Lyft Files S-1 • Hacker News Board

Re: Lyft Files S-1

#381

Post by geezerjay » Sat, Mar 02, 2019, 11:07 AM UTC

jhall1468 wrote: post #337

Alupis wrote: post #304

Earlier quoted context omitted.

The point stands... 350 engineers is an army of engineers... for $8mm monthly, it wouldn't be unreasonable to achieve 500+ engineers depending on salaries. Lyft could definitely build and maintain their own infrastructure for this kind of money... probably do it better (customized to their needs) and cheaper.

All of that is ignoring payroll taxes (for your new, very large staff), shifting all of your tax-deductible operational expenses into tax limited capital expenses. Businesses don't flagrantly throw around money just to upset people. There are huge advantages to offloading non-primary business costs to other businesses. Netflix is doing this too. I think we can assume not all of them are just idiots that haven't figur…

> Businesses don't flagrantly throw around money just to upset people.

But businesses do throw around money for the wrong reasons, and keep on doing so if that's the status quo. No one gets fired for buying IBM.

> Netflix is doing this too.

IBM stuff was bought by a lot of people.

> I think we can assume not all of them are just idiots that haven't figured out they could build this themselves.

That statement is very misguided and misses the problem. For example if you built your infrastructure around a specific solution then you also end up building a team of professionals whose livelihood is tied to a specific supplier of said infrastructure.

Re: Lyft Files S-1

#382

Post by sokoloff » Sat, Mar 02, 2019, 1:00 PM UTC

ericd wrote: post #362

spookthesunset wrote: post #278

Earlier quoted context omitted.

I promise you weren't actually doing your costing correctly to arrive at that conclusion. Engineers always badly mis-underestimate the costs of things and "rack & stack data center management" is way more costly than you are actually accounting for. Especially in terms of opportunity cost and, well, just wasted resources that aren't actually adding value to the company. There is way, way, way, way, way more to a runn…

The savings enabled us to hire more people than it took to run. After the upfront setup (Xen and Ansible), it was pretty painless, had much of the same flexibility as cloud options, and better performance. For bulk storage, we used S3. So basically, I disagree. These aren't estimates.

Did your devs have the same turnaround time for new equipment and services as AWS? When they had problems, did they have the same volume of searchable material to help them repair? Did your services evolve and adapt as quickly as AWS? Does your networking connectivity survive DDoS attacks fairly transparently? Do you have DCs all around the part of the world that’s relevant to you? Can you survive multiple DC outages?

I was a cloud skeptic and ran Tech Ops (including our DCs) for years. About 5 years ago, it dawned on me that even owning the whole budget for Tech Ops, that I wasn’t capturing the full costs of trapping my org onto our in-house solutions.

At tiny, small, and medium scale, cloud is obviously the way to go, IMO. At large and huge scale, I think letting some hybrid leak in where systems change rarely and cloud costs are WAY out of line (DropBox storage, Netflix CDN, etc) makes sense.

Re: Lyft Files S-1

#383

Post by CondensedBrain » Sat, Mar 02, 2019, 1:07 PM UTC

sciurus wrote: post #336

CondensedBrain wrote: post #180

Earlier quoted context omitted.

Netflix and its (ongoing?) transition from AWS to its own systems might provide some guidance if they ever decide to do the same.

What transition are you talking about?

The one I misremembered and that apparently never happened.

Re: Lyft Files S-1

#384

Post by treis » Sat, Mar 02, 2019, 1:37 PM UTC

throwaway-1283 wrote: post #265

treis wrote: post #263

Earlier quoted context omitted.

It's only high because they are in a money burning contest with a swath of other VC funded gig companies. There's nothing inherent about their business model that requires extremely high driver acquisition costs.

What do you mean "nothing inherent." Turnover is high because pay is low, so they need to constantly recruit new drivers via signup bonuses that pad their earnings for the first X months. If they fail to attract drivers then their growth will tank because supply will not keep up with demand. Support needs are naturally high and things go wrong all the time because you're dealing with real people in the physical world…

>What do you mean "nothing inherent."

There's nothing fundamental about a ride share company that requires high driver acquisition costs. They are a result of a bunch of companies trying massively grow in the same space. Once Lyft stops trying to grow so rapidly and the industry settles they will not have to spend as much on driver acquisition. Indeed, it's already happening as their cost of advertising as a percentage of revenue is dropping dramatically.

> Support needs are naturally high and things go wrong all the time because you're dealing with real people in the physical world - it's not just some bugs here or there on a computer screen.

Why do you think support needs are naturally high? Higher than say what Ebay provides to sellers or what Dropbox provides to their enterprise customers?

>Companies like Lyft/Uber also have a much higher % of their full time staff in "ops" roles that are driver-facing (support, onboarding, offboarding, marketing, acquisition, etc.)

Higher than who? And what are you basing that on?

>So long as their business is extracting maximal fees from each fare (thus keeping driver pay low) this cycle will go on as long as it can, and acquisition costs will continue to be high.

