
Lyft Is Said to Seek New Funding as Its Rival Uber Stumbles - uladzislau
https://www.nytimes.com/2017/03/01/technology/lyft-funding-uber.html
======
foxfired
Here is how I see it. I rely on those rides to go to work every single day and
here what it (would) costs me.

Uber: $250 a month.(Majority)

Lyft: $500 a month (Whenever Uber is too expensive)

Bus : $100 a month (1h:15 for 6 miles and 3 buses... No)

Politics and all internal conflicts aside, there is a need for these services
whether we like it or not.

When I need to make a decision in the morning I take whatever is the least
expensive and more convenient. I don't want to spend hours on the bus and I do
not want a good chunk of my paycheck to go to simply getting to work.

Speaking with drivers everyday, I understand their frustration of driving all
around town only for very small profit. Just today, I took a ride with a
driver that seemed very frustrated. I didn't want to intrude but he ended up
tell me how much he hates UberPool (that's what I use). 70 cents per mile, and
when a second rider joins the rate goes down, and for the next even lower. We
were 3 different riders.

In the riders perspective, we want the cheapest and most reliable. Sure I want
to support those who work for a company that respect them but at the end of
the day it is not a charity.

What is the answer in the consumer's perspective?

Edit: Formatting

~~~
deusex_
In Europe, your bus fare would be half of the price and probably you would
need one or two connections.

The public transport is much more developed and to me seems like a much better
mass transportation alternative. More ecological, cheaper, less cars overall.

~~~
trustfundbaby
It also helps that Europe and its cities are ... smaller.

~~~
semi-extrinsic
I don't know if you're thinking about area or population, but by either metric
London is bigger than any city in the US, and has a much better public
transport system.

~~~
argonaut
The New York and Los Angeles metropolitan areas are larger in area than the
London metropolitan area

The NY metro area is much more populous than London, and the LA metro area is
very slightly less populous.

~~~
lqdc13
NYC transportation sucks even within areas where the population is very dense.
It takes 2 hours to get from Bronx to Coney Island on subway. Plus there are
almost daily service disruptions of all kinds.

San Francisco's Bart is hated by almost everyone but it is much faster[1]. In
fact, I have never taken a slower subway than NYC subway.

[1] [https://flic.kr/p/7LhwPz](https://flic.kr/p/7LhwPz)

~~~
MaxfordAndSons
> It takes 2 hours to get from Bronx to Coney Island on subway

That's a bizarre example. Of course it takes a long time to go from one corner
of the city to the other. No reasonable person would be making that commute
regularly.

~~~
lqdc13
The point is that the subway is slow and unreliable unless you are commuting
within Manhattan for 4 stops.

Lots of people work in Manhattan and commute from Brooklyn. It's a 1.5 hr
train ride to Columbus Circle + 0-60 minute random slowdown where you may have
to take the train in the opposite direction for a bunch of stops.

Sometimes they actually tell you to get off the train, take a shuttle bus and
get back on the train. Other times the train stops 8 subway stops from where
you have to be with an inaudible message from the conductor. As a result, you
are stuck the middle of nowhere at 8 PM on a Saturday. Only option is to take
a local bus (that tends to be much more reliable) or Uber. This kind of
treatment is unheard of in any European country including Russia.

It could have been a 45 + 0-5 variation minute ride if trains ran as fast and
reliably as they do in almost every other city.

------
eddieplan9
According to leaked financial in [1], Lyft is expected to generate $32M of net
revenue on about $158M of fare, while losing $50M per month. If everything
stays the same, Lyft would have to raise rate by 156% to break even. Also,
Lyft's growth is mostly purchased:

> While rides increased about 11 percent from April to May, fully paid rides,
> without the use of a coupon or a credit, grew by only 5 percent in that
> period.

They recently launched in 50+ cities simultaneously, which means they will
bleed cash faster in hope of generating some growth number.

In comparison, according to [2], in Q3 of 2016, Uber collected 5.5B of fare,
and after paying drivers, had a net revenue of 1.7B (30%) and a loss of 800M.
If everything stays the same, Uber could break even by raising rate by 47%. If
you consider that most of the loss is from developing markets, it's actually
not that hard for Uber to break even in the U.S.

[1] [https://mattermark.com/lyft-financials/](https://mattermark.com/lyft-
financials/) [2] [https://www.bloomberg.com/news/articles/2016-12-20/uber-s-
lo...](https://www.bloomberg.com/news/articles/2016-12-20/uber-s-loss-
exceeds-800-million-in-third-quarter-on-1-7-billion-in-net-revenue)

Edits: grammar

~~~
rtpg
Uber was in a similar situation to Lyft not too long ago. Uber's also already
said that they're cash-positive in the US, and Lyft is focused on the US for
now.

