Product-led growth and signal substitution syndrome: Bringing it all together

A few years back, my former colleagues and I at SiriusDecisions introduced what we called the Intent Data Framework (IDF). About a year ago, we updated the model to include non-behavioral signals and called it the Buyer Signals Framework (BSF).

Already, it’s clear we left something out of the IDF and even BSF: product-led growth.

Signal substitution syndrome

Both versions of the framework were attempts to address a misunderstanding that was, and still is, so rampant in B2B that I have a name for it — signal substitution syndrome. The nature of this syndrome is simple: In B2B, both marketing and sales practitioners tend to see each new source of information about their potential buyers — each signal type — as a substitute for the last one that didn’t work.

If people are using the product, the need is not prospective or theoretical, it is actual.

The history of B2B could be written in the successive failure of these signals to be what we all hoped for. Whether it was people showing up at trade show booths, people filling out bingo cards from the back of magazines, the people and bots filling out website forms, webinar registrations, syndicated content leads, third-party intent signals, review site users, etc.

The misunderstanding that underwrites signal substitution syndrome is that any of these signals should be considered as sufficient — or even halfway decent — signals of buyer intent unto themselves. To be sure, by happenstance, some leads have occasionally turned into business in a way that can be seen and understood.


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But if there’s one thing that my time as an analyst taught me, it’s that leads are a depressingly high failure rate (95%-99%) signal. Intent data by itself is worse. However, they are both better than whatever we had before. In fact, none of these signals are, by themselves, actually expressions of intent. Expressions of interest? Sure. Intent, not so fast.

How product-led growth fits in

Along comes product-led growth (PLG) with the idea that we’ll offer a free or very low-cost version of our solutions and use adoption of them as the new signals that will lead to enterprise deal generation. Of course, not every product is amenable to a PLG motion. It’s pretty hard to imagine Oracle PLG-ing their manufacturing cloud, for example.

Nissan to invest $17.6 billion in EV development over the next five years

Nissan will invest 2 trillion yen ($17.6 billion) over the next five years developing new EVs and battery technology as part of a grand plan it calls “Ambition 2030,” the company announced. It aims to release 15 new EVs total by 2030, with electrified vehicles making up half its vehicle lineup at that point.

The automaker said it will develop 23 electrified vehicles in total over the next eight years, with 20 of those coming in the next five years alone. It’s shooting for a market mix of 75 percent electrified (EV and e-Power PHEV/hybrids) in Europe, 55 percent in Japan and 40 percent in the US and China by 2030.

The other part of that mix, would presumably be internal combustion engine (ICE) vehicles. It’s worth noting that in early 2021, Nissan said that it planned to electrify every all-new car it launches by the early 2030s. Presumably, then, any ICE vehicles still available would be legacy models.

Nissan will launch EVs with all-solid-state batteries (ASSB) by 2028 and ready a pilot plant in Yokohama as early as 2024, it said. That technology promises benefits like reduced charging times, but has yet to arrive to market as expected. The company also wants to bring the cost of battery packs down to $75 per kWh by 2028 with a reduction to $65 kWh further down the road. That would be about half of what EV batteries cost last year, according to Bloomberg. By 2030, Nissan hopes to be producing 130 GWh of batteries.

The company said it plans to expand its ProPilot driver assistance technology to over 2.5 million Nissan and Infiniti vehicles by 2026. It will also incorporate next-generation LIDAR systems “on virtually every new model by fiscal year 2030.”

Nissan to invest $18 billion in EV development over the next five years
Nissan

As part of Ambition 2030, Nissan also unveiled no less than four concept cars: the Chill-Out, Surf-Out, Hang-Out and Max-Out. Like most concepts, they’re meant to give a taste of Nissan’s future technology including self-driving, interior features and just far-out designs. However, Nissan has only shown images of the Chill-Out as a real vehicle, with renders of the other three vehicles.

The Chill-Out (top and above) is a smallish crossover that could be an early preview of the next-generation Leaf, which Nissan previously confirmed would move from a hatch to a crossover style body. It will use the Ariya’s CMF-EV platform and e-4orce electric all-wheel drive system, and could arrive by 2025.

