
Lyft Files S-1 - jonknee
https://www.sec.gov/Archives/edgar/data/1759509/000119312519059849/d633517ds1.htm
======
us0r
>In January 2019, we entered into an addendum to our commercial agreement with
AWS, pursuant to which we committed to spend an aggregate of at least $300
million between January 2019 and December 2021 on AWS services. If we fail to
meet the minimum purchase commitment during any year, we may be required to
pay the difference, which could adversely affect our financial condition and
results of operations.

Not as bad as snap but what could they possibly be spending $100 million a
year on?

~~~
phamilton
100M/year is ~8M/month. Some perspective on that, it could by you one of:

~400PB of data in S3.

~2600 bare metal "x1 type" ec2 instances running 24/7, 3 year upfront
reservation.

~60M Write IOPS in dynamodb

~300M Read IOPS in dynamodb

~3500 16xl RDS aurora instances

Again, each of those is spending the entire budget on a single service, but
that seems like a nonsense level of spending.

Maybe they really have that much data. Maybe they have 100PB of data in S3.
Assuming 1B rides since day 1, that's 100MB per ride, which seems high. If the
average ride is 20 minutes, that's 80KB per second. That would be 25% of the
budget.

But assuming they generate 80KB/s/ride, that's ~1MB/second (assuming 1M
rides/day). So maybe all of that hits DynamoDB, and between duplicate data,
secondary indexes, and size of dataset we have 6 million write iops. And then
we do big data processing jobs and have 5x the read load. That's 20% of the
budget.

And to process all these events there is a massive EMR cluster of bare metal
instances. About 1750 of them. That's 50% of the budget.

Leaving 5% (a measly 400k) for load balancers, and the like.

Those numbers are all a little outrageous to me, but I can see how they might
be using that much.

~~~
geezerjay
At this point isn't it cost-effective for Lyft to just build its own
infrastructure?

~~~
fierro
if I have one job in this life, it's to hang out on hacker news and repeatedly
post about how it's not cost effective to run your own infrastructure.
8MM/month doesn't even come CLOSE to needing your own infra.

\- person who knows how hard it is to run your own infrastructure

~~~
Alupis
> person who knows how hard it is to run your own infrastructure

> fierro Profile: SWE @ Google Resource & Capacity Planning

I think you mean "Person who's job it is to convince others it's really hard
and they should just buy your product"...?

~~~
fierro
ha sure. I just meant I know the sort of operational burden cloud customers
are able to outsource by not rolling their own, based on my time at the G
inside resource planning and management.

~~~
tjoff
You know anything of the burden to be reliant on someone else for your core
operations? And having to invest and adapt so much just to lock yourself to
one vendor? For many that alone is more than the operational burden of doing
it yourself.

------
cabaalis
> In 2017 and 2018, certain of our named executive officers provided rides to
> riders using the Lyft platform in a similar manner as other drivers. We
> believe that these driving activities provide the named executive officers
> with substantial practical insight into how our platform serves drivers.

I thought this was a pretty interesting point. I was about to call it
dogfooding but not quite, since it's more of an experience check than a
crucial internal usage.

~~~
mech4bg
I had one of the VC investors in Lyft pick me up for a ride a few years ago in
Menlo Park. Had a super interesting conversation - I was impressed they were
scoping out their investment directly. I wasn't sure what the protocol for
tipping as at the end, hah.

~~~
meowface
That's really cool. How did you know they were an investor? Did they introduce
themselves, or did you recognize them?

I imagine when investors or execs give rides, they probably don't generally
reveal their affiliation, since that may skew the experience and the feedback.
Though on the other hand, I suppose it could be helpful to say "I work at/with
Lyft, how do you like the app?"

~~~
Schweigi
The same happened to me when I took an Uber. The driver disclosed it
immediately that he is an investor after we started driving. I think it makes
sense because it allowed him to ask very specific questions without it being
awkward.

------
iblaine
As a former engineer at Lyft, looks like my RSUs would be worth ~2x my salary
per year. Typical RSU grants are 25% of your salary per year, so those Lyft
RSUs would have been a good return. But that's at a $18-25B valuation. I think
$15B is more realistic given the losses and most recent round of funding. Lyft
is in a tough industry. Kudos to Logan Green for getting this far. Good to see
a UCSB alumn do well.

