Ofo (company) explained

Ofo
Type:Private
Foundation:[1]
Fate:defunct (2020)
Location:Beijing, China
Founder:Dai Wei
Key People:Dai Wei
Industry:Transportation
Products:Bicycle sharing services

Ofo, stylised as ofo, was a Beijing-based bicycle sharing company founded in 2014. It used a dockless system with a smartphone app to unlock and locate nearby bicycles, charging an hourly rate for use.

In 2017, it had deployed over 10 million bicycles in 250 cities and 20 countries. The company was valued at up to US$2 billion and had over 62.7 million monthly active users.[2] [3] [4]

In 2018, Ofo announced massive reduction in operations, including withdrawing from most US cities and from several entire countries. By 2020, facing a large amount of unpayable debt, the company was no longer operating bike rentals.

History

2014–2016: Founding in China

The company was founded in 2014 by five members of the Peking University cycling club as a project that initially focused on bicycle tourism before deciding on bicycle sharing.[5] It was named "Ofo" due to the word's resemblance to a cyclist on a bicycle.[6] [7] [8] Ofo was launched in June 2015 in Beijing, gaining 20,000 users and 2,000 bicycles by October with investment funding from a Peking University alumnus.[9] In 2016, Ofo expanded to other cities in China, and had a fleet of 85,000 bicycles by the end of the year.[10] [11] The company raised US$130 million in funding from tech firms Xiaomi and Didi Chuxing in September 2016, allowing it to expand outside China.[12] A Series D funding round in February 2017, led by Didi Chuxing and Russian investor Digital Sky Technologies, raised US$450 million for Ofo and valued the company at $1 billion.[13]

2016–2018: International expansion

Ofo began expanding outside China in 2017, with launches in Singapore in February 2017;[14] Cambridge, United Kingdom in April;[15] Seattle, United States in August;[16] and Sydney, Australia in October.[17]

In April 2017, it was announced that the United Nations Development Programme has started a partnership to raise public awareness on climate changes.[18] [19] The partnership project, 1 KM Action, led to another collaboration with the Clara Lionel Foundation, an organisation founded by Rihanna, which aims to provide bikes and scholarships to girls in Malawi.[20] [21]

The same month, Ofo announced an undisclosed amount of funding from Ant Financial, an Alibaba affiliate.[22]

In July 2017, Ofo announced US$700 million of additional funding in a round led by Alibaba, Hony Capital and Citic PE.[23]

In December 2017, Ofo launched its service in Paris, France, and progressively deployed 2,500 bikes over the city of Paris and neighbouring Neuilly-sur-Seine, Boulogne-Billancourt and Levallois-Perret.[24] [25] According to figures communicated by the company in July 2018, the bikes are rented up to four times a day, representing 5,000 to 10,000 daily trips. Ofo says the financial accounts for its Paris operations are balanced.

In February 2018, Texas A&M University partnered with Ofo and rolled out a bike sharing platform on campus.[26]

Ofo raised an additional US$866 million led by Alibaba in March 2018.[27] [28]

For the US market, Ofo hired Uber spokesperson and Mandarin speaker Chris Taylor to run US operations.[29] [30]

From 2018: Crisis, focusing on "priority" markets, withdrawal

After missing the opportunity to merge with Mobike and failing to reach an acquisition deal with Didi, Ofo now suffered from consistently high operational costs and lack of additional funding to expand its business.[31]

Amidst a cash crunch, Ofo only ordered 80,000 of its expected 5 million annual bicycles.[32] [33] [34]

After Mobike received a US$2.7 billion investment from Meituan-Dianping, Ofo began an international and domestic contraction to stay alive.[35]

In an internal meeting, Ofo's CEO Dai Wei compared the company's situation to wartime Britain, as portrayed in the film Darkest Hour. He told his staff that they could leave the company then if they did not want to fight until the end.[36]

