With Lime teaming up Uber, can rival Bird afford to go it alone?

Yesterday, we learned that 18-month-old, Bay Area-based electric scooter rental company Lime is joining forces with the ride-hailing giant Uber, which is both investing in the company as part of a $335 million round and planning promote Lime in its mobile app. According to Bloomberg, Uber also plans to plaster its logo on Lime’s scooters.

Lime isn’t being acquired outright, in short, but it looks like it will be. At least, Uber struck a similar arrangement with the electric bike company JUMP bikes before spending $200 million to acquire the company in spring.

There are as many questions raised by this kind of tie-up as answered, but the biggest may be what the pact means for Lime’s fiercest rival in the e-scooter wars, 15-month-old L.A.-based Bird, who several sources tell us also discussed a potential partnership with Uber.

Despite recently raising $300 million in fresh capital at a somewhat stunning $2 billion valuation, could its goose be, ahem, cooked?

At first glance, it would appear so. Uber’s travel app is the most downloaded in the U.S. by a wide margin, despite gains made last year by its closest U.S. competitor, Lyft, as Uber battled one scandal after another. It’s easy to imagine that Lime’s integration with Uber will give it the kind of immediate brand reach that most founders can only dream about.

A related issue for Bird is its relationship with Lyft, which . . . isn’t great. BIrd’s founder and CEO, Travis VanderZanden, burned that bridge when, not so long after Lyft acqui-hired VanderZanden from a small startup he’d launched and made him its COO, he left to join rival Uber.

Lyft sued him for allegedly breaking a confidentiality agreement when he joined Uber, and the two sides later settled for undisclosed terms. But given their history, it’s hard to image Lyft — which also has a much smaller checkbook than Uber — paying top dollar to acquire Bird.

Where that leaves the company is an open question, but people familiar with both Bird and Lime suggest the e-scooter war is far from over. For example, though Uber sees its partnership with Lime as “another step towards our vision of becoming a one-stop shop for all your transportation needs,” two sources familiar with Bird’s thinking are quick to underscore its plans to expand internationally quickly and not merely fight a turf war in the U.S. (It already has one office in China.) 

That Sequoia Capital led Bird’s most recent round of funding helps on this front, given Sequoia Capital China’s growing dominance in the country and the relationships that go with it. Then again, Sequoia is also an investor in Uber, having acquired a stake in the company earlier this year, and alliances are generally temperamental in this brave new world of transportation. In just the latest unexpected twist, Lime’s newest round included not only Uber but also GV, the venture arm of Alphabet, which only recently resolved a lawsuit with Uber.

Another wrinkle to consider is the exposure that Lime receives from Uber, which could prove double-edged, given the company’s ups and downs. Uber’s new CEO, Dara Khosrowshahi, appears determined to steer the company to a smooth, and decidedly undramatic, public offering in another year or so. But for a company of Uber’s scale and scope, that’s a challenge, to say the least. (Its newest hire, Scott Schools —  a former top attorney at the U.S. Justice Department and now Uber’s chief compliance officer — will undoubtedly be tasked with minimizing the odds of things going astray.)

Yet it’s Lime’s very arrangement with Uber that could potentially create the greatest opportunity for Bird. First, by agreeing to allow Uber to apply its branding to its scooters, Lime will be diluting its own brand. Even if Uber never acquires the company, riders will associate Lime with Uber and think, for good or bad, that it’s a subsidiary.

Further, Uber does not appear to have made any promises to Lime in terms of how prominently its app is featured within its own mobile app. which already crams in quite a lot, from offering free ride coupons to featuring local offers to promoting its Uber Eats business.

Consider that in January 2017, Google added the ability to book an Uber ride to both the Android and iOS versions of its Google Maps service. Uber might have thought that a coup, too, at the time. But last summer, Google quietly removed the feature from its iOS app, and it removed the service from Android just last month. If there wasn’t much outrage over the decision, likely it’s because so few users of Google Maps noticed the feature in the first place.

Lime’s arrangement could prove more advantageous. Only time will tell. But everything considered, whether or not Bird flies away with this competition will likely owe less to Lime’s new arrangement with Uber than with its own ability to execute.

Certainly, that’s what BIrd’s flock would argue. Yesterday afternoon, Roelof Botha, a partner at Sequoia and a Bird board member, declined to discuss the Lime deal, instead emailing one short observation seemingly designed to say it all: “Travis [VanderZanden] is far more customer obsessed than competitor obsessed. That is a quality we look for in great founders.”

A Bird spokesperson offered an equally sanguine quote, saying that Bird is “happy to see our friends in the ride-sharing industry coalesce on the pressing need to offer a sustainable and affordable alternative to car trips.”

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