Long Beach: Bike Nation Brings 10 Year, $12 Million Investment

Rendering provided by Bike Nation

The Long Beach City Council, in a 9-0 vote, will permit Bike Nation to launch a 10-year, $12 million bike share program in the city, thereby creating one of the largest of its kind in the state.

Bike Nation, which manufactures its own GPS-equipped, airless-tires bicycles, was inspired by similar systems that developed in Europe, such as the successful DublinBikes in Ireland and Bicing in Barcelona. “Our business philosophy is that our bike share systems become part of the overall transportation fabric,” stated Jeff Pomeroy of Bike Nation. “It’s to provide our customers with a healthier way to experience their community; one without being encapsulated in an automobile.”

In addition to Bike Nation programs in Anaheim, Downtown Los Angeles, Westwood, Hollywood, and areas throughout Venice Beach, Long Beach will join the ranks as one of the largest with 250 kiosks that will allow citizens to access some 2,500 bikes throughout the city beginning Downtown in February of next year. With a Bike Nation membership, one can access bicycles in any city that has Bike Nation kiosks. In other words, a member ship purchased in Long Beach will work in Los Angeles or Anaheim or anywhere else Bike Nation opens shop.

Unlike some other cities, Long Beach’s Bike Nation program will be entirely paid for by the company, which has been working with the city since 2009. For Bike Nation, Long Beach had four essential components: quality bike infrastructure, community support for bicycling, a bike-able climate, and commitment from the city’s officials and staff.

“The City of Long Beach has long been considered a leader in investment in bike infrastructure, creating safer roads for its riders and cleaner air for its residents,” said Derek Fretheim, Bike Nation Chief Operating Officer, in a statement released to the press. “Bike Nation is proud to provide Long Beach residents and visitors alike with a low-cost, healthy time-friendly transportation option that will be connective to the City of Los Angeles and Anaheim systems.”

The program’s growing popularity is two-fold, given the overall nation’s interest in not only promoting healthier habits, but also those within the urban landscape frustrated by being trapped in their car.

Following registration with Bike Nation, users can access any of the solar powered kiosks so that, instead of dealing with traffic, one can hop on a bike and get to where they need to go. To incentivize users, the first 30 minutes are always free when a 24-hour membership is purchased for $6, with small decreases in costs with more day purchases: three-day ($12), weekly ($25), monthly ($35), yearly ($75) and yearly student/senior rentals ($50).

Bike Nation’s plans with Long Beach are nothing short of expansion: “Our goal is to make Long Beach the bike share model for other cities,” says Pomeroy.

Following the initial kiosks being installed downtown, other neighborhoods throughout Long Beach.

43 thoughts on Long Beach: Bike Nation Brings 10 Year, $12 Million Investment

  1. Holy crap! That system is huge and will be quite comprehensive. To put into perspective, DC’s highly successful program only has 1,670 bikes & 175 stations, Boston’s has 886 bikes and 77 stations. By summer 2013, this will be the 4th largest bikeshare in North America, trailing only NYC, Montreal, and Chicago, which are substantially larger cities. Impressive!

  2. Like most of the internet reports, this story mostly just regurgitates what Bike Nation tells them.

    Why has no one bothered to question how Bike Nation has made committments of over $30 million worth of investments for bicycle sharing systems in three cities, yet they have no previous experience in doing this and they just set-up their very first kiosk last month in Anaheim?

    How is it that Bike Nation intends to make money in the bicycle sharing business when the wildly successful Capital Bikeshare system has yet to take in enough revenue to cover their operating expenses, let alone their capital expenses? Does Blke Nation intend to make a profit by having advertising at the kiosks or on the bikes? Why has no one bothered to even ask one of the most important questions of a private operator of a bicycle sharing system, just how do they intend to make a profit on this when most cities do not?

    http://www.usnews.com/news/articles/2012/04/17/bike-sharing-systems-arent-trying-to-peddle-for-profit

    Why is it that no one seems to question the repeated assertion by Bike Nation that their bikes are proprietary, made in the U.S.A and assembled in Southern California, when clearly the bike frame, seatpost height adjuster, front basked support, tires and driveshaft look exactly like the proprietary bicycle from RuggedCycles which is assembled in Texas?

    http://www.ruggedcycles.com/industrialbikes/stepthru.html

  3. Yes. I know that Bike Nation partnered with Streetsblog on a fundraiser night, but I’d like to see some more detailed reporting on their efforts so far. For the publicity around their opening in Anaheim, I’ve read almost nothing online about what the system looks like now, and if they have delivered on their PR. This is the sort of coverage I expect to read on Streetsblog.

