ofo (company)

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ofo
Private
Industry Transportation
Founded 2014; 4 years ago (2014)[1]
Founder Dai Wei
Headquarters Beijing, China
Areas served
Key people
Dai Wei
Products Bicycle sharing services
Website www.ofo.com
An ofo bicycle in Hangzhou, China

ofo (/ˈf/) is a Beijing-based bicycle sharing company founded in 2014. The dockless system uses its 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 $2 billion and has 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.

History[edit]

2014–2016: Founding in China[edit]

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 $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 $450 million for ofo and valued the company at $1 billion.[1][13]

2016–2018: International expansion[edit]

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, lead 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 $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.[25] ofo says the financial accounts for its Paris operations are balanced.[25]

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

ofo raised an additional $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]

2018–present: Crisis and focusing on "priority" markets[edit]

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

In midst of a cash crunch, ofo only ordered 80k of its expected 5 million annual bicycles.[32][33][34]

After Mobike received a US$2.7bn 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 Darkest Hour. He told his staff that they can leave the company now if they do 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 leaves Cambridge, Norwich, Oxford and Sheffield and cancels its planned launch in Leeds in order to focus on London only.[38][44][45] In the United States (over 40,000 bikes in 30 locations in June 2018), ofo announces the layoff of 70 % of its employees and wants to focus on ″a handful cities″ only, without identifying them.[46][47]

In August 2018, China's Didi and Ant Financial weighed a joint $2 billion buyout of ofo, but Dai Wei stated that even US$10 billion would not seal the deal.[48][49]

Usage[edit]

The lock installed on ofo bicycles.

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.[50] Each yellow bicycle has GPS satellite positioning which allows users to see which bikes are available nearby. Users pay within the app, with their credit cards. 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.[51]

Controversy[edit]

Like many other dockless bike sharing companies, including ReddyBike and Obike, ofo's bikes have raised the ire of several cities, including Melbourne, Australia, Dallas, Texas, Chicago, Illinois, and San Diego, California. Because these bike companies do not ensure the bikes are parked properly, they can clutter sidewalks, blocking pedestrian and handicapped access.[52] 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.[53] ofo was also nicknamed awful by those who had a bad experience with the service.[54][55]

The terms of service for ofo also require injury claims to be settled by a private arbitrator and waive the user's right to appeal or join in a class-action lawsuit.[56]

References[edit]

