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ofo and the Future of Urban Transportation - with ofo SEA GM Alan Jiang

· The Boss Interview,Bike Sharing,Mobike,Southeast Asia,ofo

Today we are joined by Alan Jiang, Head of Southeast Asia for ofo, the world’s leading station-free bike sharing company. Alan oversees the company’s strategy and operations in Southeast Asia. Previously, Alan worked at Uber for four years, helping to launch Uber’s business in China, Malaysia, Vietnam, and Indonesia. Today, Alan starts by first sharing his story at Uber, before transitioning to ofo. Alan tells us more about how bike sharing is drastically different from ride sharing, and the impact that companies like ofo have on cities where these programs are located. Alan also talks about ofo’s global strategy, particularly in Southeast Asia.

Transcribed by Zhang Ling; Edited by Glen Meyerowitz and Caroline Chen

Link to SoundCloud (here), also available via Apple Podcasts, Google Play, etc.

[Editor's note: this interview has been edited and condensed for clarity]

***

From Uber to ofo

ofo in Singapore

Adam: Alan, you are currently the General Manager for ofo in Southeast Asia, but before joining ofo, you had a successful career at Uber, where you helped to launch Uber in a number of markets in Southeast Asia and eventually became the General Manager in Indonesia. Can you tell us more about your experience at Uber?

Alan: Thank you, Adam. Uber was a very exciting journey for me. I was there for about four years, as an operations manager in Los Angeles, managing the supply side of the business. During that time, Uber started expanding rapidly in international markets, and one of the countries we were looking at was China. I helped to launch Uber in China and ended up staying in Asia. Following that, I went to launch Uber in Malaysia and Vietnam, and ultimately ended up in Indonesia, running the business there for about three years.

 

At that time, Asia was very new to me. I had been to China a few times, but Southeast Asia was completely new. It was a very interesting adventure, exploring all different countries and cultures, and learning how to grow a new business at the same time.

Adam: This past year has been very tumultuous for Uber. Is there anything you can share from your perspective as a General Manager on the front lines in Southeast Asia?

Alan: I left Uber in February after working there for four years, so for the past year I have been an outsider at Uber. It was a very exciting journey, but I wanted to take a few months off and consider my next steps. I spent time with family and friends and travelled for leisure, not for business.

Adam: That time off is what brought you to ofo. Tell us about your experience transitioning to a new job.

Alan: To be honest, I had not thought much about bike sharing before I joined ofo. Bike sharing was a concept that I had heard of early on, because many Uber employees in China joined ofo after Uber and Didi merged. Many of my ex-colleagues were early employees during the start of the bike sharing craze. During that time, I did not think bike sharing would expand beyond China.

 

Around July or August of 2017, a bike sharing opportunity came onto my radar and I thought that this was something worth exploring. I was in Indonesia at the time and flew to Singapore to try out various bike sharing apps, such as ofo, Mobike, and Obike. I discovered that bike sharing was a very convenient service, and I could see it working in Southeast Asia. That piqued my interest. I did more market research to try to convince myself that these companies could make money. I did the math and realized bike sharing could be a very viable business model, and ultimately decided to join ofo in October of 2017.

***

The "Last-Mile" Solution

Adam: Could you explain more about what ofo does compared to Uber? It’s not as simple as saying Uber is for cars, while ofo is for bikes.

Alan: Uber is a ride sharing platform. You push a button on your phone and a car is summoned, comes to your doorstep, and takes you somewhere. It’s a very convenient way to get around town, and because of the software in the app, Uber can decrease the cost for consumers while providing drivers with higher earnings than they would receive driving for alternative services. Uber’s main goal was to decreases prices for consumers while providing for drivers.

Today, there is not a comparable service for ofo. The closest comparison would be to ride your own bicycle around. In many countries biking is very popular, but there are also many countries where biking is not very popular. ofo will not dramatically alter the transportation habits of people in a country. However, what we have seen is that bike sharing is an extremely convenient way to get around a city for short trips, from zero to three kilometers in length. This complements a city’s transportation infrastructure very well.

Think of it as the “last mile” solution for public transit. Urbanites have the option of walking, driving their own cars, or taking a ride sharing service or taxi. All of these options are available and bike sharing is just one piece of the larger puzzle. Biking beats all other options thanks to its convenience. Bikes are a great “last mile” solution, particularly in high-density areas such as bus stops, where instead of walking three kilometers home or using a ride sharing app, bikes are a much more viable alternative.

Adam: Another major difference is that a car has a driver whereas with ofo, it’s just the user and the bike. Can you tell us more about the significance of this?

Alan: The business implication is that there is a much larger focus on supply chain at ofo. Compared with ride sharing, additional challenges bike sharing must tackle are manufacturing, logistics, and dealing with hardware. ofo has a hardware engineering team as well as a software engineering team to build the best possible customer products.

Adam: The value of Uber is derived from two sides of the market: the drivers and the consumers. For example, more drivers lead to more supply and thus a better experience for the end users. It is a winner-take-all market. Whereas for bike sharing, you need to manage the supply chain. Can you describe some of bike sharing’s network effects?

Alan: There are certainly increased benefits to having more bikes on the street. One of the biggest value propositions for bike sharing is the convenience of being able to see a bike nearby. If you have to walk a kilometer to find a bike, it’s disappointing. Having more bikes in a city will cause a concomitant increase in ridership. In Beijing, for example, if there are 100 bikes scattered around the whole city, no one would use the service simply because it’s too hard to find a bike.

It can also be hard to find that sweet spot. Putting too many bikes on the road and overspending is not ideal and is a waste of money. But this is true for both bike sharing and ride sharing companies. If there are too many drivers, none of the drivers make money. In both cases, there is a sweet spot. The supply drives the demand up to a certain point, but not beyond.