Nissan to invest $18 billion in EV development over the next five years
Nissan

The Surf-Out, meanwhile, is a small electric single cab pickup with a decent-sized bed and removable canopy. It would come with a dual-motor AWD setup and a variety of power outputs, offering off-road performance, utility power and extended cargo space.

Nissan to invest $18 billion in EV development over the next five years
Nissan

Then there’s the Hang-Out, which is more like a small camper van/SUV designed to “provide a new way of spending time on the move.” It has a completely flat floor and movable, theater-like seats, offering “the comfort of your living room in a mobile space” — something we’ve seen with other recent EV concepts. It also offers e-4orce and advanced ProPilot features.

Nissan to invest $18 billion in EV development over the next five years
Nissan

Finally, the Max-Out is a concept convertible sports car that offers “superlative stability and comfort.” Body roll is limited to deliver “dynamic cornering and steering response” to optimize handling and occupant comfort. It’s supposedly lightweight with a very low center of gravity, and also offers advanced e-4orce.

Nissan’s new plan comes as the company has grappled with internal problems, including the arrest and subsequent flight of former CEO Carlos Ghosn. In the short term, the company plans to cut 300 billion yen ($2.65 billion) in fixed costs and reduce production capacity by 20 percent as part of its “Nissan Next” plan unveiled last year.

Editor’s note: This article originally appeared on Engadget.

Digital regulation must empower people to make the internet better

As COVID-19 spread rapidly across the world in 2020, people everywhere were hungry for reliable information. A global network of volunteers rose to the challenge, consolidating information from scientists, journalists and medical professionals, and making it accessible for everyday people.

Two of them live almost 3,200 kilometers away from one another: Dr. Alaa Najjar is a Wikipedia volunteer and medical doctor who spends breaks during his emergency room shift addressing COVID-19 misinformation on the Arabic version of the site. Sweden-based Dr. Netha Hussain, a clinical neuroscientist and doctor, spent her downtime editing COVID-19 articles in English and Malayalam (a language of southwestern India), later focusing her efforts on improving Wikipedia articles about COVID-19 vaccines.

Thanks to Najjar, Hussain and more than 280,000 volunteers, Wikipedia emerged as one of the most trusted sources for up-to-date, comprehensive knowledge about COVID-19, spanning nearly 7,000 articles in 188 languages. Wikipedia’s reach and ability to support knowledge-sharing on a global scale — from informing the public about a major disease to helping students study for tests — is only made possible by laws that enable its collaborative, volunteer-led model to thrive.

As the European Parliament considers new regulations aimed at holding Big Tech platforms accountable for illegal content amplified on their websites and apps through packages like the Digital Services Act (DSA), it must protect citizens’ ability to collaborate in service of the public interest.

Lawmakers are right to try to stem the spread of content that causes physical or psychological harm, including content that is illegal in many jurisdictions. As they consider a range of provisions for the comprehensive DSA, we welcome some of the proposed elements, including requirements for greater transparency about how platforms’ content moderation works.

But the current draft also includes prescriptive requirements for how terms of service should be enforced. At first glance, these measures may seem necessary to curb the rising power of social media, prevent the spread of illegal content and ensure the safety of online spaces. But what happens to projects like Wikipedia? Some of the proposed requirements could shift power further away from people to platform providers, stifling digital platforms that operate differently from the large commercial platforms.

Big Tech platforms work in fundamentally different ways than nonprofit, collaborative websites like Wikipedia. All of the articles created by Wikipedia volunteers are available for free, without ads and without tracking our readers’ browsing habits. The commercial platforms’ incentive structures maximize profits and time on site, using algorithms that leverage detailed user profiles to target people with content that is most likely to influence them. They deploy more algorithms to moderate content automatically, which results in errors of over- and under-enforcement. For example, computer programs often confuse artwork and satire with illegal content, while failing to understand human nuance and context necessary to enforce platforms’ actual rules.

The Wikimedia Foundation and affiliates based in specific countries, like Wikimedia Deutschland, support Wikipedia volunteers and their autonomy in making decisions about what information should exist on Wikipedia and what shouldn’t. The online encyclopedia’s open editing model is grounded in the belief that people should decide what information stays on Wikipedia, leveraging established volunteer-developed rules for neutrality and reliable sources.

