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ofo founder, pioneer and failure narrative protagonist of shared bikes, a defining case of the capital bubble era
Dai Wei is one of the most representative young entrepreneurs of China's 80s-born startup wave, founding ofo at Peking University in 2014 as an initial free shared bike service within campus. After multiple funding rounds, ofo at its 2017-2018 peak had 20 million bikes covering 200 global cities with a valuation of $3 billion. However, due to fundamentally flawed business model (unprofitable low pricing), overly aggressive expansion, burn-rate competition with Mobike, and strategic disagreements with investor Didi, ofo fell into a severe liquidity crisis at the end of 2018. About 15 million users' RMB 99 deposits could not be refunded; Dai Wei personally faced high-consumption restrictions; ofo ultimately concluded in near-total failure. This case became the defining lesson of China's sharing economy bubble and startup governance failure.
Connecting idle bike resources through the internet to achieve low-cost, barrier-free short-distance urban transportation is a natural application of the sharing economy in mobility, capable of solving the 'last mile' problem in Chinese cities.
Source: 戴威北京大学毕业典礼演讲，2016
When ofo was in its deepest crisis, Dai Wei rejected multiple acquisition or merger opportunities, insisting on independent operations. He believed persisting in original intent and mission is an entrepreneur's bottom line, even if it means the company ultimately fails—he was unwilling to place users and employees at greater risk. (Note: This belief was later seen as an important factor that aggravated the crisis)
Source: 戴威接受财新网专访，2019年初（内部流传版本）
During the fiercest competition in 2017, Dai Wei adhered to the internet platform economy's scale-first logic: seize as many cities and users as possible first, build scale barriers, then monetize through data and traffic. However, this logic did not hold in the shared bike's heavy-asset model, and was one of the core cognitive errors of the ofo tragedy.
Source: ofo投资者关系文件，2017
Incorrectly applying the light-asset platform model to a heavy-asset business, causing scale expansion to actually accelerate capital consumption, creating a death spiral where the bigger you grow, the more you lose.
ofo's bike procurement cost was approximately RMB 300 per bike with a 1-2 year lifespan; each ride charged RMB 0.5-1, meaning even at 100% usage rate it would require 300-600 rides to break even, while actual average usage rates were far below this, causing losses to increase with every bike deployed.
When a business model itself cannot generate positive cash flow, relying on financing to sustain operations leads to a death loop of needing to raise more and more, with collapse when financing cannot be secured.
ofo conducted a Series E round of $700 million in 2017-2018, but due to high bike damage rates and large maintenance costs, the raised funds were quickly consumed. When the final funding round fell through, the entire operating system instantly collapsed, followed by an irrecoverable deposit crisis.
When entrepreneurs excessively dilute control through multiple funding rounds while strategic conflicts exist between investors, company decision-making falls into deadlock, making rapid integration and rapid sale impossible when a crisis arrives.
During the ofo crisis, Alibaba (wanting independent operations) and Didi's (hoping for acquisition and integration) strategic interest conflicts trapped Dai Wei in a dilemma: unable to accept Alibaba's aid conditions or Didi's acquisition, missing multiple potentially life-saving opportunities.
Dai Wei refused acquisition under the pretext of mission commitment, but this seemingly noble persistence ultimately led to default on the deposits of 15 million users, creating the profound paradox that mission commitment actually meant betraying users.
Dai Wei started his business at 22, without having experienced business cycles; the abundance of capital in the bubble period formed a cognition that 'scale is everything,' lacking deep judgment on business model sustainability—this is a common cognitive limitation for young entrepreneurs in capital environments.
Peking University campus shared bike model validation
Dai Wei organized cycling activities at Peking University, discovered the demand for stationless shared bikes on campus, founded ofo with the 'yellow bike' as product image, quickly gained user recognition within Peking University campus, and completed the initial validation of the business model.
