Travis Kalanick made an succinct observation on ridesharing's future yesterday:
"If we are not tied for first [in autonomous vehicle rollout], then the person who is in first. . . rolls out a ride-sharing network that is far cheaper or far higher-quality than Uber's, and Uber is no longer a thing," Kalanick said."(1)
Lyft has raised ~$2b at a recent $5.5b valuation, Uber has raised ~$9b at a $85b valuation.
Lyft is able to somewhat compete with Uber on today's ground war of drivers & customer acquisition, but unlikely to compete in tomorrow's war of autonomous without a partner.
The recent $500m round Lyft got from GM clearly has GM positioned as takeout partner - GM brings the autonomous / Lyft brings the customers.
What I bet happened here is that Lyft tried to power move GM with some large stalking-horse bids, the tactic backfired, and now GM is leaking to put pressure on Lyft to accept a diminished offer.
People are way, way, WAY underestimating how long it will be before "self driving car picks you up, takes you to location". If we don't have self-driving cars everywhere on highways moving cargo, then we won't have self-driving taxi cabs for many years after whenever that happens. City driving, where Uber can actually make money with the density of people, is the hardest driving of all, and will be the last place where self-driving cars without any human operator take over.
It's interesting that Google decided early on that fully autonomous was the only way to go (because half-awake driver + imperfect computer = accidents), but Tesla, BMW, and Uber are bringing to market semi-autonomous vehicles first.
It occurs to me that their incentives aren't exactly aligned, and aren't aligned with the public. If Tesla or Uber brings out a semi-autonomous vehicle and then lots of accidents occur, it poisons the well for self-driving vehicles. People start associating them with fatal crashes, they shy away from them out of fear, and the status quo reigns. In the status quo, Uber is on top for ridesharing and Tesla/BMW/GM/etc are on top for conventional car purchases, so it all works out for them.
By contrast, Google only succeeds if autonomous vehicles become a real thing that people trust for their everyday transportation needs. They don't have a horse in today's race; either they build a fully-autonomous vehicle or they get nothing.
Methinks we'll see a big PR campaign from Google to make a big public distinction between semi-autonomous and fully-autonomous driving, along with a lobbying campaign to ban semi-autonomous driving. They have to get out ahead of public opinion before lots of accidents happen, otherwise the whole category will be ruined.
He might be right, but it would require allowing cars to drive around on roads without anyone in them.
Using a shared, limited resource in that way is such a prototypical "tragedy of the commons" that I can't see any government allowing it.
Traffic will be insane if people can send their cars on errands without having to sit in the resulting traffic, or if hired cars can drive halfway across the city to pick up the next fare with no impact to the car's owner besides wear and fuel.
No amount of incremental improvements in capacity due to "better" robot drivers will make up for that.
Interesting, my intuition is the exact opposite. With human driven vehicles, you have a chicken and egg problem. Drivers only come if there are riders, and riders only come if there are drivers. Having the biggest user base is a big plus.
With driverless vehicles, a company can solve the supply side of the market making problem by buying a few cars in one market.
If I'm in city A, I just want an app that summons a driverless car to me. Do I care if the company behind that app is also in 200 other cities? Is there any cost to me to having multiple apps on my phone?
My intuition would have been that uber is way overvalued because once driverless cars are mainstream, it's easy for a competitor (possibly local government!) to break into any given market.
I believe that everything will reset when automated cars come out. Whomever is in the lead now will not matter because automated rides will be such a game-changer that it'll reset the entire market.
So is it reasonable to surmise that what's happening here is:
Lyft has a 1.2B cash reserve, ~400MM/yr in revenue, isn't profitable, and has now hit the end of the line on "unicorn" infusions at favorable terms. It's locked in a total war with Uber, which it cannot win or even stalemate while simultaneously shielding its reserves to keep an adequate runway to profitability.
So, since it can't win the race against Uber, its prospects are greatly diminished, and the greatest value it might hold is as someone else's strategic asset.