This model ensures that for any given Wikipedia article on any subject, people who know and care about a topic enforce the rules about what content is allowed on its page. What’s more, our content moderation is transparent and accountable: All conversations between editors on the platform are publicly accessible. It is not a perfect system, but it has largely worked to make Wikipedia a global source of neutral and verified information.

Forcing Wikipedia to operate more like a commercial platform with a top-down power structure, lacking accountability to our readers and editors, would arguably subvert the DSA’s actual public interest intentions by leaving our communities out of important decisions about content.

The internet is at an inflection point. Democracy and civic space are under attack in Europe and around the world. Now, more than ever, all of us need to think carefully about how new rules will foster, not hinder, an online environment that allows for new forms of culture, science, participation and knowledge.

Lawmakers can engage with public interest communities such as ours to develop standards and principles that are more inclusive, more enforceable and more effective. But they should not impose rules that are aimed solely at the most powerful commercial internet platforms.

We all deserve a better, safer internet. We call on lawmakers to work with collaborators across sectors, including Wikimedia, to design regulations that empower citizens to improve it, together.

VC has a pivotal role to play in the climate fight, but it can’t do everything

The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the tech sector and global politics.

The COP26 in Glasgow last week averted disaster but also made clear the private sector’s crucial role in tackling climate change. Besides a few notable political wins to address methane leaks and rekindle frayed cooperation between economies, it was new commitments from the private sector that perhaps hold the most promise.

Back in 2006, Al Gore’s film “An Inconvenient Truth” helped ignited $25 billion of venture investments in clean tech, mostly in the solar and ethanol sectors. Despite investors’ optimism, much of this capital burned out only a few years later, and as a result, many venture investors categorically avoided clean tech for the better part of a decade.

Thanks to our successes in the first clean tech wave, we are naturally optimistic about the role of VC in helping fund and scale game-changing clean tech solutions. Coming out of COP26 and as the world relies on the rapid adoption of clean tech to tackle climate change, it’s important that we understand VC’s further potential — but also its limitations.

VC’s strengths

At its best, the venture model enables young companies to take risks on early technology and pursue innovation in a way that large companies cannot. It might be counterintuitive, but venture-backed startups — beyond the magic created by their highly performing founders and organizations — also often outspend much larger and better-financed companies.

For a decade, Tesla, then an early-stage startup, easily outspent and outthought VW, Ford and the rest of the established car companies on engineering, designing and manufacturing electric vehicles (EVs). Similarly, startups Joby Aviation and Lilium are running circles around Boeing and Airbus on electric vertical takeoff (eVTOL) aircraft and QuantumScape is leading on next generation solid-state batteries.

Read more from the TechCrunch Global Affairs ProjectDue to short-term horizons, CEOs at large companies focus on incremental growth, cost savings and other “market-driven” imperatives and cannot stomach the risks required to develop and commercialize disruptive innovation. Although history is filled with vivid lessons in disruption, big company CEOs still don’t lead. As a result, we continue to find areas where long time horizons, high risks and lack of leadership yield opportunities uniquely tailored to VC. A striking example is that 20 years after Tesla, there are still such opportunities in electrifying the transportation space. For instance, with the EV revolution now underway, the need to recycle EVs and their batteries is becoming critical to sustaining growth; the leadership position in this nascent endeavor to recycle batteries is once more occupied by a startup, Redwood Materials.

Venture investors can push forward climate-friendly disruption in many legacy industries. Take, for instance, the chemical and manufacturing sectors. The incumbent companies in these and other heavy industries are slow to act and culturally inept in reacting to disruption. VC money, on the other hand, is helping to develop technologies that will give them no choice but to adapt, such as sourcing hydrocarbons sustainably by using renewable energy to separate hydrogen from water and carbon from air and combining these elements into all the chemicals that we have until now made from coal, oil and gas. Young companies like Electric Hydrogen and Twelve are doing exactly that.