Global expansion and burn-rate competition
With capital support from Zhu Xiaohu, Didi, Alibaba and others, ofo went from campus to national and then global scale; at its 2017 peak it covered 200 cities with over 20 million bikes, engaged in fierce burn-rate competition with Mobike, and reached a peak valuation of $3 billion.
Liquidity crisis, deposit default, and failed ending
Multiple factors including financing breakdown, out-of-control operating costs, and strategic conflicts with investors combined to push ofo into a severe liquidity crisis. About 15 million users' deposits could not be refunded; Dai Wei was placed on a court-ordered high-consumption restriction list; ofo essentially ceased normal operations, becoming the most typical case of the sharing economy bubble.
Context: Dai Wei was born in Xichang, Sichuan, and later enrolled at Peking University's School of Economics; during his time at PKU he developed a strong interest in cycling and conceived entrepreneurial ideas.
Decision: Chose cycling-related entrepreneurship, seeking business opportunities combining PKU campus cycling needs
Reasoning: PKU campus had large bicycle transportation demand but chaotic management; using the internet to solve on-campus cycling problems had natural application scenarios and a user base
Outcome: Formed a shared bike business concept, laying the foundation for later founding ofo
Lesson: The best entrepreneurial opportunities often come from scenarios the entrepreneur deeply understands and pain points they have personally experienced
Context: In 2014, Dai Wei and several Peking University classmates co-founded ofo, initially operating shared bikes within PKU campus on a public interest basis, using a stationless design different from public bikes where users could park anywhere, quickly winning popularity among campus students.
Decision: Use campus as a starting point to validate the stationless shared bike model, without rushing commercialization
Reasoning: Campus is a relatively closed usage scenario, convenient for cost control and model validation; stationless design reduces operational infrastructure investment, more suitable for rapid iteration
Outcome: ofo quickly gained user recognition within PKU campus, validating shared bike demand and attracting the first angel investments
Lesson: Validating product demand in a closed scenario (campus) before pushing to open markets is an effective path for reducing startup risk, but may also lead to underestimating the complexity of open markets
Context: In 2015, GSR Ventures partner Zhu Xiaohu saw the market potential of shared bikes and led ofo's angel round; once funding was secured, ofo began expanding from PKU campus to Beijing universities and urban markets.
Decision: Accepted external venture capital, launched rapid expansion plan, abandoned cautious growth approach
Reasoning: The shared bike market window was limited; Mobike was also rapidly expanding simultaneously, requiring capital support to quickly capture market share
Outcome: ofo began rapid expansion, but simultaneously opened a path of high capital dependency, sowing the seeds of the subsequent crisis
Lesson: Accepting venture capital means entering a capital-driven growth model; if the business model itself cannot achieve positive cash flow, capital dependency will be fatal
Context: In 2017, ofo completed a Series E round of $700 million with a valuation of $3 billion; investors included Alibaba, Didi, DST, and other top institutions. That same year ofo announced entry into 200 cities in 20 countries globally, with 20 million bikes and daily orders exceeding 30 million.
Decision: Continuously scaled up operations, insisted on independent operations, rejected discussions of merger with Mobike
Reasoning: Believed scale was the most important competitive barrier in shared bikes; independent operations were needed to maintain brand integrity and strategic initiative
Outcome: Ostensibly reached career peak, but had actually fallen into a death spiral of rapid capital consumption, with operating costs continuously exceeding financing replenishment speed
Lesson: Business scale peaks and worst financial conditions often occur simultaneously; scale numbers alone cannot serve as the sole criterion for assessing company health
Context: In 2018, Didi attempted to gain substantive control of ofo and seek deep integration; Dai Wei resisted firmly out of concern for losing independence; simultaneously, aid negotiations with Alibaba also fell into deadlock due to condition disputes. The game between the two major investors pushed ofo deeper into difficulty.