~~~
throwaway-1283
I don't see how these companies will stop losing $1b+ a year each year. The
public markets will not be too kind.

The end game was supposed to be autonomous taxis (cutting the driver out). I
don't see how that's going to happen before they run out of money unless they
1) significantly raise prices or 2) take increasingly bigger cuts from
drivers.

Personally I will be shorting as soon as I can.

~~~
BinaryIdiot
Right? Even if autonomous taxis _is_ their endgame, why couldn't companies
that actually produce the cars do it cheaper? Almost all of them are heavily
investing in it right now, some are even partnering up with companies that
know how to do a lot of it.

I don't see how this works out for Lyft or Uber. To me it just looks like
they'll both eventually run out of money and get squashed. Maybe I'm missing
something?

~~~
sonnyblarney
Auto companies are not service companies, those are very different things.

That said, given the dynamism of markets, there's nothing to indicate that
Lyft/Uber will have any huge advantage when the time comes.

But this is a game of musical chairs - early investors need to create the
biggest, most miraculous but 'believable' story so they can pass the bag onto
retail investors long enough to cash out.

If retail investors were able to do their homework, or rather, if their
advisors at Morgan Stanley etc. were to do their jobs, I think that they'd see
there is far more risk in these things than the valuations imply.

The problem is of course is that Morgan Stanley private wealth managers,
managing for all those doctors, dentists, lawyers etc. only make money if
there is buying action. And the emotional excitement of 'getting in on an IPO'
is just too much to ignore.

The 'bragging rights' value of your dentist in Akron Ohio being able to tell
to his buddies on the golf course that 'he has an 'in' on the Lyft IPO' (not
really of course, he's at the tail end), is just worth more than a scrutinized
deal.

Also - notice the PR/branding for Lyft, it's so funny, like the opposite of
Uber - and yet they are for all intents and purposes the very same thing.

~~~
panarky
_> so they can pass the bag onto retail investors long enough to cash out_

I used to say this too, when companies sold stock to the public at outrageous
valuations.

I thought it was insane to be the retail "dumb money" left holding the bag on
companies like Amazon, Google, Facebook, Netflix, Twitter and Snap.

So will Lyft and Uber be more like Snap or the others on this list?

~~~
sonnyblarney
They are all different kinds of companies from different eras.

Amazon went IPO very early and had a very long term vision.

Lift and Uber, it's hard to say and also depends on price.

------
randomacct3847
Biggest thing I noticed is that the cofounders only own a little more than 1m
shares each, which is less than .5% each!

Painful amount of dilution....wow.

~~~
Fordec
Still, a $150M-90M personal net worth at the 18B-30B valuation window. They're
not going to starve either.

~~~
untog
This is something that always strikes me about the amount of money swilling
around in tech. $90M is an absurdly huge amount of money. By absolutely any
outside objective measure of work put in to payoff it is off the scale. To
look at this as the founders having lost out is almost comical.

~~~
teej
The founders (theoretically) created $20B in value and you think $90M is
sufficient compensation?

$90M is definitely enough to be more than comfortable the rest of your life.
But a $5B payout would have meant they could start a VC firm, invest in the
next several generations of startups, partially self-fund something ambitious
like a Space-X, start funded non-profits, etc.

~~~
jjeaff
You can do all of those things and more - easily - with $90m.

~~~
ericd
Elon invested more than $100M in SpaceX and they came very close to death
before they finally succeeded with their last rocket. So it's not clear that
you can do all of those and more, easily, with $90M.

------
morningmoon
_" We have incurred net losses each year since our inception and we may not be
able to achieve or maintain profitability in the future. We incurred net
losses of $682.8 million, $688.3 million and $911.3 million in 2016, 2017 and
2018, respectively."_

~~~
jandrese
It's pretty impressive that they've managed to lose that much money despite
the fact that they are just running a website and an app.

