Leaked Lyft Document Reveals a Costly Battle with Uber • Hacker News Board

Re: Leaked Lyft Document Reveals a Costly Battle with Uber

#21

Post by Retric » Thu, Apr 30, 2015, 9:22 PM UTC

dankohn1 wrote: post #13

gphil wrote: post #5

What I want to know is, when the VC money runs out, what's the barrier to entry to this business? Right now, Uber can beat everybody on price and quality because they don't have to be profitable for a long time. But once they have to compete on price, where's their advantage? Installed user-base? Incumbents forced out of business? Many times I call for an Uber and a cab comes first and then they lose my business to t…

Uber is a classic two-sided network [0], like eBay or Craigslist. It is extremely difficult to displace a first-mover advantage. The hundreds of thousands of drivers are set up with Uber and will stick with it unless something new is meaningfully better (and Lyft is currently worse). Same with the users. I think you can be legitimately critical of Uber's poor business ethics [1], but the sustainability of their curre…

The problem is you end up with network effects on the drivers side per city. So 2020's Ultra startup can just displace Uber in say NY and ignore every other city. After winning that they can fight for DC etc.

Also, drivers are a commodity market which is much easier to displace. Amazon marketplace vs eBay's auctions.

Re: Leaked Lyft Document Reveals a Costly Battle with Uber

#22

Post by eli » Thu, Apr 30, 2015, 9:23 PM UTC

toomuchtodo wrote: post #7

gphil wrote: post #5

What I want to know is, when the VC money runs out, what's the barrier to entry to this business? Right now, Uber can beat everybody on price and quality because they don't have to be profitable for a long time. But once they have to compete on price, where's their advantage? Installed user-base? Incumbents forced out of business? Many times I call for an Uber and a cab comes first and then they lose my business to t…

There is no barrier to entry. Seriously. Mobile apps? Backend infrastructure? Trivial. I take that back; the biggest barrier to entry might be a massive trove of ride data for machine learning used to predict capacity requirements. In large metro areas, you might be able to get this data in an open format, obviating the need for you to gather the data yourself (the recently FOILd New York Cab Ride data comes to mind…

I disagree. The network is the product, not the mobile app. Drivers won't switch to a new app that has no customers and customers won't want an app with no drivers.

Re: Leaked Lyft Document Reveals a Costly Battle with Uber

#23

Post by toomuchtodo » Thu, Apr 30, 2015, 9:26 PM UTC

eli wrote: post #22

toomuchtodo wrote: post #7

Earlier quoted context omitted.

There is no barrier to entry. Seriously. Mobile apps? Backend infrastructure? Trivial. I take that back; the biggest barrier to entry might be a massive trove of ride data for machine learning used to predict capacity requirements. In large metro areas, you might be able to get this data in an open format, obviating the need for you to gather the data yourself (the recently FOILd New York Cab Ride data comes to mind…

I disagree. The network is the product, not the mobile app. Drivers won't switch to a new app that has no customers and customers won't want an app with no drivers.

Oh puh-lease! We hear this argument time and again, yet continue to hear anecdotes about drivers who drive for both Lyft and Uber.

There is zero friction to install a new app and accept fares via that app, except perhaps how many ridesharing apps you can run at once on your device for accepting passengers.

Re: Leaked Lyft Document Reveals a Costly Battle with Uber

#24

Post by russell_h » Thu, Apr 30, 2015, 9:29 PM UTC

HockeyPlayer wrote: post #3

russell_h wrote: post #2

> The $130 million in revenue for 2014 is based on the combined net revenue from Lyft Classic and gross revenue from Lyft Line during the month of December, which implies $10.8 million in revenue during that month. What is this sentence supposed to mean?

They took the $10.8m in December 2013 revenue and multiplied by 12 to get the $130m number.

But that doesn't make sense, why would they use a year old run rate instead of actual revenue numbers? This presentation was seemingly somewhat recent.

Also did Lyft Line even exist in 2013?

Re: Leaked Lyft Document Reveals a Costly Battle with Uber

#25

Post by tswartz » Thu, Apr 30, 2015, 9:37 PM UTC

The second line of the article states that growth is beginning to slow. It felt ominous, but buried in the 5th paragraph it says they are still expecting 512% YoY growth in 2015.