It's not hard to imagine that after this multi-city expansion, costs will go
way down.

I wouldn't qualify the growth as "mostly purchased" when it's... 50/50
couponed/full? That seems to be more a consequence of the multi-city launch
than anything.

I'm pretty optimistic of Lyft's chances here (politically motivated by Uber's
attitude, granted). They're spending a lot of money to capture parts of a
well-defined market (US carsharing), and have a PR edge with informed riders.

Uber could theoretically start couponing to hell and back in the US again, but
they're going to run out of money someday.

~~~
acchow
> I wouldn't qualify the growth as "mostly purchased" when it's... 50/50
> couponed/full

If most of their customers are buying only because they are selling under the
market price, then it doesn't matter if the subsidy is 5% or 50% or 100%;
their sales are "mostly purchased".

Imagine you open a store tomorrow and sell gold for 1% under the market price
- suddenly your sales blow up to $1 billion in a day. You have purchased all
of your sales, with just a 1% coupon.

~~~
disiplus
thats the price of acquiring a customer. for my saas the cost to acquire a
customer is X, X is multiple of montly fees. so only after couple of months im
going to be on 0. The cost for me could be adwords, running a free plan, or
something else.

how is this different. I assume that they hope to convert some of those to
regular customers.

~~~
aedron
"We'll sell at a loss but we'll make it up in volume."

~~~
vacri
Selling at 1% under market price is only a loss if you're acquiring from the
same market.

------
techsupporter
Forgive me if this is me being dense, but from an outsider's perspective I
don't understand what makes Lyft any better than Uber. Neither company
properly categorizes their drivers (as employees), both have a rather sizeable
cut from fares, both depended on being basically illegal cabs--except for Uber
Black, which uses licensed black car services--to get started, and neither has
a financially viable business model.

Why is either business the cat's meow?

~~~
smileysteve
The key points are

\- CEO never blackmailed journalists

\- No major revelations of sexual harassment

\- ~~No major revelations of political support~~

Related to core business

\- Surge Limit has prevented complaints about emergency pricing vs Uber.

\- Lyft takes a lower commission capped at 20%/25%

\- Lyft has in app digital tipping (drivers keep 100% of tips). Uber's tip
policy encourages cash, which is an often cited complaint of taxis.

\- Major investment / partnership with GM (mentioned in an Uber thread that
Car Makers will need a cheap / reasonably priced app)

~~~
freyr
> _Lyft has in app digital tipping (drivers keep 100% of tips)._

One of the reasons I don't like Lyft. How about this system: pay the drivers a
fair wage up front, so they don't need to subsist on the generosity of
strangers. If they get great ratings, you can give them a bonus.

~~~
mc32
Exactly! Charge me what you're going to charge. None of this tipping nonsense.
It's really a vestige of former times when if someone felt nice enough they'd
offer you a tip --not that you deserved it, but it was to show they had heart,
a kind of virtue signal.

Why would Lyft want to continue this anachronistic idea which puts the burden
on a fare? It's the number one reason I do not use Lyft.

~~~
yladiz
The number one reason you don't use Lyft is because of tipping? What do you
use instead, Uber, taxi, or do you drive? If it's the first, how do you
justify using Uber when its practices are significantly worse than an
_optional_ tipping for the users? If it's the second, how do you justify using
a taxi when tips (in the US) are almost mandatory?

~~~
mc32
Uber. It's just mentally easier to deal with. After spending time in other
countries, I have come to dislike tipping. Having to decide --do they deserve
it, do they not? I don't want to deal with it. Tipping used to be an optional
thing in transactions but it has become pervasive. Tipping jars. Just charge
me more and pay the barista a wage a highschooler or recent graduate can live
on.

~~~
duiker101
But that is what Lyft is doing... they charge your more to give a little more
to the driver. And on top of that they offer the tipping. On the other hand
Uber pays less and doesn't offer tipping. The worse of both worlds.

I agree with you on tipping but your reasoning seems to need some work.

~~~
kobeya
You assume he cares more about the driver than his own internal state.

------
songzme
Anyone tried carpooling services like Waze pool? As an employee at google, I
decided to give Waze pool a try. I live in San Jose and usually ride the
google shuttle to work. During traffic, it takes about 1 hour to 1.5 hours
(keep in mind Google shuttle has multiple stops).

After using Waze Rider a few times, it has now become my main mode of
transportation to work and back. It cost $5 (and possibly less) and you get to
sit in a car and talk about life, share your interests, problems, with another
human being. So far I have completed about 26 rides and the socializing aspect
outside of my social circle makes my commute much more exciting. Since drives
can't make a living off the money from Waze carpool, the drivers I tend to
meet are those who doesn't really need the money and simply doing it to meet
new people. They all have different backgrounds going to work (or home). I've
met a nanny, tax accountant, an aspiring policeman going to the academy, VP of
a company, and software engineers. Yesterday, I waze carpooled with a product
manager and a startup who picked me up in his Tesla. It was the first time
I've ridden in a Tesla.