Venture is also well positioned to provide funding for experimental technologies, like fusion energy. Outside of government, there are essentially no incumbent companies in this area, and with no adjacent companies bold enough to seize the day, the field is reliant on startups. Several startups have this year attracted more than $500 million each of investment capital, including Helion Energy and Commonwealth Fusion Systems.

VC can’t solve everything

Despite my optimism about our ability to have an impact, we must remember that tech, let alone venture funding, is only one piece of the puzzle in addressing climate change. We must scale clean tech solutions unnaturally fast in order to combat the relentless march of climate change, and VC is not well structured as a sector to address some of those key challenges.

First, we need to see giant sums of capital, dwarfing anything in VC, flow to low-risk, already established solar, wind and storage technology, often in countries with weaker currencies and much higher financing costs than the nearly free money we can access in the United States. By our estimates, more than $30 trillion, and therefore more than 10% of all investable capital in the world, needs to be invested in the coming decade, at rates of return of no more than a few percent; otherwise, clean infrastructure will not proliferate fast enough to combat the relentless tide of climate change.

The good news is that giant sums of capital are currently languishing in bonds at rates of return below those in renewables. One of the challenges of this decade is to incentivize other sectors of the financial markets to reallocate some of that capital, especially in emerging markets where demand for power, transportation, materials and food is growing quickly. VC, with its demand for high returns and mismatched scale of capital, will have little bearing on this giant, but pivotal, infrastructure challenge and opportunity.

Many point to “impact investing” as a way around this problem. And it’s true: During our early years, we were often the only capital available to a new startup, and therefore we had the leverage to demand a high return. We could invest in high-impact initiatives without sacrificing our financial incentives.

But as we have been joined by many new funds in pursuing clean tech opportunities, the balance between impact and return has become harder to strike. We need to recognize the potential incongruence between high returns and high impact, and VCs today need to add singular value to justify a higher cost of capital and also remain disciplined amidst great enthusiasm in the sector. It’s very tempting to chase “hot” opportunities and shift focus to proliferating more mainstream technology. From my perspective, clean tech is still ripe for breakthrough technological innovation and the best and most impactful VCs will maintain a contrarian philosophy and focus on areas that are unpopular and unable to otherwise attract capital at an early stage.

Second, the importance of government intervention cannot be overlooked. The market is not pushing incumbents in the energy and other industrial spaces to transition away from dirty, fossil-based systems fast enough. Despite the promises of net-zero pledges and the growing accountability for results demanded by shareholders, government mandates likely remain necessary to speed up this process.

Finally, philanthropy has an important role to play. I am very proud that I helped launch the nonprofit MethaneSAT, an organization that will police methane leaks from oil and gas operations globally through satellite imaging. Though clearly impactful, the initiative’s role as an open and objective policy enforcement tool does not align properly with a for-profit endeavor. There are numerous other important nonprofit interventions to fund and pursue.

It has been a great privilege to have supported from an early stage some of the most iconic and important companies and technologies in clean tech. But enabling these technologies and the startups around them remains only one ingredient in our fight against climate change. We cannot let the excitement about new technology distract us from the monumental infrastructure tasks needed in the near future. A substantial portion of the world’s financial capital needs to turn its attention to this space, and other forms of capital — social, political, philanthropic — must also be deployed if we are to secure a more stable future for generations to come.

Read more from the TechCrunch Global Affairs Project

Apple’s mixed reality headset may be a standalone device

Apple’s long-rumored mixed reality headset will be powered by two processors, according to renowned analyst Ming-Chi Kuo. In Kuo’s latest research report seen by MacRumors and 9to5Mac, the analyst said that the device will have a main processor with the same computing power as the M1 chip and a secondary processor to handle all sensor-related computing. With both processors in place, the headset won’t need to be tethered to an iPhone or a Mac.

The device will be able to provide not just augmented, but also virtual reality experiences, Kuo said, thanks to a pair of 4K Micro OLED displays from Sony. That’ll only be possible, because the M1 chip has the power needed to be able to support the displays. As for the separate processor for its sensor, it’s apparently necessary because “the computing power of the sensor is significantly higher than that of the iPhone.” Kuo expects the device to arrive in late 2022 and said Apple will make sure it can support a “comprehensive range of applications” with the ultimate goal of replacing the iPhone in a decade’s time.

