
Lyft Is Said to Seek a Buyer, Without Success - coloneltcb
http://www.nytimes.com/2016/08/20/technology/lyft-is-said-to-fail-to-find-a-buyer-despite-talks-with-several-companies.html?_r=0
======
aresant
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.

(1) [http://www.businessinsider.com/travis-kalanick-interview-
on-...](http://www.businessinsider.com/travis-kalanick-interview-on-self-
driving-cars-future-driver-jobs-2016-8)

~~~
seibelj
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.

~~~
chrischen
Not to mention even when that happens, a properly invested public mass transit
system will still be more efficient.

~~~
bcoates
They're extremely complimentary. In LA (for example) mass transit has a
tendency to strand you, and traditional taxis and car services have gigantic
no-go areas unless you're a VIP.

I can take a bus or train anywhere at any time, knowing that if I'm, for
example, south of Washington at any time of day or downtown after 2am, I can
call a car and still get home. In the 00s, the only way out of those zones was
to bring your own car or be prepared for a "Falling Down" style 10 mile walk.

Yellow cabs (then and still) don't enter a massive buffer zone around regions
where they might get a black guy as a fare even if you called, but Uber serves
those areas reliably, 24/7.

~~~
xenadu02
Absolutely agree with this. There is no reason we can't move people the way we
move goods. Public transit, trains/planes, etc serve as the distribution
network. Self-driving cars are the "last mile" delivery service.

------
tptacek
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.

Or is it something more fundamental than that?

~~~
mathattack
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.

~~~
joelrunyon
I believe Google has a not-insignificant stake in Uber already. Would be
interesting to see them on both sides.

~~~
supster
Google is in a really interesting spot:

\- They own a significant stake in Uber via GV (formerly Google Ventures)

\- They own Google Maps, which everyone relies on at the moment

\- They own the most advanced self driving car and are closest to Level 4
autonomy

\- They own Waze, and have a significant community there

In my mind they should acquire Lyft, let it run as is. Then when they are
ready to go primetime with their self driving cars, start piloting them as a
cheaper/free option within the Lyft app. If the pilot works, expand the cars
nationwide and aggressively finance the fleet using their balance sheet.

~~~
shostack
What is really interesting about that is Google's ability to price it as a
loss leader propped up by the ad business. They could even tie in a new
AdWords extension to let people pay to have customers driven somewhere.

They could completely undercut Uber on price AND have better data sets.

------
philip1209
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.)

[https://www.theinformation.com/lyft-rebuffs-acquisition-
appr...](https://www.theinformation.com/lyft-rebuffs-acquisition-approach-
from-gm)

(sorry for paywall)

------
skynetv2
I like Lyft and use them preferentially, hope they stay afloat.

~~~
kyrre
why? same drivers. very similar app.

~~~
llamataboot
Not in the city I'm in. Lyft drivers are notably more friendly, to the extent
that it's almost a stereotype. Uber seems to have more regular taxi drivers
moonlighting, Lyft seems to have more people making it their second job.

~~~
tammer
During driver on-boarding Lyft trains drivers to converse with passengers,
while Uber actively discourages it. This is the dynamic you're picking up on,
and to me it plays out clearly in the customer space. I prefer a quiet ride,
therefore I choose Uber, but I know plenty of people like you who prefer the
conversation.

I think currently its a good differentiator for Lyft but Uber's preparing us
for our driverless future.

~~~
r00fus
I took a Lyft recently - when I made it clear I didn't want to talk, the
driver clammed up, was polite and I got to ride in peace (had a headache &
just got off hours of customer calls).

------
bcoates
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.

~~~
Animats
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."

[1] [http://www.wsj.com/articles/peter-thiel-competition-is-
for-l...](http://www.wsj.com/articles/peter-thiel-competition-is-for-
losers-1410535536)

~~~
smnscu
Your quote is taken a bit out of context, but still – I already didn't like
Peter Thiel, this further reinforces my impression of him being a scummy,
shady character.

~~~
Animats
Name one "unicorn" with a competitor that's at least half its size. In
automotive, GM, Ford, Toyota, and Chrysler have been plugging away for
decades, and all have US market shares within a 2:1 range. We're not seeing
that in new businesses.

~~~
dharmon
I thought your grandparent post was being facetious, but are you being serious
with this one?

Here's off the top of my head: Airbnb, Xiaomi, Flipkart, Pinterest, Snapchat
(if you count instagram as a competitor), Zenefits, Didi until last week,
Dropbox, Theranos, Snapdeal, Slack.

Now that I think about it, it's probably much harder to come up with unicorns
that _do_ have a monopoly.

~~~
Animats
AirBnb vs HomeAway is bigger than 2:1. [1]

Xiaomi is a cell phone manufacturer, in an established industry.

In the social space, Facebook towers over Pinterest, Snapchat, Instagram, etc.

Zenefits is indeed in a competitive space. It's in B2B, where crushing the
competition is harder because of lock-in.

Theranos may have a value of zero.

Shopping cart companies (Flipkart, Snapdeal, Alibaba) tend to be nation-
oriented, so you have to look at them country by country.

Slack and Atlassan do seem to be in the 2:1 range. Again, B2B with lock-in.

[1] [http://fortune.com/2014/03/12/growing-quietly-in-airbnbs-
sha...](http://fortune.com/2014/03/12/growing-quietly-in-airbnbs-shadow/)

~~~
dharmon
I wasn't thinking HomeAway, I was thinking every hotel chain out there.

You said within 2:1, so Pinterest and Snapchat definitely qualify if you are
counting their competitor as Facebook. Unless you meant 1:2, which doesn't
make sense for your argument.

Sounds like you agree then that Thiel's "You must be a monopoly" argument is
bunk? Haha, I'm still confused by your comments.

------
amelius
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).

~~~
krschultz
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.

------
chrisabrams
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

~~~
karma_vaccum123
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..."

~~~
chrisabrams
They didn't order me out of the car; I actually chose to get out and order an
Uber because this driver took me to a random warehouse area off the highway.
They said if we waited there a few minutes that the app would let us pair up
and then they could drive me. I didn't feel safe so I decided to not
participate any longer; I requested an Uber near the highway entrance ramp.

------
kinofcain
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.

~~~
trestles
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.

------
cft
I do not see how this is different from the airline business, where several
airlines co-exist in the US

------
jondubois
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.

------
pasbesoin
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.

~~~
bcoates
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.

~~~
nefitty
What city are you in? I've never experienced a terrible ride like that from
Lyft, and I use it exclusively, almost every day. The weirdest experience was
a driver offering to take me to a weed dispensery to buy weed for me. And that
was him tryin to be nice! Besides that it's just maybe tired or awkward
drivers who can't hold a conversation...

------
justinzollars
Why is everyone so afraid of going public?

~~~
erobbins
Because it brings accountability.

~~~
justinzollars
I want accountability.

------
flylib
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

------
rezashirazian
I know HN is not a big fan of proverbs but "Great companies are not sold, they
are bought" rings a little too true in this case.