I would add that their flanking Uber internationally (China) failed. Whoever purchases them would want some asset whose value isn't tied to fighting Uber head-to-head.
Perhaps the network could be valuable to Google? I notice that Waze seems to be inching in that direction, and perhaps they could get value from the mapping too.
The ride-sharing market seems to have network effects, which means the service with 80% of the market will get much more than 80% of the profit.
No, that's pretty much the scenario as I can see it. And to add to that, they're bleeding to death extremely fast. They have a matter of 12 to 18 months to find a buyer or they might as well close up shop. Each quarter that passes will diminish their financial position and lessen their bargaining power in the sale. If they wait toward the end of the time horizon, it'll practically become an expensive talent acquisition ala Jet.com.
Uber and Lyft are both vulnerable to self driving cars. They're hard to compete against when you need drivers-who-aren't-employees, but not nearly as hard to replace when you can just manufacture new cars.
Their app and scheduling smarts are valuable too, but won't be _more_ valuable when the drivers go away.
The Information reported that they declined an offer from GM and ended up pursuing another round of funding. (It's a little unclear whether there was a formal bid.)
I'm honestly a little surprised Uber and Lyft can't manage a duopoly, considering how many miles ahead of the nearest competitors they are and how many mutual enemies they have.
Competition is so last-cen. You need a monopoly, so you can screw over the customers. Read Peter Thiel, "Competition is for losers".[1] "If you corner the market for something, you can jack up the price; others will have no choice but to buy from you."
That is pretty interesting, though it's also possible Lyft's got itself into a tight spot with finances (debt service or other obligations).
If the ride-share service industry can't support two major players, questions of why emerge. Is it not sufficiently large, and current expectations are horribly overblown? Or is it subject to natural (or unnatural) monopoly effects to some massive degree?
Isn't transportation a "commodity" service? And if so, how can Uber's and Lyft's valuation be explained then?
I'm not an economist, but I would predict that the future of personal transportation is going to look like a race to the bottom, just like what is happening to cable companies (who transport data instead of people, and actually own some important infrastructure to keep their quasi monopolies up).
I 100% agree. Uber would like to own a 2 sided marketplace like Ebay, in which case it's nearly winner take all. The dynamics of ridesharing don't seem to match up with that. Every driver in NYC has 2 or 3 phones running multiple apps, the supply is not constrained to any particular network. Autonomous cars owned independently would obviously be smart enough to take the ride with the highest revenue. Thus the marketplaces are going to have to compete based on how much they pass through to the car owners. The margins are going to be paper thin.
I'm not surprised: I've only done one Lyft ride in my life. I arrived into Newark Airport and needed to get to New York City. Uber had a 3x surge, so I downloaded the Lyft app. I saw that Lyft was offering $5 if I did their ride share option, so I chose it.
- Driver picks me up quickly, no problem
- Driver makes 3 loops around the airport to pick up my ride share, but she cannot understand the Lyft app's GPS/map and is unable to find the person.
- Driver decides to just leave the airport without picking the ride share person
- Lyft app cancels other ride share's ride AND my ride, while at this point we are on the high way.
- Lyft driver tells me to re-request the ride, but after a couple of attempts, I am unable to pair back with the driver whom's car I am in (kept pairing me with other drivers)
- Eventually I get out of the car, on the side of the highway, and order an Uber.
- Because I'm not in the airport geofence, I didn't get a surge :O
Wait...what? The Lyft driver ordered you out of the vehicle on the shoulder of the highway?? Because his own app isn't functioning???
How does this person still have a driver's license let alone a job?
If that was me, I would have told him, "tough luck, sorry your app sucks, but I'm not getting out of this car, feel free to phone the police...sure they would be interested in hearing about your plan to drop me off on the highway shoulder..."
If Uber is investing heavily in self-driving cars, there's a case to be made that Lyft represents a "purer" investment in ride-sharing without assuming the cost/risk of that massive expenditure.
