Veo CEO Candice Xie has a plan for building a sustainable scooter company, and it’s working

Startups are the embodiment of frenetic action. The rush to grow, outrun, and disrupt runs in the lifeblood of today’s entrepreneurs, driving their fervor and enabling them to capture markets from giants of industries too big to maneuver in a quickly changing landscape.

That has been truer for the mobility landscape than most other industries. Companies like electric scooter providers Lime and Bird have raised tons of capital to change how the urban population gets around, but that growth has come at the cost of a bottom line still in the red.

So it’s striking to see electric scooter company Veo take a different approach to the business. Rather than raising venture capital and scaling quickly, the company does business the old-fashioned way: Proving the model works in one market before moving to the next. This slower, more methodical approach has worked in Veo’s favor — it might be the only company in its industry that has been consistently profitable.

Veo’s approach reflects its co-founder and CEO Candice Xie’s belief that transportation is not an industry that allows companies to scale rapidly and turn a big profit within a year, and especially not if it’s going to make sense for a city. Electric scooters aren’t just a business to Xie — they’re a utility, a tool that can be best implemented through patient collaboration between public and private partners. The CEO has taken this ethos and executed Veo’s business model with the expectation that it will make the company the most impactful in the industry.

A former financial planner for automation solutions company, Schneider Electric, in Chicago, Xie launched Veo in 2017, partly inspired by the bike-share boom in Asia. She was decidedly against the poor quality bikes many operators were deploying at the time, and was also frustrated by the lack of affordable, safe and convenient transportation in Chicago. After some market research, Xie and her co-founder, Yanke (Edwin) Tan, a bike engineer, discovered the gap in last-mile transportation in the United States.

The following interview, part of an ongoing series with founders who are building transportation companies, has been edited for length and clarity. 

In your Medium post titled “Sorry, Boys. The First Profitable Micromobility Company Was Veo, Not Lime,” you fired some shots at Lime and the tech bro-ey micromobility industry at large. That was pretty bold. 

Thank you! I think because of the VC money and also the hype in the industry, a lot of people just forget how easy and simple the business should be. That’s why I put out the post. It was just time to say something in the industry and help people to understand.

What made you write it?

That was actually the time when Lime announced they were the first ones to achieve profitability, and that’s through EBITDA, and a lot of people were clapping for them. I was compelled to write because many people who follow the industry asked me, “Hey, it seems their approach is working? Should we follow suit? Why are you taking a different approach?”

I felt like that statement from Lime was quite misleading for a lot of people, and I don’t think that was a responsible statement, either. So that made me feel like I should use my insight and just explain things a bit more openly with our information.

How did the industry respond?

I felt like there was a paper window over the industry before, and I’m just somewhat making it disappear. I think a lot of people appreciated the insights, and many people echoed that they felt the same thing. They felt like my article was straightforward and transparent, and just being honest about the situation in the industry.

Your ethos is that in order to be sustainable, you don’t need your business to scale so quickly. This seems to run against what the rest of the industry has done. What led you to employ such an approach?

I will say it depends on the industry. I understand people are eager to prove their unit economics, their scalability and also improve their matrix to the VC to raise another round. I would say that’s OK in the consumer industry, like consumer electronics or SaaS.

But we are in transportation. It is a different business, and transportation takes years of collaboration and building between private and public partners. It’s not something we can have right away, because the infrastructure takes years to see, the urban planning takes years to improve, and we also need time to understand what our user truly needs. So I don’t see it happening from day one, turning over a billion-dollar company, while simultaneously having it all make sense for the cities and users. So that’s why from day one we have pretty different beliefs and have executed very differently in our business model.

You were recently awarded the permit for New York City, and that’s a pretty big city. Has New York always been a target for you or is this a reflection of a shift in your business?

Another city we recently were awarded was Santa Monica, but I will say it’s a natural progression of what we can achieve. So, what we essentially did was we started in university markets, which are very small, and we built our business model, our operational model, to make sure it can be profitable and sustainable for a long time.

And then we built into medium-sized cities of like 300,000 people. Last year, we entered into major cities in the U.S. We just make sure with every step up we take, we validate our business model. So the New York City win is within our expectation, it is within our capability, because we built our business model very purposefully in order to serve cities like New York City, Santa Monica and also San Diego.

So if this is a natural progression, are you planning on expanding into other large cities in the future?

We do have a plan, and I think we have already built a very solid business model to scale this year. We’re going to be entering Seattle this July or early August, and we are also getting a permit for Los Angeles, also possibly in July. And we’re entering Austin this July, as well.