Kuo’s prediction that the headset will be a standalone device goes against a report by The Information from September claiming that it will need to wirelessly communicate with an an iPhone, an iPad or a computer to handle most of its computing. That report also said that the headset will be aimed at developers and creators and will have a potential price of around $3,000.

Editor’s note: This article originally appeared on Engadget.

Germany’s incoming government wants to end coal use by 2030

Germany plans to phase out coal use by 2030, eight years earlier than previously planned, as part of its latest climate pledge. That same year, the country wants 80 percent of its electricity to come from renewable sources. Per the BBC, Olaf Scholz, the leader of Germany’s Social Democratic Party, announced the plan on Wednesday as part of a deal that will see the former vice-chancellor govern the country at the head of a three-party coalition made up of the Greens and Free Democrats.

Germany’s September 28th national election saw the Greens claim 118 seats in the Bundestag, making it the party’s best-ever showing. Scholz is expected to tap Greens leader Annalena Baerbock to serve as his foreign minister. Moreover, it’s likely Greens co-leader Robert Habeck will get the vice-chancellorship and the chance to oversee the country’s energy transition.

Notably, the coalition didn’t set a more aggressive emissions reduction target. By 2030, the country still plans to cut emissions by 65 percent from 1990 levels. According to an estimate from nonprofit Climate Action Tracker, Germany needs to reduce its greenhouse gas output by at least 70 percent by the end of the decade to meet the 1.5 degrees Celsius target put forward by the Paris Agreement.

Additionally, in making a deal with the Social Democratic Party, the Greens made a significant compromise. Per Bloomberg, the country will use natural gas to ease the transition between coal and renewables. Critics also say the coalition had to do more to push electric vehicle adoption. The government only plans to have 15 million EVs on German roads by 2030. “This does not look like a coalition for progress,” Christoph Bautz, the head of Campact, told Clean Energy Wire. “The climate movement will have to keep pushing the coalition to truly make it a climate government.”

Editor’s note: This article originally appeared on Engadget.

As human capital grows scarce, flexible compensation can help attract and retain talent

The Great Resignation is among the most significant events in recent U.S. history. We are seeing a post-COVID-19 generation refusing to work under the same conditions as they did before. The U.S. is facing the most prominent labor shortage of the decade, and positions that require high-demand skills are harder than ever to fill.

Midsized companies are finding it particularly hard to retain qualified personnel. Confronted by notable resource constraints, smaller budgets and workers’ demand for flexible solutions, the problems for SMBs are as great or even more significant than for larger organizations.

One way to make your company attractive is by developing attractive compensation strategies and increasing pay transparency and equity. Employees don’t always leave or stay because of their pay, but an opaque model for allocating compensation exacerbates feelings of disconnection and lowers engagement.

Let’s dive into how startups can benefit from compensation analysis, and how they can utilize available data to develop a comprehensive compensation strategy.

Understanding the complexity of compensation

Pay equity is one of the most pressing social issues today, and any discrepancies can have adverse spillover effects on reputation and company relationships.

The amount that lands in an employees’ bank account is just one fragment of today’s compensation packages. Compensation can consist of a base salary, annual cash bonuses and long-term incentives.

When stirring a compensation mix together, there are different trade-offs to consider:

  • Fixed versus variable compensation: Base salary compared with bonuses.
  • Long-term incentives versus short-term incentives: Short-term incentives can be in the form of annual bonus structures. Long-term incentives are usually stock or other forms of compensation that vest over the years.
  • Cash versus equity: Equity can include stock options, restricted stock and performance shares.
  • Group incentives versus individual incentives: You could implement a percentage-based salary increase for all positions or give bonuses to select employees.

It isn’t ideal to have a uniform policy for all positions and departments. Managers should explain their reward decisions on an individual level, and compensation decisions should reflect the skills and contributions of every employee. In addition, companies are bound to have varying budgets (e.g., higher revenue during the holiday seasons) and philosophies on allocating them.