Uber is betting that they'll be first to self-driving cars, Lyft is betting it will be any one of a dozen companies that aren't Uber.
I think that's a pretty reasonable bet. If/when self-driving cars hit there's no way they'll be limited to ride sharing, so the chance that Lyft will be able to benefit from general availability is high.
I agree there is not a great difference in the places I am mostly (SF and LA) but I think Uber was smart to bring on a lot of cheap capital the past few years.
The ride-sharing hype train ran out of investors. I struggle to think of a company who would want to buy Lyft. The most interesting one which comes to mind is Didi Chuxing.
Though given how much money they wasted competing with Uber in China and then buying Uber out of China; I don't think Didi has much cash left (or interest) to buy Lyft in order to compete with Uber on US soil - They probably just want to bury the hatchet with Uber and each plow their own fields.
I don't think Uber would buy Lyft for several reasons:
- Uber started cutting back on spending - Probably not the best time for acquisitions.
- Such an acquisition could raise antitrust issues.
- Uber knows that there aren't many potential buyers for Lyft - Uber may be tempted to just wait it out and let Lyft go out of business - Then Uber can pick up most of Lyft's old customers for free.
I would not want to be a Lyft employee right now; especially not the kind who has stock options.
In my (limited) circle, I often hear Uber mentioned. I never hear mention of Lyft.
Paywall is keeping me out of the NYT article, at the moment, but I wonder whether Lyft is simply on the losing slope of a plot of momentum, at this point.
Shame, as I am not very fond of Uber's business practices. Though I don't know that Lyft is any better.
I know a lot of people prefer Lyft as a first resort but to me it has two serious problems:
* Lyft doesn't let you book a ride by web or sms, which means in an emergency, I can't cadge a ride easily at a web cafe, library, laptop at a Starbucks, borrowed phone, etc. Lyft is optional, having a working m.uber.com login is a survival skill.
* I've never experienced the level of drivers outright misbehaving and fucking with passengers in an Uber that I semi-frequently experience as a friend's guest in a Lyft. I don't know if it's culture or what, but Lyft drivers seem to feel comfortable doing things like picking a location and ditching you or not accepting your instructions to drive a particular place, which as far as I can tell is a "never drive for us again" infraction over at Uber and the drivers know it.
this is playing right into Uber's hand's, part of their fundraising strategy was to scare investors from putting more money into Lyft and it may be finally paying off.
Now Lyft won't be in a position of leverage when they have to sell themselves as no one wants them at their current price and acquirers will know Lyft is running out of options and will be 1/4 of the price by the end of 2017
[+] [-] aresant|9 years ago|reply
"If we are not tied for first [in autonomous vehicle rollout], then the person who is in first. . . rolls out a ride-sharing network that is far cheaper or far higher-quality than Uber's, and Uber is no longer a thing," Kalanick said."(1)
Lyft has raised ~$2b at a recent $5.5b valuation, Uber has raised ~$9b at a $85b valuation.
Lyft is able to somewhat compete with Uber on today's ground war of drivers & customer acquisition, but unlikely to compete in tomorrow's war of autonomous without a partner.
The recent $500m round Lyft got from GM clearly has GM positioned as takeout partner - GM brings the autonomous / Lyft brings the customers.
What I bet happened here is that Lyft tried to power move GM with some large stalking-horse bids, the tactic backfired, and now GM is leaking to put pressure on Lyft to accept a diminished offer.
(1) http://www.businessinsider.com/travis-kalanick-interview-on-...
[+] [-] seibelj|9 years ago|reply
[+] [-] nostrademons|9 years ago|reply
It occurs to me that their incentives aren't exactly aligned, and aren't aligned with the public. If Tesla or Uber brings out a semi-autonomous vehicle and then lots of accidents occur, it poisons the well for self-driving vehicles. People start associating them with fatal crashes, they shy away from them out of fear, and the status quo reigns. In the status quo, Uber is on top for ridesharing and Tesla/BMW/GM/etc are on top for conventional car purchases, so it all works out for them.