Yeah, that's oversimplifying it, but it's not like they own factories or
storefronts or need to buy access to expensive services or something. The vast
majority of their "employees" are independent contractors with no healthcare
or retirement benefits who get paid by the ride (so Lyft doesn't lose out when
business is slow).

It seems like it should be a license to print money, but somehow they're
losing cash hand over fist. Are they subsidizing rides all over the world?

~~~
aeternus
When starting out in a city, these companies often have a chicken & egg
problem around getting to critical mass.

To solve this, they must offer guaranteed minimums to drivers to maintain an
available network even with low ridership. Without that, passengers are
unlikely to find an available ride and will easily give up on the app.

Those guaranteed minimums are expensive, but are true one-time costs. They are
no longer needed once the network is established.

~~~
morningmoon
Their sales and marketing is 25% of their expenses, and it’s not clear to me
how much of that is driver incentives. Even if they cut all driver incentives
and marketing they’re still in the hole.

~~~
aeternus
It looks like sales and marketing only includes driver incentive's due to
driver referrals. Referrals are likely a low number compared to the
'guaranteed minimum' incentives used in new markets.

Looks like the other driver incentives may not be included in revenue?

>This four percentage point improvement in Revenue as a Percentage of Bookings
was driven by greater efficiency and effectiveness of driver incentives, which
contributed approximately two percentage points, increased service fees and
commissions, which contributed approximately one percentage point and revenue
from the Select Express Drive Partner program, which contributed approximately
one percentage point.

~~~
morningmoon
_Looks like the other driver incentives may not be included in revenue?_

Revenue is money they take in. If they pay drivers a minimum it will be an
expense. I’m assuming under “cost of revenue” or “sales and marketing”, since
they don’t categorize drivers as employees but contractors.

------
jonknee
2018 revenue of $2.16B, with a loss of $911.3M. Oof. Though as a passenger I
can't say I mind buying $2 bills for $1!

~~~
Fordec
20% of Uber's revenue with 50% in losses.[0]

I want to see Lyft succeed just to counter Uber, but yeah, those numbers need
to be healthier

[0] [https://www.reuters.com/article/us-uber-results/uber-
posts-5...](https://www.reuters.com/article/us-uber-results/uber-
posts-50-billion-in-annual-bookings-as-profit-remains-elusive-ahead-of-ipo-
idUSKCN1Q42CI)

~~~
jjeaff
That fully depends on what the losses are. I haven't read their financials,
but if the losses are from expansion and other investment but their unit
profitability is good, then it's not a problem. They can always pull back on
investing in growth just to reap profits.

~~~
misun78
But this is where their one-trick pony hurts them. Where will growth come from
if they stop growing in the one market they're currently in?

------
econner
Nothing like increasing net losses leading up to IPO!

2016 - ($682,794)

2017 - ($688,301)

2018 - ($911,335)

As a percentage of revenue though the loss is decreasing,

2016 - 2x

2017 - 0.6x

2018 - 0.45x

2018 revenue was $2.1bn.

Since they are a tech company and not a real company they can IPO at 10x
revenue so that's ~20bn.

Who cares what their margins are.

------
cm2012
Some notes:

\- They claim their US ride sharing marketshare is 39% - that seems high to
me.

\- $800 mil in marketing spend in 2018 from $500 mil in 2017 - they say this
increase was largely driven by cost of acquiring new drivers. I honestly
thought this would be higher as a % of revenue - this topline number also
includes spend on promotions/discounts for passengers.

~~~
panarky
_> that seems high to me_

What data do you have that indicates their market share is overstated?

~~~
whymauri
Obviously they have no data, it's a hunch they have. This should be clear from
how it's stated.

~~~
panarky
I value informed opinion much more than random anecdotes.

I'm hoping there's more to this comment than just "my friends use Uber so it's
hard to believe Lyft has 39% market share".