Sounds like this is going to be a big summer for Veo. Are you feeling up to it?

First of all, we have a very strong and solid business model and operational model. Most importantly, we also offer a different vehicle type, which is our sitting scooter. We also are expanding our vehicle types a lot, so that’s another differentiator.

The second thing is that we truly focus on innovation, especially on the hardware side. This is still transportation, so the modes and the form factor are very important. This industry is still young, and we just haven’t figured out what our users want and what other modes we can supply to help them achieve their trip goal. Right now, the trip purpose hasn’t been fulfilled yet. As you know, commuting trips only comprise 20% of the overall trip time across the nation. That means there are large numbers of untapped trip time we haven’t been able to serve that well.

Which brings me to our user type. A stand-up scooter is not for everyone — it can scare the hell out of people. Like, not everyone grew up riding scooters very comfortably. And standing up at relatively high speeds alongside cars and a lot of people … women with high heels are basically not able to ride it. People like the elderly just think it’s a joke, like, “I’m never riding that thing.”

So thinking about how we can expand the vehicle types is another important goal within Veo, because that is where I think we can better fulfill our goal to provide more inclusive and accessible micromobility to all. I don’t think spending on the standard scooter is the answer, and it won’t be because this industry is still growing. We’re still learning.

What’s different about your scooters’ form factor?

Right now we have our pedal bike, which is where we started, and we have our e-bike, and then we have our standup scooter, and our generation four is about to release. We have our sitting scooter, and right now we are also working on something that can have more cargo capacity and weather resistance.

We also want to attract people who drive a lot, like families. So that means people might need to carry their kids, so maybe two seats with child seats might be important and interesting for our user type as well. There are a lot of vehicles under development.

The difference with Veo is that we control our supply chain — we design, manufacture and deploy our own vehicles, and our lead times are extremely tight. We do vehicle design and feature improvement every month, and we can do small-batch manufacturing. A lot of companies, in order to get the best pricing from the manufacturer, need to order like 10,000 vehicles at one time. But we are quite different. We can do around 150 or 300 at one time while continuously improving and adding new features as we see the feedback from our users and the city.

In our most recent about-to-release vehicle, our users have told us they just cannot do hand gestures on the standup scooter, and it’s very dangerous for them to ride at night, because they can’t indicate when they want to turn when they’re sharing the road with cars. So we’re putting the first turn signal in a shared scooter to eliminate their concern and improve the safety level.

You said that you manufacture your own scooters. Do you do that in the country? Is that why you can do small batches?

We do that in different countries. We have plants in Cambodia, Vietnam and Portugal.

What do you think will happen to other companies and the industry at large in the future?

For Veo, our goal is always how we can better serve the whole rider base and help our legacy partners achieve their goals as well. I am less focused on the competition, because eventually, whoever does the best will stay. And if people don’t have a healthy business model, they will be out of business, because they don’t have enough money to fund their business and they cannot find investors.

As you wrote in that Medium post, you were the first scooter company to be profitable. Are you still profitable?

We are still profitable. Quarter after quarter.

And that’s, as you say, by not scaling too quickly but rather getting the business right first?

That’s correct. I think one difference is that we choose where we want to go. We don’t do land grabs to deploy in 100 cities and compete with the speeds. We’re more purposefully looking at New York City — we see there’s a feasibility and we can do it profitably. And that’s the same with the other markets we’re entering this year.

So where do you want to be a year from now?

Our goal is to be the No. 1 micromobility provider in U.S. Additionally, this year, we have a very good product offering, and we also have a very good best practice across the nation. We want to stand out and set the industry standard, and make sure that we are helping the industry to elevate it to the next stage. We want to take the leadership and be the champion for it.

When you say you want to be the No. 1 micromobility company, what does that mean for you?

More from the impact standpoint, like when people are talking about micromobility they will think of Veo right away. We are the company that can provide the best user experience, the best vehicle and also make the most positive impact in their city. I’m not competing with the quantity; it’s more about the quality of the program we are running.

Where do you expect to see the industry in a year?

Even though a lot of cities realize the need to elevate their standards for hardware, there’s not a clear standard. So it gives people who don’t really have a track record or are able to deliver on an opportunity to get into the industry, which is not right, because the cost is [borne by] the residents. The residents who use the program will suffer because of the poor quality of the product or poor quality of the program offered.

I think it’s important just to help the city understand: What are some key features we need in order to enhance the safety level of the program. What are some key vehicle types we need to include in order to make sure we’re meeting accessibility standards, and what are some key regulations that need to be implemented in order to make sure riders can work very well with non-riders and they don’t have competing interests.

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