Many make the mistake of sticking to an approach that doesn’t pan out from a strategic standpoint or doesn’t motivate the team enough. Instead, managers should gather data, work through various analyses and scenarios and design a compensation strategy tailored to the company. This is where compensation management software comes into play.

The devil is in the data

Data will help you understand where the talent market is headed and where your company stands.

Dear Sophie: How long does International Entrepreneur Parole take?

​​Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

TechCrunch+ members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.


Dear Sophie,

My co-founders and I think we might qualify for International Entrepreneur Parole.

How long does it take to get IEP approved? How does that compare to other options that are available to startup founders, and can my spouse work?

— Committed COO

Dear Committed,

Great questions! With Thanksgiving in the United States tomorrow, I’m reflecting on how appreciative I am of you and everyone who submits questions to this column, wherever you are in the world!

My law partner Anita Koumriqian and I recently chatted on our Thanksgiving gratitude podcast episode about all the things we appreciate about U.S. immigration in 2021, including how grateful we are that U.S. Citizenship and Immigration Services (USCIS) announced this year that it would continue the International Entrepreneur Parole (IEP) program. (In May, USCIS under the Biden administration announced it was rescinding a proposal created by the previous administration that would have ended the IEP program.)

I recommend that you consult an immigration attorney who has experience filing IEP applications. Remember, only up to three individuals from the same startup can get IEP. Take a look at these previous Dear Sophie columns in which I discuss the qualifications for IEP and the IEP process. An immigration attorney will also be able to offer alternative options and steps to take based on the unique needs and situations of you and your leadership team.

A composite image of immigration law attorney Sophie Alcorn in front of a background with a TechCrunch logo.

Image Credits: Joanna Buniak / Sophie Alcorn (opens in a new window)

 

Timing is still an unknown

The time it takes USCIS to process IEP applications remains uncertain for now, but we are still fervently advocating for anyone who may be eligible to take this path.

USCIS began processing IEP cases just this year, and it does not offer an estimate on processing times for Form I-941, the application for IEP, on its Case Processing Times webpage.

Tesla requires Full Self Driving testers to allow video collection in case of a crash

With Tesla’s latest FSD (“Full Self-Driving“) release, it’s asking drivers to consent to allowing it to collect video taken by a car’s exterior and interior cameras in case of an accident or “serious safety risk.” That will mark the first time Tesla will attach footage to a specific vehicle and driver, according to an Electrek report.

Tesla has gathered video footage as part of FSD before, but it was only used to train and improve its AI self-driving systems. According to the new agreement, however, Tesla will now be able to associate video to specific vehicles. “By enabling FSD Beta, I consent to Tesla’s collection of VIN-associated image data from the vehicle’s external cameras and Cabin Camera in the occurrence of a serious safety risk or a safety event like a collision,” the agreement reads.

By enabling FSD Beta, I consent to Tesla’s collection of VIN-associated image data from the vehicle’s external cameras and Cabin Camera in the occurrence of a serious safety risk or a safety event like a collision.

As Electrek notes, the language could indicate that Tesla wants to ensure it has evidence in case its FSD system is blamed for an accident. It could possibly also be used to detect and fix serious issues more quickly.

FSD 10.3 was released more widely than previous betas, but it was quickly pulled back due to issues like unwarranted Forward Collision Warnings, unexpected autobraking and more. At the time, CEO Elon Musk tweeted that such issues are “to be expected with beta software,” adding that “it is impossible to test all hardware configs in all conditions with internal QA, hence public tests.”

However, other drivers on public roads are unwitting beta testers, too. The National Highway Traffic Safety Administration is currently investigating a driver’s complaint that FSD led to a November 3rd collision in Brea, California. The owner alleged that it caused his Model Y to enter the wrong lane and hit another car, causing considerable damage to both.

Tesla is releasing the new beta to even more users with Driver Safety Scores of 98 and up — previously, beta releases were limited to drivers with perfect 100 scores. Tesla charges drivers $199 per month for the feature or $10,000 in one shot, but has failed meet promised deadlines for autonomous driving. Currently, the FSD system is considered to be a Level 2 system — far from the Level 4 required to really be “full self-driving.”

Editor’s note: This article originally appeared on Engadget.