> Lyft projects $796 million for 2015, a slowdown in growth but still an impressive 512 percent jump from 2014

Re: Leaked Lyft Document Reveals a Costly Battle with Uber

#26

Post by simonw » Thu, Apr 30, 2015, 9:41 PM UTC

toomuchtodo wrote: post #23

eli wrote: post #22

Earlier quoted context omitted.

I disagree. The network is the product, not the mobile app. Drivers won't switch to a new app that has no customers and customers won't want an app with no drivers.

Oh puh-lease! We hear this argument time and again, yet continue to hear anecdotes about drivers who drive for both Lyft and Uber. There is zero friction to install a new app and accept fares via that app, except perhaps how many ridesharing apps you can run at once on your device for accepting passengers.

The challenge is reaching critical mass, where you have enough customers to keep the drivers busy and enough drivers to guarantee a quick pickup.

The linked article says Lyft now have an average pickup time in SF of 2.5 minutes. Good luck bootstrapping to that kind of performance with a brand new ride share company starting from scratch.

Re: Leaked Lyft Document Reveals a Costly Battle with Uber

#27

Post by simonw » Thu, Apr 30, 2015, 9:43 PM UTC

revelation wrote: post #19

lbarrow wrote: post #12

Earlier quoted context omitted.

You don't have to wonder. It says at the bottom of the article that Lyft is not profitable: Though currently unprofitable, Lyft's ride economics appear to be going in the right direction.

Wow. Leave it to a startup to go into the red whilst providing 1) an app and 2) fluff mustaches and .. well not much more, really.

They're in a flat out race to gain market share with Uber. If they were profitable (rather than reinvesting revenue in further growth) their investors would rightfully be furious.

Re: Leaked Lyft Document Reveals a Costly Battle with Uber

#28

Post by chasing » Thu, Apr 30, 2015, 9:45 PM UTC

eli wrote: post #22

toomuchtodo wrote: post #7

Earlier quoted context omitted.

There is no barrier to entry. Seriously. Mobile apps? Backend infrastructure? Trivial. I take that back; the biggest barrier to entry might be a massive trove of ride data for machine learning used to predict capacity requirements. In large metro areas, you might be able to get this data in an open format, obviating the need for you to gather the data yourself (the recently FOILd New York Cab Ride data comes to mind…

I disagree. The network is the product, not the mobile app. Drivers won't switch to a new app that has no customers and customers won't want an app with no drivers.

Every driver I talk to has both User and Lyft installed. And I have have both Uber and Lyft installed. If one is surge pricing, I check the other.

Re: Leaked Lyft Document Reveals a Costly Battle with Uber

#29

Post by baddox » Thu, Apr 30, 2015, 9:49 PM UTC

dankohn1 wrote: post #13

gphil wrote: post #5

What I want to know is, when the VC money runs out, what's the barrier to entry to this business? Right now, Uber can beat everybody on price and quality because they don't have to be profitable for a long time. But once they have to compete on price, where's their advantage? Installed user-base? Incumbents forced out of business? Many times I call for an Uber and a cab comes first and then they lose my business to t…

Uber is a classic two-sided network [0], like eBay or Craigslist. It is extremely difficult to displace a first-mover advantage. The hundreds of thousands of drivers are set up with Uber and will stick with it unless something new is meaningfully better (and Lyft is currently worse). Same with the users. I think you can be legitimately critical of Uber's poor business ethics [1], but the sustainability of their curre…

The product is a bit more commoditized than with eBay or Craigslist though, right? Above some reasonable level of service, a ride is a ride. Assuming that the friction for switching services for the two sides is relatively low, it seems like there's a clear path to a new competitor starting slow and building both sides of the market at the same rate.

But for eBay, the products people want vary vastly from each other. I want to buy something fairly niche, so to save time it helps if there's one massive site where all of the people on the other side of the market are all located.

Re: Leaked Lyft Document Reveals a Costly Battle with Uber

#30

Post by mathattack » Thu, Apr 30, 2015, 9:50 PM UTC

tswartz wrote: post #25

The second line of the article states that growth is beginning to slow. It felt ominous, but buried in the 5th paragraph it says they are still expecting 512% YoY growth in 2015. > Lyft projects $796 million for 2015, a slowdown in growth but still an impressive 512 percent jump from 2014

The crazy thing is how a relatively small miss on a large growth rate can cause big valuation problems. When the value of the company is in future revenue, this happens. (Look at Twitter)