Transportation · Startups

What went wrong with Leap Transit?

Nate Holbrook Founder / CEO at Lilac

September 21st, 2015

Although Leap Transit was shut down a few months back. What was it exactly about the company’s strategy - positioning in the market that ultimately caused them to go under? What mistakes did they make that others who are in the same industry must not repeat? (ie. Chariot, Bridj, Shuddle)


Greg Sherwin vp engineering + it • singularity university

September 21st, 2015

I thought they got shut down by the California Public Utilities Commission - not a price war.

They seemed to fall into that so-called cynical category of packaging services that compete with public infrastructure, skimming the most profitable customers of that infrastructure by charging a premium for exclusivity and higher service expectations, and eschewing less profitable regulatory "inconveniences" like ADA compliance and the like.

I'd say its fatal flaw was operating in a legal grey area that skirted the law without a lobbyist arm to get its customers to politically influence and speak up for that legality.

Karl Laughton VP of Finance at Insightly

September 21st, 2015

Greg, 

That wouldn't explain time of death immediately following the launch of uberpool, lyft line, and Chariot all priced between $3-7 and operating similar services within compliance standards. They hit the market at $10, and couldn't find the volume/ have the resources to come down the price curve to compete and cover their slow and expensive upfront costs/bus... 

Karl Laughton VP of Finance at Insightly

September 21st, 2015

From what I could tell the main takeaway is that it's better to get to market with something and let the customer tell you how to improve it than it is to try and perfect a product before its launch. Ultimately they got caught in a price war and didn't anticipate the consumers real need in the space, the mix between speed, luxury, and price.

Joanan Hernandez CEO & Founder at Mollejuo

September 23rd, 2015

Well,

For what is worth... I think they should have started in a simpler, less regulated market. They could have started get some traction and after that attack SF.

Pubic transportation has its flaws, so it's not that difficult to offer a better service. Public transportation in North America isn't as good as in other countries, so it makes sense to think that there's space for a private option. Others have started offering alternate service without being in directly competition with the public ones.

I still think Leap was an achievable project, they just started on the wrong city. After all, London buses (the red, two floor ones), are mostly (if not all) operated by private companies. And these are not luxury buses, those are the buses people use everyday. Those companies operate under a license approved by the city of London, old school companies, making their fair profit.

Cheers!