- Ofo is a smart, station-free bike sharing program that allows people to unlock bikes with their smartphones.
- Ofo is currently in 180 cities, with over 25 million trips per day and over 10 million bikes deployed.
- The company was founded by a group of passionate cyclists who wanted to solve the problem of bike theft and provide a solution for last mile commuting.
- In the first year, Ofo initially relied on existing bikes donated by people, but the supply grew slowly while the demand grew rapidly.
- To scale the supply, Ofo approached bike manufacturers and started purchasing new bikes to be shared on their platform.
- Ofo expanded to 200 universities in China within a year, gaining insights and experience in managing operations and ground teams.
- The university environment was ideal for testing and refining their operation model before expanding to city markets.

- The company has experience from operating in universities that they can apply to expanding in cities
- They initially expanded to districts in Beijing and Shanghai to gain experience before going to other cities
- Different cities have different regulations, so they had to modify their operations and vehicles accordingly
- They learned from Facebook's approach of starting with universities before expanding to the general population
- They decided to switch to the city when they felt ready in terms of product, operations, and market
- They research and analyze various metrics to determine target cities for expansion
- They send a team to the city to conduct market research and establish the basic foundations of the company
- The team composition includes a city GM, operations team, and marketing team
- Operations involve bike deployment, balancing, and maintenance
- They maximize bike efficiency by strategically placing them in bike-friendly or densely populated areas.

- The company finds bike-friendly and densely populated cities to deploy bikes
- They use heat maps to identify areas where people frequently open their apps, indicating high usage potential
- Singapore was chosen as the first national city to launch because of its popularity on the global map 
- The company works with local authorities to provide assistance in areas with limited mobility options
- They aim to solve mobility problems and provide solutions based on the needs of each city
- The company has launched in Seattle and the Greater Boston area in the US, with plans for more cities
- The CEO believes that the demand for bikes in the US exists and that their solutions can adapt to local markets
- The company is exploring the use of electric bikes to extend trip distances and reduce pollution and congestion in cities
- The team currently has over 2,000 employees in China and over 100 international employees
- The company hires the best talent and looks for people who share their passion for changing how people get around
- Despite the potential dominance of self-driving cars, the CEO believes there will still be a huge demand for bike sharing.

- The speaker believes that even with the availability of autonomous driving cars, there will still be a high demand for bike sharing.
- The advantages of bike sharing include density and cost.
- The speaker believes that autonomous driving cars will require significant investment and be costly to operate.
- The cost per trip for bike sharing is lower compared to ride-sharing with drivers.
- The cost for bikes is mostly fixed, while the cost for cars is variable.
- The speaker believes that the maintenance cost for cars may be higher than for bikes.
- The speaker acknowledges that there may be density and system management issues with autonomous driving.
- The total cost of operation and management for autonomous driving may be higher than for bike sharing.
- The speaker supports autonomous driving but acknowledges that only time will tell the true costs.

- Ofo is a smart, station-free bike sharing program with over 10 million bikes deployed in 180 cities.
- The company started with donated bikes but switched to purchasing new bikes to meet demand.
- Ofo expanded to universities before entering city markets to gain experience and refine their operations.
- They analyze metrics to determine target cities for expansion and strategically place bikes in bike-friendly areas.
- The company has launched in the US and plans to explore electric bikes and expand further.
- The CEO believes there will still be a high demand for bike sharing despite the rise of autonomous driving cars.
- Bike sharing has advantages in terms of density and cost compared to ride-sharing with drivers.
- The speaker acknowledges potential issues with autonomous driving and believes time will reveal the true costs.

Yanqi Zhang is a cofounder and COO of Ofo - https://www.ofo.com

Anu Hariharan is a Partner at YC - http://twitter.com/anuhariharan

And thank you, Yankee, for being here today with us for our Global Growth event and for doing this interview with us.

So Yankee is the co-founder and CEO of Ofo.

Can you describe what Ofo is for our audience?

So first of all, I know, thanks very much for having us.

I'm very excited to be here to share our story.

So OPPO is the first smart, station-free bike sharing program in the world.

So what we do is that we provide the station-free bikes and for people to use to unlock with their smartphones.

It's very easy accessible, it's very green, and it's a very smart way of getting around the city, especially for the last mile.

