Company / division: Lyft
Lyft’s Rapid Growth Continues in Q1, While Losses Narrow (Apr 27, 2017)
Following Bloomberg’s exclusive on Uber’s financials for the end of last year, which were provided officially, it now has leaked numbers for Lyft for Q1. Those numbers, like Uber’s, show very strong growth, though the implication that this has come as a result of Uber’s troubles isn’t supported by other recent data. What’s really happening is that the whole space is growing extremely rapidly and these two companies are capturing the vast majority of that growth in the US. The big difference between the two is that Lyft’s numbers show smaller losses in dollar terms, while Uber’s showed growing dollar losses. Lyft’s recent aggressive expansion is probably going to slow its progress towards profitability somewhat, but that goal continues to look quite a bit closer for Lyft than for Uber.
There were reports about new fundraising for Lyft a while back, and it looks like it’s now completed a decent-sized round at a significantly higher valuation than its last round a year ago. The FT article also suggests that Lyft has been benefiting from Uber’s recent troubles, though there’s actually been little evidence of that and some to the contrary. It’s still smart for Lyft to raise funding and fuel its rapid expansion in the US during this time, but there’s no guarantee that it’ll be able to gain meaningful share as a result given that it seems to have been able to do little of that even in what’s been a disastrous period for Uber on the PR front.
via Financial Times
8,000 Uber, Lyft, ride-hailing drivers fail new background checks in Massachusetts – The Boston Globe (Apr 5, 2017)
Massachusetts put in place a new law requiring drivers for ride sharing services to acquire a license, which in turn requires passing an extensive background check. Of the 71,000 existing drivers who applied, a little over 11% failed these background checks, in many cases because of issues with driver’s licenses, at least some of which should have been caught by Uber and Lyft. Those companies, in turn, countered that they either don’t have access to longer criminal histories or that they have deliberately ignored older offenses as a way to help people with troubled pasts move on. Though there’s some truth to the former point, the latter is at least partly spin. Sex offenders, of whom 51 were rejected by Massachusetts, have to register, and presumably blocking them from becoming drivers would be both easy and desirable, no matter how long ago the offenses. The Massachusetts law is stricter than in other states and as such helps highlight how the background checks the companies themselves conduct can miss potentially serious issues in drivers’ histories.
via Boston Globe
Though I think we tend to think of services like Uber and Lyft as disrupting the status quo in transportation, it’s sometimes amusing to watch them instead recreate existing models, as in this case, where Lyft appears to be creating what’s essentially a bus service. Now, it’s still different in that it’s not tied to set routes, the drivers aren’t professionals or employed by any municipality as most bus services are, and the pricing is unpredictable, so there may be both pros and cons to this approach. But the more adoption of ride sharing services grows, the more they’re going to emulate existing modes of mass transportation like buses, because those continue to be the most efficient and cost effective ways to get people from A to B, especially during commuting times. Whether they end up being better than traditional mass transit in the same way as the original ride sharing services were better than traditional taxis remains to be seen.
Lyft will be breathing a big sigh of relief over the finalization of this settlement, which has been in the works for months, and Uber probably is too. Even though the latter is the focus of a lot of news coverage of how ride sharing companies treat drivers, it’s worth remembering that Lyft has exactly the same relationship with its drivers, which it insists on treating as independent contractors rather than employees. Both companies have now fought (and in Uber’s case are continuing to fight) groups of drivers lobbying for employee status and the benefits that would come with that, and so far they’ve prevailed. Keeping this arm’s-length arrangement in place is critical for maintaining the current financial structure of the ride sharing market, and any change to employment status would have pretty severe effects on the business model, so expect these companies to continue fighting these attempts to reclassify workers tooth and nail.