By contrast, Google only succeeds if autonomous vehicles become a real thing that people trust for their everyday transportation needs. They don't have a horse in today's race; either they build a fully-autonomous vehicle or they get nothing.
Methinks we'll see a big PR campaign from Google to make a big public distinction between semi-autonomous and fully-autonomous driving, along with a lobbying campaign to ban semi-autonomous driving. They have to get out ahead of public opinion before lots of accidents happen, otherwise the whole category will be ruined.
[+] [-] kinofcain|9 years ago|reply
Using a shared, limited resource in that way is such a prototypical "tragedy of the commons" that I can't see any government allowing it.
Traffic will be insane if people can send their cars on errands without having to sit in the resulting traffic, or if hired cars can drive halfway across the city to pick up the next fare with no impact to the car's owner besides wear and fuel.
No amount of incremental improvements in capacity due to "better" robot drivers will make up for that.
[+] [-] Tarrosion|9 years ago|reply
With driverless vehicles, a company can solve the supply side of the market making problem by buying a few cars in one market.
If I'm in city A, I just want an app that summons a driverless car to me. Do I care if the company behind that app is also in 200 other cities? Is there any cost to me to having multiple apps on my phone?
My intuition would have been that uber is way overvalued because once driverless cars are mainstream, it's easy for a competitor (possibly local government!) to break into any given market.
[+] [-] berberous|9 years ago|reply
[+] [-] __derek__|9 years ago|reply
[1]: http://www.bloomberg.com/news/videos/2016-08-12/lyft-said-to...
[+] [-] MichaelApproved|9 years ago|reply
[+] [-] tptacek|9 years ago|reply
Lyft has a 1.2B cash reserve, ~400MM/yr in revenue, isn't profitable, and has now hit the end of the line on "unicorn" infusions at favorable terms. It's locked in a total war with Uber, which it cannot win or even stalemate while simultaneously shielding its reserves to keep an adequate runway to profitability.
So, since it can't win the race against Uber, its prospects are greatly diminished, and the greatest value it might hold is as someone else's strategic asset.
Or is it something more fundamental than that?
[+] [-] mathattack|9 years ago|reply
Perhaps the network could be valuable to Google? I notice that Waze seems to be inching in that direction, and perhaps they could get value from the mapping too.
The ride-sharing market seems to have network effects, which means the service with 80% of the market will get much more than 80% of the profit.
[+] [-] adventured|9 years ago|reply
[+] [-] mrkurt|9 years ago|reply
Their app and scheduling smarts are valuable too, but won't be _more_ valuable when the drivers go away.
[+] [-] ced|9 years ago|reply
[+] [-] philip1209|9 years ago|reply
https://www.theinformation.com/lyft-rebuffs-acquisition-appr...
(sorry for paywall)
[+] [-] skynetv2|9 years ago|reply
[+] [-] kyrre|9 years ago|reply
[+] [-] bcoates|9 years ago|reply
[+] [-] Animats|9 years ago|reply
[1] http://www.wsj.com/articles/peter-thiel-competition-is-for-l...
[+] [-] dredmorbius|9 years ago|reply
If the ride-share service industry can't support two major players, questions of why emerge. Is it not sufficiently large, and current expectations are horribly overblown? Or is it subject to natural (or unnatural) monopoly effects to some massive degree?
[+] [-] amelius|9 years ago|reply
I'm not an economist, but I would predict that the future of personal transportation is going to look like a race to the bottom, just like what is happening to cable companies (who transport data instead of people, and actually own some important infrastructure to keep their quasi monopolies up).
[+] [-] krschultz|9 years ago|reply
[+] [-] yalogin|9 years ago|reply
Uber will just become the service provider. That is their goal to become the PG&E of transportation.
