
Uber Tells Investors It Wouldn’t Pay Above $2B for Lyft - JumpCrisscross
http://www.bloomberg.com/news/articles/2016-08-20/uber-tells-investors-it-wouldn-t-pay-above-2-billion-for-lyft
======
erdevs
This is such an obvious ploy, it probably has the opposite of the desired
effect. Uber would've been better served saying Lyft is worth less than their
cash on hand because of burnrate / runway and fierce competition. By
establishing a $2B floor in what is _clearly_ a ploy, Uber is _actually_
communicating that they obviously think Lyft is worth far more than $2B. They
just helped establish an anchor of more like $6-8B. If you are Lyft or
Qatalyst, this is an exceptionally easy case to make.

The only way this is smart is if they're hoping to help pump up Lyft's price
as a comp for themselves, or if they hope to drain a buyer of cash/assets by
overpaying for Lyft and thereby lessening their competitive resources under
that buyer. Both are stretches and silly bets, though.

~~~
mkolodny
I think you're over thinking this. Suggesting that Lyft is worth a low price
so that people think that means Lyft is worth more doesn't seem plausible. Why
not just suggest that Lyft is worth $8 billion?

On the other hand, I could see Uber trying to devalue Lyft so that they could
buy them for cheaper. Or so that Lyft has a hard time raising money at a
higher valuation.

~~~
leereeves
Would regulators allow Uber to buy Lyft?

~~~
sdenton4
Since when does uber care about regulations?

~~~
billmalarky
From the article regarding Uber purchasing Lyft:

"Uber Chief Executive Officer Travis Kalanick has said privately that he would
not support such a deal because he believes it would face intense regulatory
scrutiny"

------
andy_ppp
They are scoping the price range of Lyft for other buyers, a clever tactic.

However I'd place a big bet that Uber will not be sold self driving cars by
car companies and they will slaughter them by launching their own services.

If you have a self driving car selling them to Uber rather than taking the
profit for yourself is just stupid, much like selling bitcoin mining hardware
- if it's worthwhile you might as well just let it make you money?

It's not like Uber have something special; maybe they'll remain carless and
let the car manufacturers run their cars on Uber's network? Still the
estimated returns Uber expects won't materialise because the car companies
will still be able to dictate a price.

Is Uber building their own self driving car?

~~~
kovek
If autonomous cars will be on the uber platform, the autonomous rides will be
very cheap. There is even more incentive for people to not own a car and
instead use Uber. This means that there will be less customers demanding to
own an autonomous car. The autonomous car manufacturers will have to sell to
Uber.

~~~
AJ007
It will be interesting to see how this ends up playing out. During stage 1,
uber was able to win by scaling up driver and rider supply with enough balance
to keep everyone happy enough to continue use.

Stage 2, the transition to the self driving vehicle, can be won by whoever is
able to supply self driving vehicles at scale.

It is plausible that Google and Apple could create a ride marketplace for
vehicle manufacturers. You press a button on your phone and a car shows up.
This would provide a survival path for car manufacturers.

Another plausible scenario is cities converting to self driving "platforms"
exclusively run by single companies such as Uber or Google. In the shorter
term this could be a winning play because it makes the self driving automation
part a little easier. Longer term this doesn't scale so well. However, if a
larger company is able to get big cities to sell transportation rights there
could be long term lock in. There will be big opportunities here in the next 5
years as municipalities continue to become more strapped for cash.

Google, Apple, Uber, Tesla, and BMW are the companies I'm watching closest
right now. The big question may be what was more important -- have the
rider/driver network first, actually manufacturing self driving electric
vehicles (electric is important because emissions and air quality will win
cities), or having the platform users use to hail vehicles (Apple and Google.)
Uber could have a big IPO and buy a car manufacturer outright but I don't know
if that makes much sense. Buying up assets of a bankrupt or bleeding car
manufacturer seems more opportune.

~~~
LAMike
If Tesla pulls off the Gigafactory, they are in good position to take over
stage 2

------
twblalock
If I were CEO of Uber, I would want Lyft to survive in order to avoid anti-
trust issues.

I suppose Uber can point to taxi companies as competition, but at the rate
those are dying off, and considering that Uber's app puts Uber in something of
a new category, I would want to hedge my bets and keep Lyft around in case a
regulator doesn't take the taxi argument seriously.

~~~
bazqux2
Microsoft bailed out Apple and see how that turned out.

~~~
samfisher83
Microsoft still owns the majority (90%+) of the desktop market and the office
market. They always had kind of crappy mobile os and that hasn't changed.

~~~
tuxracer
Sure but the smartphone space at the time was an insignificant percentage of
the market. That's by far no longer the case now. Having a crappy mobile OS in
2000 is a magnitudes smaller problem than having a crappy mobile OS in 2016.

------
qj4714
This is like the economic twlight zone, when you see one overvalued company
trying to rationalize the value of another. Why not pay 4 billion or 5 billion
when you are playing with monopoly money?

~~~
lukeschlather
That only makes sense if you can pay with monopoly money.

~~~
qj4714
Uber stock is like Monopoly money at a $60 billion valuation

------
detaro
Would Lyft iself have any value to Uber? Or would the value just be to take
the largest competitor out of the picture, forcing others to start from
scratch, without driver network, brand recognition etc?

~~~
huac
beyond monopoly benefits, lyft's supply of drivers is probably still valuable.
i don't think their rider base is that valuable to uber, since there is
probably significant overlap. however, that rider base would be of value to
another player trying to build their own platform, e.g. google

~~~
erichurkman
There is massive overlap of drivers, too, and it's incredibly trivial for
drivers to sign up for a new service. (You might, at most, need a new
inspection performed.)

------
lacker
Lyft has $1.4 billion in cash, but Uber wouldn't pay above $2B? That seems
quite odd - maybe the $2B refers to the value before including cash on hand,
and that got lost in the "leak" somehow.

~~~
hkmurakami
Well if you tried to liquidate ASAP, you likely wouldn't be left with that
$1.4B on hand due to outstanding obligations, severance pacakages, legal fees,
etc.

------
usrusr
The best thing that could happen to Uber would be Lyft getting acquired by an
unloved buyer other than Uber. Imagine Lyft becoming a Microsoft brand, or
something Chinese, or the personal toy of some Saudi prince-investor who could
easily be slandered with difficult to refute claims of terrorist support. Uber
criticism would instantly stop being popular. Uber would be stupid to destroy
this possibility by buying Lyft for themselves.

~~~
fullshark
That stuff doesn't really matter. Lowest price reliable rides will win no
matter what.

~~~
usrusr
But on the other hand, not getting bogged down by legal resistance works a lot
better when you are not perceived as the biggest asshole in the room.

AirBnB for example is facing some resistance despite having a very clean
image, but I imagine it would be much more vicious if they had a reputation
like Uber.

------
free2rhyme214
The better question is, "Why does Lyft want to sell?"

