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Lyft looking to raise $500M in new funding at valuation of about $4B

nytimes.com

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Re: Lyft looking to raise $500M in new funding at valuation of about $4B

#31

Post by cperciva »

[deleted] wrote: post #30
cperciva wrote: post #28

Earlier quoted context omitted.

Nonsense. Lyft's drivers could be contractors. Tarsnap's revenue is all the picodollars users spend, even though I pass quadrillions of them over to Amazon to pay for the storage I'm reselling. But Amazon is definitely not my employee.

[deleted]

I'm not trying to answer the "contractor vs. employee" question. There are many factors which go into that determination and I don't know enough about Lyft to offer an informed opinion about that.

My point is just that a contract between you and Lyft which states that Lyft will get someone to drive you somewhere does not imply that Lyft's drivers are employees, because the presence of a contract between Lyft and its customers is entirely consistent with Lyft's drivers being contractors.

Re: Lyft looking to raise $500M in new funding at valuation of about $4B

#32

Post by rahimnathwani »

antr wrote: post #22
rahimnathwani wrote: post #19

Earlier quoted context omitted.

When you order a ride with Lyft, a contract is established between you and Lyft. You pay Lyft $10. Payment to the driver is a cost incurred by Lyft in providing services to you. When you order something on eBay, a contract is established between you and the seller. You pay the seller $10. The seller gives eBay a cut. eBay's cut is a cost incurred by the seller in providing goods to you.

It's incorrect to do that, and no leading accounting firm would sign-off those statements. The service provided by Lyft is not the taxi ride, but the arrangement of the taxi ride. Lyft is acting as an agent, not the principle, and consequently they can only recognise the booking fee, not the entire service.

"The service provided by Lyft is not the taxi ride, but the arrangement of the taxi ride."

You are right. I was wrong about how Lyft's customer agreement works. I looked up the Lyft T&Cs[0] and they specifically say:

"In exchange for permitting you to offer your Services through the Lyft Platform and marketplace as a Driver, you agree to pay Lyft (and permit Lyft to retain) a fee of up to 20% (the “Administrative Fee”) of the Ride Fees paid by Riders for such Services."

This makes it clear that Lyft is acting as an agent (like eBay) not as a principal (like Tarsnap).

[0] https://www.lyft.com/terms

Re: Lyft looking to raise $500M in new funding at valuation of about $4B

#33

Post by rahimnathwani »

jcdavis wrote: post #21
rahimnathwani wrote: post #19

Earlier quoted context omitted.

When you order a ride with Lyft, a contract is established between you and Lyft. You pay Lyft $10. Payment to the driver is a cost incurred by Lyft in providing services to you. When you order something on eBay, a contract is established between you and the seller. You pay the seller $10. The seller gives eBay a cut. eBay's cut is a cost incurred by the seller in providing goods to you.

We can argue this one all day :). I would argue Lyft is merely providing the service of matching me with the driver (who is a 3rd party, specifically not an employee), for which it takes a fixed cut. The driver is the primary provider of the service, and as such Lyft is merely an agent, and should follow net revenue reporting. Really Lyft (and Uber) fall on both sides of EITF 99-19, but I suspect when Uber IPOs you w…

"We can argue this one all day :)."

Actually, we don't need to :) It's clear as day in Lyft's T&Cs. You are correct. Lyft is an agent, not a principal to the transaction.

Re: Lyft looking to raise $500M in new funding at valuation of about $4B

#35

Post by heyimmanel »

jcdavis wrote: post #2

"At the Robin Hood Investors Conference in New York on Tuesday, Lyft said it expected to generate about $1 billion in annualized gross revenue next year, a figure that does not account for the cut of money the drivers take from each transaction." Maybe I'm missing something, but isn't the driver's "cut" like 80%+? This seems pretty misleading

Does VISA or AMEX add all the transactions they handle in their networks as revenue? or the fees? Does Apple Pay add all the transactions they do as gross revenue? There you go... pretty misleading.

Re: Lyft looking to raise $500M in new funding at valuation of about $4B

#36

Post by jcdavis »

rahimnathwani wrote: post #33
jcdavis wrote: post #21

Earlier quoted context omitted.

We can argue this one all day :). I would argue Lyft is merely providing the service of matching me with the driver (who is a 3rd party, specifically not an employee), for which it takes a fixed cut. The driver is the primary provider of the service, and as such Lyft is merely an agent, and should follow net revenue reporting. Really Lyft (and Uber) fall on both sides of EITF 99-19, but I suspect when Uber IPOs you w…

"We can argue this one all day :)." Actually, we don't need to :) It's clear as day in Lyft's T&Cs. You are correct. Lyft is an agent, not a principal to the transaction.

It makes sense - As soon as they claim they are a principal the lawsuits from their drivers about employement status become more legitimate.

Re: Lyft looking to raise $500M in new funding at valuation of about $4B

#37

Post by [deleted] »

gamblor956 wrote: post #16
dietrichepp wrote: post #8

Earlier quoted context omitted.

It doesn't sound particularly misleading to me. That's just what "gross" means. Gross is always way, way higher than net. You wouldn't subtract the wholesale cost from the gross income of a retail chain, you wouldn't subtract employee wages from the gross income of a software firm, and you wouldn't subtract contractor payments from Lyft.

Under generally accepted accounting principles (GAAP), and their European equivalent, IFRS, a company generally cannot include in income payments it receives on behalf of others. Lyft, and Uber, rely on the fiction that they are merely booking apps for drivers, so the fares belong to the driver, and Lyft and Uber are merely entitled to a portion of the fare for providing the booking service. At no time are they/were…

[deleted]

Re: Lyft looking to raise $500M in new funding at valuation of about $4B

#39

Post by mkagenius »

gregoryw wrote: post #15
jcdavis wrote: post #2

"At the Robin Hood Investors Conference in New York on Tuesday, Lyft said it expected to generate about $1 billion in annualized gross revenue next year, a figure that does not account for the cut of money the drivers take from each transaction." Maybe I'm missing something, but isn't the driver's "cut" like 80%+? This seems pretty misleading

He's right. You can't double count the revenue of your partners. That would be like eBay posting revenue of $300 billion. Or the NYSE posting revenue as all trades executed rather than their commission. Lyft is still under $200 million and is raising at 25x revenue or so.

> is raising at 25x revenue or so.

valuation is not equal to annual revenue..its more like the value over the lifetime.

Re: Lyft looking to raise $500M in new funding at valuation of about $4B

#40

Post by dnautics »

jibjabjib wrote: post #38

$1 billion next year. Assume 60% YoY growth -> doing about $600mm this year? Say average $12 a ride...that's 50m rides this year -> 137k rides a day/65 cities served -> 2100 rides/city/day. That's definitely lower than I expected.

In san francisco, there are about 200-400 or so drivers and each takes about 20 rides a day, and this is of course the sity with the biggest volume.
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