Vadzim Vosipchyk, CEO of Kolobike bicycles sharing, spoke on the business model, struggling with Internet trolls and Minsk vandals, caring for users and expansion into the regions.
From policeman to businessman
I got higher technical education, now I am a retired police officer. Before cycling, I was engaged in electronic security systems business: video surveillance, access control systems, computer networks, etc.
I started my second business by chance.
I am not a fan of cycling and sports: the last time I rode a bike was in childhood many years ago.
But then I visited European countries and noticed a large number of bicycles. People come up, take a bike, ride, it all was incomprehensible for us.
When my daughter came from Warsaw to Minsk for the holidays, she offered to take a bike and ride. We came to the distributors, they named the price, asked us to leave our passports and return bicycles in the same place after the time paid. My daughter was surprised! She said that it was inconvenient, you won’t get where you need to. That was not how it worked in Warsaw.
It hit me: why not bring bike-sharing in Minsk, the city was ready for it.
Equipping of bike lanes have been in progress over the past few years, it is far from completion, but even now the environment is rather good.
Here we must pay tribute to the Minsk City Executive Committee.
Unreliable Chinese partners and bike-sharing adjustment
I began to search for information on the Internet, analyze various models, trying them on to Belarus. The Chinese model of bike-sharing seemed the most acceptable, as it had no reference to parking and rent can be done in one click. Docking stations bicycle-sharing systems are very expensive and inconvenient, so they are often subsidized by municipalities.
With all the advantages of cycling without parking, there is one point — the element of unpredictability.
Delivering a station bike to another station you ensure that nothing happened to it. Our bikes may fall into the hands of inadequate schoolchildren. But I do not regret choosing our model.
At first, we wanted to take a franchise from Chinese Mobike bike-sharing. We had negotiations and signed several preliminary agreements. But Mobike was outbid by another Chinese company, and the policy changed, they decided to concentrate on the domestic Chinese market. Then we decided to make our own bike-sharing.
We began to develop our own model.
I went to China with a friend who works in software. We began to choose suppliers among a huge number of bicycle factories. We found a company that exported bikes. They said that they delivered their bicycles to Norway, I specified where exactly, contacted the Norwegians and received real feedback. We now have the same model, which was a little bit modified, and our bikes have been working without failures for two years.
In the Minsk bike version, we added a holder a bottle of water and smartphone so that it was convenient to use navigator.
The wholesale cost of a bicycle is 780 rubles. We were offered for $70 per bicycle, but we chose more expensive and high-quality ones, emphasizing the system of protection against vandalism.
Then we went in search of locks. Sharing is a combination of bicycles and electronics, which is located inside the bike and in the lock. It is what the system consists of. The bike is equipped with 3G, GPS, Bluetooth — this is like a mini-smartphone.
Four Chinese partners who participated in this chain, to my great surprise, let us down. Each of them! That is why we launched not in May but in July.
Now we are cooperating with the telephone operator MTS: they were very interested even at the stage of discussion of our pioneering idea. Others somehow had no enthusiasm at first. They came to their senses only when we had already started. The same situation was with banks. Belarusbank supported us, and after the launch, others began to call and offer cooperation on the best conditions.
Five thousand bicycles for Minsk — is it a lot or a little?
Now there are 3000 bicycles in Minsk, except for some retired, 250 electric scooters, and electric bicycles will arrive by the end of August or beginning of September. I think that there cannot be many bicycles at all. It seems that everywhere in the city there are our “kolobikes”. Still, I see that I’m not able to leave by bicycle from here and right now. I think that around 5,000 bicycles for the capital will be just right.
When we look at the experience of European countries in the field of sharing, we must take into account the quality of their bike lanes. Minsk does not reach them.
But when compared with Moscow, St. Petersburg, Kyiv, then our situation is much better.
The model of our bikes is ergonomic for the city. Yes, the bikes are heavy. But a thin and light bike cannot be well protected. In Minsk, bikes suffered a lot from vandals in the first month, but they are all repairable.