~~~
booi
Looks like we found the Google employee

~~~
humanrebar
> As an employee at google

It was disclaimed. Let's not be snarky.

------
maxander
Lyft and Uber, from a birds-eye view, do the _exact same thing_ ; and
furthermore, neither is profitable, so the entire market is built upon
potential future sales bases. Lyft is here valued at, generously, $7 billion.
Meanwhile, Uber's valuation is reported variously, but a general Google search
suggests its well in excess of $50 billion.

This exceeds any expectation of market craziness. Are these investors
_talking_ to each other? Are things so far gone that a vague promise of self-
driving cars is worth almost a _factor of ten_ valuation difference?

~~~
prostoalex
Early stage private valuations tend to be focused on future potential, usually
expressed in total addressable market figures.

Lyft was selling slow expansion (they're still a US-only operator, and even
within the US operate in relatively few markets) and most likely positive
cashflow.

Uber was selling rapid global expansion, where each new city could be scaled
up via Uber playbooks. Then it started selling itself as "last-mile logistics
provider" for things like food deliveries and clothing. Then as a leading
developer of self-driving vehicles, later complemented by self-driving trucks,
later complemented by self-elevating passenger-carrying robotic drones.

You have to give Uber credit, they do address a broader TAM, even if their
underlying core business doesn't seem that different from Lyft or Gett or
Wingz or Hailo or MyTaxi or Didi or GrabTaxi or Ola or Yandex.Taxi.

~~~
maxander
And? What's the difference between total coverage in 2018 versus total
coverage in 2020? Uber can't lock Lyft out of the market- that was abundantly
proved when a bit of ham-fisted PR made Lyft one of the most popular apps of
January. And Lyft can just copy any of Uber's random X-delivery schemes _that
actually works_. Self-driving cars might be a distinguishing factor, since as
far as I know Lyft has no efforts in that direction, but that deficit could be
entirely compensated for if Lyft winds up selling themselves to some company
that does have that tech.

~~~
threeseed
One of the most popular apps in the US. Not the world.

Here in Australia everyone uses Uber and the experience has been excellent.
Which means that it's going to be that much harder for Lyft to get any
traction.

------
myblake
While I think now is probably the time for lyft to strike while the iron is
hot, I appreciate nytimes' candor in acknowledging neither Lyft nor Uber has
demonstrated a "financially viable business". The road ahead is undoubtedly
not easy for Lyft.

~~~
a13n
> neither Lyft nor Uber has demonstrated a "financially viable business

Self driving cars

~~~
vkou
In the magical future where self-driving cars will be able to replace 100% of
what a driver does 100% of the time, what barrier to entry will protect Uber
from competition? What stops someone from leasing a few dozen vehicles, and
opening up their NotUber self-driving taxi service?

~~~
lern_too_spel
Especially in a world where Google Maps has already intermediated the
ridesharing services. NotUber just needs to integrate with gmaps to instantly
get ridership without spending billions in incentives to build their own two-
sided marketplace.

When that happens, any Uber employees still holding equity are going to take a
bath. They will be holding onto shares likely worth less than what they paid
in taxes to get them.

------
cpprototypes
I often wonder what is the natural market price of these services? Basically,
without massive VC money distorting everything, how much would a Lyft or Uber
ride really cost? I have a feeling it would be much higher than now. Despite
all the hype, true level 5 self driving is decades away. When the VC money
stops, what are these companies going to do?

I think the only viable option for them is Lyft Line/Uber Pool. It benefits
from network effects (more using the service, better it gets) which also
prevents newcomers. It could become a monopoly like Facebook. They should be
pushing this harder than unrealistic dreams of level 5 self driving.

~~~
Gibbon1
I saw one economist trying to figure out what the appropriate fare for BART
should be.

Ans: Free.

One place I worked in the early 2000's gave us checks were could redeem for
transit.

[https://commuterbenefits.511.org/docs/faq.pdf](https://commuterbenefits.511.org/docs/faq.pdf)

One thought might be to have a subsidized ride share system where
employers/transit authority pays people to ride share. Impression that based
on transit authorities reaction to causal car pooling is they wouldn't support
it. AKA they don't want people carpooling they want them to ride busses.