Great, can you talk about the scale as well?

We have deployed over 10 million bikes already.

And we're in right now, globally, 13 countries.

The goal here is that by the end of this year, we're going to go to at least 20 countries.

I mean, it's truly unique for a Chinese company to really go international this fast.

Now, before I touch into how you did the international expansion, I wanted to hear your story on year 1.

What was the motivation to launch OFO, and how did you guys go about doing that?

Basically, the company was founded by a group of passionate cyclists.

So it was founded in university, when we were in university.

So the very natural thing is that you have your bike in the university.

But I think probably like this is something everybody has experience is that your bike has been stolen.

A lot in San Francisco, actually, unfortunately.

So found himself like he lost 4 bikes during his university period of time.

So yeah, so we come up with this idea of what if, like, we have a shared bike system?

Like people don't need to worry about, like, bike being stolen, be like, when you go out of a station, there's still like 1.5 miles to go, but you don't have any transportation methods.

I think this kind of last mile commuting problem is, we feel that in China, but right now we know it's actually universal.

Before us, there's not a very good solution for that.

And it's very natural, like any other startup in the world, we came up from wanting to solve a very simple pain point of people's regular daily life, right?

So yeah, So we started in 2014 in a university, right?

So basically that's where the founding team studied.

So basically we started from there and we spent some time to expand to 200 universities at the beginning.

And starting from 2016, end of 2016, we expanded to the cities.

So in the city markets, because we have the experience of running operations and all the systems like within the university, so in the city it's a different scenario, but there are a lot of things we can borrow.

We spend 8 months to expand to over 170, 180 cities.

And China also includes some international cities.

And the trips grew from, at the beginning it was 200,000 trips last year.

So that's sort of like our story and our trajectory.

So I wanted to go back a little bit on the first year when you launched in the university.

Because you obviously wanted to move from dockless stations to something that people could access anywhere.

So how did you, What was the supply in the first year?

Yeah, so it's very interesting because at the beginning, the idea was to use what we call the 100% sharing model.

It's like we use the existing bike as a supply source.

So In China, well, China is called the kingdom of bicycles.

So when we started the business, we looked at the statistics, the annual sales of bike and the existing stock of bike.

Actually in China we have 400 million bikes.

So it's very natural thoughts, like what if we activate that existing supply, right?

So basically what we do is that we go out there and telling people through different channels, like we're doing this shared bike program, and everybody's welcome to donate their bike to our system.

We start something like, we call it Exchange 1 for N, which means like you donate your bike and then you have access to all the off-road bikes in the system.

Right, so we think that, we thought that people would love it and like a lot of bike will be donated.

But what actually happened is that it's a very new idea, first of all.

And second is that not actually many people are willing to give up their personal positions like then share.

At the beginning, it's hard for people to quite understand the idea.

So at the beginning, the supply growth is actually quite slow.

Every day, I think we collect 30, 40 bikes.

At the same time, the demand actually grew very fast.

When we put the first batch of bike on the street in the university, people just love it.

People talk about it in different forums, everything.

The only thing is that people complain that they cannot find the bikes.

They saw students riding bikes, but they cannot get 1 for them because there's not enough bikes.

So that was the moment really we started to think the supply growth is very bottleneck for us.

So I think back in 2015, we came up with this idea of going to the largest manufacturers in China, which is in Tianjin, is a city very close to Beijing.

That's where most of the largest bike manufacturers are in China and in the world.

Basically, we start this to expand the idea of sharing, bike sharing, right?

So it's not just about sharing the existing stocks, but also about bringing the new bikes that the manufacturers tend to sell, plan to sell to the individual buyers, to our platform, to be shared by people, right?

So on average, our bikes are 20 times more efficient than the private bike.

On our platform, on average, 1 bike serves over 20 users compared to 1 private bike serves 1 people.

So we came up with this idea, and then we approached them.

And then we started to have a small trial at the beginning, because we do not have much funding in the beginning.

So we buy some bikes, and then we put it in the university.

And also, when you have your own suppliers, it's very easy to control the qualities and also like the colors and the bike itself, right?

And that's when we call the small yellow bike was born, right?

Back then, it's like we have the bikes and we paint the bike, but it's not very good.

