The Tycoon at the Helm of China’s Bike-Rental Revolution
WHY YOU SHOULD CARE
Because he wants to change cities and save the world … two wheels at a time.
Ever since China started drinking the capitalist Kool-Aid in 1978, cars have been as viral as opium, with bikes cast aside as Mao-era relics. But communal super bikes hooked with the internet of things are back, and leading the charge is Mobike, founded by 36-year-old buzz-cut Joe Xia. Since its start in 2015, Mobike has flooded China with millions of dockless bikes — and will roll into Europe with its U.K. launch on June 29.
With more than $925 million from leading Silicon Valley, Wall Street and Shenzhen investors — including $600 million raised in June — Mobike will be able to double its production capacity to 10 million bikes a year. Why is the world greasing the company in cash? According to strategy consulting firm Roland Berger’s 2015 report, bike sharing will become a $5 billion industry by 2020. Before Mobike and Ofo — its nemesis, with more than $580 million in backing — hit the streets, there were fewer than 700,000 shared bikes in more than 500 bike-sharing systems.
“Mobike was an important innovator in its launch of large public systems in China,” says Karl Ulrich, vice dean of entrepreneurship and innovation at the Wharton School of Business. Although Ulrich was initially “skeptical” about Mobike’s prospects — speculating its conspicuous orange bikes would get stolen and daily usage would be low — he now admits he was “just wrong.”
Others continue to doubt the profitability of a venture charging 15 cents for half an hour of service. “Mobike has to be careful, because it’s costly to win market. Look what happened to Uber in China,” says Rebecca Fannin, founder of Silicon Dragon Ventures. After a protracted price war, Uber China bled $2 billion and was absorbed by local rival Didi Chuxing, which has injected $130 million into Ofo. Uber, Didi and Ofo did not respond to requests for comments about Mobike’s claim that it’s the world’s largest shared transportation firm, with 20 million daily trips.
I decided that bikes are more fun. It’s more than profit. It involves emotions.
Joe Xia, Mobike co-founder
Unlike earlier bike-sharing systems, such as Citi Bike in New York City, Mobike does not have docking stations, so users can pick up and park self-locking bikes anywhere by scanning the QR code on their app. The result is smiles for commuters in congested city centers — and nightmares for city authorities dealing with shared bikes strewn across roads and pedestrian paths. Many municipalities, including Beijing and Shanghai, have cracked down on shared bikes, and Mobike has created a point system to freeze irresponsible users’ subscriptions.
A younger Joe Xia might’ve been one of Mobike’s less responsible patrons. “My parents were not typical Chinese parents,” he recalls. “They gave me a lot of freedom and allowed me to make a lot of mistakes.” When Xia was 8, he bought plastic guns with pocket money he was supposed to deposit at the bank. He was quickly stripped of the privilege to manage his finances.
Born soon after Deng Xiaoping’s liberalizing reforms, Xia was raised in Jiangsu, renowned for its quaint canal cities and classical gardens. “We had our own house with a backyard and a small river at the back. I would go to the river and catch crab and fish after school,” says Xia, who now lives in Shanghai and has two children. “My kids go to lessons, stay in an apartment and don’t have friends. They lack the fun we had before.”
Biking was not a big part of Xia’s childhood, but he played many sports and was a star guard on his college basketball team in Nanjing. “I wasn’t the top student,” he admits. He majored in communication engineering and founded his first ventures in website design and lottery software during college, cashing out for about $150K. His graduate degree in information systems took him to the University of Essex in England, and he spent nearly a decade working for Chinese telecommunication behemoth ZTE, followed by Ford and Fiat Chrysler, before launching Mobike.
Xia’s career trajectory mirrors that of the trinity of IT entrepreneurship in China: search giant Baidu, e-commerce titan Alibaba and internet conglomerate Tencent. Unlike in America, where the myth of the entrepreneur includes dropping out of college to chase a jackpot dream, Chinese entrepreneurs tend to stay in school and cycle through several cog-in-the-wheel jobs before launching their own ventures.
Initially, Xia’s big hairy entrepreneurial goal involved smart cars with internet-of-things technology. Then, in 2012, he met future Mobike co-founder Hu Weiwei; she was a reporter who’d asked to interview him at the Consumer Electronics Show. Xia got stood up, but they ran into each other on the last day of the show. Two years later, while Xia was cooking up his startup, Hu convinced him to pivot from cars to bikes. “I decided that bikes are more fun,” says Xia. “It’s more than profit. It involves emotions.”
Together with Davis Wang, who left Uber China to become the third co-founder, the team’s been pedaling hard ever since. Mobike has more than 300 employees, and Xia says he averages four to five hours of sleep a day. “If you work 16 hours a day, then you buy back a day,” he explains. A smart strategy for someone looking to “change cities and save the world,” he declares. As legions of smart bikes fill city sidewalks, time will tell if a sharing economy with Chinese characteristics can help bring blue skies to gray cities … two wheels at a time.