The Startup With Thousands of Electric Vehicles and Hundreds of Collisions

(Bloomberg) -- When New York locked down last March, Kurt Yaeger was among those in the city who had to go on working. A neurosurgery resident, he didn’t feel comfortable climbing into an Uber and filling his lungs with the same air as the driver and previous customers. The subway might have been safer, but trains stopped running between 1 a.m. to 5 a.m., so Yaeger was out of luck if he had early rounds at hospitals in the Mount Sinai Health System.

Fortunately, Yaeger discovered that Revel Transit Inc., a Brooklyn-based provider of shared electric mopeds, was offering free memberships to health-care workers. He enjoyed zooming around in the open air. Some of his fellow doctors signed up, too, and they became a more affable version of the Hells Angels. “We felt like a scooter gang, all dressed in our scrubs, going together to different hospitals,” Yaeger says. 

He says his new mode of transportation was “serendipitous” because he soon found himself treating other riders. “We actually saw a lot of people come through with traumatic brain injuries who had been on a Revel,” Yaeger says.

Revel’s outreach to health-care workers coincided with its biggest expansion yet. The two-and-half-year-old company now operates 6,000 electric mopeds in New York; Miami; Washington, D.C.; San Francisco; Oakland, Calif.; and Berkeley, Calif. By some measures, its rapid growth has been a stunning success in a year when the pandemic knocked so many other businesses sideways. It tripled the size of its New York fleet to 3,000 vehicles just as the coronavirus arrived and people started shunning public transportation. At the end of 2020, Revel said it had 400,000 registered users in the city—up 133% since March.

That means what it comes to shared electric transportation, Revel has established itself as a dominant name in America’s largest metropolis, second only to Citi Bike, which expects to have almost 4,000 e-bikes on the streets at the end of January.Alternative transportation advocates say the success of companies such as Revel is crucial if countries around the world are to meet the goal ofnet-zero emissions by 2050, endorsed by U.S. President-elect Joe Biden.

In New York City, where motor vehicles contributed nearly 15% of greenhouse gas emissions in 2019, political leaders are operating under the same deadline. “In 10 or 20 years, every vehicle on the roads in New York is electric, and ideally, as many of them as possible are lighter and not like SUVs,” says Andrew Salzberg, creator of the Decarbonizing Transportation newsletter. 

Revel’s mopeds, however, are more dangerous than other kinds of what’s often referred to as micromobility. They’re heavier than e-scooters or electric bikes, and with a top speed of 30 mph, they’re much faster. Revel’s New York expansion was marred by the deaths of three riders this summer, including Nina Kapur, a 26-year-old TV reporter for a local CBS affiliate, who tumbled from one on July 18. Never mind that many more died during the same time in motor vehicles collisions in the city. Revel was still fairly new, so the mishaps of its customers got a lot of attention.

Ten days later, Revel voluntarily ceased its operations in the city. It spent much of August bolstering its safety protocols and resumed service at the end of the month with much tighter requirements. The result: a 50% decline in collisions in September compared with three months earlier when the rate peaked, according to the New York City Department of Transportation. Even so, in October, an 82-year-old woman died after being struck by a Revel rider.  

Revel is grappling with the fallout of these problems, including more than 40 lawsuits in New York. Daniel Flanzig, an attorney whose firm is handling more than a dozen of these cases, says Revel’s safety problems were evident before Covid-19 became a household word. “They blame it on the pandemic,” he says. “They just got the spotlight shined on them.”

City officials also have Revel in their crosshairs. Until recently the startup had the luxury of largely doing what it pleased in its home city. That’s because mopeds are considered class B motorcycles under state law and are therefore lawful to operate with a normal driver’s license. That set the mopeds apart from e-scooters and e-bikes, which were illegal until last year in the state.

Now New York City Mayor Bill de Blasio’s aides and members of the City Council want to belatedly fashion a permitting process for shared moped companies that will almost certainly make it tougher for Revel to operate in its largest market. They are talking about probationary periods for new riders, stricter helmet requirements, and the adoption of safety technology that may or may not exist yet.

Most of Revel’s critics in city government say they support moped sharing and praise Revel’s elevated safety measures. The question is how much further must Revel go—and at what point do the imposed restraints threaten not only the company’s ability to operate but also New York’s chances of meeting its own emission-reduction target?

Revel has grown so rapidly this past year that Frank Reig, its 35-year-old CEO, has difficulty keeping track of all the changes. He makes this admission in early November while giving a tour of the company’s warehouse in Queens. The garagelike building is four times the size of its previous Brooklyn facility. Revel moved in early last year, but Reig is not precisely sure when. “Everything starts to blur,” he says.

One thing Reig can say for certain is that Revel needed the larger space to service its moped armada. He walks through the room, pausing to examine the tags dangling from a few of the several hundred vehicles here today for maintenance. On the side of the room, employees are recharging similar volumes of batteries.