So when you walk in the university, you see our log, that means that's Ophelbike.

So it's not very easy to identify sometimes.

And also, like, there are different bike types, does not look very identical.

So yeah, so basically, like, the new model works better.

So that's the solution we find to scale our supply and it works out pretty well.

And very quickly we expand to like 10 universities, 50 universities, and we spend a year to expand to 200 universities, which is quite a lot in China.

100% market share, profitable, and people love it, students love it.

And so, yeah, so that's how our story begins.

So you expanded to 200 universities by the end of first year?

So basically, we started, well, like, gradually pick it up, And we started in 2015 of this, like, new model of purchasing the bikes and expand.

And we spent a year from 2015 to 2016, and we're focusing on expanding to different universities.

Because universities, like, it's a closed area.

In China, most of the universities have the walls.

So it's sort of like a natural closed area where you don't need to worry about a bike being taken out of the university.

Because we hire people, our staff, at the gate.

And also, it's a much simpler environment in terms of the user behavior.

Students, where they live, where they go, where the library, the refectory, the gyms, the football fields, dorms, it's very easy to do the rebalancing.

It's very simple, I would say, the scenario.

So I think that 1 year actually gave us a lot of insights, a lot of practice about how to organize the operation.

Even back then, we do not have a very smart system.

We use sometimes just write down at different universities.

But that gave us a very good experience on how to manage a ground team.

So how many people we need for how many bikes, and how to maintain the bikes, and what bikes we need, because people will see bikes being broken.

So how much time in advance do we need in what scenarios?

So actually, we have a lot of experience and being playbooked into our operation model in that year, which where we can borrow for the city expansion.

So I think that's 1 of the most important reason why we can expand so fast, scale so fast in the city.

Because when you figure something out in a smaller scale, that's sort of like a natural, like a business development.

It's like when you figure something out in a small environment and then you gradually take it out.

And also, at the beginning when we do city expansion, we do not just go to a lot of cities.

We go to districts in Beijing and Shanghai.

And we try to have a managed expansion and have some experience.

Okay, this is how it feels like in the city and how people use it.

We use certain type of vehicles to do the shifting and rebalancing stuff.

But in a city, different city has different regulations.

So for example, in Beijing, we can use this three-wheel electric vehicle to move bikes.

But in a lot of southern cities in China, like Shenzhen and Guangzhou, the cities, these vehicles are banned.

Sometimes we need to modify some of the small vans to do the rebalancing.

So yeah, all those kind of challenges specifically in the city we need to tackle.

Even though you're very different from a social network, I think Facebook often talks about that.

Like the learnings for them was the fact that they did a university and university rollout.

First they figured out Harvard, then Stanford.

And then, you know, before they opened it up to basically to everyone, they had 80% penetration in universities in the US.

And they talk about how they figured how to build a product such that there was high engagement in universities.

And so I wanted to ask you when you were in 200 universities, how did you decide when to switch to the city?

And what motivated you to switch to the city?

And how did you think about, you know, because as you said, for all the elements, why the university is so different from the city.

How did you tackle that first city that you went to?

Yeah, I think there have been discussions of going to the city very early, right?

I think there are a lot of conditions of going to the city, right?

So we need a lot more bikes than in the university.

And the bike itself needs to be upgraded because in the university we use simple bikes, regular bikes.

In the city, probably we need to use bikes with gears, bikes with a lot of anti-theft features being implemented, which will increase the cost and everything.

So basically, we spend a lot of time, first of all, researching, developing the bikes that we need for the city and do tests in a very small area.

So, yeah, so basically, like, We develop the bike for the city, and we expand operationally to the universities.

And at a certain point, we think that, first of all, we're ready on the product side, and also we're ready on the operation side.

So we think that...in China, I think there are 2,000 universities, but the best ones are like the top 10%.

So we have quite good coverage of the good quality universities, like which has the best, I would say, the campus construction and also like the university students' quality and everything.

So, yeah, so basically you feel like in US you have all the Ivy League or the UC system, right?

So, when you have all that, we think that, okay, so the next stage probably like we can go to the city.

Also, like, in terms of like the team, right?

At the beginning, the company was created by...founded by like a student project.

But later, like, we upgrade the team, upgrade the team.

And at a certain point, like, we have like the city management, city operation management team set up.

