Reporting on pedestrian life in the D.C. area

Why Capital Bikeshare succeeded where SmartBike failed

September 22, 2011 - 10:20 AM
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Former D.C. mayor Adrian Fenty helped launch the SmartBike program in the District in August of 2008. This move made our capital the first city in North America to offer a bike-sharing program, a joint venture between DDOT and Clear Channel. 20 Photos
Former D.C. mayor Adrian Fenty helped launch the SmartBike program in the District in August of 2008. This move made our capital the first city in North America to offer a bike-sharing program, a joint venture between DDOT and Clear Channel. (Photo: Wikimedia Commons/Creative Commons | Date: Nov. 19, 2009)

Washington, D.C. has a special honor among U.S. cities — our capital is the first community in North America to offer a government-sponsored bikesharing system. Several cities have followed our lead across the country, from Denver to Minneapolis to the 10,000 bikes New York City is planning for 600 bikeshare stations.

But D.C.'s landmark first bikesharing program is not the one you might be thinking about.

Picture bikesharing in D.C. and today you likely think of the iconic, successful Capital Bikeshare program, sponsored by DDOT and Arlington County and sporting more than 100 bikeshare stations and with more than 1,100 bikes. Launched one year ago as of this past Tuesday, the program is, by virtually any definition, a success for D.C. It proudly announced a million trips registered on the morning of its birthday. But Capital Bikeshare was not D.C.'s first service. Remember SmartBike D.C.? SmartBike, a joint public-private venture between Clear Channel and DDOT, debuted in August of 2008 and lasted until January of 2011, eclipsed by the larger and rapidly growing Capital Bikeshare, which has doubled projections for it first year. The more modest SmartBike offered 10 stations and 120 bikes, and  its launch was highlighted as groundbreaking by the New York Times three years ago. But in celebrating Capital Bikeshare's success today, it's worth remembering the failure of SmartBike — and the lessons it taught in how to create value for a city's bicycling community.

"It seems like SmartBike was designed to fail," said Ryan Hamilton, a 36-year-old MBA professor at Emory University in Atlanta, Georgia. The man knows his business and knows his marketing — and more than that, he understands why SmartBike failed where Capital Bikeshare succeeded, visible to his business-school thinking even several states away.

The case was so clear that Hamilton teaches it to his first-year MBA students as part of an introductory marketing management class.

In 2009, Hamilton began introducing the topic of what makes a successful bikeshare to the class. He had been teaching for a year at this point and had read about the SmartBike program on blogs and in media. His facility with his students and topics like this help me understand why MBA-centric news source Poets and Quants named Hamilton one of the world's top 40 MBA professors under 40. He would walk into his MBA class of 40 to 50 Emory business students and pose a scenario: "Let's brainstorm — let's figure out who might want a bikesharing program." 

Bike commuters? Tourists? People looking for quick and easy exercise? The students brainstormed for about five minutes, naming different possible users, and then Hamilton would turn to Washington, D.C.'s inaugural service.

Yes, Hamilton tells the class. All are very possible bikeshare users, and a service has to specify how to serve each. The MBA professor saw this as a lesson in market segmentation, targeting, and positioning. To achieve a product's value through these frames is "one of the core fundamental things we do in marketing," Hamilton told me. SmartBike, from what he could see, achieved no value for any of those potential group of users. Commuters wouldn't need it because there were too few bikeshare stations (and located right next to Metro stations, anyway). Tourists might have been one set of users, but the service required you to sign an annual contract of $40. And errand runners? The basket was just too flimsy. Plus there was the bike's thin, overwhelming appearance that bordered on "a very socialist look,' Hamilton said, which would appeal to some but not for many.

"SmartBikes were also iconic [in appearance, like Capital Bikeshare] — but they were also extremely goofy," Hamilton said. "For most people, the SmartBikes would not look appealing at all."

Another big problem, of course, is that Clear Channel never seemed to offer enough money and create a bikeshare program on a large enough scale, a point that DDOT's spokesman John Lisle observed last week when I mentioned my curiosity in North America's first government-funded bikesharing service. It's true. D.C. Bikesharing needed a system with a larger scale like Capital Bikeshare's, a greater commitment to the stations, the availability, the benefits, not to mention the brand. Capital Bikeshare provided 10 times the stations and number of bikes at its very outset, and, Hamilton is happy to note, fixes most of the concerns he noted about SmartBike. Capital Bikeshare does create value for these different groups of users and even actively finds ways to target them, as with Capital BIkeshare's partnership with Kimpton Hotels. Added convenience factors help target both commuters and tourists. "The free first half hour helps," Hamilton said, who also points to the added funding of Capital Bikeshare.

Hamilton now closes off his bikesharing example in class by bringing up Capital Bikeshare, a testament to how a program can work. Its success has inspired several other cities to kickstart their own bikesharing programs, such as in New York City. But this success, of course, makes it too easy to forget that it may well not have been possible if not for the model that SmartBike set. Capital Bikeshare is fulfilling the dream first imagined by SmartBike. Despite its stumbles, SmartBike showed that a bikesharing culture was possible. Look back to the photos of people riding their SmartBikes — they seem thrilled. The enthusiasm was there, as was the talk of benefits like exercise, commuting, and a city brought to life by biking. DDOT wanted to expand such a model at the time and expand the city did, through its own program.

Considering the future of bikesharing and its growth, Hamilton ultimately encourages people to be aware of their market and how to best segment the different groups of potential users, which differs based on location and countless other details of context. "Sometimes people get enamored with programs like this and lose sight of what goals they have," the professor said.

But Hamilton is glad for the success and value he sees in Capital Bikeshare so far. He likes the ability not only to bring up SmartBike's failings but now contrast them with Capital Bikeshare's successes. Students, after all, like a happy ending.

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