8 Things this Project Tells us about Mobility-As-A-Service

Tony Hsieh is the Zelig of downtown Las Vegas. Although he ostensibly still runs Zappos, the online shoe and clothing retailer he sold to Amazon in 2009 for nearly a billion dollars, visitors invariably stumble across him hanging out in the courtyard of Zappos’ new headquarters or at one of the many downtown bars he frequents. It’s easy for Hsieh to do both because he lives barely a block away. But it is not so easy for the rest of Las Vegas – nearly two million metropolitan residents at last count – to reach the urban oasis he’s building as part of the Downtown Project.

Almost three years ago, Hsieh announced his plan to invest his $350 million Amazon payout into building a creative class company town¹ complete with restaurants, bars, a health clinic, a school, coworking spaces, and dozens of startups lured by Hsieh’s money. Zappos’ new headquarters in the former City Hall would provide the centerpiece, and its employees the critical mass for local businesses. But apparently they haven’t been critical enough.

Hsieh, who often speaks about the “three Cs” — “collisions, co-learning, and community” — has combined the urban economics of Ed Glaeser² with the social physics of Geoffrey West and Luis Bettancourt³ to produce a theory that density, or at least a density of encounters, promotes the exchange of ideas, a strong community and local culture, and ultimately produces the rising productivity and other beneficial effects noted in dense cities. Or, as Hsieh likes to say, “living downtown will make you smarter.”

As part of this strategy, last April Hsieh announced he had ordered 100 Tesla S electric sedans as the backbone of what was promptly codenamed Project 100 — a private, intermodal transportation service combining car-sharing, ride-sharing, bicycle-sharing, and shuttle bus service within the 1.5 square mile downtown area, all accessible through a smartphone app at prices potentially ranging from $50 to $500 per month, depending on the level of service. Today, Project 100 is comprised of thirteen employees, led by Hsieh’s 32-year-old lieutenant, Zach Ware, and is expected to launch this summer in beta.

In January, I paid a visit to the startup as part of my research for “Re-programming Mobility” at New York University’s Rudin Center for Transportation Policy and Management (with generous backing from the Rockefeller Foundation). Below are eight points to ponder from a year’s worth of thinking and planning at one of America’s first mobility-as-a-service startups.

1. Multi-modality from scratch.

Susan A. Shaheen and Matthew Christensen previously discussed the incremental progress toward integrated multi-modal transportation, ranging from smart phone apps such as RideScout and Nimbler to various cities laying the groundwork for multimodal transit using RFID readers. Project100, which will be rebranded at launch, aims to sidestep legacy issues by creating a completely self-contained service — from the interface to the customer experience (drivers will be staff, for example, unlike Uber) to operations. “A lot of cities are stuck with what’s come before,” says Ware. Instead of trying to knit together what already exists, Project 100 prefers a tabula rasa.

2. Private instead of public.

Multimodal transit is nothing new. The city of Bremen’s mobil.punkt, for example, was first piloted more than a decade ago, and today its 48 car-sharing locations offer around 180 cars for 7,600 clients, with each location using public parking and doubling as a bus stop and bike-sharing station. But whereas mobil.punkt and its descendants are public goods, Project 100 is a private service in the mold of Uber: a members-only subscription service that is privately-financed, uses private land for stations and operations, and is ultimately for-profit (in addition to Hsieh’s desire to enhance the connectivity of downtown). It is also scalable; the plan is to eventually expand to other cities with similar urban profiles, that is, small, dense cores surrounded by low-density suburbs.

3. Who is Project 100 for?

Hsieh describes the Downtown Project in terms of “the city as a startup,” applying the startup logic of cultural fit to attract like-minded residents from the suburban fringes of Las Vegas and beyond. But downtown has another population as well, a third of whom live below the poverty line and whose median household income of $25,839 is barely half of the state’s overall. They, too, could stand to benefit from unlimited mobility at $500 per month (the prospective price point of its all-you-can-move option), which is two-thirds the monthly cost of car ownership, gasoline, and maintenance, according to AAA. But given its smart phone interface – less than half of Americans earning less than $30,000 per year own one, according to the Pew Research Center – it remains to be seen just how inclusive Project 100 will be.

