After Divorce, I Can Hear the Future

Chapter 53: OFO Shared Bikes

“Hello, Professor Liang. My name is Lu Liang, from Tianxing Investments...”  

At the expo’s management office, Lu Liang introduced himself and inquired about the entrepreneurial team behind the yellow bikes.  

"Yellow bikes?"  

Following Lu Liang’s gaze, Liang Juntao suddenly understood. “Mr. Lu, that’s OFO, a shared bike startup team from Peking University. They’re participating in our entrepreneurship expo, but their slot is scheduled for tomorrow.”  

This year, the expo had been extended to two days due to an overwhelming number of applications, with teams split across two sessions.  

“Are you interested in their project, Mr. Lu? We could arrange an introduction for you,” Liang offered.  

OFO’s founder came from a distinguished background, and Liang had received instructions from his superiors to pay special attention to their team and connect them with potential investors. It was a rare opportunity to earn goodwill effortlessly.  

While Liang hadn’t heard of Tianxing Investments, the gold-trimmed invitation Lu Liang carried signified high status.  

“Please wait a moment. Here’s their proposal for you to review while I contact Dai Wei, their team leader.”  

Lu Liang was shown to a lounge, where a part-time student worker softly asked, “Sir, what would you like to drink?”  

“Iced water, please.”  

As he browsed OFO’s proposal, his mind wandered.  

OFO’s business model combined the shared economy with smart hardware, aiming to address the “last mile” travel problem.  

Founded last December with a registered capital of 1 million yuan, the company operated 1,800 shared bikes across four campuses, including Peking and Tsinghua Universities.  

To prepare for the expo, OFO had deployed 300 bikes at Shanghai Finance University over the past week.  

Their revenue model charged users 0.5 yuan per hour, with a maximum daily charge of 2 yuan.  

Currently, OFO had over 20,000 paying users and an average of 8,000 daily rides. The company was valued at 5 million yuan and sought 10% equity for 500,000 yuan in angel investment.  

Lu Liang opened the window to let in fresh air, lit a cigarette, and pondered.  

The concept of OFO was promising but faced a significant challenge—scaling beyond campus environments.  

Over six months, they had deployed 1,800 bikes with a loss rate of only 1.7%, a testament to the high caliber of Peking and Tsinghua’s communities. Outside campus, however, the loss rate could easily exceed 20%, which would be disastrous.  

Each yellow bike cost 330 yuan to produce. Even with cost-cutting measures, high damage and theft rates would render the business unsustainable.  

Lu Liang searched online for related information until a knock at the door interrupted him.  

“Mr. Dai, this is Mr. Lu from Tianxing Investments...”  

Liang entered with several young men in their twenties—the co-founders of OFO, all classmates from Peking University.  

Lu Liang greeted them with a warm smile, shaking hands with each before focusing on Dai Wei, the team leader and major shareholder, who held 70% of the company’s equity.  

“Mr. Dai, I’ve reviewed your proposal and find your project intriguing. Could you elaborate on it for me?”  

Thrilled, Dai eagerly launched into a detailed explanation of OFO’s advantages and market potential.  

Lu Liang listened attentively, occasionally nodding and appearing deep in thought.  

When Dai finished, Lu Liang’s smile faded slightly. “Mr. Dai, I have a question. Could you help me understand something?”  

“Of course, Mr. Lu,” Dai replied, his joy evident at receiving affirmation.  

“How will you address the issue of high loss rates if OFO expands beyond campus?”  

Lu Liang’s tone sharpened. “Your current loss rate of 1.7% is only because your bikes are restricted to Peking and Tsinghua, where students and faculty are highly disciplined. Outside, this would be a very different story, wouldn’t it?”  

Dai’s smile stiffened. “We’ve considered this issue seriously. We plan to mitigate risks by collecting deposits from users.”  

Dai glanced nervously at Liang Juntao, who had assured him earlier that Lu Liang seemed easygoing. Why the sudden turn?  

Liang remained silent, observing quietly. Investors, after all, could be demanding, and their satisfaction was essential for securing funding. Lu Liang’s probing might also be a test of Dai’s resilience, a common tactic to gauge compatibility.  

“And how much will you charge as a deposit?” Lu Liang pressed on.  

“99 yuan,” Dai answered.  

“Less than a third of a bike’s cost,” Lu Liang remarked nonchalantly before asking, “What will convince users to trust you with their 99 yuan?”  

Dai hesitated before replying, “We’ll focus on building a larger market and promoting our brand to earn customer trust.”  

Lu Liang chuckled. “Your valuation is 5 million yuan, and you’re seeking 500,000 yuan in funding. How much of the market can you possibly capture with that?”  

With each bike costing 330 yuan, even without factoring in operational costs, 500,000 yuan would only purchase 1,515 bikes—enough to deploy at just five more universities before running out of funds.  

Dai and his team exchanged uneasy glances, bitterness evident in their expressions.  

This issue wasn’t new to them but was something they avoided examining too closely. With a production cost of 330 yuan per bike and a revenue model charging 0.5 yuan per hour, profitability remained an elusive goal.  

Sensing the right moment, Lu Liang shifted gears. “Your concept is sound,” he said with a faint smile.  

“But your execution lacks precision, and your project’s initial positioning is flawed.”  

“Mr. Lu, could you elaborate?” Dai asked, clearly upset but eager to hear Lu Liang’s insights.  

“The idea of shared bikes dates back to 1965 in Amsterdam with a government-led free bicycle system...”  

Lu Liang had just researched the history of shared bikes, which had evolved through four generations.  

In his view, OFO was less an internet product and more a financial one. Its success hinged on significant upfront investment, far beyond what a few investors could cover.  

However, if positioned as a financial derivative, the project had vast potential.  

Financial products allowed for leverage, with the extent of leverage depending on how big the vision could be sold.  

“In time, if daily national usage exceeds 100 million rides, net earnings could reach 50 million yuan a day,” Lu Liang explained.  

“And if you’re the only player in the market, pricing could rise to 1 or even 2 yuan per ride, yielding daily revenues of 100 million or 200 million yuan.”  

Lu Liang painted a grand vision, captivating Dai and his team, who began envisioning this prosperous future.  

But just as they were lost in the dream, Lu Liang punctured it with a cold dose of reality.  

“But your project has a fatal flaw,” he said bluntly.  

“Please, Mr. Lu, what is it?” Dai asked, now entirely serious.  

“You lack core technology. Your concept is extremely easy to replicate.”  

Each word landed like a blow. Dai knew this truth well.  

Last month, Dai had learned from a friend in Hangzhou that a competing bike-sharing service, Mobike, had launched there. With strikingly similar operations and deployment strategies, Mobike had already entered university towns, signaling an imminent threat in the winner-takes-all market.  

This was why OFO had offered 10% equity at a low valuation—they urgently needed funding to expand and secure their position.  

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