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A graveyard of Ofo bikes.
OH NO

Bike-sharing company Ofo is dramatically scaling back in North America

By Alison Griswold

Ofo is backpedaling—fast.

The Chinese bike-sharing startup has laid off employees across the board in North America—in marketing, communications, and engineering, among other teams, a source familiar with the matter told Quartz, as it dramatically pulls back its US operations. Ofo told team members on a call today that it is “going into sleep mode” in North America. Chris Taylor, a former Uber employee hired by Ofo to lead its North American operations in October 2017, announced his departure from the company a few weeks ago.

Ofo confirmed the layoffs to Quartz. The company said it is not vacating the US, but is reorienting to focus on markets that will help it become profitable. Ofo plans to maintain operations in US cities including Seattle, San Diego, and New York, where it recently was selected to participate in a dockless bike-share pilot in the Bronx.

“As we begin to prioritize our US operations around markets that will best enable us to grow and build the business, we look forward to serving communities with the Ofo experience our riders have come to love,” Andrew Daley, Ofo’s new head of North America, said in an emailed statement.

The cuts to US operations are the latest in a global retreat for the company, which was reported earlier today to have left Germany. Last week, Ofo announced plans to exit Australia and Israel, and dialed back operations in the UK. It reportedly laid off its staff in India earlier this month. Ofo had ambitious plans for the US, its third largest market globally. Just last month, it said it was servicing 30 US cities, and aimed to be in “at least 100” by the end of the year.

The company was founded in 2014 by students at Beijing’s Peking University who wanted to create a dockless bike-share system. The company deploys and manages fleets of bright yellow bicycles that can be rented through a mobile app for about $1 per 30-minute or one-hour ride, depending on the city (its name, “ofo,” is supposed to resemble a bicycle). As of June, Ofo claimed to have some 15 million bikes in operation in more than 300 cities across 22 countries, as well as 250 million global users.

Ofo raced to an early lead in China’s bike-sharing battle, which has been compared in its intensity to the ride-hailing war that birthed Uber competitor Didi Chuxing. Ofo, which in April 2017 claimed to be worth over $2 billion, last raised $866 million in March at an undisclosed valuation. Its backers include Alibaba, Ant Financial, and Didi.

After getting started in China, Ofo expanded aggressively in 2017: first to Singapore, then the UK, the US, Australia, and France, among other countries. Ofo pitched itself as a crucial addition to transit infrastructure—a mode of transportation that could be used to cover the so-called first or last mile of any trip, such as from a home to a subway station, or a parking garage to an office building. Ofo also emphasized that bikes were good for the environment and could reduce congestion during weekday rush hours.

In cities around the world but particularly in China, Ofo has struggled with theft and vandalism. The influx of undocked bikes from Ofo as well as well-funded rivals like Mobike and HelloBike led to huge graveyards of broken, abandoned, and impounded bikes. Dockless bikes have also been found on streets, in trees, and even tossed into lakes. Such vandalism forced Hong Kong-based bike-sharing startup Gobee to retreat from Europe, before shutting down entirely this month.

Ofo was one of the first dockless bike-share companies to set up in the US, challenging existing docked programs like Ford GoBike in San Francisco and Citi Bike in New York. Those docked bike-share programs were largely operated by a company named Motivate, which sold to Lyft earlier this month for a rumored $250 million. That deal followed Uber buying dockless bike-share startup Jump Bikes in April for a reported $200 million.

Ofo believed the dockless model, in addition to being more convenient for customers, would help it expand quickly and affordably. In January, Taylor, Ofo’s then-head of North America, told Quartz that a typical docked bike program spent $80,000 to $100,000 to set up each dock, and $1,500 to $2,000 per bike. By comparison, he said, Ofo spent “a couple hundred bucks” per bike. “We provide a better bike and it’s more cost effective,” he said.

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