Decision: Refused acquisition, insisted on independent operations, sought new solutions
Reasoning: Dai Wei believed ofo's mission and brand value existed independently, that acquisition would lose control over company direction and potentially harm user interests
Outcome: Refusing the acquisition caused ofo to miss its last possible rescue opportunity, with the crisis deepening further and the deposit crisis escalating
Lesson: When a company faces an existential crisis, founders insisting on control while unable to independently solve financial problems is irresponsible to users and employees
Context: At the end of 2018, ofo's official App launched a deposit refund function, but actual refunds stalled with over 15 million user instances queuing for refunds; company funds were exhausted with supplier debts exceeding RMB 1.2 billion and employee salaries in arrears.
Decision: Unable to resolve the deposit issue, publicly acknowledged the crisis but without substantive solutions
Reasoning: The company had no funds available; any decision faced the impossibility of cooking without rice. Without new financing coming in, the deposit crisis could not be fundamentally resolved
Outcome: 15 million users' deposits were frozen; most users dealt with this through long waits or abandonment; Dai Wei was placed on a court enforcement list with high-consumption restrictions
Lesson: User deposits are not interest-free loans but trust guarantees; using user deposits for business expansion is a serious commercial ethics issue and fundamental flaw of the business model
Context: In 2019, due to ofo's debt issues, Dai Wei was placed on enforcement lists by multiple courts, restricting high-consumption behaviors such as taking planes, high-speed rail, and staying at star-rated hotels—one of the highest-profile high-consumption restriction cases in Chinese entrepreneurship history.
Decision: Publicly accepted personal legal responsibility, did not choose to flee or shift blame
Reasoning: As the company founder and legal representative, regardless of psychological acceptance, one must face the legal responsibilities arising from the company's debts
Outcome: Personal reputation and credit were severely damaged, but Dai Wei persisted in staying in the country to face the situation rather than fleeing, preserving some moral evaluation space
Lesson: Startup failure itself is not shameful, but harming user interests and refusing to take responsibility is unforgivable; Dai Wei's persistence demonstrated the entrepreneur's final moral bottom line
Context: In 2020, ofo essentially ceased urban operations, maintaining only a small number of bikes in limited areas; Dai Wei began living quietly, occasionally expressing reflections on the startup failure through internal sharing or personal reflection articles.
Decision: Accepted the reality of failure, withdrew from public view, engaged in personal summary and reflection
Reasoning: Failure was already determined; continued public justification would only deepen negative impressions; silence and reflection is the most dignified way to face failure
Outcome: The ofo case became one of the most important failure case studies in Chinese sharing economy and entrepreneurship history, widely researched and cited
Lesson: A failed startup, if it can honestly summarize and share lessons learned, may contribute to the industry no less than a successful one
ofo's early establishment in PKU campus with its 'small steps, rapid iteration' approach spiritually aligned with Lean Startup principles. But after capital flooded in, ofo actually deviated from lean principles and chose large-scale burn-rate expansion, becoming a counter-example to Lean Startup philosophy.
ofo's founding stage campus shared bike validation was typical '0 to 1' innovation, but the later global expansion phase was '1 to N' imitative competition against competitors, precisely violating Peter Thiel's core argument about avoiding competition and building monopolies.
Ben Horowitz's philosophy on entrepreneur decision-making during the hardest moments forms a profound contrast with Dai Wei's situation during the ofo crisis. If Dai Wei had had the opportunity to read this book earlier, he might have reflected differently on the decision of 'persisting at all costs.'
GSR Ventures' Zhu Xiaohu was ofo's most important early investor; his philosophy of 'merger over competition' and strong support for scaling directly influenced Dai Wei's strategic decisions
ofo's failure became a classic case in Chinese entrepreneurship education, influencing later entrepreneurs' understanding of business model sustainability, capital dependency risks, and user deposit management
Mobike founder Hu Weiwei and Dai Wei jointly created China's shared bike industry; their competitive relationship profoundly shaped the evolution trajectory of the shared bike model
戴威是我见过的最能坚持的年轻人，但坚持本身不能代替正确的商业判断。