Reig introduces me to Asa Block, Revel’s ball-cap-wearing director of product, who takes a break from whatever he’s doing at his standing desk to demonstrate how the company uses its home-brewed code to monitor the whereabouts and condition of its fleet. It’s raining in New York, but that hasn’t deterred all riders. Block can see on one of his screens which of Revel's mopeds are generating income. “There's 140 people riding right now,” he says. "Even with the crappy weather.” He and Reig seem satisfied.

Reig, who grew up in Staten Island, had his first encounter with a moped when his father, an auto mechanic, found one broken on the street, took it home, and got it running again. Reig was 8 years old, and he spent the rest of the summer “driving this ridiculous little moped that probably topped out at 15 miles an hour, up and down my block.”

In 2017, Reig was living in Brooklyn and working for Gerson Lehrman Group, a company that provides research to corporate clients, when he had a more life-changing experience with mopeds. He took a vacation to Buenos Aires. The South American city reminded him of Brooklyn. Same bohemian vibe. The difference was that the streets were buzzing with the lightweight motorcycles. He couldn’t stop thinking about how mopeds would be a natural fit for New York. 

He shared his musings over drinks with Paul Suhey, one of his Gerson Lehrman co-workers. “It wasn’t like he came to me with a fully fleshed idea,” Suhey recalls. “It was more of ‘There’s something here.’”

It didn’t take long before the two of them decided to quit their jobs and start Revel. They raised $1 million from friends and family and sent LinkedIn messages seeking advice from anybody they could find in the ride-sharing world. They discovered mopeds were legal as long as they were registered with the state and licensed and insured. New York was also one of the few U.S. cities that didn’t have residential permit parking, meaning customers could park bikes for free in much of the city. “You get to a certain point where you’re, like, I’m not crazy,” Reig says. “We can do this!”

By July 2018, Revel introduced a fleet of 68 dockless mopeds in Brooklyn, charging $4 for a 20-minute ride and 25¢ per mile after that. Its safety regime was minimal compared with what it is now. Customers were required to scan their license so the company could screen out anybody with drunk driving records. Bikes came with two helmets. If riders didn’t wear one, they risked a fine.

Reig says Revel’s machines were so coveted that customers often logged on to its app only to find none available. The demand helped the startup to raise $28 million in the fall of 2019. “We looked at the numbers and said this company has the potential to become a multimillion-dollar business,” says Brian Abrams, president of Ibex Investments LLC, a Denver-based hedge fund that led the funding round. 

By the end of the year, Revel had expanded into Washington, and it was eyeing other cities. Its average customer trip was about 4 miles, enabling it to claim it was replacing Uber and Lyft rides. “We’re a third of the price,” Reig says. “We’re a helluva lot more fun. And when you talk about sustainability, clearly a two-wheeled electric vehicle trip is a lot better than a Toyota minivan picking you up.” 

Then coronavirus arrived, and Revel’s home market shut down. Rather than let its mopeds sit idle, the company offered free rides to doctors and nurses. When New York Governor Andrew Cuomo eased the lockdown in June, Revel’s ridership spiked. Reig says it was soon signing up 4,000 new users a day. 

It was an unsettling time in New York. Its streets were much less congested, which meant drivers of all vehicles could race around at much higher speeds. It was also a moment when the city was being shaken by Black Lives Matter protests, and police seemed to back off from enforcing lesser crimes such as traffic offenses. With fewer cars and fewer police officers keeping watch on the streets, many Revel customers could be seen riding against traffic on one-way streets, traveling on sidewalks, running red lights, some with children in their lap, few of them wearing helmets. 

There were 340 collisions involving Revel mopeds from early January to July 28, 2020, when the company ceased its operations in the city, according to data provided by the New York City Police Department. “A lot of people were just wrecking these things,” says Erik Marketan, injury prevention coordinator at St. Barnabas Hospital in the Bronx.

Revel attempted to rein in its less constrained users. It loaded its GPS system with more granular mapping data from the city and used it to track when customers were riding against traffic, permanently suspending those who continued flouting the law. It sent an email warning all riders against riding on sidewalks, racing through city parks, and letting others borrow their accounts. “We can’t believe we have to say this, but no running red lights,” Revel pleaded.

It wasn’t enough to prevent the succession of injuries and deaths. Facing mounting pressure from the de Blasio administration, Revel pulled its vehicles from city streets. “We realized we needed to take a pause,” Reig says.

Revel riders are now required to pass a multiple-choice safety quiz twice with 21 questions including “Why am I required to wear a helmet?” and “Why are Revels NEVER allowed in parks?” before they’re allowed to start using mopeds. The second time, the questions are scrambled so, as Reig puts it, users can’t “button-mash” their way through. Before every rental, riders must also upload a selfie of themselves in a helmet, which Revel verifies using artificial intelligence. 