  1. ^ a b "One Startup Builds $1 Billion Business Out of 15-Cent Bike Rides". Bloomberg News. February 28, 2017. Retrieved March 11, 2017. 
  2. ^ Lazo, Luz (October 9, 2017). "Chinese bike-share giant ofo is rolling into D.C." The Washington Post. Retrieved October 27, 2017. 
  3. ^ Tao, Li (July 24, 2017). "Parents of ofo's bike user sue company for negligence after accident". South China Morning Post. Retrieved October 27, 2017. 
  4. ^ "Chinese bike-sharing firm Ofo raises $866 million led by Alibaba". Cnbc.com. March 13, 2018. Retrieved July 18, 2018. 
  5. ^ Jiamin, Lua; Xueling, Lin (July 27, 2017). "You won't last 3 days, they told ofo co-founder, now a multimillionaire at 25". Channel News Asia. Retrieved October 27, 2017. 
  6. ^ Annear, Steve (September 27, 2017). "A new bike-share company, ofo, is rolling into cities near Boston". Boston Globe. Retrieved November 19, 2017. 
  7. ^ Yang, Yuan; Liu, Xinning (March 19, 2017). "China's bike-sharing boom in charts". The Financial Times. Retrieved November 19, 2017. 
  8. ^ Phillips, Tom (December 27, 2016). "Bike-sharing revolution aims to put China back on two wheels". The Guardian. Retrieved November 19, 2017. 
  9. ^ ""ofo bicycle": riding bicycles anytime and anywhere". Peking University. October 29, 2015. Retrieved October 27, 2017. 
  10. ^ "Dockless bike hire scheme launches in Sheffield". Retrieved June 20, 2018. 
  11. ^ Jiang, Sijia. "Two-wheel drive: China tech giants bet on 'Uber for bikes' in hunt..." U.S. Retrieved June 20, 2018. 
  12. ^ Qi, Liyan; Abkowitz, Alyssa (October 25, 2016). "Chinese Startups Saddle Up for Bike-Sharing Battle". Wall Street Journal. Retrieved October 27, 2017. 
  13. ^ "ofo, Chinese bike-sharing firm, raises $450 million in latest funding round". Reuters. February 28, 2017. Retrieved March 11, 2017. 
  14. ^ Cheong, Danson (February 18, 2017). "New bike-share scheme hits the road". Straits Times. Retrieved October 27, 2017. 
  15. ^ Walsh, James (April 21, 2017). "'Uber for bikes' comes to Cambridge – if you can find it". The Guardian. Retrieved October 27, 2017. 
  16. ^ Gutman, David (August 15, 2017). "Big Chinese firm will become third bike-share company operating in Seattle". The Seattle Times. Retrieved October 27, 2017. 
  17. ^ Needham, Kristy (October 24, 2017). "World's biggest bike-share company ofo to bring hundreds more bikes to Sydney". Sydney Morning Herald. Retrieved October 27, 2017. 
  18. ^ Pascual, Christina (August 31, 2017). "UNDP Chinese Bike-Sharing Joins Forces for Climate Change". The Fox Magazine. Retrieved May 5, 2018. 
  19. ^ "UNDP, Chinese bike-sharing start-up ofo join forces to support innovative solutions to climate change challenges". UNDP. Retrieved May 5, 2018. 
  20. ^ "Rihanna and ofo working in tandem to bring college education to Malawi girls · TechNode". TechNode. August 2, 2017. Retrieved May 5, 2018. 
  21. ^ "The Clara Lionel Foundation and ofo Jointly Fund the Global Scholarship Program | My Social Good News". My Social Good News. August 1, 2017. Retrieved May 5, 2018. 
  22. ^ Shu, Catherine. "Alibaba's Ant Financial invests in Chinese bike-sharing startup unicorn ofo". TechCrunch. Retrieved May 11, 2017. 
  23. ^ "ofo Eyes Global Expansion After Raising More Than $700 Million". Bloomberg News. July 6, 2017. Retrieved July 10, 2017. 
  24. ^ "Vélo sans borne : le géant chinois Ofo arrive à Paris" (in French). December 5, 2017. Retrieved July 16, 2018. 
  25. ^ a b c "Paris : 500 000 trajets en 6 mois sur les vélos Ofo" (in French). July 10, 2018. Retrieved July 16, 2018. 
  26. ^ "Texas A&M Transportation Services, ofo Roll Out Campus Bike Share Program – Texas A&M Today". today.tamu.edu. 
  27. ^ CNBC (March 13, 2018). "Chinese bike-sharing firm Ofo raises $866 million led by Alibaba". 
  28. ^ "Ofo Keeps Pedals Moving With New Funding - Caixin Global". www.caixinglobal.com. Retrieved 2018-08-16. 
  29. ^ "Ofo: Wheels of fortune - Forbes India". Forbes India. Retrieved July 18, 2018. 
  30. ^ "ofo appoints former Uber executive as Vice President overseeing U.S. operations". www.prnewswire.com. Retrieved July 18, 2018. 
  31. ^ "Taking a closer look to Mobike's deposit removal: Ofo's day will be tough – KrASIA". kr-asia.com. Retrieved July 12, 2018. 
  32. ^ "Ofo slows down orders from bike makers · TechNode". TechNode. May 7, 2018. Retrieved July 12, 2018. 
  33. ^ "ofo's B2B business claims to hit the RMB 100 million revenue mark · TechNode". TechNode. June 14, 2018. Retrieved July 12, 2018. 
  34. ^ "Daily Briefing: oBike and Ofo struggle amidst cash crunch; $1.34b Singapore-Johor transit project weighs more than HSR project". Singapore Business Review. Retrieved July 12, 2018. 
  35. ^ "China's bike-sharing war enters crucial stage with Mobike going deposit free". South China Morning Post. Retrieved July 12, 2018. 
  36. ^ "China's remaining independent bike-sharing startup Ofo wants to "fight till the end"". Abacus. Retrieved July 12, 2018. 
  37. ^ "Bike-Sharing Giant Ofo Puts Asia Expansion in Reverse: Source - Caixin Global". www.caixinglobal.com. Retrieved 2018-08-16. 
  38. ^ a b "Alibaba-backed Ofo shrinks overseas bike-sharing". July 10, 2018. Retrieved July 18, 2018. .
  39. ^ "After Australia, ofo exits Germany amid push into priority markets". July 18, 2018. Retrieved July 18, 2018. .
  40. ^ "Ofo fires staff in India, winds down operations in the country". July 9, 2018. Retrieved July 18, 2018. .
  41. ^ "Chinesischer Leihradanbieter Ofo gibt auf" (in German). July 14, 2018. Retrieved July 18, 2018. .
  42. ^ "Räder von Ofo und oBike sollen bis August Wien verlassen" (in German). July 18, 2018. Retrieved July 18, 2018. .
  43. ^ (in Spanish) "OFO abandona Madrid". 21 July 2018. Retrieved 23 July 2018. .
  44. ^ "Bike sharing firm ofo quits Norwich". July 10, 2018. Retrieved July 18, 2018. .
  45. ^ "Greens call for council report into yellow bikes". July 10, 2018. Retrieved July 18, 2018. .
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  47. ^ "Chinese Bike-Share Startup Ofo Lays Off Majority Of US Staff As It Scales Back Global Ambitions". 18 July 2018. Retrieved 19 July 2018. .
  48. ^ "Ofo's CEO says no offer would be good enough for Chinese bike sharer". South China Morning Post. Retrieved 2018-08-05. 
  49. ^ Zhu, Julie. "China's Didi, Ant Financial weigh joint $2 bln Ofo buyout: source". U.S. Retrieved 2018-08-05. 
  50. ^ 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. doi:10.1016/j.im.2011.09.006. 
  51. ^ "The Race is on NB-IoT Boosts Smart Bike Sharing for ofo". Huawei. Retrieved October 27, 2017. 
  52. ^ "For disabled people, rent-a-bikes are more than an annoyance, but do they violate the ADA?". January 20, 2018. 
  53. ^ Needham, Kirsty (October 4, 2017). "Ofo, the world's biggest share bike scheme, comes to Australia". Retrieved November 21, 2017. 
  54. ^ "道不同,不相怼". 简书. June 27, 2017. Archived from the original on March 14, 2018. 
  55. ^ Wisniewski, Mary. "Ofo pulls its dockless bikes from Chicago because of locking rules". Chicagotribune.com. Retrieved July 18, 2018. 
  56. ^ Gutman, David (July 11, 2018). "Bike-share user agreements: The rights you give up by renting a LimeBike or ofo". The Seattle Times. Retrieved July 11, 2018. 

External links[edit]