Second thought of mine based on buses in San Francisco is the buses are too
large and too few. More smaller buses would increase ridership and reduce trip
times.

~~~
kingnothing
You can already pay for Uber rides with commuter benefit cards.
[https://newsroom.uber.com/poolcommutes/](https://newsroom.uber.com/poolcommutes/)

~~~
Gibbon1
My thought might be interesting if car poolers could tap into the commuter
benefit cards. AKA pick up someone on the way to work and they can transfer
25-50 cents a mile into your account.

------
aliceyhg
I had the opportunity to speak with an Uber driver today who spoke with a
gentle voice and was very pleasant. She didn't speak much and when she did,
she was very agreeable. However, when the Uber topic came up, she was very
vocal about how unhappy she was driving with Uber (She did not know about the
recent Uber drama going on because she was so busy driving all the time).

She complained about Uber's frequently changing driver bonuses. Right when she
figures out a routine that fits her schedules, Uber sweeps out the rug from
under her and changes the payment structure.

Example: Previously you complete 125 rides / week and you will get a $500
bonus. This a significant number for her. Now, Uber split it up so you have to
do 75 rides by Thursday to earn $250. Then do 65 rides on fri/sat/sun to earn
the remainder $250. This is incredibly frustrating for her because on weekends
she usually gets long rides (SF to San Jose). This immediately takes an hour
off her day (for one ride) and she would have to work extra to meet her
target.

Obviously, I asked her why she doesn't drive for Lyft. She used to, and Lyft
did many things right. She loved it. However, Lyft decided to take away Lyft
power driver bonus (similar to Uber's bonus) and that made a significant dent
in her earning potential. She had to switch and drive for Uber to make ends
meet. I'd imagine many Lyft drivers had a similar reaction, which is why I
still find much more drivers on Uber than on Lyft despite the all the negative
publicity. Here are some things that I think Lyft can improve on their
business strategy:

1\. Be willing to do what it takes to succeed. Uber has repeatedly shown their
agility and versatility to adapt to changes around them. When they realized
that Uber Black was not what the public wanted, they introduced UberX (which
screwed over alot of their existing drivers) and lowered fares. It was harsh
and unfair, but it had to be done.

If I was running Lyft and was low on cash and could not afford to continue
driver bonuses, I would have laid off a chunk of the engineering team / staff
to raise capital to retain the drivers from switching.

2\. With all these #deleteUber hashtags, why haven't I heard any of my friends
promoting Lyft? Now should be the perfect time to splurge on marketing and
capture all the disgruntled uber drivers and passengers. Wait a month, most of
the fire would have died.

As much as I love Lyft and the experience I have riding with Lyft, I prefer
giving that up for a cheaper service. Most people I know would prefer to save
money. I hope Lyft figures out an aggressive business strategy and become a
viable Uber competitor.

------
qq66
I don't think this will work because I don't think modern megacorporations
suffer consequences for poor ethics the way normal-sized local businesses did
a hundred years ago. If the local tannery was run by a bad person, people
would say "I don't do business with him" and he could lose 50% of his
serviceable customers and employees. Today, the corporations are completely
faceless, and the fact that there are actual people behind Uber the company is
not readily apparent when using their app. People will just go for the
cheapest ride and think only briefly about the scandal they read about last
week.

~~~
a13n
Except when #DeleteUber trends on Twitter... Sure it won't be 50% but I doubt
the charts look pretty

~~~
ryanSrich
I'd wager the folks reading Twitter and random blogs on medium occupy a
microscopic portion of Uber consumers. I would be very surprised if Uber saw
any significant hit to their business because of the recent events

------
pfarnsworth
Lyft couldn't sell themselves for $5B and now they're looking for funding at
$6B. I'm curious as to who would be dumb enough to invest in Lyft after a
scenario like that.

~~~
curiousDog
The same ones who were dumb enough to invest in Uber I guess.

------
jwatte
Also, the quality of Uber cars has declined, even within "black" and
especially "SUV" classes.

So, might as well save the money.

------
patrickaljord
Outside of SV and HN crowd, I don't know of anyone who heard of the scandals
here in Paris at least. They seem to be doing great (or at least similar than
pre-scandals).

------
simplehuman
Let's say I have to take a cab everyday to work. If Uber gives me a ride for
15 bucks and Lyft gives me the same ride for 18 bucks, I know which one I will
choose. Do you?

~~~
teach
It's easy for me to say, but I won't ride in an Uber vehicle. I've disagreed
with their practices for quite some time, and these more recent events have
only solidified my resolve.