In July 2018, Ofo announced that it will entirely leave several countries and significantly reduce the number of cities served in others in order to focus on "priority" markets. Operations ceased completely in Australia,[37] Austria, Germany (where Ofo was present with 3,000 bikes in Berlin for only three months), India (5,000 bikes in Bangalore, Delhi, Chennai, Ahmedabad, Coimbatore, Indore and Pune), Israel, Spain (Granada, Madrid) and Thailand.[38] [39] [40] [41] [42] [43] In the United Kingdom, the company left Cambridge, Norwich, Oxford and Sheffield and cancelled its planned launch in Leeds in order to focus on London only,[44] [45] but withdrew from London in January 2019.[46] In the United States (over 40,000 bikes in 30 locations in June 2018), Ofo announced the layoff of 70% of its employees to focus on an unspecified ″handful of cities″.[47] [48] In August, Ofo left Dallas, leaving hundreds of bikes at the recycling center[49] and exited Seattle, where it donated some 800 bikes to three nonprofits.[50] [51] In August 2018, China's Didi and Ant Financial weighed a joint US$2 billion buyout of Ofo, but Dai Wei said he would even turn down an offer of US$10 billion.[52] [53]

In October 2018 a flood of requests for Ofo user deposit refunds started.[54]

In December 2018, Ofo considered declaring bankruptcy several times over cash flow issues.[55]

It was reported in January 2019 that Ofo had dissolved its international division and offered its 50 remaining employees the option to leave immediately or take a 50% pay cut and transfer to the Chinese business.[46]

Ofo's former employees in Singapore also said in January 2019 that the firm's operations in the country have "practically ceased" as there were no personnel left.[56] As of February 3, 2019, Ofo's website has become defunct and shows a plain white page. The Ofo app still works and bicycle's location are still shown in the app. On January 14, 2019, Singapore's Land Transport Authority suspended Ofo's operating license due to its failure to meet regulatory requirements such as implementation of QR code for parking of bike and decreasing its fleet size. Ofo was required to remove all its bicycles within a month.[57]

Usage

Customers use the company's mobile app on their smartphones to locate nearby bicycles. Each bike has a QR code on the frame, which the customer scans to unlock the bike. Ofo bike unlocking is also available on other collaborative apps such as WeChat and Alipay in Mainland China.[58] Each yellow bicycle reports its location via satellite positioning, allowing users to see which bikes are available nearby. Users pay within the app using available payment methods such as credit cards, WeChat Pay or Alipay in China, etc. After customers are finished, they can leave the bike anywhere and lock it. The bicycles use NarrowBand IOT to power the locks, developed by Huawei and China Telecom.[59]

Controversy

Like many other dockless bike sharing companies, including ReddyBike and oBike, Ofo's bikes have raised the ire of several cities, including Melbourne, Dallas, Chicago, and San Diego. Because these bike companies do not ensure the bikes are parked properly, they can clutter sidewalks, blocking pedestrian and handicapped access.[60] Bike clutter has been so extreme that some cities in China have reached "peak bike" capacity, and have begun regulating the number of bikes that may be deployed.[61] Ofo was also nicknamed “awful” by those who had a bad experience with the service.[62] [63]

The terms of service for Ofo required injury claims to be settled by a private arbitrator. Users were expected to waive their rights to appeal and to join in a class-action lawsuit.[64]

