BEIJING: When Dai Wei founded ofo with his fellow Peking University cycling club members in 2014, they had only 400 yuan (US$60) in the bank.
“When I look back on the last 12 and 24 months, it was full of difficulties. I suffered every day (plagued) by different problems,” said the 25-year-old CEO of one of China’s largest bike-sharing companies.
Three years on, what started out as a passion for cycling and a desire for a more environmentally-friendly mode of public transportation has become a multi-national company worth over US$1 billion.
Ofo now has a fleet of more than six million xiao huang che, or “little yellow bikes”, worldwide, with app users making 25 million trips a day.
On the interview programme Conversation With (watch the episode here), Dai Wei said that ofo is expected to break even by this year, and will start earning a profit by 2018.
Its business model’s success has attracted big-name investors like Alibaba and Chinese ride-sharing giant Didi Chuxing. Earlier this month (July), ofo raised more than US$700 million in a round of fundings.
Ofo’s success is part of the global bike-sharing boom in recent years. In China alone, there are at least six major bike-sharing companies. Fellow Chinese bike-sharing start-up Mobike, which launched in 2015, is also valued at more than US$1 billion and has got investors like tech juggernaut Tencent.
CONVINCING THE SCEPTICS
But the road to success was not an easy one – Dai Wei’s family and friends were initially sceptical of his vision.
“At that time, all of my teachers, my classmates and even my family – they didn’t believe we could survive for three days,” recounted the young man who graduated from Peking University’s Guanghua School of Management just last year.
“They told me, ‘if you put the bikes on the streets, all the bikes will be stolen in three days. So you won't be able to survive for three days.’”
Watch: Idealist or businessman? (2:51)
It also took more than one-and-a-half years for Dai Wei to convince his parents of ofo’s viability.
“Every time I came home, my parents and I would have a long conversation about whether I should get an internship in some big company, or apply for a full-time job or start a business. We talked about it until the end of last year,” he said.
“OFO IS GOING TO BE LIKE ANDROID”
The streets of many big Chinese cities like Beijing are now clogged with hundreds and thousands of brightly-coloured bikes, which are mostly provided by the various bike-sharing apps trying to increase their market share.
However, bike-sharing companies are facing pushback – some see the sheer number of bikes on the streets as a public nuisance. In March, thousands of illegally parked bicycles were impounded in Shanghai.
Similarly, in Singapore, authorities have also impounded more than 100 errantly parked bikes from bike-sharing companies.
Despite tightened regulations, the cut-throat race to win over users to the app is still a numbers game – and Dai Wei has devised a plan to win.
The self-professed idealist sees ofo’s future as a platform for other bike-sharing companies to manage their business.
An example would be in Hangzhou, where ofo is working with a local bike-sharing company called Qibei, Dai Wei noted. In the city, people can use ofo’s app to scan and unlock Qibei’s bikes.
“Ofo is going to be like Android,” Dai Wei predicted.
“We will provide the standard API to different local bike sharing companies … we have the management system ability because we manage six million bikes now, and no other companies can manage that many bikes and they don’t have experience.”
IT’S ALL NUMBERS
When asked if ofo’s business model was a sustainable one given the frequent reports of stolen or vandalised bikes, Dai Wei said that “all the things are numbers, are maths”.
In June, a 14-year-old was arrested in Singapore for allegedly throwing an ofo bike from a high-rise building.
Said Dai Wei matter-of-factly: “We have to calculate everything: What percentage of the bikes may be stolen, or broken up. If you calculate everything in your model, you can have a number for the profit. And now after two years of operation, I can say our business model has really worked.”
“100 million bikes by 2030,” Dai Wei said with a big toothy grin.
Watch the episode with Dai Wei here. Conversation With airs every Thursday at 8.30pm SG/HK.