We think that's the time because when we go to the city, we want to make sure that that is a win.

And we have, so this is sort of like a bet we take.

So we need to make sure we have the necessary resources, the necessary team, and product ready before we go to the city.

I think last year, I think November, October, November, was the moment we think, OK, we're ready.

Can you also talk about the playbook for each city?

So when you're deciding to launch in a new city, what's the first step?

So how do we launch cities, both domestically and internationally?

Is that, first of all, we would do a research.

We would do like a city list digging into which cities are the target cities.

I think there are over 20 of them, including the population density, the credit card penetration, the smartphone ownership, how the city is planned, and also like the price for the public transportation, for taxi, how much money...how much percentage of money the household average spend every month on transportation and stuff, all this metrics, etc., etc.

So we come up with a city list, a market size, and also what's the history of the local authorities about the new technologies, new companies, and all these.

We quantify it, and then we have a list of cities out there in China and internationally.

So that's sort of like what we call Air Force approach.

Like you look at it And then we look at the marine approach.

So we send people on the ground, sort of like the launchers or basically the launchers.

Sometimes we send operation managers as launchers, but some people on the ground.

In China, actually, because we're already in 200 universities to start with.

So, we have teams in 200...not 200 cities, but like I think 50 cities.

We just have some people to go to the city to do some tasks and stuff.

But for international markets, we do need to hire launchers and send them.

But the hiring process start like a few months before the launch date of their national business.

So yeah, we hire the people, like most of them, like Chinese at the beginning.

They have experience of leaving international countries or doing business there and stuff.

So we send the first batch of launchers, landing team on the ground.

So it's like 1 people to 1 country, Something like that.

And then they go there and they launch the...do the basic setups, right?

And well, first of all, what they need to do is that actually the market research, the green light process.

So they go there, spend like a week or 2 actually to cross-check with what the Air Force has found.

So all those metrics, what it's really like, and how people think about everything, and talk to people.

Actually try out the local public transportation, and feel about experience and everything.

So yeah, so the Greenlight process will take 1 week or so, or 2 weeks.

And then we have them start to establish the basic foundations of the company.

So we'll start to initiate contact with the local authorities.

We'll start the recruiting process because, like I said, we need a local team to run the business like in the long term.

So they start to recruit the local people.

What's the team composition initially for a local team?

So the ideal structure would be like a GM, a city GM, and with operation, because we're quite heavy on operation, so maybe 1 or 2 operations.

1 in terms of managing the maintenance stuff, 1 is managing the bike.

So it's like operation, and also on the marketing side, we also need people to do the user acquisition, the PR, like the things.

But in terms of hiring orders, so it's the city GM and the operation team and the marketing team.

But sometimes to find the city GMs is slower, right?

So we probably start with the operation team side.

So most of the city are run by launchers.

And it's very similar to most of the expansion model by other internet companies, I would say.

Only 1 difference is that we are operation heavy.

So basically, we'll put more, I would say, their attention on the operation side.

So yeah, so basically that's the basic structure.

Can you talk a little bit about the operations?

Because it's a little different from ride sharing, right?

Ride sharing, you have someone who's driving their own car and you're requesting via the app and it helps you take point A to point B.

At OFO, you have your supply of bikes, and people can drop it anywhere and pick it up anywhere.

So can you talk about what does the operations entail?

Yeah, so the operations, there's different categories.

So the most important ones are the bike deployment, the bike balancing, and bike maintenance.

So at the beginning, obviously, we have the bike in the city.

And basically, we ship bike from China or some factories in Europe and different parts of the world.

So when you have the bike, when the bike enters the city, it's the operation team's responsibility to maximize the efficiency of the bike.

So where to put the bike to begin with, right?

For example, in small cities, it's easier.

So it's just like put it in a city, like the transportation hub.

But for big cities like London, like San Francisco, well, we're not in San Francisco yet, but if we do, probably, like, we start with 1 district, right, instead of, like, going to the whole city.

So yeah, so basically, like, we will find, like, the most bike-friendly, either the most bike-friendly or the, like, the most dense city in terms of population.

See all Y Combinator transcripts on Youtube

The Future of Bike Sharing with Ofo Cofounder Yanqi Zhang and Anu Hariharan