[+] [-] chrisabrams|9 years ago|reply
- Driver picks me up quickly, no problem
- Driver makes 3 loops around the airport to pick up my ride share, but she cannot understand the Lyft app's GPS/map and is unable to find the person.
- Driver decides to just leave the airport without picking the ride share person
- Lyft app cancels other ride share's ride AND my ride, while at this point we are on the high way.
- Lyft driver tells me to re-request the ride, but after a couple of attempts, I am unable to pair back with the driver whom's car I am in (kept pairing me with other drivers)
- Eventually I get out of the car, on the side of the highway, and order an Uber.
- Because I'm not in the airport geofence, I didn't get a surge :O
[+] [-] karma_vaccum123|9 years ago|reply
How does this person still have a driver's license let alone a job?
If that was me, I would have told him, "tough luck, sorry your app sucks, but I'm not getting out of this car, feel free to phone the police...sure they would be interested in hearing about your plan to drop me off on the highway shoulder..."
[+] [-] econner|9 years ago|reply
[+] [-] kinofcain|9 years ago|reply
Uber is betting that they'll be first to self-driving cars, Lyft is betting it will be any one of a dozen companies that aren't Uber.
I think that's a pretty reasonable bet. If/when self-driving cars hit there's no way they'll be limited to ride sharing, so the chance that Lyft will be able to benefit from general availability is high.
[+] [-] trestles|9 years ago|reply
[+] [-] cft|9 years ago|reply
[+] [-] jondubois|9 years ago|reply
Though given how much money they wasted competing with Uber in China and then buying Uber out of China; I don't think Didi has much cash left (or interest) to buy Lyft in order to compete with Uber on US soil - They probably just want to bury the hatchet with Uber and each plow their own fields.
I don't think Uber would buy Lyft for several reasons: - Uber started cutting back on spending - Probably not the best time for acquisitions. - Such an acquisition could raise antitrust issues. - Uber knows that there aren't many potential buyers for Lyft - Uber may be tempted to just wait it out and let Lyft go out of business - Then Uber can pick up most of Lyft's old customers for free.
I would not want to be a Lyft employee right now; especially not the kind who has stock options.
[+] [-] pasbesoin|9 years ago|reply
Paywall is keeping me out of the NYT article, at the moment, but I wonder whether Lyft is simply on the losing slope of a plot of momentum, at this point.
Shame, as I am not very fond of Uber's business practices. Though I don't know that Lyft is any better.
[+] [-] delecti|9 years ago|reply
[+] [-] bcoates|9 years ago|reply
* Lyft doesn't let you book a ride by web or sms, which means in an emergency, I can't cadge a ride easily at a web cafe, library, laptop at a Starbucks, borrowed phone, etc. Lyft is optional, having a working m.uber.com login is a survival skill.
* I've never experienced the level of drivers outright misbehaving and fucking with passengers in an Uber that I semi-frequently experience as a friend's guest in a Lyft. I don't know if it's culture or what, but Lyft drivers seem to feel comfortable doing things like picking a location and ditching you or not accepting your instructions to drive a particular place, which as far as I can tell is a "never drive for us again" infraction over at Uber and the drivers know it.
[+] [-] frandroid|9 years ago|reply
You can either click the "web" button under the article link, or right-click the link and open in a private browsing window.
[+] [-] jjnoakes|9 years ago|reply
[+] [-] justinzollars|9 years ago|reply
[+] [-] dredmorbius|9 years ago|reply
Aren't the emperor's clothes simply fabulous?
[+] [-] erobbins|9 years ago|reply
[+] [-] flylib|9 years ago|reply
Now Lyft won't be in a position of leverage when they have to sell themselves as no one wants them at their current price and acquirers will know Lyft is running out of options and will be 1/4 of the price by the end of 2017
[+] [-] unknown|9 years ago|reply
[deleted]
[+] [-] rezashirazian|9 years ago|reply