Tuesday, January 02, 2007

The Incredible Story Of French Scooter Taxi


As a tourist in Thailand and the Dominican Republic, Cyril Masson hopped on unlicensed motorcycle taxis to get around. Back home, the 33-year-old Parisian and two friends hit on a business idea that some might consider just as crazy: running a two-wheel-taxi operation in one of the world's most genteel cities.

Motorcycle taxis are the developing world's limos. Scooters, mopeds and motorcycles offer a fast, cheap and risky way around snarled traffic and scarce mass transit. Mr. Masson, who ran sales to French Internet companies for Britain's Cable & Wireless PLC, had also faced clogged streets and a shortage of traditional taxis in Paris, and he realized it offered an opportunity for taxi-bikes, which can squeeze through jams.

What he didn't expect were hurdles faced by entrepreneurs world-wide: the complexity of executing a simple idea, and of translating a business concept from one culture to another. Many overseas franchisees of successful U.S. companies, for instance, have failed because they didn't adapt the American model to local habits.

High-End Challenge

Mr. Masson knew that positioning his high-end service would be tough: The motorcycle taxi could suffer from its association with the less-developed countries, poverty and reckless drivers. Lining up insurance and finding qualified drivers proved surprisingly difficult. Protecting passengers in natty business attire from rain and cold posed additional challenges, as did little details, like how to keep the passenger's helmet clean from one rider to the next.

In December 2002, Mr. Masson and two friends pulled together €165,000 ($200,244 at current exchange rates) of their own and from friends and family, quit their safe jobs and started planning their company, Citybird. "There were many people who thought we were crazy," Mr. Masson recalls.

Citybird works like any radio-taxi service -- except that instead of a black sedan arriving on call, a sporty motor scooter pulls up. The company today employs 11 people and expects revenue of around €420,000 for the year ending March 31, up from €175,000 in its latest fiscal year. Mr. Masson expects an operating profit this year, after Citybird's current fleet of nine scooters reaches 15, around midyear. Managers hope to increase the fleet to 25 in 2007 and eventually operate as many as 200 bikes.

Mr. Masson and his friends weren't the first to try taxi bikes in a developed nation. Sir Richard Branson's Virgin Group whisks celebrities and executives around London on nine fat red Yamaha motorcycle taxis. At least one other company operates in Paris, where thousands of locals already zip around the city on their own motorcycles and Vespa-type scooters.

From the start, Citybird's target customers were an upscale crowd, like Mr. Masson and his co-founders, Guillaume Raif, then a banker at Sociйtй Gйnйrale, and Emmanuel Pery, who worked in advertising and communications. They believed taxi-bikes would appeal to harried executives who can't waste time stuck inside a limo. To hone their concept, the partners quizzed managers at Virgin Limo Bikes in London and studied other small motorcycle-taxi services. One tip they gleaned: They'd have to have a supply of disposable paper helmet liners.

A quick analysis also indicated that large motorcycles were too big to squeeze through traffic jams and too costly to operate. Instead, they selected top-of-the-line Piaggio and Suzuki motor scooters, which are cushier than the compact and classic Vespa. The models use about half the fuel of a large motorcycle and offer lots of storage space for bags. And the partners figured that for most trips, it wouldn't matter that scooters don't move as fast as motorcycles.

"Traffic is so dense that we don't need to go very fast to gain a lot of time" over a regular taxi, Mr. Masson says, sitting in Citybird's storefront office not far from the Eiffel Tower.

Citybird's founders also knew that to woo serious professionals as customers, they needed equally serious drivers. Lots of motorcyclists applied for the job, and they whittled the pool down to a handful of former police motorcycle instructors, Tour de France camera-crew drivers and similar specialists.

But obtaining insurance for their service created big headaches. French law doesn't mention two-wheeled taxis, so the founders faced a legal vacuum. Most underwriters rejected Citybird because they equated the service with motorcycle couriers, "who crash around 10 times a year," Mr. Masson recalls. Finally, the specialized insurer that covers Paris taxis consented, but at rates five times those of normal motorcycle insurance.

Both Mr. Masson and managers at Virgin Limo Bikes say they get calls from U.S. entrepreneurs who want to start similar services. But high U.S. insurance rates, extreme weather, and strict American traffic laws that forbid motorcycles from overtaking cars in slow traffic have thwarted many of those efforts, the Europeans say.

Foul-Weather Gear

Paris rarely faces blizzards or torrential downpours, but light rain is a frequent nuisance for two-wheelers. So Citybird managers spent a long time finding the best gear to protect passengers. Each scooter carries riding gloves, boots to cover nice shoes, a loose-fitting jacket that can slide comfortably over a business suit, and a waterproof leg wrap to protect against splashes.

The first bikes rolled in September 2003, promoted by targeted ads, brochures and direct mailings touting the service at flat rates of €20 for rides inside Paris and €45 to Charles de Gaulle Airport.

"It was difficult at first," recalls Mr. Masson. But by targeting people most likely to accept the concept, especially in less conservative media circles, word spread and early customers became regulars. The main appeal: guaranteed punctuality and significantly shorter trips. During rush hour, Citybird promises it can slash the travel time between central Paris and the airport from around 90 minutes to 30 minutes.

Within a year, business was picking up. One early customer was Patrick Malval, commercial manager in France for British Airways, who liked the service because of its speed and punctuality. After a tough audit of safety and service quality, Mr. Malval struck a deal in early 2004 for Citybird to carry the airline's passengers to and from the airport. "At first we thought it would be a niche service," Mr. Malval recalls. Today, he says, demand is taking off and those who try the service are hooked.

As business grew, Citybird moved to expand. Tapping a circle of successful Internet entrepreneurs whom Mr. Masson knew from his previous career, the founders in 2004 raised 300,000 euros to build their fleet. The company even landed a second insurer.

Today Citybird has around 2,500 clients and adds more than 150 each month, Mr. Masson says. Its bikes total around 70 trips each day.

Down the road, Mr. Masson figures Citybird and its growing field of smaller rivals could equal around 4% of the total Paris taxi market. He wants to maintain Citybird's 50% share of the taxi-bike market. "In a few years we could have 200 motor scooters," he predicts.

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