Reig says thousands of users have been kicked out of the system for good as result of such measures. “There are people that have paid us hundreds and, even in certain circumstances, thousands of dollars in revenue, and we have suspended them permanently from the platform,” he says. “What business does that?” 

Doctors who treated injured Revel users in the city’s emergency rooms during the summer say they haven’t seen many lately. “That’s really dropped off since they’ve had to reset a lot of their safety standards,” says Mount Sinai’s Yaeger, who remains a Revel rider.

City government officials see improvement, too. Even so, the City Council held a hearing in October on a proposed bill to create a permitting process for Revel and other shared moped companies. Polly Trottenberg, the city’s transportation commissioner at the time, talked about possibly sanctioning Revel if customers didn’t wear helmets and restricting the times of day and areas in which new riders could travel until they have shown their proficiency on a moped. 

Trottenberg also spoke candidly about the possible impact such measures could have on Revel. “At some point, the operational requirements that we may put on them would make it hard for the company to be financially viable,” she said. (The New York City Department of Transportation declined to make Trottenberg, who departed in December to join the Biden transition team, or any staff member available for an interview.)

Ydanis Rodriguez, chairman of the council’s transportation committee and the proposed bill’s sponsor, argued that Revel should be held to a standard that some might have found unduly high. “Any company that allows a single rider to use one of those mopeds without helmets at any second or on the sidewalk should not be allowed to do business in our city,” he said. 

How did Rodriguez expect Revel to achieve such a level of self-enforcement? He said it should put sensors on its mopeds enabling it to know at all times whether riders are wearing proper headgear. “There should be somebody in the private sector with an app,” he said.

Reig was present at the Zoom meeting and testified that Revel would be happy to consider such technology. He said there was only one problem: It wasn’t available yet. “There is no magical sensor,” he said. “It does not exist.”

Rodriquez is still talking about such sensors a couple of weeks later when I meet him in his Upper Manhattan district and talk to him about Revel. He’s mystified by Reig’s insistence that nothing is on the market that would enable his company to constantly monitor whether its riders are wearing the proper headgear. He says students at a high school in his district recently invented a bike helmet that alerts riders when a car is nearby. “That’s happening at the high school level,” Rodriguez says. “What about MIT? What about Silicon Valley?”  

He also brings up Wheels Labs Inc., a scooter company seeking permission to operate a shared rental business in the city, which has sensors on its vehicles that monitor helmet use. “They say that they do have it,” Rodriguez says. 

Not quite. A Wheels spokesman says the company offers discounts to users who wear helmets that come with the vehicles. He says its technology enables it to see when customers have removed helmets from their cases on the bike and when they return them, which it figures is a good indication of whether they’re wearing them. But that’s the extent of it.

What rarely comes up in the Revel debate is that there’s some risk with every form of transportation. Decarbonize Transportation’s Salzberg argues that it’s counterproductive for cities to dwell on the relatively small number of accidents involving micromobility when there’s so much at stake environmentally. “I don’t think accidents should disqualify the whole idea of lighter electric vehicles on the roads,” he says. “We should be finding more ways to make that possible rather than burdening new operators with excessive restrictions while allowing much larger and more dangerous vehicles to travel at high speeds.” In an email, a DOT spokeswoman says that any regulations should enhance safety, support the city's climate goals, and enable companies like Revel to succeed.

A week later, Reig returns on a bike, the kind you pedal, to the Brooklyn neighborhood where Revel started. It’s early evening. He peers through the window of his old office, the exterior of which is still decorated with a spray-painted picture of a blue moped. He shows me a nearby lot where he and Suhey unloaded their first container of mopeds. The bikes didn’t come with the front wheels or the helmet case attached; some didn’t start. It was up to the founders to put them together. He says it feels like a million years ago.

Revel is much bigger now, and so are its problems. Reig dismisses the lawsuits against Revel, calling them one of the costs of doing business in the transportation industry. “How many times does Uber get sued a day?” Reig asks. “I can’t even imagine.” He says he’s not worried about the future permitting process in New York. He says Revel is already operating legally in the city; it shouldn’t be difficult.

He’s more peeved by suggestions that Revel isn’t doing enough to safeguard its users. “At a certain point, why don’t you just wrap everybody in bubble wrap?” he asks.

Some Revel supporters say that rather than piling more regulations on Revel, the city should be asking cops to issue more tickets to bareheaded riders. You’d expect Reig to concur. But he’s uncomfortable with the call for stepped-up enforcement. In October, Karon Hylton, a 20-year-old Black man, died while riding a Revel bike after he collided with a car in Washington, D.C. At the time, police said he was being pursued by officers who had seen him riding on the sidewalk without a helmet. Activists in the city blamed the cops for the accident. Nights of protests and property damage ensued. “There’s no perfect answer,” Reig says. 

The streets in the neighborhood are quiet tonight. Then a white pickup truck roars past us at a frightening speed. When, Reig wonders, will the city do something about that?