This is interesting data which confirms something that I’ve always suspected but never had more than gut feel to go on: that matters of principle rarely cause large scale and lasting changes in consumer behavior. In other words, even with the high profile and almost continuous coverage of everything going on at Uber at the moment, only relatively small numbers of people seem to be switching to Lyft, and they seem to be doing so fairly temporarily. The article cites spend data from a company called TXN which shows only a brief and switch of spending from Uber to Lyft in a couple of cities, which appears to represent roughly 5-10 points of market share at its peak. Convenience, habit, peer pressure and a myriad of other factors all likely weigh as heavily or more so in decisions to use a service or not, and Lyft’s big problem is that in many cities it’s simply not as big as Uber is. In the two cities cited here, it looks like Uber had two thirds and four fifths of spending at its nadir following the negative news, and that’s likely representative of many other cities where both operate (and of course there are still cities where Lyft doesn’t operate at all despite its recent expansion). That makes it tough to capitalize in a major way even when Uber appears to be stumbling significantly, especially because those stumbles haven’t affected the user experience in the slightest.
Lyft looks to raise $500M as Uber stumbles – USA Today (Mar 2, 2017)
As I mentioned in covering Lyft’s rapid expansion into new cities in the first two months of the year, taking advantage of Uber’s current struggles is smart, but it’s going to be costly. This news that Lyft is raising more money is validation of that view, but may also be a sign that it work even harder to take advantage of this window of opportunity. That’s smart – Uber is especially vulnerable with both drivers and riders at the moment, and the differentiation between the two is so limited that as long as Lyft has the capacity it could take really meaningful share.
via USA Today
A few weeks back, I wrote about Lyft expanding into 40 new cities as part of a 100-city push for 2017. Here’s the second part of that push, with another 54 cities launching today. Given what’s been happening with Uber over the past week or so, the timing of this massive expansion couldn’t be better from Lyft’s perspective – it’s now primed to benefit from the #deleteUber movement in many more places, given that it’s the only meaningful alternative to Uber across most of the US. Again, as I wrote in that earlier comment, this means Lyft is likely investing heavily in those new markets, which will push it further into the red at a time when it looked like it might be making progress towards profitability, but if this expansion helps it close the gap with Uber, then it’s almost certainly worth it.
via USA Today
That’s two major carmakers who now plan to deploy their first autonomous vehicles in ride sharing fleets, with Ford already committed to rolling out its first self-driving cars in a similar scenario. This makes lots of sense – two of the biggest limitations of early AVs are going to be cost and restricted geographic use, so deploying them in ride sharing fleets where they can be limited to a narrow area and driven almost constantly creates conditions in which they can still be both effective and cost effective. I’m still skeptical that we’ll see these cars roll out in more than one or two markets in the timeframes mentioned here, and even then I think it’s quite likely they’ll require human drivers for quite some time. But all this also reinforces the sense that it will be many years until we see universally autonomous vehicles (rather than cars able to be autonomous within narrow confines), and also somewhat undermines Lyft’s claims of getting to 50% autonomous in its fleet by 2021.
This is a big hire for Lyft, which so often plays second fiddle to Uber in so many ways. Being able to recruit a top notch mapping engineer like this away from Google is a great validation of Lyft as a company and as a recruiter specifically, and should make it easier to hire in other talent for mapping and autonomous vehicle technology at Lyft. It’s also notable that Vincent would be willing to leave Google, which obviously has far bigger and deeper efforts underway around mapping and autonomous driving than Lyft does.
The tech industry’s response to the Trump administration’s executive orders on immigration has predictably become a competitive dynamic, with Uber customers boycotting the company over a perceived weaker response to the situation than major competitor Lyft. This BuzzFeed piece does a nice job drilling down a bit and separating the rhetorical and practical responses of both companies to the immigration moves, which is more nuanced than the boycott implies. But this raises two other big points. Firstly, to what extent will a failure to stand up for certain causes start to be used as a weapon against companies? We’re already seeing both a backlash against Uber from those who oppose the immigration ban and a backlash against Starbucks from those who dislike its commitment to hire more refugees. No wonder tech companies have been reluctant to take a stand – after such a divisive election, there are large chunks of every company’s customers and potential customers on each side of the issue, and these issues are complex. Secondly, how interchangeable are Uber and Lyft really, to the extent that a temporary boycott might shift meaningful usage from one to the other in a permanent way? I’ve argued in the past that the nastiness that’s characterized competition between the two stems from their fundamental lack of differentiation, which makes them that much more vulnerable to perceived differences and makes them fight that much dirtier to get and keep customers.