  4. Bike Nation was founded in 2010, or so I’ve read in a few places online. How could they have been working with Long Beach since 2009? 

  5. You would have thought that Long Beach would have been wise enough to wait until a product had been proven before they guarantee a 10-year exclusivity contract dedicating public space for a for-profit entity.  To this day, there is no station installed in Anaheim.

    It looks like you can have anything your way when your PR Firm is run by the 2-time former mayor of Anaheim.

    Please let the LA Times know that you want an investigation into Bike Nations claims regarding (http://www.latimes.com/la-email-newstips,0,3159176.customform):

    Their Bikes – Claimed “Buy America Compliant”, locally made, and proprietary tech when they’re actually supplied by Rugged Cycles of Texas that sources everything but the tires from East Asia.

    Their Business Model – You can’t support a bikeshare system on advertising and user fees alone and expect to pay back Park Lane (their investment bank) a suitable profit.

    Internal Billing – It can’t just be coincidental that First Pacific Holdings has separate subsidiary companies for HR, Advertising, bikeshare administration, and website development while one of the employees has companies for bike inventorying and kiosk development. Sounds like a situation ripe for Hollywood Accounting and the public paying the tax on First Pacific Holdings’ profits!

    Backroom Deals – Having Curt Pringle’s PR firm in your corner and starting a Long Beach office before the city council votes is enough to raise suspicion.

    The Lack of Product & Experience – Bike Nation does not have anyone employed that has experience with bikeshare nor have they ever installed a bikeshare station. They had a “launch” in late July for their first Anaheim station (when their launch date was set for May 1), but the station didn’t stay. It was removed… because it didn’t work!

  6. According to a direct correspondence with Bike Nation spokesperson Jim Polmeroy, the company has been working with the City since 2009; I am unsure of any source outside of that which states the company didn’t exist at that time.

  7. DecoBike lost money with higher fees compared to other bicycle sharing systems and advertising on the bike baskets at the locations in Miami Beach. They city then allowed advertising at the kiosks. It’s likely that this is what will transpire with Bike Nation if they survive long enough to install their $30 million worth of bicycle sharing systems in Long Beach and Los Angeles.

    http://www.miamiherald.com/2012/07/18/2900924/miami-beach-commission-to-vote.html

  8. What I don’t understand is DecoBike is losing money, yet Miami decided to start a new 10 year contract with them?

    Also, keep the info coming, you seem quite knowledgabe in this area.

  9. Jeff Pomeroy (a new name in Bike Nation news) is, apparently, a new PR firm for Bike Nation (http://www.jdppr.com/JDP/Clients.html). His company, JDP Communications, is recently formed after he struck off on his own, having left Turner Sports sometime in December ’11 or January ’12.

    Could this mean that Curt Pringle is out and JDP is in? If so, why?

  10. To Dennis: We have asked them about how they plan on making a profit. They don’t want to give out too many specifics of their business model but have confirmed that advertising is part of their model.

    To Evan: The kiosk in Anaheim was part of a demonstration. The system isn’t up and running yet. Yes, the delay is troubling. But Both New York and Chicago are seeing major delays in their system so it isn’t overly surprising.

    To Dennis: Personally, I don’t really care where their bikes are made. We are planning a multi-part series about the creation of the bikes and kiosks when the Anaheim share is online. We don’t have a date for that yet. 

  11. Bikeshare friend,

    Would you be so kind as to state who you are? You seem to be either a disgruntled ex-employee or a freelance journalists. Either way, people should know from where all this information and opinion is coming.

  12. LA Streetsblog – I think anyone who is concerned about their “revenue” is whether or not the business plan they’ve presented is actually sufficient to fund their systems. Even if Bike Nation (through Media Nation) were to land an exclusive advertising contract for, say, Nike, the for the sides of baskets of 2,500 bikes and at station kiosks *cannot* provide the $12,000,0000 in revenue (to pay for the Long Beach system) plus all the interest that will be demanded by their investors. No business in their right mind would buy into that.

    Long-term membership revenue is a drop in the bucket (as Capital Bikeshare has stated over and over again). Tourist revenue (daily memberships with major time overages) are 70+% of Capital Bikeshare user fees and they are JUST starting their first year in the black. And DC is a MASSIVE tourist spot.

    As such, Bike Nation (First Pacific Holdings) will have to engage in some extremely creative accounting to make Bike Nation either seem profitable or simply overcharge them internally to the point where First Pacific Holdings can *claim* massive losses to reduce their reported profits and save on taxes. That’s non-taxed money for FPH and a tax bill that the public has to pick up.

