6 ms·

Leaked Lyft Document Reveals a Costly Battle with Uber

59 points by danzheng 11y ago

russell_h 11y ago
> 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?
- HockeyPlayer 11y ago
  They took the $10.8m in December 2013 revenue and multiplied by 12 to get the $130m number.
  - dwightgunning 11y ago
    Also commonly referred to as "revenue runrate".
  - russell_h 11y ago
    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?
    - jonas21 11y ago
      Yeah, I think they used the December 2014 numbers.
MadManE 11y ago
I keep hearing about this huge war between Lyft and Uber, but I don't see anything evidenced in the price to the user. Now, maybe I'm just naive, but shouldn't this kind of competition drive the prices down?
- mayneack 11y ago
  Have you used uber pool or lyft's equivalent? I can take a 45 minute ride in LA for $5. I've only had someone else get in the car once out of at least 20 rides. They're definitely losing some money there.
- jordanthoms 11y ago
  Prices have been coming down. Just look at UberX prices in the established markets.
gphil 11y ago
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 the cab, which kind of highlights the commodity nature of rides--especially in the unregulated environment they themselves advocate. Maybe the long-term plan is de-regulate and re-regulate in favor of Uber? Just thinking out loud because I'm genuinely curious what the strategy is.
- dankohn1 11y ago
  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 current business model looks excellent, at least for each city in which they are established as the first mover. [0] http://en.wikipedia.org/wiki/Two-sided_market http://en.wikipedia.org/wiki/Two-sided_market [1] http://en.wikipedia.org/wiki/Uber_(company)#Sabotage_against_competitors http://en.wikipedia.org/wiki/Uber_(company)#Sabotage_against...
  - Retric 11y ago
    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.
  - baddox 11y ago
    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.
tomashertus 11y ago
So taking into account these two facts: > in 2014, it was 51,000 drivers and 2.2 million monthly rides, according to the document > A ride booked in San Francisco through the Classic service generates a 92-cent profit for Lyft, including marketing costs but excluding corporate expenses, such as software developers and office space. and assuming that all these 26.4 rides where Lyft Classic(which is of course foolish, but good for now), they would have around $24.28M for corporate expenses. Well and office in SF with ~500 people and all these perks in the heart of Mission district, makes me wonder if they are even profitable...
- lbarrow 11y ago
  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.
  - tomashertus 11y ago
    my bad, I was agitated from the graph above this statement!:) Thanks
  - revelation 11y ago
    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.
    - simonw 11y ago
      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.
      - revelation 11y ago
        They are a middleman. Where exactly is the finish line of this particular race? Because it sounds very much like an antitrust lawsuit.
tswartz 11y ago
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
- mathattack 11y ago
  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)
BAMartelly 11y ago
Does anyone have a link to the actual pitch document? I couldn't find it in the article or on google. Interesting excerpts but I'm greedy and want all the context in the doc :)

59 points by danzheng 11y ago

> 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?

HockeyPlayer 11y ago
They took the $10.8m in December 2013 revenue and multiplied by 12 to get the $130m number.
- dwightgunning 11y ago
  Also commonly referred to as "revenue runrate".
- russell_h 11y ago
  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?
  - jonas21 11y ago
    Yeah, I think they used the December 2014 numbers.

MadManE 11y ago

I keep hearing about this huge war between Lyft and Uber, but I don't see anything evidenced in the price to the user. Now, maybe I'm just naive, but shouldn't this kind of competition drive the prices down?

mayneack 11y ago
Have you used uber pool or lyft's equivalent? I can take a 45 minute ride in LA for $5. I've only had someone else get in the car once out of at least 20 rides. They're definitely losing some money there.
jordanthoms 11y ago
Prices have been coming down. Just look at UberX prices in the established markets.

gphil 11y ago

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 the cab, which kind of highlights the commodity nature of rides--especially in the unregulated environment they themselves advocate. Maybe the long-term plan is de-regulate and re-regulate in favor of Uber? Just thinking out loud because I'm genuinely curious what the strategy is.

dankohn1 11y ago
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 current business model looks excellent, at least for each city in which they are established as the first mover. [0] http://en.wikipedia.org/wiki/Two-sided_market http://en.wikipedia.org/wiki/Two-sided_market [1] http://en.wikipedia.org/wiki/Uber_(company)#Sabotage_against_competitors http://en.wikipedia.org/wiki/Uber_(company)#Sabotage_against...
- Retric 11y ago
  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.
- baddox 11y ago
  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.

tomashertus 11y ago

So taking into account these two facts: > in 2014, it was 51,000 drivers and 2.2 million monthly rides, according to the document > A ride booked in San Francisco through the Classic service generates a 92-cent profit for Lyft, including marketing costs but excluding corporate expenses, such as software developers and office space. and assuming that all these 26.4 rides where Lyft Classic(which is of course foolish, but good for now), they would have around $24.28M for corporate expenses. Well and office in SF with ~500 people and all these perks in the heart of Mission district, makes me wonder if they are even profitable...

lbarrow 11y ago
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.
- tomashertus 11y ago
  my bad, I was agitated from the graph above this statement!:) Thanks
- revelation 11y ago
  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.
  - simonw 11y ago
    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.
    - revelation 11y ago
      They are a middleman. Where exactly is the finish line of this particular race? Because it sounds very much like an antitrust lawsuit.

tswartz 11y ago

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

mathattack 11y ago
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)

BAMartelly 11y ago

Does anyone have a link to the actual pitch document? I couldn't find it in the article or on google. Interesting excerpts but I'm greedy and want all the context in the doc :)