***

Tackling Urban Transportation

ofo in China

Adam: People often think about bike sharing and ride sharing and how they relate to autonomy, concluding that there will be a decreased need for personal ownership in the future. This can change how streets, houses, and other urban infrastructure are designed and maintained. Can you describe the impact bike sharing has on the city itself?  

Alan: Adding bikes as a transportation option can have a significant impact on the way a city feels and how a city builds transportation infrastructure. As cities around the world become more crowded, everyone is investing in building more public transit. Public transit is the most space-efficient way of moving people around a city. However, one of the biggest questions for public transit is how to solve the “last mile” question. Before bike sharing, the solution was either walking, driving, or being driven. Walking three kilometers is not fun. An alternative is to build rail stations very close to each other, so people do not have to walk far. If stations are far enough apart, people end up taking cars. Neither is a good option. Bike sharing has a lot of potential to aid urban planning and development.

It is also very exciting to see cities moving towards bike friendly city planning. This includes building bike lanes and making it easier for bikers to get around. Some cities have made more progress on this front than others, and we see this as an opportunity to engage with cities and provide a service to encourage and streamline bike usage.

Adam: Uber has developed other services, such as Uber Eats. Has ofo thought about adding similar services on top of bike sharing?

Alan: We are very focused on our core business of increasing the number of bikes on the road and making it more convenient to get around a city for short trips. I would not be surprised if many food delivery drivers already use bicycles, since it’s faster and more efficient when you don’t have to deal with traffic congestion or worry about fuel costs. Overall, the increase in convenience has led to bikes replacing other forms of transportation for short trips, whether by delivery drivers or the average urban commuter. We recently conducted a study with a Chinese environmental agency and found that fuel consumption in China year-over-year has declined by 6%.

Adam: Can you tell us more about how ofo uses and leverages data from rides?

Alan: We study data from rides very carefully to inform how we implement our bike supply. We manage our supply on the ground by moving bikes from low demand areas to high demand areas and by collecting broken bikes to bring them back to warehouse for repair. We use our data to ensure the team on the ground is efficiently managing that supply.

We also collect large amounts of data on how traffic flows throughout a city. All of this data has the potential to be used for city planning and infrastructure design. 

***

The Southeast Asia Puzzle

ofo in Malaysia

Adam: As the General Manager for Southeast Asia, how do you think about the global strategy? And where does Southeast Asia fit it the global picture?

Alan: 2017 has been an exciting year for ofo with very rapid international expansion. We hit a new milestone in terms of global trip growth with over 32 million trips per day. It is a very large and fast-growing business. Today, we operate in 20 countries with our main business sectors located in the U.S., Europe, and across APAC, particularly Southeast Asia and markets outside of China. In Southeast Asia we are in Singapore, Malaysia, and Thailand.

 

A lot of people question the viability of the bike sharing model in Southeast Asia since there isn’t much of a pre-existing bike culture. Bike sharing may be a great option in China, but considering weather and traffic patterns, bike sharing may not take off as quickly in Southeast Asia. That is a concern I had before joining ofo, but after seeing the growth and the way people use the service, I no longer worry. Biking in Southeast Asia wasn’t popular because it wasn’t easy to do so. But as biking becomes more convenient, it will become increasingly popular.

In terms of our global goals, ofo is working with cities to provide alternative transportation methods. ofo is not trying to replace existing forms of transportation, but rather, looking to become the “last mile” solution. Our goals are to find out where the high demand areas are, to ensure bikes are always readily available, and to offer this service to people at a very low price.

Adam: Southeast Asia is not just one country but an entire block of different countries. How do you navigate in different countries? How do you approach each of them separately while still viewing them as part of the Southeast Asia block?

Alan: Southeast Asia is very unique in that sense. There are many different cultures and languages, one of the key challenges international companies face when they tackle this region, and this can lead to many mistakes. Each country operates differently in terms of the way people do business as well as the maturity of infrastructure, transportation, and banking systems. These all impact our way of doing business. We need to adapt very carefully. We start by hiring a local team with a local General Manager, a local operations leader, and a local marketing person. These people really understand the nuances of that country and will be the ones to run the business.

***

Eye on the Competition

ofo and Mobike on the street

Adam: Ofo is one of the largest bike sharing companies in the world. A major competitor is Mobike. In Southeast Asia, how does ofo operate and compete with Mobike?

Alan: We want to have a razor sharp focus on the product experience for consumers. That requires figuring out what consumers want, why consumers use our product, and providing that for them. Our focus is making sure that we can provide convenient services at affordable rates. We work through a lot of data to determine where to put bicycles. We have a large operations team on the ground, constantly moving bikes from low demand areas to high demand areas to increase efficiency. Ultimately the feedback loop from the client improves our service.

Adam: There are two long term business trends that become apparent in similar fields. There is either one company with a significant lead or there is corporate consolidation between competitors. What is your view of the eventuality of consolidating with other bike sharing companies?

Alan: Bike sharing and ride sharing operate in very different spaces. In the ride sharing space, the competitors are often subsidizing more than the cost of a single trip. When a company pays too many incentives, it is like throwing money into a bottomless pit.

Bike sharing is different. Regardless of how low the cost of a bike trip is, even it is free, the trip does not cost the company money. Therefore, competition is different. At this time, we see a lot of potential growth in this space and we are not looking into consolidation.

Adam: Alan, thank you so much for your time. I wish you and ofo the best of luck.

The opinions expressed in this article are Alan's own and do not reflect the views of ofo

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