If it does, that's only because it's more profitable for Lyft to cycle through drivers than pay more to retain them.

Re: Lyft Files S-1

#385

Post by treis » Sat, Mar 02, 2019, 1:42 PM UTC

TheCoelacanth wrote: post #331

treis wrote: post #258

Earlier quoted context omitted.

>The difference between a SaaS and a Lyft is that Lyft has huge operating expenses Lyft is SaaS (technically a platform) and doesn't really have more operating expenses than any other internet company.

Lyft is not SaaS. Their software is how you purchase non-software services from them, you do not pay for the software itself.

Lyft doesn't provide any services. They connect riders with drivers and provide the technology to make that work. Whether or not that merits a SaaS label isn't really the point. The point is that Lyft has the same cost centers as SaaS companies.

Re: Lyft Files S-1

#386

Post by devocracy » Sat, Mar 02, 2019, 1:58 PM UTC

buboard wrote: post #251

CondensedBrain wrote: post #18

Earlier quoted context omitted.

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.

what's the cost of the driver? seems marginal compared to the cost of the cars

If that were true (I have no info either way), wouldn't that mean most drivers have no clue the true cost of working for Lyft/Uber? All they see if free money, but aren't factoring in repairs.

Re: Lyft Files S-1

#387

Post by puranjay » Sat, Mar 02, 2019, 2:48 PM UTC

Fordec wrote: post #24

randomacct3847 wrote: post #7

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.

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

I know a couple of bootstrapped founders running businesses with $10M+ ARR. They own the business in full. Any exit event would net them the same figure as Lyft's founders.

Makes you wonder if raising money to run a business like Lyft is worth it from a personal financial perspective. The bootstrapped founders I mentioned are extremely satisfied with no outside interference or investors breathing down their necks

But then again, not everyone can build a $10M ARR business

Re: Lyft Files S-1

#388

Post by ericd » Sat, Mar 02, 2019, 3:10 PM UTC

sokoloff wrote: post #382

ericd wrote: post #362

Earlier quoted context omitted.

The savings enabled us to hire more people than it took to run. After the upfront setup (Xen and Ansible), it was pretty painless, had much of the same flexibility as cloud options, and better performance. For bulk storage, we used S3. So basically, I disagree. These aren't estimates.

Did your devs have the same turnaround time for new equipment and services as AWS? When they had problems, did they have the same volume of searchable material to help them repair? Did your services evolve and adapt as quickly as AWS? Does your networking connectivity survive DDoS attacks fairly transparently? Do you have DCs all around the part of the world that’s relevant to you? Can you survive multiple DC outages…

We did have quick turnaround - we were running everything on Xen VMs on LLVM internally, it was trivial to throw up new instances, snapshot them, etc. Our demands weren’t changing that quickly, so there wasn’t that much need to bring on new hardware all the time. A small number of dual socket machines can go a very long way these days. We didn’t have the same kind of multi-DC redundancy that AWS can give you, no, but over those years, many AWS based services were down multiple times due to being focused in Virginia, so it’s not an automatic win for AWS. The amount of time we would have spent getting that running and maintaining automatic multi-zone failover on AWS likely would have swamped the benefits for us, though, and I think are usually overkill for a small company. YMMV.

Re: Lyft Files S-1

#389

Post by oneplane » Sat, Mar 02, 2019, 3:59 PM UTC

oneplane wrote: post #52

us0r wrote: post #12

>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 a…

Even medium retail easily does 10 million per month.

Not sure what all the downvotes are about, but spending a bunch of money on your (virtual) datacenter isn't a new or strange thing. Whereas Lyft might not spend it on processes that deal with physical products, they do have a much larger amount of connected clients and data processing.

While in theory you'd "just need a database and some REST API" it is never as simple as that. Say you have one set of systems for production, you may want one or more duplicates for engineering purposes. And then you'll want tools to managed those systems, and tools to manage those tools. Then there is AAA, versioning and storage, and you'll have some sort of forensic/auditing log.

Up to some point, what makes a system expensive isn't the one set of parts that make production, that is just the tip of the iceberg. It's that you need everything else as well.

So regardless on whether you are doing a relatively simple service (getting people from A to B), or doing buying, sales and logistics for retail, which isn't rocket science either, you get the same initial cost and overhead.

Re: Lyft Files S-1

#390

Post by hoschicz » Sat, Mar 02, 2019, 4:07 PM UTC

ukoki wrote: post #286

us0r wrote: post #12

>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 a…

> Not as bad as snap but what could they possibly be spending $100 million a year on? They are working on self-driving cars — which likely comes with massive storage requirements for recorded sensor data, and the compute to crunch it.

Is Lyft itself working on self-driving cars? I thought that GM and Alphabet (which are both investors in Lyft) are doing that and Lyft itself is doing no self-driving car research.

EDIT: now I see, page 3: "Simultaneously, we are building our own world-class autonomous vehicle system at our Level 5 Engineering Center, with the goal of ensuring access to affordable and reliable autonomous technology"