In 2014 the city and state committed a total of $2 million as seed funding to create a bikeshare program to achieve health, affordability, transportation and sustainability goals. They granted that to a new nonprofit, Bikeshare Hawaii, where I became CEO.
Bikeshare Hawaii worked like a lean entrepreneurial start-up over a 30-month period to create the system — to review and select bikes and other equipment and technology, set service standards for operations and customer service, review and select an operator, determine and prepare plans for each bikeshare station location, conduct extensive community and business outreach, develop and execute the system’s brand, create a proprietary app, build a website, develop pricing that would be attractive to both residents and visitors, and manage the system launch.
Crucial was finding money for the bikeshare equipment — $5 million to $7 million was needed to fund at least 100 bikeshare stations and 1,000 bikes so it would be convenient enough to gain ridership. I knocked on doors of most large local companies seeking a sponsor. Honolulu has local heroes, but none willing or able to underwrite at this level.
I pitched the program to private investors and banks, but they were not interested since virtually all other bikeshare systems in the world were not profitable. Most systems survived because of major subsidies from their municipality or a major sponsor. Or they folded.
So, as we evaluated potential operators, we required them to purchase equipment and assume operating risk while delivering our service standards. We determined that fare and sponsorship revenue would go to fund their equipment financing and system operations. No financial guarantees were made by Bikeshare Hawaii nor the city. (At the time, most cities purchased bikeshare equipment and hired a for-profit operator to run their system through a service contract. Financial risk was totally with a city.)
We reached an agreement with Secure Bike Share who felt positive about the program and thought success here could help them achieve other worldwide goals. If the program failed, they were the losers. They worked hard with us, the city, and the community to make Biki a success.
The city and Bikeshare Hawaii collaborated on Biki Stop locations. We looked at locations for potential use and the need to build a cohesive and convenient network.
The city evaluated each location to ensure it met strict traffic and safety requirements, and provided no-cost permits to support the project.
Biki launched June 28, 2017. After seeing Biki through its first 18 months of operations, I retired. I left gratified, watching Biki become more and more popular.
I was proud to see the city, state, federal government, local companies, small businesses, private enterprise, other nonprofits, visitors and residents come together — each supporting the program in their own way: Somewhat like a public private partnership (P3) on steroids.
I understand people might equate lots of Biki riders with lots of profit. But Biki is a capital-intensive start up. And as with any similar new venture, financial projections did not show fare and sponsorship revenue covering financing and operating expenses for several years. Even with high levels of ridership.
I am glad to see the current interest in Biki. I’m hoping that as it is further examined, the city will consider any loss of parking revenue a small contribution to a program that is achieving all goals set out for it. And, that it will further support Biki with the funding it requires to expand and deliver a proven transportation mode to more and more people in our community.
Lori McCarney is founding CEO of Bikeshare Hawaii.
