Gabe Klein, former transportation chief in DC and later Chicago, has just published a book, Start-Up City. We’re pleased to present a few excerpts. In this one, Gabe talks about how DC’s first experiment with bike sharing, Smartbike, turned into the wildly successful Capital Bikeshare.
Like the much larger Vélib bike-share system in Paris, which was run by advertising giant JCDecaux, our SmartBike program had been launched and operated by Clear Channel, who also contracted with the city to advertise on bus shelters. SmartBike was only one component of a much larger contract.
Unfortunately for the city, one line at the end of our agreement outlined the private partner’s lackluster commitment to the program. It stated that Clear Channel agreed to set up and operate a bike-share program in Washington, DC That’s it! Oh no, I thought, this was not terribly sound footing on which to expand our partnership, but let’s meet them and see.
In my first meeting with Clear Channel, a few things became clear. They felt that the District had gotten a very rich, fifteen-year deal and associated revenue stream for the bus-shelter contract. They even mentioned that DC had “signed the contract at the height of the market.” My reaction? “Not really the District’s problem.”
Furthermore, they had recently been purchased by Bain Capital, of Mitt Romney fame, and had little interest in “municipal street furniture,” as they saw the program. Lastly, they had no contractual obligation to expand the program, which was true. We were victims of minimal planning for success by government, and an amorphous contract that gave the private sector an easy out.
At the end of the day, our incentives were not aligned, and the SmartBike program died as a result. However, this ended up being a blessing in disguise in the long run.
Capital Bikeshare is born of partnerships
Luckily, Arlington County, Virginia, was planning to launch a bike sharing program around the same time as it became clear that SmartBike’s demise was imminent. Because I had a history of partnering with the county, Capital Bikeshare became the first of many projects that we would work on across borders during my tenure. Arlington had already put a procurement process in motion for a bike sharing system and was in the process of receiving bids from vendors.
As many jurisdictions do, typically through their regional planning authority, we combined our efforts with Arlington’s procurement process to save time and build a regional program. In terms of financing the system, we wanted to use federal money for 80 percent of the cost and applied for Congestion Mitigation Air and Quality funds through the regional metropolitan planning organization. All we needed now was the mayor’s agreement to put $1 million into a revamped bike-share program.
My entire conversation with Mayor Fenty about Capital Bikeshare was less than ten minutes. I told him what I wanted to do, and he asked me three simple questions:
- Could our system be the biggest in the United States? Yes.
- Will it be the best? Yes, absolutely.
- Can we minimize the capital DC puts in and could it break even or be profitable operationally? I said, “I think so,” and aimed to make that happen. …
The DDOT bike team was doing a lot of the planning and outreach for the system’s initial ninety planned stations in DC proper. We set up a website and crowdsourced public input about where people wanted bike stations in their DC and Arlington neighborhoods. We had just finished rebooting our transportation demand management (TDM) program, known as goDCgo, and had again partnered with Arlington County to bring their nationally recognized TDM program to DC. The new program was essentially top-flight marketing, promotion, and outreach for alternative transportation options. This team was put in charge of coordinating the marketing for the new bicycle transit system.
In keeping with our strong outward communications plan, we partnered with local blogs like the influential and widely read Greater Greater Washington and crowdsourced the name for the system, which became Capital Bikeshare. That name organically became “CaBi” for short. The system’s website went through multiple iterations until it felt more like a polished private-sector offering such as Zipcar, rather than a stale and opaque city website. …
By the time we opened the system in September 2010, there was a palpable level of excitement from the public. At our launch event at the U.S. Department of Transportation in Southeast DC, we brought all the bikes out and had the public sign up to ride them back to stations throughout the city. Throughout the bike share process we had involved the public at every stage, and we wanted them to feel ownership. This was the people’s bicycle transit system, CaBi.
Capital Bikeshare launches to rave reviews
We were careful to gradually launch stations for Capital Bikeshare, and later followed the same pattern with Divvy in Chicago. It’s crucial for a system to be operationally sound, if not close to flawless, the first time a user tries it.
Like any service, you are only as good as the first experience a customer has, and we aimed to learn the rebalancing patterns from day one to avoid empty or full stations as much as possible, which are the bane of the bike-share user experience. Starting with 50 stations in DC, we ramped up to 110 stations regionally before the end of 2011 when Adrian Fenty left office. The reviews were in and the public loved Capital Bikeshare.
Today there are more than 350 stations spanning DC, Maryland, and Virginia, making it the second largest bike share in the United States by number of stations as of this writing, with more than 10 million trips taken!
In DC, the system broke even on an operations basis (give or take a few thousand dollars) from day one. Keep in mind that this is with zero advertising until 2014 and no sponsorship agreement, two conditions that would be highly unusual today. On top of that it is one of the more expensive systems to run based on it being the first large contract in the United States with no benchmarks on which to base it.
How did we pull it off? The user experience was solid. The locals were loyal and signed up in droves. More than 30 percent of initial usage was by tourists and visitors. We had projected single-digit percentage visitor use because SmartBike had no daily use option. The $7 daily user fee subsidized the yearly $75 membership for locals (28 cents per day).
Without any advertising at all, the system could foreseeably generate enough profit to fund the 20-percent match needed for capitalization of new equipment for expansion, or replacement of old bikes and stations down the road. With advertising and sponsorship this was virtually assured.
Fundamentally though, I credit the relationships among all of the parties involved and the collaboration as being the most important factors in the system’s financial stability and success.
|This excerpt has been edited for length. You can purchase Start-Up City from Amazon, or until October 26, half off directly from Island Press. See Gabe Klein speak and sign books on November 4 at the National Building Museum at 12:30, that night at BicycleSpace in Adams Morgan at 7:30, or at Upshur Street Books on November 24th at 7 pm.|