The Last Mile
Executive Summary
Team Name: The Last Mile
Team Leader’s Name: Jeremy Faludi
Team Leader’s E-mail: jer@faludidesign.com
Team Leader’s Phone Number: 206 407 7975
1. The Opportunity
Public transportation is inconvenient for commuters who live or work more than 5 or 10 minutes from a
station; people then drive, usually alone, for convenience. The "Last Mile" is a personal vehicle that
bridges this gap and enables public transit use. It is an exciting business proposition because it requires
little capital investment, little risk, and can provide a fast return on investment. It uses only off-the-shelf
technology, and a working prototype already exists.
2) The Target Market
The target market is people commuting and running errands--the two biggest uses for single-occupancy
vehicle trips. Over 115 million Americans commute daily, and each spends $8,000 per year on their cars.
If the Last Mile captured 0.1% of that, it would be a billion dollar business. That is unlikely, but a $50
million business is plausible. Trek Bicycles has annual revenues of $600 million. Company growth for
the Last Mile could be very fast--the Razor scooter was an instant fad, and even several years after the fad
was over and cheap imitations had flooded the market, Razor USA still makes over $6 million in annual
sales.
There are two primary segments to the target market: long-distance commuters and neighborhood users
(the Segway market). The neighborhood users may be earlier adopters, because it would fit into their
existing habits--they would see it as a stylish "granny cart" that you can ride, or a Segway with three times
the functionality and 1/10th the price. However, once the long-distance commuters learn that the Last
Mile plus transit can replace driving, it will be a broader market, since there are more of them. Early
adopters would be in their 20's and 30's, professional and fit, but not fit enough to be cyclists. They would
use foot power as often as electric power, to get exercise but not break a sweat. Second-wave adopters
would be older professionals, retirees, and soccer moms, who would mostly use electric power.
Current trends in public transit usage strongly support the Last Mile. Ridership nationwide has increased
28% in the last ten years. Rising gas prices, traffic congestion, and environmental awareness are all
pushing people towards transit; the only thing standing in their way is convenience. Sales will be even
stronger in Europe and Asia, where cultures of public transit are already strong. No government
regulations stand in the way of the vehicle, provided it is low-speed and safe, as is planned. Also, market
trends strongly support the introduction of the Last Mile as a neighborhood vehicle. The popularity of the
Razor Scooter and Segway, despite their usability flaws, proves that the market is hungry for a solution.
3) The Team
Jeremy Faludi, CTO: Invented the Last Mile. Green design and engineering consultant with five years'
experience; has worked for Rocky Mountain Institute, the Biomimicry Guild, Lawrence Berkeley Labs,
and others. One of the many authors of the book Worldchanging: a User's Guide to the 21st Century. A
bicycle he helped design is currently in the Cooper-Hewitt National Design Museum's exhibition "Design
for the other 90%". As a freelancer, he has the ability to concentrate 100% of his time on this venture if it
is funded. Jeremy will lead the development of the product and future product lines.
*******second team member**********
The critical team opening right now is for a person with business expertise, who knows how to build a
company. A part-time manufacturing liaison may be required, if manufacturing is done overseas, which is
the most likely course. Some consultants will temporarily need to be brought in to advise on design for
manufacturability, styling, and further refinement of steering geometry, but none of these experts will be
needed for more than a few weeks, they are not critical parts of the team.
4) The Product/Solution
Established companies have tried to address the target market with bicycles, folding bicycles, and folding
scooters. All of these have fatal flaws. Bicycles are often prohibited on trains and light rail, especially
during crowded commuting hours; buses often lack the special racks needed to carry bikes. Folding
bicycles are slow and awkward to fold. They also have no place to carry the user's stuff; in fact, once the
bike is folded, it is another thing to carry in addition to the user's stuff. Folding scooters have this same
problem, and are dangerous to ride due to unstable handling and small wheels. The reason the Razor
scooter's instant success was only a fad is because once people actually rode the scooters for a while, they
found out how dangerous they are. There have been a few attempts at cargo-carrying folding scooters, but
none have had stable enough steering or big enough wheels to make them safe and comfortable for a
professional adult to ride. Nor have they been motorized, nor have they been well-designed to fit adult
users' lifestyles.
