After adding Berlin in July, Swapfiets is looking to expand its basic bike-for-a-monthly-fee model overseas.

Amsterdam has more bikes than people, and far more of its 860,000 residents pedal to work than take a car or public transit. But at least 80,000 bikes are stolen every year, and flats and breakdowns are common. On any given day thousands of Amsterdammers face life without their two-wheelers. Richard Burger has a solution.

Five years ago he, Martijn Obers, and Dirk de Bruijn co-founded Swapfiets in Delft, where the three were students at the University of Technology. Swapfiets—Dutch for “swap bicycles”—provides a basic bike for a monthly fee of about €16.50 ($18). That covers repairs and insures against theft. Although there are many motives for signing on, Burger says, “everything comes back to the fact that you get the advantages of a bicycle, and as soon as there are disadvantages, we will take care of them for you.”

Convenience—and cost—persuaded Ruta Puodziunaite, 24, to sign on. “When you go to a store, they offer you a bike for €300, which is too much. Why pay €300 to get a bike, with a shitty lock, which gets stolen in like two days, if you can get a Swapfiets for €16 a month?”

That argument has led about 130,000 customers, mostly in the Netherlands but also in Germany, Denmark, and Belgium, to join Swapfiets. As the hassles of owning a bicycle increase, the company’s prospects rise, the co-founders say. If a customer suffers a flat, or a cable snaps, a few clicks on the app will summon a technician, who can fix the bike on the spot in as little as 10 minutes or swap it if the bike needs extensive repairs.

The operation began in spring 2014. Burger, Obers, and De Bruijn were working on a thesis project together—about icebreaking vessels. They fell into conversation about how many bikes they noticed in need of repair. That led to the bike swap idea. The three quickly set up a website and a Facebook page. A fellow student needing wheels contacted them via the site, and practically overnight, the business was born. They bought 40 bikes from a depot where the city deposits abandoned and illegally parked bikes. Within a couple of weeks, they bought 100 more from the depot. (The first customer remains a subscriber today.)

Before long, the trio was overwhelmed: They had 200 customers on a waiting list, and they needed money to maintain and fix the bikes they bought. In the spring of 2016, Swapfiets started making its own bikes via a deal with Almere-based Pon Bicycle Group, the manufacturer of the popular Gazelle and Kalkhoff models. They also hired a Pon executive, Steven Uitentuis, as managing director and secured an investment from a Pon-affiliated venture capital firm, Ponooc, which enabled much faster and sustainable growth. In fall 2016 a quarter of the university’s 4,000 first-year students had signed up for a bike with Swapfiets. The Pon partnership also has led Swapfiets to add a seven-speed (€19.50 a month) option and an e-bike (€75 a month).

There have been plenty of growing pains, says Burger. “First we didn’t have enough bikes, then we had enough bikes but not enough people to work for us. Once we got them, we didn’t have the back office to handle it all.” They staffed initially from their own network of friends. As they expanded to other cities, back-office operations—hiring, training, payroll, and more—gradually developed. Today, Swapfiets has 1,300 employees in more than 50 cities across four countries. More specialized roles have been created, such as one to oversee bicycle logistics and another to analyze repair and usage data. The information offers a competitive advantage, the founders say, that many bike manufacturers miss out on, since their customers typically visit independent repair shops for fixes.

The first city outside the Netherlands Swapfiets entered was Leuven, Belgium. Because it’s a university town, a large percentage of its 100,000 residents are bicyclists; the city has more than 500 bike paths. The local bike culture is key to the company’s decision of which new markets to enter.

Expansion brings headaches. “Requests for baskets, helmets, and bicycle bags came much more from other countries than from the Netherlands,” Burger says. Michael Lucassen, a partner at VC firm Tiin Capital in Naarden, says, “Close to home, you can find people who support your high level of service.” Local laws also dictate some bike features. For example, Germany requires an additional brake system beyond a coaster brake.

Swapfiets is weighing moves to Australia and Japan and considering two cities in the U.S.—Portland in Oregon and Boulder in Colorado. Burger won’t comment on specific plans, save to say that the founders want their blue-tired bikes—the color of every front tire in the fleet—in every city with bike racks. The Netherlands might be the biggest bicycle country, Burger says, but “it is of course not the largest country.” —With Ruben Munsterman

BOTTOM LINE – A bicycle-rental startup begun by three college classmates in the Netherlands now has its sights on bike racks in Asia, Australia, and North America.

source:https://www.bloomberg.com/news/articles/2019-08-22/swapfiets-bike-subscription-service-prepares-for-global-expansion?srnd=businessweek-v2