See also

Notes and References

  1. News: One Startup Builds $1 Billion Business Out of 15-Cent Bike Rides . . February 28, 2017 . March 11, 2017.
  2. News: Lazo . Luz . October 9, 2017 . Chinese bike-share giant Ofo is rolling into D.C. . . October 27, 2017.
  3. News: Tao . Li . July 24, 2017 . Parents of ofo's bike user sue company for negligence after accident . . October 27, 2017.
  4. Web site: Chinese bike-sharing firm Ofo raises $866 million led by Alibaba . March 13, 2018. Cnbc.com. July 18, 2018.
  5. News: Jiamin . Lua . Xueling . Lin . July 27, 2017 . You won't last 3 days, they told Ofo co-founder, now a multimillionaire at 25 . . October 27, 2017.
  6. News: Annear . Steve . September 27, 2017 . A new bike-share company, Ofo, is rolling into cities near Boston . . November 19, 2017.
  7. News: Yang . Yuan . Liu . Xinning . March 19, 2017 . China's bike-sharing boom in charts . . November 19, 2017.
  8. News: Phillips . Tom . December 27, 2016 . Bike-sharing revolution aims to put China back on two wheels . . November 19, 2017.
  9. News: October 29, 2015 . "ofo bicycle": riding bicycles anytime and anywhere . . October 27, 2017 . https://web.archive.org/web/20171028145810/http://english.pku.edu.cn/news_events/news/campus/4059.htm . October 28, 2017 . dead .
  10. News: Dockless bike hire scheme launches in Sheffield . June 20, 2018 . https://web.archive.org/web/20180620232143/http://www.bqlive.co.uk/transport-infrastructure/2018/01/09/news/dockless-bike-hire-scheme-launches-in-sheffield-29837/ . June 20, 2018 . dead.
  11. News: Two-wheel drive: China tech giants bet on 'Uber for bikes' in hunt... . Jiang . Sijia . U.S.. June 20, 2018 . en-US.
  12. News: Qi . Liyan . Abkowitz . Alyssa . October 25, 2016 . Chinese Startups Saddle Up for Bike-Sharing Battle . . October 27, 2017.
  13. News: February 28, 2017 . ofo, Chinese bike-sharing firm, raises $450 million in latest funding round . . March 11, 2017.
  14. News: Cheong . Danson . February 18, 2017 . New bike-share scheme hits the road . . October 27, 2017.
  15. News: Walsh . James . April 21, 2017 . 'Uber for bikes' comes to Cambridge – if you can find it . . October 27, 2017.
  16. News: Gutman . David . August 15, 2017 . Big Chinese firm will become third bike-share company operating in Seattle . . October 27, 2017.
  17. News: Needham . Kristy . October 24, 2017 . World's biggest bike-share company Ofo to bring hundreds more bikes to Sydney . . October 27, 2017.
  18. News: UNDP Chinese Bike-Sharing Joins Forces for Climate Change . Pascual . Christina . August 31, 2017 . The Fox Magazine . May 5, 2018.
  19. Web site: UNDP, Chinese bike-sharing start-up Ofo join forces to support innovative solutions to climate change challenges . UNDP . en . May 5, 2018.
  20. News: Rihanna and Ofo working in tandem to bring college education to Malawi girls · TechNode . August 2, 2017 . TechNode . May 5, 2018 . en-US.
  21. News: The Clara Lionel Foundation and Ofo Jointly Fund the Global Scholarship Program My Social Good News . August 1, 2017 . My Social Good News . May 5, 2018 . en-US.
  22. Web site: Alibaba's Ant Financial invests in Chinese bike-sharing startup unicorn Ofo . Shu . Catherine . TechCrunch . May 11, 2017.
  23. News: Ofo Eyes Global Expansion After Raising More Than $700 Million . July 6, 2017 . Bloomberg News . July 10, 2017.
  24. Web site: fr . Vélo sans borne: le géant chinois Ofo arrive à Paris. December 5, 2017 . July 16, 2018.
  25. Web site: fr . Paris: 500 000 trajets en 6 mois sur les vélos Ofo . July 10, 2018 . July 16, 2018.
  26. Web site: Texas A&M Transportation Services, ofo Roll Out Campus Bike Share Program – Texas A&M Today . today.tamu.edu. February 27, 2018 .
  27. Web site: Chinese bike-sharing firm Ofo raises $866 million led by Alibaba . CNBC . . March 13, 2018.
  28. Web site: Ofo Keeps Pedals Moving With New Funding – Caixin Global . Caixinglobal.com . en . August 16, 2018.
  29. Web site: Ofo: Wheels of fortune – Forbes India . Forbes India . July 18, 2018.
  30. Web site: ofo appoints former Uber executive as Vice President overseeing U.S. operations . Prnewswire.com . July 18, 2018.
  31. Web site: Taking a closer look to Mobike's deposit removal: Ofo's day will be tough – KrASIA . kr-asia.com . July 5, 2018 . July 12, 2018.
  32. News: Ofo slows down orders from bike makers · TechNode . May 7, 2018 . TechNode . July 12, 2018 . en-US.