The business plan is to pay off in 2.5-3 years
The development of the KoloBike application cost about $60,000. We took the software of a company that produces locks for bicycles as a base for our app. We thought that their electronics and software would be good friends with each other. But in fact, the software, which was also delivered to us with a delay, was rough. We processed it by more than 50%, so we can assume that it is ours.
Our database has about 180 thousand users.
The number of users who downloaded the application, but have never ride it for money, is under 1000 I think. The rest actively uses sharing.
We expected huge popularity, but it is still flattering. Therefore, 3 thousand bicycles are not enough — next year we will add, if not as many, then 2 thousand for sure.
Minsk has a good transport network, but on hot days, for example, traveling in a trolleybus is terribly uncomfortable. And breaks can be quite long. Most of the trips we have are at rush hour: this is morning and evening. But quite a few trips are made after midnight.
Kolobike is a great alternative to a taxi.
If you drank a little, the taxi is expensive, and public transport no longer runs, then you can clear your head by riding a bicycle. Our transport is equipped with a lamp and reflectors.
Our business is seasonal, we are laying the risks of a long winter. But still, we plan to start from mid-April and work until October.
We have a small margin, it is about 5-10% since we wanted to make a mass, national product that would serve as an alternative transport and be affordable for everyone.
If we did it more expensive, we would not take as many bicycles as we have now. If everything goes according to plan, then we will pay off after 2.5-3 years.
Target audience: “We want to pull up people who are over their 50ths”
Our target audience is active users of mobile applications, accustomed to online payments and IT technologies. Approximately these are people under the age of 45 years.
But I would really like to attract the category of women and men in good physical condition at the age of more than 50 years.
They could well use our service, but they have a stupor facing technology. Therefore, in the offseason, we want to launch some training videos and show that everything is easy.
When the "kolobikes" just appeared, I decided to ride. I had to drive 2 km. It was terrible: my legs hurt very much. And now I can calmly sit down, cheerfully drive about 15 kilometers. Our bikes are good trainers!
Price increase not planned
Our service is 2.5 times cheaper than bike rental. Now a half-hour ride on a “kolobike” costs 1 ruble, an hour — 2 rubles.
We do not plan to displace out distributors and increase the price, being monopolists.
Our goal is to turn sharing into an alternative mode of transport. Therefore, the trip should not be much more expensive than a bus ticket or token in the subway.
I’m not afraid of competition from Velosmart, the station sharing that plans to launch next season. The station model of sharing without subsidies from the municipality will not pay off, and the city is unlikely to give subsidies. It will be very difficult to compete with non-stationary “kolobikes”
Vandalism mixed with idiocy
The scale of vandalism for us is within the expected range — we looked at the average figures in the global practice of sharing. Although my expectations from Minsk riders were different than the reality. I am from Minsk, I love our city very much, and I always thought that our people are law-abiding, decent and well-mannered. But the statistics really surprised me.
In world practice, vandalism in sharing is about 10%.
At first, I hoped for 5%, but it turned out about 7-8%.
I feel sorry for the bicycles, I treat them like children! They are so beautiful and bright. But youth is youth, there’s nothing to be done.
We began to work actively with vandals. Now we have 6 criminal cases, on August 20 there was the first trial under the article “Theft”, which ended in a fine of 1200 BYN. In general, young people have nothing against bicycles themselves. It’s just that this topic has become popular for hype. You know, this is such vandalism mixed with idiocy. I did it, posted it on social networks, got a couple of likes, and then we catch them.
People who ride bicycles do not ruin them. But when a "kolobike" just stands, troubles begin…
Recently I saw a funny post on Instagram, they say, stop vandalism, otherwise, Kolobike will leave, and in the comments there was a discussion. But I must say that vandalism has already subsided. People are accustomed to bicycles, and the hand does not reach already to do disgusting things.