------
apas
FWIW, @modestproposal pulled out some interesting nuggets from the S-1 filing
and wrote a very interesting thread about some good stuff and some things that
raise questions. Worth reading. [1]

[1]
[https://twitter.com/modestproposal1/status/11015421794812887...](https://twitter.com/modestproposal1/status/1101542179481288704)

------
smallgovt
For those who can't wait to short Lyft/Uber, on average, it takes 10-12 weeks
to hit the markets after the initial S-1.

~~~
usaar333
That's far too slow given that they confidentially filed earlier.

e.g. Dropbox (which also confidentially filed earlier) was public 1 month
after the public S1.

Realistically, Lyft is public by end of April, barring a Box-style pullback

------
40acres
The prediction was that ride-sharing would become a winner take all market and
that Lyft and Uber would fight it out to attrition, but I'm not sure if this
is the case. Both of these companies are massive and I don't see one reaching
escape velocity to leave the other in the dust. At a point the losses will
matter and the realization will need to be had that the other will not die.

~~~
maxxxxx
"winner take all market "

This is the wet dream of all tech bubbles. It was the same in the 90s when
people said whoever sells dog food online first will win that market and be
the leader in perpetuity. Lyft and Uber will be easy to attack by local
companies once they have to stop subsidizing their rides and actually run a
real business (aka making profit)

~~~
jrochkind1
That's an amusing example, because it turns out... pretty much only Amazon
will sell dog food online. So it maybe WAS a winner-take-all market, but the
winner wasn't that winner...

~~~
maxxxxx
There are tons of dog food sellers online. Chewys, Petco, Petsmart and many
others. Amazon is usually more expensive.

------
chollida1
Some stylized notes:

\- If they do go public for $20B+ they that would be for more than Twitter and
Facebook went public for. Would you really want to own Lyft over FB and TWTR
the day they went public? That's a very large ask of the public markets.

 __EDIT __To be clear I "m talking about their valuation multiple not the abs
valuation.

\- working with JPMorgan, Credit Suisse and Jefferies. So I guess we know 3
banks who won't be on the Uber IPO. Goldman probably has that locked up

\- doing a traditional IPO

\- banks pitching a valuation of $18 to $30 Billion, I believe their last
round as at $15.1B

\- Seems rushed to beat Uber to market, maybe there is only room for 1 hugely
money losing, $10B+ ride sharing company?

\- how do you loose $1B in a year on $2.2B in revenues and ave any concrete
plan at all to become profitable?

> Lyft generated $563 million in revenue in the third quarter, up from $300
> million in the same period a year earlier, a person familiar with the matter
> said in October. Losses increased to $254 million in the period from $195
> million in 2017, the person said.

So losses increase as revenue increases, again, what's the profitability plan?

I actually have no idea how to value this company? What metrics should we be
looking for? How do use future cash flows to evaluate a company when their
future cash flows are all negative by even the most optimistic of estimations?

\- Will be interesting to watch the first 6 months, if things don't go well,
Uber could be in for a rough ride on the public markets. Uber has a much more
diverse product line, maybe that will be their pitch.. Watch Uber's S1 to see
if they promote food delivery, etc over ride sharing.

\- Part of Uber's pitch may be their stake in Didi ala Yahoo and Alibaba, if
that's true

\- can't find any info yet on how long employee's and investors will be locked
up

\- Lyft has lots of room for international growth as they are only in North
America

\- shareholders with more than 5 percent of stock

    
    
      - Rakuten Europe S.à r.l.with 13.05 percent
    
      - General Motors Holdings LLC with 7.76 percent
    
      - Fidelity associated entities with 7.71 percent
    
      - Andreessen Horowitz associated entities with 6.25 percent
    
      - Alphabet Inc. entities with 5.33 percent.
    

\- Lyft's founders did negotiate for a special class of stock that gives them
20 votes for each of their shares. Will be interesting to see if they get
locked out of indexes for this. Index/ETF flow can be a godsend to management
as they tend to be passive and long term holders.