4. Don’t be Uber.

Las Vegas is one of a handful of cities in which Uber’s usual tactics of kicking down regulatory doors and whipping up popular support via social media failed to disrupt incumbent taxi and limousine operators, who have banded together under the banner of the Livery Operators Association of Las Vegas (LOA). Ware takes pains to differentiate Project 100 from Uber, starting with the fact that the service will launch without chauffeured cars. The Tesla S fleet will be offered along the lines of Zipcar instead, a short-term leasing membership which raises no red flags under current regulations. That will change eventually when Project 100 hires drivers of its own, as employees rather than subcontractors. “‘Where do we push and how much do we push it?’ is a question I ask myself every day,” says J.J. Todd, Project 100’s in-house counsel.

5. The perfect city car doesn’t exist.

Project 100’s vehicle lineup —Tesla S sedans, SoBi bicycles, and a trolley bus — also includes a two-seat electric vehicle, Renault’s Twizy. Designed to address the challenge of traveling within downtown at distances of less than a mile, the Twizy isn’t the perfect solution, but the least bad one. The Project 100 team considered Polaris GEMs, the BMW i3, and even Segways as their intermediate mobility option before concluding that the car they wanted is the one that doesn’t yet exist: the stackable electric CityCar. Developed by the late William Mitchell at the MIT Media Lab, it has yet to go into production despite an agreement with Hiriko Driving Mobility in Spain and interest from Chinese suppliers and manufacturers. “If Chinese production launches, we’ll come back to it,” swears Ware.

6. Driving a giant sensor.

Project 100 generated plenty of buzz around its choice of the Tesla S as the workhorse of its fleet. Not only will its depreciation and replacement schedules make the project the largest single owner of the vehicle, but also singlehandedly create a secondary market as well. One detail that raised eyebrows was the project’s inability to score a discount for volume. It will pay close to the sticker price of $62,400 per vehicle, or as much as $6.2 million. Instead of a discount, Project 100 is working with Tesla to install onboard telemetry that transmits the car’s current speed as well as location. A large part of the Tesla’s appeal — as well as the SoBi bicycle, which also has a GPS transceiver — is its unprecedented ability to generate data.

7. Playing SimCity for real.

That data will determine the project’s success or failure. As a monthly subscription service, its revenues are capped, while usage is theoretically unlimited. This places a premium on the ability to manage assets and shape demand. To do that, Project 100 intends to build an “agent-based model,” essentially a stylized, highly accurate version of SimCity populated by algorithms standing in for users that can simulate mobility patterns and help guide the project in choosing how to scale and where to locate new stations. To develop this model, along with accompanying algorithms, the company held talks with both McLaren Applied Technologies (an offshoot of the McLaren Group’s famed Formula One team) and BoldIQ (whose software was developed for the complex logistics of an air taxi service) before deciding to go it alone.

8. Just-in-time mobility.

While many hurdles remain in getting the service up and running, Ware and his team are already pondering ways to integrate it with the Downtown Project. At one point, he muses about linking one’s Google Calendar to the Project 100 app. If you’ve forgotten about your meeting across downtown five minutes from now, an alert would automatically trigger a request and suggested routing. Although the idea of “transmobility”⁴ isn’t new, through its implementation, Project 100 is inching nearer to a pioneering integration of existing services.

The imminent launch of Project 100 (or whatever it comes to be called) primarily suggests two things: that the multi-modal sharing model pioneered in Europe has a future in the United States, although it will not be led by transit agencies or other public sector actors. Instead, it will follow the Uber model of a private service scaling horizontally across multiple cities (although Project 100 has not yet identified a second target), with the added twist of creating an end-to-end experience rather than offloading the customer service and regulatory issues on to drivers. Will it be profitable, is one question, but more intriguing is: who in downtown Las Vegas will benefit — and who won’t?