  33. News: ofo's B2B business claims to hit the RMB 100 million revenue mark · TechNode . June 14, 2018 . TechNode . July 12, 2018 . en-US.
  34. News: Daily Briefing: oBike and Ofo struggle amidst cash crunch; $1.34b Singapore-Johor transit project weighs more than HSR project . Singapore Business Review . July 12, 2018.
  35. News: China's bike-sharing war enters crucial stage with Mobike going deposit free . South China Morning Post . July 12, 2018 . en.
  36. News: China's remaining independent bike-sharing startup Ofo wants to "fight till the end" . Abacus . July 12, 2018.
  37. Web site: Bike-Sharing Giant Ofo Puts Asia Expansion in Reverse: Source – Caixin Global . Caixinglobal.com . en . August 16, 2018.
  38. Web site: Alibaba-backed Ofo shrinks overseas bike-sharing . July 10, 2018 . July 18, 2018. .
  39. Web site: After Australia, ofo exits Germany amid push into priority markets . July 18, 2018 . July 18, 2018. .
  40. Web site: Ofo fires staff in India, winds down operations in the country . July 9, 2018 . July 18, 2018. .
  41. Web site: de . Chinesischer Leihradanbieter Ofo gibt auf . July 14, 2018 . July 18, 2018 . https://web.archive.org/web/20180718094717/https://www.rbb24.de/wirtschaft/beitrag/2018/07/ofo-obike-leihraeder-berlin.html. July 18, 2018 . dead. .
  42. Web site: de . Räder von Ofo und oBike sollen bis August Wien verlassen . July 18, 2018 . July 18, 2018. .
  43. Web site: OFO abandona Madrid . July 21, 2018 . July 23, 2018. .
  44. News: Bike sharing firm ofo quits Norwich . BBC News . July 10, 2018 . July 18, 2018. .
  45. Web site: Greens call for council report into yellow bikes . July 10, 2018 . July 18, 2018. .
  46. Web site: Ofo cycle hire firm pulls out of London . . January 10, 2019 . Julia Kollewe and Niamh McIntyre . January 10, 2019.
  47. Web site: China bike-sharing giant Ofo to shut most US operations after less than a year . Abdullah . Zhaki . . July 19, 2018 . July 19, 2018.
  48. Web site: Chinese Bike-Share Startup Ofo Lays Off Majority Of US Staff As It Scales Back Global Ambitions . Carson . Biz . . July 18, 2018 . November 4, 2019.
  49. Web site: Hundreds Of Bikes Dumped At Dallas Recycling Center As Ofo Leaves Market . Chappell . Bill . . August 7, 2018 . November 4, 2019.
  50. News: Ofo bikes may be done in Seattle, but they still have miles ahead . Martin . Casey . August 22, 2018 . . November 17, 2018 . en-US.
  51. News: Ofo saying goodbye to Seattle, will donate bikes . . August 20, 2018 . November 4, 2019 . en-US.
  52. News: Ofo's CEO says no offer would be good enough for Chinese bike sharer . Yang . Yingzhi . . August 3, 2018 . November 4, 2019.
  53. News: China's Didi, Ant Financial weigh joint $2 bln Ofo buyout: source . Zhu . Julie . . August 3, 2018 . November 4, 2019 . en-US.
  54. Web site: Monday Tech Briefing: No Cash for Ofo Customers . Erchi . Zhang . November 26, 2018 . Caixin Global . December 2, 2018.
  55. Web site: Chinese bike-sharing startup Ofo considering bankruptcy . . . December 20, 2018 . December 26, 2018.
  56. Web site: Ofo has 'practically ceased' operations, sacked employees say, no official notice made to LTA . Yusof . Amir . . en . February 2, 2019 . February 22, 2019.
  57. Web site: Licence of bike-sharing firm ofo in Singapore suspended: LTA . . February 14, 2019 . February 16, 2019.
  58. Lu . Yaobin . Yang . Shuiqing . Chau . Patrick Y. K. . Cao . Yuzhi . December 1, 2011 . Dynamics between the trust transfer process and intention to use mobile payment services: A cross-environment perspective . Information & Management . 48 . 8 . 393–403 . 10.1016/j.im.2011.09.006.
  59. Web site: The Race is on NB-IoT Boosts Smart Bike Sharing for ofo . . October 27, 2017.
  60. Web site: For disabled people, rent-a-bikes are more than an annoyance, but do they violate the ADA? . Martin . Kyle . . January 20, 2018 . November 4, 2019.
  61. Web site: Needham . Kirsty . Ofo, the world's biggest share bike scheme, comes to Australia . . November 21, 2017 . October 4, 2017.
  62. News: 道不同，不相怼 . 简书 . June 27, 2017 . live . https://web.archive.org/web/20180314123639/https://www.jianshu.com/p/1edd1506475b . March 14, 2018.
  63. Web site: Ofo pulls its dockless bikes from Chicago because of locking rules . Mary . Wisniewski . . July 9, 2018 . July 18, 2018.
  64. News: Gutman . David . July 11, 2018 . Bike-share user agreements: The rights you give up by renting a LimeBike or ofo . . July 11, 2018.

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