\- from the S1 "We have incurred net losses each year since our inception and
we may not be able to achieve or maintain profitability in the future. We
incurred net losses of $682.8 million, $688.3 million and $911.3 million in
2016, 2017 and 2018, respectively."

\- will list on Nasdaq under ticker LYFT, sweet ticker!!

~~~
CondensedBrain
I think investors are mostly betting on self-driving cars being closer than
anyone thinks. The first company to get rid of its drivers wins.

~~~
cm2012
People online say this but I'm pretty sure it's nonsense. The word right now
is self driving cars won't be working for quite a while since they're nowhere
near solving for rain and snow.

~~~
mikepurvis
Not that I disagree with the larger point here, but it's fully possible that a
system which can't (yet) handle rain and snow could still deliver a ton of
value— for example, in Arizona, where neither of those things happen all that
much.

A partial launch also gives you a bunch of opportunity to iron out other
details, like establishing the protocols which allow a rider to call for
assistance, or a remote safety driver to take over in a construction zone,
weird driveway pull-in, whatever.

------
trimbo
It looks like they spend a bunch of pages on rider retention and gloss over
what I think is the primary issue for the gig economy: provider retention.

It's just like Groupon, you can't have a good sell-through product
indefinitely if the service providers aren't happy and churn at a high rate.

Sooo... what's the churn for the drivers?

~~~
smallgovt
Driver churn isn’t important if driverless cars are on the way.

~~~
trimbo
So you think they'll stay solvent for 25 years?

------
ryougazilla
For those interested in modeling out the s1, here is a link to an excel
version of all the tables in the s1: [https://get.sentieo.com/lyft-
ipo/](https://get.sentieo.com/lyft-ipo/)

------
paydirt412
As a multimodal platform/TaaS, is Lyft going to enter the urban air mobility
space? Uber is already looking into eVTOL and air mobility with their Uber
Elevate team. I saw Blade just launched scheduled helicopter flights in the
Bay Area. Use my invite code, SF-4DAN98, for early access. Going to try a
flight next week to see if it reduces my commute time.

------
eatbitseveryday
Why are there missing numbers in the form? For example, the percentage the
founders hold, or the number of shares that will be made available?

~~~
richardwhiuk
Some details can be excluded from the public filling and get filled in closer
to the IPO date.

------
standerman
This explains why I have seen such an increase in the number of cars with Lyft
lights in their windshield driving around town.

------
ackbar03
Aws costs aside, they are being painfully honest in their prospectus
[https://www.bloomberg.com/news/articles/2019-03-02/lyft-s-
ri...](https://www.bloomberg.com/news/articles/2019-03-02/lyft-s-risk-factors-
are-the-stuff-of-ipo-dreams-bad-ones)

~~~
richardwhiuk
You are pretty much required by law to be painfully honest. You are required
to disclose anything that you know of that might have a material impact on the
shares.

------
CondensedBrain
Some useful numbers from the filing:

1 billion+ cumulative rides.

$8.1 billion in bookings in 2018

$2.2 billion revenue in 2018

From risks:

>> _" We have incurred net losses each year since our inception and we may not
be able to achieve or maintain profitability in the future. We incurred net
losses of $682.8 million, $688.3 million and $911.3 million in 2016, 2017 and
2018, respectively."_

~~~
xxpor
1 billion rides really doesn't seem that impressive to me given they're a
global company.

~~~
driverdan
Lyft is not a global company. They're only in North America.

~~~
xxpor
Oh wow. I don't know where I got the idea they were global from then. Thanks
for the correction.

------
8ytecoder
Obligatory read about Lyft's dual class shares from Matt:
[https://www.bloomberg.com/opinion/articles/2019-02-12/lyft-d...](https://www.bloomberg.com/opinion/articles/2019-02-12/lyft-
doesn-t-need-investors-to-vote)

------
yuvalkarmi
Mazel tov! About time :) Congrats to John, Logan, and the entire Lyft family!

------
googlemike
Uber is kicking their teeth in. I would be very surprised if Lyft is still
around in 5 years.