The Last Mile is a cargo-carrying folding scooter, with the following features: Electric drive (or foot
power, or both), steady but responsive steering geometry and large wheels, acts like rolling luggage when
folded (consolidates your stuff), fits between bus seats (even with a full load), light enough to lift, allows
the user to use their existing briefcase/bags/etc. Electric models may vary, but will have at least a 12mph
top speed and 4 mile range. The Last Mile has been presented to over two dozen target users, with quite
favorable reactions; many people ask "when can I buy one?"
Value proposition: Americans average 100 hours commuting per year--nearly three working weeks. Time
spent on buses and trains can be productive or relaxing, but time spent driving is lost. The customer also
saves money: The retail price will be between $300 and $600 for the motorized model, between $80 and
$160 for the non-motorized one, and the average American spends over $1000 on gas per year.
5) Go-to-Market Strategy (Feasibility)
A working (non-motorized) prototype already exists. No outside IP is required, all components are off the
shelf. Three to six months of development and user testing is required to integrate the power system,
design for manufacturability, and determine appropriate styling. After that, manufacturing can be set up
overseas and distribution can go through multiple retail outlets: bicycle shops, Sharper Image (who caused
the Razor Scooter craze), Target, or others. Online sales would also be used.
6) Sustainability
Public transit use in the U.S. already saves 1.4 billion gallons of gas per year; increasing ridership just
1% would save an additional 140 million gallons per year. Transit produces 95% less CO, 90% less
VOCs, and about 50% less CO2 and NOx per passenger mile, than private vehicles. About half of
America's 900 million daily car trips are less than five miles; if just 1% of these could be replaced with the
Last Mile, it would save another 220 million gallons per year, for a total of 360 million gallons per year.
If the company is truly successful, its impact could be ten times larger, saving over three billion gallons
per year. In addition to the fuel and emission savings, the Last Mile can allow some users to give up their
cars entirely, saving the manufacturing waste and energy; widespread use can even save land for use as
housing or commerce instead of parking. Also, the ability to exercise while riding allows users to improve
their health, and can help address the obesity epidemic. The Last Mile will also benefit cities--public
transit use has been shown to build local economies and communities.
Manufacturing of the Last Mile will use the absolute minimum mass of material possible (both for
environmental impact and usability), the product will be durable and easily repairable (again, both for
environmental and usability reasons), and it will use recycled and recyclable or certified-green materials
wherever possible (aluminum, regrind PET or HDPE plastic, possibly FSC wood, etc.) Only factories
with fair wages and good working conditions will be used; factories which already manufacture similar
products (such as bicycles) will be preferred, both for environmental and quality-control reasons. No
negative environmental or social impacts are anticipated.
7) Financials and Funding Required
The key driver to the revenue model is that the Last Mile can be produced at high quality for a reasonable
price; it will command a price premium over competing products because it solves the users' problems
better. Ideally some detail of its design or manufacture can be patented, though this cannot be relied upon.
Financial projection, assuming it becomes a small fad, slumps, and then steadies out afterwards:
Tot Revenue ($000s)
GM %
EBITDA*
Headcount
2008
2009
2010
2011
2012
700
24
400
3
40,000
42
32,100
10
180,000
50
150,200
20
90,000
40
60,200
20
100,000
46
70,200
20
So far, no funding has been raised. Raising $1.1M would allow for the first entire year of operations and
manufacturing, bringing the company to profitability at 24% gross margin. That includes six months of
development and testing, and sales of just 10,000 units.
Investors would most likely get their return by the company being acquired by a larger bicycle or scooter
company. An IPO is also possible, as is the company buying out the initial investors.
8) California Based
Yes, already living here.