  13. Dennis Hindman’s Friend – Miami re-signed because, for better and for worse, bikeshare is “all the rage” right now. Every major city wants one. It’s a feather in the cap. Many advocates like myself see the benefits in bikeshare and think it’s great in certain places, but it will rot in places that are not sufficiently bike-friendly (see Bike Nation’s proposed Anaheim bikeshare locations).There is some federal money available and municipalities love to spend federal money. Where there isn’t any available, snake-oil salesmen like Bike Nation come in.

  14. When we did our story on Bike Nation and the city of Los Angeles’ negotiations, I talked to executives at two bike share companies that estimated that Bike Nation would easily clear the cost of their product. One actually estimated revenue at $40 million for ten years. They were arguing that LA got fleeced by not demanding a larger investment or a piece of the pie. – Damien

  15. If the critics of Bike Nation are right, then I would like to offer my sincere congratulations to Bike Nation!

    You don’t get to become an integral part of our civic infrastructure without completely compromising your morals and business at the alter of acquiring enough votes to get things done.

    I often joke that LA will truly be bike friendly when we have our first union member buried under a bike lane and a Republican Criticall Mass. Add to that list: a mismanaged kick-back laden bike share (finger’s crossed).

    In all seriousness, if you are successful, I would expect more criticism and bile from those who wish they’d done what you are doing and those that couldn’t get the money and glossy brochures printed in time to compete.

  16.  I keep reading and re-reading this looking for the scandal you seem to be hinting at. Is it a scandal that public relations (i.e .propaganda) is being used to secure a contract for business with a public agency?

    I believe there is a word for what Bike Nation is doing: business.

  17. The problem, Ubrayj02, is that Bike Nation is *not* successful. They’re completely unproven (as in they have never to this day installed a single bikeshare station anywhere) and yet Anaheim, Los Angeles, and Long Beach have bought in.

    Success thus far has been found in B-Cycle and Alta/Bixi implementation (though not universally), but at least they openly share their exact business plans.

  18. LA Streetsblog – I have a hard time believing that an exec from an established bikeshare system would suggest that Bike Nation can pull in $40 million over 10 years in Los Angeles unless they greatly over-estimate the value of advertising post-recession. That would be an average of $4,000,000 per year. Wouldn’t *their* bikeshare be doing that if it was at all possible?

    From Wikipedia’s article on Capital Bikeshare (the most successful bikeshare in America): “First-year operating costs of US$2.3 million for 100 stations… In April 2011, Capital Bikeshare administrators said they expect earned
    revenue to cover 50% of the system’s annual operating costs. The District of Columbia also plans to sell advertising on Capital Bikeshare stations with the goal of raising US$500,000.”

    From the Streetsblog Article (http://goo.gl/ux9W4): “A rival company estimated that the advertising that could come from a
    functioning bike share system with 4,000 bikes could be $40 million over
    the next decade or 250% of Bike Nation’s initial investment.”

    That would be $10,000 per bike in advertising over 10 years. Or $1,000 per bike per year in advertising. Or $2.74 per day per bike in advertising revenue. Who is going to pay $2.74/day for advertising on a single bike? No one.

    For an advertising investment to be worthwhile, you’d be looking at advertising on at LEAST 100 bikes… and you would obviously want them clustered around each other most of the time (not possible when bikes roam from station to station). Either way, the expected revenue for advertising on 100 bikes would be $8,333.33 per month. Can you imagine *anyone* willing to pay that? And if the advertising message isn’t saturated?

    Bike Nation is more than likely going to be looking for *sponsors*– people who don’t expect to have an increase in business as a result of giving huge amounts of money to the project, but would want to see that they are preventing X tons of greenhouse gas emissions or people have burned Y amount of calories. That sponsor revenue will will decrease quickly if Bike Nation cannot show people using the bikes which almost completely relies on MASSIVE changes to cycling infrastructure or a specific targeting of stations in places where people are already biking.

    They’re always talking possibilities, but it’s never been truth and it’s never reality.

  19. Any profits from an entirely privately funded and operated bicycle sharing system are not going to come from memberships and user fees. Profits are from the advertising or the sponsors paying to have their name on the bikes. What is the motivation to provide a good quality service to the users when that is the money losing part of the whole operation? What could happen is that there will be nothing more than bus stop sized billboards attached to full or under stocked docking stations that have mostly poorly maintained bikes that few people want to use. Also, where is the motivation for Bike Nation to place kiosks beyond the most lucrative locations for the advertising?