I do not think that vandals have contributed to the growth of the popularity of "kolobikes". This is by no means my PR. Living in Minsk now, it is impossible not to know that our service exists. Bicycles in themselves attract attention: both the shape is interesting and bright. Therefore, breaking them or throwing them on a tree for hype is stupid.
Struggling with fakes and trolls
I did not expect that there would be so many fake accounts. This is because we became popular overnight, they even want to nominate us for Brand of the Year and Breakthrough of the Year. And on this wave of popularity and media attention, there appeared social media accounts, and their creators even monetized them by selling ads.
I know about the telegram channel “Achievements of Minsk Share Users”, I saw a photo. There was also a VKontakte group, in which they conducted a dialogue with participants on behalf of our company, gave harmful advice to people (for example, to lock bicycles in the hallways at night). I wrote a complaint about them, and their policies changed. They removed our logo, began to behave differently, indicated that everything that people see is not a call to action. But we have all the screenshots, and we are already preparing with lawyers for litigation with dishonest accounts.
There are a lot of fake accounts. I must say that they are being conducted well, but photos are taken from open access, and information is written on behalf of the company. For example, on Instagram, they just managed to intercept the name of the account.
We did not expect such a trick, so we did not register an account previously.
Recently, the owner called me and offered to pay them $ 400 per account.
But it will stop soon. We have documents on the registration of our trademark, logo, so we will get rid off all accounts that use them.
“Investments had totaled about $ 2 million”
I don’t want to name the investor, but this is a fairly well-known Belarusian businessman. Yes, this is a small fortune for our country, but the investor is a technically educated person, he likes innovations, and he realized that the idea of bike-sharing could work. This is a healthy lifestyle, this is environmental and the social aspect.
The investor felt positive from the very first conversation, I did not have to convince him. Initially, it was about an even larger amount of investments because we were going to make a franchise. For example, Mobike asked for 20% of the income! Still, it wasn’t the worst condition: many companies have stated that they do not sell, but rent bikes and an app for 20% of the turnover. It is too much.
The hardest thing is to find an idea and a person who understands this idea.
I was very lucky in this regard, I did not hunter the thresholds.
As soon as the idea arose of creating cycling and there was already an approximate business plan, I thought about potential investors and this person immediately came to my mind. We were already acquainted before, so the issue was resolved very quickly.
The future of bike-sharing in Minsk
The culture of cycling will improve in the future.
Taking into account the popularity of the service, the launching of our sharing can be compared with the opening of the metro in Minsk.
Our yellow bikes are somewhat the face of the city.
The more people will use the bicycle service, the more actively the city officials will be engaged in improving the bicycle infrastructure.
We recently had a meeting with Belarusian enthusiastic cyclists and decided to start creating a map of bike lanes in Minsk and create such a bicycle navigator. We would like to indicate the quality of the road, ramps, sidewalks. The shortest route is not always the best.
A man got hurt due to scooter malfunction
НElectric scooters disappeared in August for some period. This happened due to one case when a person fell while driving and was injured due to a technical fault.
We withdrew all scooters for an inspection to make sure that this was an isolated incident and not a serial defect.
We checked all scooters during the week, and only then returned them into the streets.
The injured person is an active user of our sharing. We were very sorry that this situation happened and paid him compensation. But thanks to this incident, we learned about the nature of the theoretical defects of our scooters.
Expansion into the regions and St. Petersburg partnership
We have plans to expand in a to the regions, it depends on the preparedness of cities for bicycles. I know that there is good infrastructure in Brest, in Grodno, so we plan to go to these cities, approximately next year. The plan is to expand my network to all regional centers.
Recently, a person who wants to open a sharing in St. Petersburg contacted me. He would like us to help him in organization and software issues. This season they will test the sharing of 50 bikes, and next year they plan to put about 1000 in the city. A small number of bicycles is explained by the geography of the city. I would not dare to engage in such a business in St. Petersburg, but we will assist the daredevils.