How micromobility operators can unlock a $300B industry

Compared with cars, e-scooters are a lower-carbon, quieter and cheaper means of transport that can make a positive impact on urban mobility and the environment. However, despite their promising potential, the majority of the urban population perceives them either as toys or a public safety hazard.

The amount of venture investments in the industry is correspondingly meager: Since 2010, shared micromobility received only $9 billion in investments globally — compare that with the $72.3 billion raised by U.S. startups in the third quarter of this year alone. If we want to move toward a truly sustainable urban environment where people en masse choose low-carbon micromobility transport over cars, we need to find ways to make this business profitable.

Initially, e-scooter operators were competing for the attention of riders by putting as many e-scooters as they could on the market, and physical presence meant success. As cities started to adopt regulations and grant licenses, the operators’ focus shifted to getting approvals from city officials because licenses secured their access to end consumers and gave confidence that allowed for long-term planning.

The licenses also eased the task for investors, and the startups that secured licenses saw a surge of funding. For instance, in 2021, players like Tier, Voi and Dott raised a cumulative $490 million.

This sends a clear message to other e-scooter operators that aim to compete on the market: If you want to raise investments and grow, claim a place in the cities first. Currently, this applies predominantly to Europe, which has a better infrastructure and serves as a test site for micromobility transport and business models.

However, when micromobility at large proves efficient for urban communities, these practices will likely expand to other regions such as the U.S., where major cities are already building more bike lanes. Considering that by 2030 global micromobility is expected to become a $300 billion to $500 billion industry, it’s well worth the effort.

Merely winning a tender, though, isn’t enough because the licensed operators move on to the next round of competition. They have to meet the expectations of both end consumers and investors — that is, to achieve profitability while offering supreme product and product experience.

So far, the e-scooter sharing business has not proven profitable, and the existing business models have lots of room for improvement. The most evident issues are expensive charging and operations that may account for 60% of costs, so even a slight optimization here would be beneficial.

So what can we do?

Operations may vary between companies, but charging scenarios are few. Micromobility operators either collect vehicles manually at the end of the day to bring them to charging warehouses or manually swap dead batteries for new ones. Both of these involve manual labor, and some players have started offering solutions that aim to cut this cost.

Taiwan-based e-scooter manufacturer Gogoro launched swapping stations that essentially pass charging tasks on to riders. So far it’s compatible only with two e-scooter brands. German operator Tier chose a similar approach and recently rolled out Tier Energy Network: Now, Tier riders can swap batteries themselves using PowerBoxes installed at local partner shops. However, if an operator goes for swapping, they have to have at least two batteries in stock for every e-scooter in their fleet, and battery cells are the most expensive hardware component.

Besides, having to change a route to swap batteries at brand-specific locations might worsen product experience for some consumers and limit an operator’s user base, which is essential when the competition is tight.

Moreover, when the demand for micromobility increases, the stations will need to be able to fit a large number of vehicles simultaneously. It will create a demand for universal infrastructure. Companies such as Kuhmute and PBSC Urban Solutions have partially addressed this issue and developed universal chargers compatible with various e-mobility vehicle types and brands, though many such solutions are electric contact-based and therefore can accommodate only a limited number of vehicles at a time. Besides, stations are prone to contact oxidation in two to three months and change the city landscape.

In that case, a natural next step would be to roll out a one-type-fits-all charger with a substantially bigger parking capacity. Though once we start discussing parking spaces, cities come into play as key stakeholders. They already have to convert plenty of land suitable for residential development into spaces for cars to park, and they’ll need to also assign it to e-scooter charging — both swapping stations and charging docks have overground hardware.

Some players have started addressing this issue, and such products already exist in the electric car domain. For instance, U.S.-based company WiTricity has developed a ground charging pad that charges cars wirelessly and over-the-air once vehicles are parked over it. The charger doesn’t have any overground hardware, so it can double as a regular road or sidewalk. The absence of destroyable parts also serves as vandalism protection.

If applied in the e-scooter segment, this technology can improve unit economics by saving on extra batteries and manual labor required to swap or plug them in. Such standardization would be beneficial for end consumers and micromobility companies alike.