I'm sure I'm the tiny minority, but $3 a day is a pittance vs knowing I'm
supporting such a toxic culture.

Plus, if you can't afford an "extra" $3 a day to get to work, then use neither
Uber nor Lyft and get on a bus.

~~~
simplehuman
My understanding is that Uber was never popular in cities with good public
transport...

As for 3$ a day, this is the choice people make everyday with using free
Google stuff and promoting ads and surveillance culture. It's really not that
simple as money as you make it sound.

------
m3kw9
If that is the best shot Lyft has, it would seem futile

------
systematical
I'm really surprised that Lyft and Uber are not profitable. As for which is
better. Uber once charged my friend $80 for a 15 minute ride in Salt Lake City
around midnight. There is a markup and a then there is bend over. They marked
up a bend over on that one. I try my best not to use them. I also like the
option of giving a tip.

~~~
tim333
On the other hand when I visited SF I did five rides on Lyft and got charged
$0.79 in total which I thought very nice of them but not very profitable. They
gave me one of their intro deals.

------
losteverything
I'm curious.

Do you price check each time??

Is there an app that can determine which is cheapest?

If the prices are about the same can you hail both and take the one that
arrives first (& cancel)? (Getting from a to b is a commodity)

Does the uber app detect that you have a competitor and can it be smart enough
to price accordingly?

------
alphonsegaston
Anybody who's got a small but viable alternative to Uber could really benefit
by pivoting to an "ethics first" model right now. Between Kalanick and Thiel,
the market seems ripe for disruption.

~~~
dwg
Can you give an example of large companies which operate on a "ethics first"
model?

~~~
throwaway2048
costco and mars incorporated both have long histories of ethical, sustainable
practices, and a strong reputation for resisting the quality lowering death
spirals that infect many consumer goods focused companies.

~~~
dwg
Costco is probably the best example that comes to mind for me to, considering
the scale at which they operate and the fact that they are actually widely
reputed for their ethical practices.

Nonetheless I think they are an exception and, while not impossible, it would
be pretty difficult to disrupt the disruptor with a business model based on
being more ethical.

~~~
ftlio
Costco's profits are less their subscription revenue. That tells me the space
for bulk retailers in middle class areas with the type of consumers that can
shell out a yearly subscription fee isn't a whole lot bigger than Costco
already occupies. Costco shoppers have more money, so they can buy more
economically at Costco quantities, and they have a higher expectation of
service which requires a higher paid employee. Costco has effectively packaged
that arrangement in a $50 fee and keeps prices competitive by selling mostly
bulk quantities compared to grocery stores. Good luck trying to compete at
scale while holding on to costly values that your competitors don't. Your
choices are fail entirely or carve out a niche that you can keep almost
exclusively.

In my mind, the mental ceiling keeping us from understanding 'Why more
companies can't be like Costco' and 'What's the real value of an Uber ride
sans venture capital subsidies' is a lack of understanding of the extensive
properties of capital that automation is going to either push us through or
bring down on us in a rain of deadly glass shards. I'm not going to wait
around for the market to 'get real' and 'focus on companies with actual viable
business models' though. 1) The bulk of your portfolio should already be
occupied by companies that fit that mold, but 2) The practice of leveraging
profitability today for gains in equity tomorrow is going to push through a
few big winners consistently enough that it's not going away regardless of the
overall consequences. Meanwhile we'll keep asking the same questions that
ultimately amount to 'Why does capital beget capital?'

------
jonthepirate
Hopefully us former employees see some liquidity before driverless wipes these
companies out. The value of ride dispatching aggregators is in the driver
network. Apps and cars are easy to make.

------
brogrammer2
Wouldn't it be better, if half of that money could go into improving the
public transport of cities or building new infrastructure that would ease up
congestion on roads?

------
randyrand
Do we have any reason to believe Lyft is actually more moral? And not just
putting on a "we're moral" marketing stunt?

~~~
jcl
I personally was convinced Lyft was more moral when Uber employees did things
like booking Lyft rides for the purposes of recruiting away the drivers or
making fake Lyft accounts to book and cancel thousands of rides. As far as I
can tell, Lyft employed no similar tactics.

[http://money.cnn.com/2014/08/11/technology/uber-fake-ride-
re...](http://money.cnn.com/2014/08/11/technology/uber-fake-ride-requests-
lyft/)

[http://www.businessinsider.com/ubers-operation-slog-
against-...](http://www.businessinsider.com/ubers-operation-slog-against-
lyft-2014-8)

------
Apocryphon
Anyone betting that GM will end up acquiring them?

