Bluegogo

» see bluegogo.com as it lived, on the wayback machine

~ the obit ~

Bluegogo was founded in Tianjin in November 2016 by Li Gang, who already ran SpeedX, a company making carbon racing bicycles. He walked into a market that had two giants in it. Ofo and Mobike were a year ahead of him, both funded by the largest technology investors in China, both flooding cities with hardware on the reasoning that whoever put out the most bikes would own the category. Bluegogo's plan was to be the third one.

Third place in a subsidy war is the worst seat at the table. The mechanic in Chinese bike share in 2017 was that a rider paid a refundable deposit to unlock a bike, usually 99 or 199 yuan, then rode for almost nothing because every operator was discounting toward zero to take share. The deposits were the float. A company holding enough of them could run on other people's money for a while, and Bluegogo did exactly that.

It grew fast on that basis. Around 70,000 bikes were out by January 2017 across Shenzhen, Guangzhou, Chengdu, Beijing and Nanjing, and the company took 237 million yuan of venture capital, roughly 34 million dollars. It also went abroad, which nobody else at its size attempted. In January 2017 Bluegogo dropped a few hundred bikes onto the streets of San Francisco with no permit and no conversation with the city first. The city attorney made the position clear and the bikes came off the streets before the expansion had really started.

What it never had was the balance sheet to lose money for as long as Ofo and Mobike could. Bluegogo burned through 600 million yuan, about 119 million dollars, which is more than double what it ever raised. By the autumn of 2017 both suppliers and staff were going unpaid, and on 10 November the company's social accounts went silent with no explanation attached.

~ the rap sheet ~

~ the bike pile ~

The physical residue of 2017 is the part people remember. Chinese cities ended that year with bicycle graveyards, aerial photographs of tens of thousands of frames stacked in fields outside Shanghai and Xiamen, impounded by municipalities that had run out of pavement or abandoned by operators that had run out of money. Bluegogo's share of those piles was blue. The bikes in them were about a year old and most of them still worked.

~ the letter li gang wrote ~

On 16 November 2017 Li Gang published an open letter. He announced that Bluegogo had reached a strategic cooperation with Green Bike-Transit, a Chengdu operator, and then wrote the line that got quoted everywhere: "As a CEO, I've made mistakes. I was filled with arrogance." Rumors were circulating on Chinese social media that he had left the country, and he answered them directly, saying he had always been inside China and was fighting on the front lines for redemption.

Employees were told their wages would be deferred to February 2018. Some went to the press instead, describing months without pay and no way to cover rent while the founder apologized in public. The handover to Green Bike-Transit never restored service, and it did not go anywhere near the deposits.

~ the deposits ~

At its peak the company was holding at least 1.98 billion yuan of user money. A refundable deposit does not belong to the company, and Chinese regulators had been warning about this exact arrangement for a year before Bluegogo demonstrated the point. When the app stopped processing refunds, millions of people worked out that the 99 yuan they had put down to unlock a bicycle had been paying for the bicycle. Didi Chuxing signed an agreement in late December 2017 and announced in January 2018 that it would take over operations. Bluegogo was folded into the Didi app, and by the end of that month the blue bikes in Chengdu and Beijing were being swapped for Didi's own Qingju brand. The terms left the debts and the deposits with Bluegogo.

Ofo, the giant Bluegogo could not outspend, took two more years to fail in the same shape and left something like 16 million people queuing online for deposits it could not return. Read from here, the whole episode is about a category that never existed at this scale in Turkish cities, where bike share stayed municipal and stayed small. The part that traveled was the deposit model, which turned up again in every app that asked for money up front and then found that the float had quietly become the business.

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