Silicon Valley’s responses to Trump’s immigration executive orders, from strongest to weakest – The Verge (Jan 28, 2017)
This is a good summary of the responses from the tech industry so far to President Trump’s executive orders on immigration from Friday. It also does a nice job sorting the responses by strength – there’s quite a range in the responses, from those focusing narrowly on the practical impacts on employees of each company to those issuing broader moral condemnations of the policy. This certainly won’t be the last we hear on this topic. It’s notable that as of right now Amazon is one of the major holdouts among the big consumer tech companies.
via The Verge
Lyft is perennially in second place in the US ride sharing market, in terms of cities served, rides taken, and any other metric you might care to check. But it’s also been losing far less money at its smaller scale, and has looked like hitting profitability rather sooner than Uber. However, a massive expansion like this is likely to set that effort back somewhat, given that the main reason for the losses is customer acquisition costs, which are always highest in a brand new market. I’ve yet so see any commentary on that point from any of the coverage on this news today, but it should be a major focus here for anyone watching the company.
via Business Insider
U.S. Department of Transportation announces a new committee focused on automation – TechCrunch (Jan 11, 2017)
If there’s one thing that’s become very clear to me this week as I’ve attended the North American International Auto Show in Detroit, it’s that autonomous driving is a vastly more complex proposition than many of the claims from its various proponents would suggest. All autonomous driving technology is not created equal, and governments and regulators have lots of thorny issues to resolve before widespread autonomous driving can become a reality. The good news is that the US Department of Transportation seems to understand that and is taking steps to understand all the implications, working with many of the players likely to make it a reality in the coming years. I hope this work continues under the incoming administration, because it’s critical.
Lyft Co-Founder John Zimmer Drives And Dishes On Automation, Car Subscriptions, And Cash – BuzzFeed News (Jan 6, 2017)
An interesting tidbit in here – Lyft is already profitable on a per-ride basis, and the $150m or less it aims to lose each quarter is down to customer acquisition costs – free rides and so on. In that sense, it’s like many enterprise SaaS companies, and the burn rate is a factor of the rate of growth versus the base of customers. Lyft is much smaller than Uber, but also losing a lot less money. The key question therefore is whether it can at some point shift that balance between growth and profitability despite its smaller scale.
This article highlights two things: first, Uber still dwarfs Lyft, with 78 million rides in December to the latter’s 18.7 million. Secondly, both companies are still growing ridership at a rapid pace. That’s important because although this sometimes feels like a zero sum game, it clearly isn’t, at least not yet. The overall pie is still growing, and even though Lyft’s slice is far smaller, that’s growing too. The question is how long both the overall growth and individual companies’ growth will continue.
The Third Transportation Revolution – Lyft CEO (Sep 18, 2016)
Lyft CEO John Zimmer makes two strong claims in this piece: autonomous vehicles will account for the majority of Lyft rides within 5 years (i.e. by 2021), and private car ownership will all but end in major US cities by 2025. Both of these claims are directionally correct – autonomous cars are absolutely coming, and thanks to ride sharing, many city dwellers will eventually abandon car ownership. But the timelines for both are likely dramatically over-optimistic. Most major car manufacturers aren’t talking about having production autonomous cars on the road until the early 2020s, and car ownership trends will shift much more slowly too. We therefore have to ask to what extent Lyft’s business plans are based on these over-optimistic goals.