    What would lead me to believe this might happen? First, the bikes are a off-the-shelf design intended for industrial use by employees on a company’s property. There seems to have been little effort to provide some resistance to theft or vandalism by trying to hide the wires and putting bolts on the bike that are difficult to remove with standard hand tools. There are also does not seem to be any lights on the bikes at the first station they set up in Anaheim. Do they not expect anyone to ride these bikes at night, or maybe they just don’t care about the safety of the user? Where are the coat protectors that Bixi and B-Cycle use which will prevent dresses or coats from getting caught in the rear spokes? The bikes demonstrated at MTA headquarters had pedals that were uncomfortable for at least one woman in high heels. Is Bike Nation not expecting women in high heels or men in suits to use the bikes?

  20. Ubrayj02 –
    Buy America compliance is a term that describes where the majority of certain materials (steel, in particular) comes from and where the item is actually manufactured (http://en.wikipedia.org/wiki/Buy_American_Act). This is important because certain federal grants require those submitting proposals (municipalities) to show that the product(s) provided were actually made in America. When Bike Nation says their bikes are “Buy America Compliant”, they’re saying “Submit for your federal grants! Our bikes will meet their standards!” But when the grant is actually won and the federal government audits the product, both the municipality and Bike Nation will be on the line for DEFRAUDING THE FEDERAL GOVERNMENT. While they’re footing the bill on the vaporware systems for Anaheim, LA, and LB, they are on the record on many occasions stating with no doubt that their bikes are 100% proprietary, made locally, and Buy America Compliant.

    This means they are liars.

    The first issue with their business model is what happens when it collapses. Failed bikeshare systems don’t get rebuilt without massive political will and as someone who is for bikeshare, I don’t want the first impression of the concept in a Southern California city to be one of scams and failure. Portland had to (with questionable ethics) force bikeshare funding through for their political system, against the commonly expressed will of the people because their first attempt at bikeshare stank. If bikeshare fails in such high-visibility places like Los Angeles and Long Beach, you’ll get nothing but bike and bikeshare defeatism for at least a decade.

    The seconds issue with their business model is that the math to support the debts incurred by their investments. It doesn’t add up. The only imaginable way that they can turn profit and pay back their lenders for the investment is to use Hollywood standard “creative accounting” that minimizes the amount of reported income so they don’t have to pay taxes on it. The money will still have been earned, but they save expenses on the taxes… which means that’s corporate revenue taxes that would have to be burdened by the public… for a system that’s supposed to be free to the public.

    Another massive concern is that these guys are able to solidify contracts without ever proving the existence of a product. That’s a sign of corruption. Why is this different from any other corrupt deal within city councils? Because this one is so directly visible and obvious. Cities are handing over public land to be profitized by a private business with no reason to expect that the private business will provide a usable system to the public.

    If you’re ok with local governments allowing this, then you and I just have a simple difference in expectations and standards. I think that if the government is going to invest time, money, resources, and/or land, they need to work to make sure that their contracts are going to *definitely* provide the service they say they will. Otherwise, it’s just waste.

  21. LA Streetsblog –

    Below, in another discussion thread, you asked for me to
    identify myself because I seem to be “either a disgruntled ex-employee or a
    freelance journalist” and that “people should know from where all this
    information and opinion is coming from”. That is incredibly disappointing. As a
    journalistic entity, well-respected by the public, I would expect that, if you
    found someone providing information that was in fact an ex-employee, you would
    attempt to protect that person’s identity. Instead, you use the possible
    employment status or even the term “freelance journalist” as a derogatory.

    I will NOT give my real name because that’s really the
    benefit of being online in a pseudonymous environment. It allows someone to
    speak her/his opinion without fear for retribution. As a group working in
    journalism, you should understand that.

    However, I’m more than happy to reveal my informational
    sources: Google Web Search and personal conversations with the Bike Nation
    team. I know. Incredible!

