The challenger brand fighting for London’s micro-mobility market
Forest is the company behind the dark green shared e-bikes in London. Co-founder and CEO Agustin Guilisasti had previously launched Cabify (an Uber competitor) in Chile. He grew the business there from nothing to today employing 50,000 drivers. Agustin's inspiration for starting Forest came from a trip to the Amazon with the Cabify founding team. Moved by the need to protect the Amazon and frustrated by the limited offering for affordable and sustainable e-bikes In London where he was studying for a masters, he co-founded the micro-mobility business with two long term connections, Caroline Seton and Michael Stewart.
Forest’s key point of difference has been that they show in-app advertising and, as a result, are able to offer users 10 free minutes of cycling each day. Their AdTech platform allows corporates like Whole Foods Market, Shakespeare’s Globe and the Financial Times to promote sustainability-focused consumer products. Uber is integrating advertising into their app experience but for now none of Forest’s micro-mobility competitors have yet done so.
Growth driven by creative marketing is part of Forest’s DNA. A recently released video of one of their team cycling from London to Wales on a shared e-bike has attracted over 62,000 views. His route took him to Abergavenny, Wales, where Forest’s carbon off-setting partner The Great Reserve, are aiming to plant over 100,000 trees.
Can I ride a SHARED E-BIKE from LONDON to WALES?
Sustainability is key to how Forest position their business. They’re one of only two micro-mobility companies to achieve B-corp status, the certification for social and environmental impact. Every time someone makes a trip on one of their blue River bikes they donate 5% of proceeds to the Rivers Trust.
Forest describe themselves as a ‘second-generation’ micro-mobility company. They’ve seen the many mistakes made by the first wave of shared bike companies and worked hard to avoid them.
From 2016 onwards the micro-mobility market whipped venture capitalists into a frenzy. Ofo raised $2.2 billion and Mobike $828 million. Money poured into a market which, unlike high margin software products, was a low margin, operationally complex grind. Some of the first companies to enter the UK, like Mobike and Ofo, were hit by a devastating wave of vandalism and theft losing as much as 10% of their fleet each month. Despite their huge fundraising efforts both Mobike and Ofo have since ceased trading. Interestingly, it’s still possible to buy a Mobike on Ebay - although we can’t vouch for how it was originally acquired!
The pandemic and rising interest rates meant that the financial viability of micromobility startups was stress tested. Bird, which raised $916 million and was at one point the fastest unicorn in history, has now been delisted from the stock exchange and filed for Chapter 11 bankruptcy.
The ‘creative destruction’ in the micromobility market has also led to significant mergers. Dott ($228 million raised) merged with Tier and Jump was acquired by Lime.
Shared e-bikes offer enormous environmental potential but the destruction of such vast amounts of capital has led to huge waste. There are shared bicycle graveyards in China with hundreds of thousands of abandoned bikes.
During Jump’s acquisition, for instance, thousands of e-bikes appeared to be destroyed despite being in perfectly good condition.
Forest argue that, despite the failure of so many companies, the micro-mobility market is viable and here to stay. We went to visit them at their workshop in London. Each night electric vans pick up and drop off bikes in need of repair. The Forest team replace batteries that need to be recharged and they redistribute their fleet if needed. The former police station’s location, a short walk from Borough market, allows for much quicker turnarounds than some of their competitors who operate large warehouses in London’s outskirts.
The Forest team aim for 90% of their fleet to be available to ride at any time. Damaged bikes need to be assessed, repaired and tested as efficiently as possible. Forest have their eyes wide open when it comes to the low margins in their industry and their focus on sustainability means they’re repairing rather than replacing wherever possible. They’ve learnt to repair some bike parts at a rate of 90%.
Will, Forest’s Chief Operations Officer, showed us around the workshop. He’s a former Royal Marine and perhaps predictably has focussed on building a culture of high standards where behaviours like having the correct uniform are strictly enforced.
When a bike arrives at the workshop team members use a custom-built app to identify the bike, select the repair job that needs doing and mark it as completed. Rather than using financial incentives to drive efficiency each team member is set clear expectations. They track output and then look to optimise the team’s overall efficiency. The risk of financial incentives, Will says, is that they often create perverse outcomes where individuals lose sight of the team’s overall goal and rush to complete individual jobs.
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Many micro-mobility companies outsource the charging of their batteries and the collection and repair of their vehicles but Forest have used a mixed resourcing model where their core team in the workshop is permanent and they supplement it with agency staff when they see increased demand. All permanent members of the team have stock-options whether they’re driving a van or on the leadership team. In 2023 Forest grew their e-bike fleet in London from 2,000 to 10,000 bikes.
When you zoom out from the market turmoil it's obvious that the way we travel needs disrupting.
Cars are usually the second most expensive asset we buy after a home, but they spend 95% of their lifetime parked, unused and depreciating.
Space needs to be allocated for those parked cars not just at home but wherever we’re likely to need to park (at the gym, at work, at the supermarket). Cars, parking lots and roads currently take up more space that we allocate for homes.
It’s estimated that each parked car could provide enough space for storage for 10 bikes. In London there are 400,000 second cars, occupying enough parking space for 4 million bikes. Car manufacturers have never had an incentive to care about the level of utilisation of their vehicles. They optimise for the initial purchase. A shared bike company in contrast should be ruthlessly optimising the utilisation of their vehicles and ensuring they last as long as possible.
There are an estimated 1,500 deaths a year in the UK caused by accidents involving cars and 27,000 severe injuries. Cars also contribute significantly to air pollution which its estimated kills 4,000 Londoners a year.
The 'trip economy', where users pay for a trip rather than buy their own vehicle, could provide a huge opportunity for regulators. Where previously their only levers were public or private, today ‘the trip economy collapses the gap between the two, offering the efficiency and convenience of a private market with the ability to easily factor public benefit considerations’. Los Angeles launched an open-source software system for managing data on the vehicle trips of micromobility companies in their city. This near real-time data can allow them to incentivise operators who are solving social problems like providing mobility to neighbourhoods that previously had poor transport options and to use punitive measures where there are problems like abandoned bikes.
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London’s shared bike market is not currently regulated at a city-wide level. Instead, each borough implements its own tendering process resulting in inconsistent parking rules between boroughs. Dott recently pulled out of London because of the fragmented regulatory landscape, their CEO describing it as 'out of control'. Some boroughs such as Islington are very forward-thinking installing parking spaces for shared bikes whereas others are much less receptive to the schemes.
While Forest are smaller than their larger, better funded rivals with a team of just 60 people, it is now just one of two dockless e-bike companies in London having successfully won agreements with 13 London boroughs. Since their founding in 2019 Forest have largely kept the same leadership team in place. Their young, innovative and scrappy team have certainly done well so far. In summer 2023 they broke even across everything apart from the cost of deploying their bikes.
McKinsey estimates that by 2030 the global micromobility market will be worth $340 billion. Forest’s ability to continue to succeed in this market and punch above their weight remains to be seen. But they certainly have a growing presence in London. When their CFO recently went for a haircut, the barber asked him where he worked. ‘At a startup called Forest,’ he replied. ‘Oh Forest, the bike company? That’s not a startup!’ his barber scoffed.
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