and bike share agencies. Finalized demand analysis and pricing strategy will ultimately define the price points and demand forecast for the system. All pro forma financials are based on these estimates.

F I N A N C I A L P R O J E C T I O N S

start-up costs In the proposed provisional model, Triangle Bike Share will operate the bike share system under a city contract. Upfront capital investment will come from grants and private sources. Systems that have employed this model are Boston Hubway, which raised the $4.5 million in grant monies from the Federal Transit Authority; the Minneapolis NiceRide which secured initial funding through the Democratic National Convention; the Chicago bike share system contract will meet capital and start-up costs with a $18 million federal grant and an additional $4 million federal grant for phase two of the system; Capital Bikeshare, which saw some $6 million in grants from the US Department of Transportation 21 and more from private donors and local public transportation authorities.

Early estimates for a Raleigh system total 40 stations and 400 bicycles. The capital investment needed will be approximately $4000 per bike for implementation and an annual operating cost of approximately $1800 per bike ($155 per bicycle per month). 22

Equipment is the largest expense, costs of stations ranges from $22K-$38K depending on the size and installation is around $4,500 for each station.22 Table 3 breaks down these costs.

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Table 3 — Startup costs for Raleigh System

Item QTY Unit cost Total Cost

Bicycles 400 1000 $100,000 Stations 40 ~$30,000 $1.2M

Station Installation 40 ~$4500 $180,000 TOTAL $1.48 Million

operational costs Operational costs can be broken down to a per bicycle measurement of $155 per bike per month. The stations are automated and require no vending personnel. Operational costs are derived from the following sources:

• 24-hour system service and operability • inspection and routine maintenance on bikes • balancing the system to distribute bike evenly amongst stations • customer service center personnel • robust website for member profiles, statistics, tracking and membership sales

Source: ‘How Jurisdictions Can Join Capital Bikeshare’ Cost Basics

Expected life of the bicycles is six years, while station replacement can be anticipated on a 10-year basis. This gives a lengthy window of depreciation on equipment, but most systems do not expect to recover startup capital investment. This is precisely why cities and systems pursue one-time grants and private funding to purchase the system and contract operations from an experience company.

Operational expenses for Triangle Bike Share’s first system, first year are expected to be approximately $853,685.

revenue sources Revenue sources for the system come from three main sources, but can vary with contract and city-specific stipulations. Sources include the following

• Membership sales: a primary revenue source from demand for the system’s service. • User Fees: usage fees beyond that of a membership cost • Sponsorships: obtaining a corporate sponsorship for the system can generate significant revenue

for the system and is highly advisable. • Street Furniture/Advertising: the most successful systems employ an advertising contract with

the city. Typically this revenue source is high, but sometimes conflicts with existing contracts or no-advertising ordinances.

Table 2 — Memberships and Sales Volume—offers a glimpse at initial estimates for sales volume of memberships by type for the first year. Based on comparable bike share models and sales performance in systems across the country in similar demographic, geographic and cycling metrics, demand has been estimated for the Raleigh market and a breakdown by month (TBS-Sales) can be found in the appendix.

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A P P E N D I X

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S O U R C E S

1 American Community Survey Data 2010 2 Bike Share – History, Impact and Prosivions –Paul DeMaio 3 http://plancharlotte.org/story/charlotte-bike-sharing-dnc-uptown-downtown 4 Denver Bike Share 2010 Annual Report 5 CommuterPageBlog.com, Paul DeMaio

http://www.commuterpageblog.com/2012/02/capital-bikeshare-striving-to-become-financially-self-sufficient.html 6 IBISWorld.com Public Transportation Industry Report, June 2011 7 Transportation Research Part A – Bicycling renaissance in North America? 8 US Census Bureau 9 Capital Area Bus Transit Development Plan, Technical Memorandum #2, (2011) 10 http://www.apta.com/mediacenter/pressreleases/2012/Pages/120312_2011Ridership.aspx 11 Seattle Feasibility Study Department of Urban Design and Planning, University of Washington 12 CityData.com 13 SimplyMap.com 14 Raleigh Bicycle Transportation Plan 2009 15 Minneapolis NiceRide Subscriber Survey 2010 16 Bike Sharing for the Triangle Region March 2, 2012s 17 SmartBike DC Survey Results 18 Case for Bike Share: Opportunities in NYC 19 http://technicallyphilly.com/2011/02/21/cityrydes-bike-sharing-software-close-to-being-awarded-carbon-credit-certification 20 Philadelphia Bikeshare Concept Feasibility study (2010) 21 http://dcist.com/2012/03/national_mall_capital_bikeshare_sta.php 22 Capital Bike Share “How Jurisdictions Can Join Capital Bikeshare”