    Doing a Google search for “Bike Nation” before or soon after
    they locked down the Anaheim deal made it easy to dig up a ton of information without getting a ton of news/blog hits on the matter.
    Here’s what I found:

    The Anaheim Announcement that Bike Nation stations will be
    installed around May 1: http://www.anaheim.net/administration/PIO/news.asp?id=1420
    (they’re still not installed)

    Park Lane is the (a?) source of money for Bike Nation: http://www.prkln.com/transactions/

    Phoenix Design & Innovation created the kiosks and
    docking mechanisms: http://www.phoenixdesignandinnovation.com/projects.html
    , http://www.phoenixdesignandinnovation.com/portfolio.html

    I (among others) recognized the shaft-drive system as a
    Rugged Cycles bike and compared the Bike Nation bike with the Rugged Cycles
    bike: http://www.myruggedcycle.com/overview.aspx
    There no question about it and with a simple call to Rugged Cycles, I was able
    to confirm that they are indeed sourcing the bikes for Bike Nation. They’re not
    hiding it, but Bike Nation would still have people keep mum. Moreover, the
    found of Rugged Cycles goes on the record multiple times (here’s one: http://www.youtube.com/watch?v=6oph9Zw-SeM)
    stating that everything but the tires are made in Asia. Again, he’s not shy
    about saying so. And yet, Bike Nation continually stated that their bikes are
    proprietary and Buy America Compliant. Buy America compliance is a term of federal law, by the way. When they claim it in an attempt to get a municipality to spend federal money on their system, they’re defrauding the municipality AND the federal government.

    Continued below… 

  22. It looks like Streetsblog is now deleting my comments. They asked me to identify myself and the sources of my information and when I go to reveal my information sources, they delete the comment.

    We should all disappointed.

  23. LA Streetsblog –

    Below, in another discussion thread, you asked for me to identify myself because I seem to be “either a disgruntled ex-employee or a freelance journalist” and that “people should know from where all this information and opinion is coming from”. That is incredibly disappointing. As a journalistic entity, well-respected by the public, I would expect that, if you found someone providing information that was in fact an ex-employee, you would attempt to protect that person’s identity. Instead, you use the possible employment status or even the term “freelance journalist” as a derogatory.

    I will NOT give my real name because that’s really the benefit of being online in a pseudonymous environment. It allows someone to speak her/his opinion without fear for retribution. As a group working in journalism, you should understand that.

    However, I’m more than happy to reveal my informational sources: Google Web Search and personal conversations with the Bike Nation team. I know. Incredible!

    Doing a Google search for “Bike Nation” before or soon after they locked down the Anaheim deal made it easy to dig up a ton of information without getting a ton of news/blog hits on the matter. Here’s what I found:

    Continued below….

  24.  The Anaheim Announcement that Bike Nation stations will be installed around May 1: http://www.anaheim.net/administration/PIO/news.asp?id=1420 (they’re still not installed)

    Park Lane is the (a?) source of money for Bike Nation: http://www.prkln.com/transactions/

    Phoenix Design & Innovation created the kiosks and docking mechanisms: http://www.phoenixdesignandinnovation.com/projects.html , http://www.phoenixdesignandinnovation.com/portfolio.html

  25.  I’m having a hell of a time posting replies to my own post. I have all the info, as requested, but something keeps going wrong. I don’t know if it’s a “posts per time” limit or what… but blargh!

  26. Bikeshare Friend,

    I didn’t realize people were still commenting here so that’s why I’m a bit late with this post.  Anyways, I just read all of your recent posts, and I must say I’m quite impressed with the info you were able to dig up and your replies to everyone here.

    You strike me as someone who is passionate about bike sharing and wants it very much to succeed.  I’m the opposite, I loathe bike sharing and want it to fail because I’m confident it will hurt the long-term goals of the livable city/streets community.  Even though you and I have differing views on bike sharing, I believe our differences can be worked out.

    Your passion for bike sharing is clearly shown in your posts, and it is that passion that I find intriguing.  You revealed something else, which I won’t mention here, that I also find intriguing.  So I’m wondering, is there a way I can contact you in the future?

    I’ve been working on a project for quite some time now.  It will contain certain information that will back up the claim I mentioned above.  I plan to make my project public in about 6 months (cross-fingers), but before I do, I would like to get your opinion on it.  Do you live in Southern California?  If yes, which city or county?  If you are in or around Orange County, then maybe we can meet up when I’m ready to show and tell.  Also, I was wondering if you can reveal what you do for a living?

  27. Bikeshare Friend’s Friend —

    I’m very interested in hearing your reasoning against bike sharing. Drop me a line at bikesharefriendtatgmaildotcom.

    Since I’ve been unable to post the rest of the backup to my opinions here (no clue why), I’ll send them to you as a response.

  28. I agree with you completely, as well as have been following.  A friend, turned me on to this blog and I’ve been reading everything.  Your spot on one everything you say.  Bike Nation is getting ready to have their feet taken out front under them, that’s all I can say…wish I could tell you more.  Concerned Bike Share lover

  29. Omg this Derek Fretheim guy is a complete scam artist. Just look at his past companies! He has a civil suit history a mile long!

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