Whizz Targets NYC’s E-Bike Subscription Market Amidst Regulatory Changes
New York City, renowned for its dynamic gig economy with over 60,000 delivery workers, has intensified its regulations on low-cost, uncertified e-bikes due to numerous battery fire incidents. While many e-bike providers perceive these regulations as detrimental to business, Whizz, a burgeoning e-bike subscription startup, sees an opportunity. “I think the market is moving from a Wild West to a mature market,” stated Mike Peregudov, CEO and co-founder of Whizz, in an interview with TechCrunch. “We’re lucky to be here in this moment because after all the regulations happen, it will be very hard to enter this market.”
Whizz’s Offering and Strategic Partnerships
Founded in 2022, Whizz provides gig workers with access to high-quality, certified e-bikes through subscriptions priced between $139 and $149 per month. The company has partnered with major delivery services like Grubhub and DoorDash, offering their couriers a 15% discount on subscriptions and rent-to-own schemes. The subscription package includes maintenance, service, anti-theft protection, and more.
To support its growth, Whizz recently secured $12 million in funding, comprising $5 million in equity led by Leta Capital and $7 million in debt from Flashpoint VC. This funding will facilitate the production of additional e-bikes, the development of e-mopeds, and expansion to other major U.S. cities including Boston, Chicago, Miami, Philadelphia, and Washington, D.C. In the immediate term, Whizz aims to expand its NYC fleet from 2,500 to 40,000 e-bikes within three years.
Navigating the Competitive Landscape
Whizz operates in a nascent e-bike subscription market with few competitors. Its primary rival, Zoomo, offers a similar service but at a higher cost. Despite the competitive pressures and past failures of micromobility subscription services in NYC, Whizz aims to differentiate itself through its proprietary software and operational efficiency.
Whizz’s ERP system is a cornerstone of its strategy, enabling the startup to cut costs by 35% and achieve an 85% fleet utilization rate. The system manages various aspects of the business, from repair times and warehouse logistics to revenue and customer analytics. This technological edge, combined with a culture of bootstrapping, has propelled Whizz to a 3.5x year-over-year growth and an annual recurring revenue (ARR) of over $8 million as of May 2024. Peregudov anticipates the company will be EBITDA positive in two to three months and fully profitable within nine months.
The Path to Nationwide Expansion
Whizz’s founders, who previously built and sold subscription-based businesses in Russia, bring valuable experience to the table. Their strategic approach avoids the pitfalls of blitzscaling, instead focusing on sustainable growth. This strategy involves gradually expanding along the East Coast before moving nationwide and introducing new vehicle types, such as e-mopeds and potentially EVs for delivery workers in less bike-friendly cities.
The startup’s in-house designed e-bikes are tailored to the needs of food delivery workers, featuring large, UL-certified batteries capable of supporting up to 1,000 miles of monthly travel. Whizz’s customer service, available in six languages, further enhances its appeal to NYC’s diverse gig worker community.
Challenges and Future Outlook
A significant challenge on the horizon is the new tariffs on Chinese imports, including e-bikes and batteries, announced by the Biden administration. However, Peregudov remains optimistic, citing Whizz’s ability to relocate production to India or Vietnam if necessary.
From my point of view, Whizz’s meticulous approach to scaling and leveraging proprietary software for efficiency gives it a potential edge in the market. The combination of regulatory compliance, strategic partnerships, and technological innovation positions Whizz favorably against competitors. However, the high-capital nature of hardware-as-a-service (HaaS) and the historical volatility of the micromobility sector necessitate cautious optimism.
If Whizz can maintain its operational discipline and continue to meet the specific needs of gig delivery workers, it stands a strong chance of becoming a dominant player in the e-bike subscription market. The next few years will be crucial as Whizz attempts to replicate its NYC success on a national scale, navigating both market opportunities and regulatory challenges.
