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Uber and Lyft Investors Are Looking for Signs of a Détente
- Marazan 7y agoYoU JuST donut UnderSTand Their BusyNEss MODEL!!111one!
- dang 7y agoCould you please stop posting unsubstantive comments to Hacker News?
- Sphax 7y ago> Uber complicates the analysis somewhat. Its third-quarter operating loss is estimated to be $4.96 billion. Yes, you read that right. The figure accounts for costs related to the initial public offering Not familiar with all this, can someone ELI5 what are the "costs related to the initial public offering" ?
- H8crilA 7y agoYou have to pay the investment banks for underwriting, pay the stock exchange for listing, pay for the "roadshow", probably have some additional labor costs on your side and probably some other costs that I'm not aware of. Why do you think investment bankers paddle IPOs so much? Like sure, they take underwriting risks, but they also set the IPO price, so they control the demand. In other words, imagine if you have 100 pieces of gold. I come to you and tell you: I guarantee to sell this gold for you. You don't know the price until (a day before) I sell it. You still have to pay for my services.
- yes_man 7y agohttps://abcnews.go.com/Business/uber-fires-400-people-marketing-team-restructuring-lyft/story?id=64653082 https://abcnews.go.com/Business/uber-fires-400-people-market... At least they seem to have had a lot of marketing folk that were laid off shortly after the IPO
- kgwgk 7y agoThe article mentions Lyft included similar costs last quarter and this is what they said: "Net loss for Q1 includes $894 million of stock-based compensation and related payroll tax expenses, primarily due to RSU expense recognition in connection with our initial public offering."
- acollins1331 7y agoThis is not a sustainable company. Autonomy will not save it in time. The VC rounds and lying are over, it's valuation will continue to plummet. This is classic America for you. New startup comes in and undercuts regulated businesses (taxis) forcing them out of business. Then the VC money runs out and you find out their business was unsustainable. The only way Uber will stay afloat is to raise rates. Now we have the same rates we did before with cabs but none of the nice regulations on them, and none of the decent paying jobs. Good thing a bunch of investment people got rich though. America is still great!
- darkwizard42 7y agoHm. Not sure I agree here. I think the rates will increase but the fundamental technology of dispatch is probably more efficient than “cruising” as cabs normally do. I’m making no claims on how profitable either company will be but I think they have added value to the transportation industry that isn’t artificial. Disclaimer: I work at Lyft.
- jasonlingx 7y agoThe ride hailing tech is not rocket science and it is commoditised. Self driving is the end game here but the ride hailing companies are not in this game. Here in Asia, Grab/Gojek etc has diversified into payments, food delivery, massage etc which brings some semblance of sustainability.
- ulfw 7y agoI am sceptical about that though. It’s a copy of the China model of super apps but that’s a way different market. South East Asia isn’t one (pretty unique) country. It’s a whole range of countries, cultures, history, languages, economies, you name it. A super app that does everything for everyone is a bit like Yahoo! in the mid 90s. Might work okay in the beginning but as the markets mature, why bother with one app instead of specialist expert apps.
- 7y ago
- ghaff 7y agoThe current headline "Uber and Lyft Investors Are Looking for Signs of a Détente" isn't really touched on in the body of the article. But it seems obvious that Uber and Lyft need to both raise their prices--with of course no collusion involved /s. That does get into the question, as the article, touches on of what happens to the market for these services if you double (or whatever) what they cost. Presumably fewer riders which means longer waits, fewer areas where the density makes them viable, etc. So higher prices/worse service. I think these would still work in cities for when people would have historically taken taxis. Probably works less well for casual use and when people are using to replace public transportation or car ownership on a daily basis.
- tim333 7y agoA problem with Uber and Lyft as investments is that the barriers to entry aren't that high. In London recently I've been using Kapten and Bolt rather than Uber as they are both similar services with VC funded special offers. If Lyft/Uber raise prices the competitors will probably flood in. Some great deals on Kapten/Bolt by the way - 15 minute journeys for like £2.
- ghaff 7y agoThat's fair. There's certainly a race to the bottom aspect to the whole business. But, surely at some point, funding undifferentiated businesses to lose money when you know they'll have to raise prices sooner or later (at which point they're just like everyone else) can't continue forever. I know a lot of VCs are stupid, but that stupid? Maybe we just end up with Taxis 2.0. Mostly local businesses with a very low cost structure.
- tim333 7y agoOr maybe someone like Google provides an almost free (commission wise) app service for drivers. A bit like providing Android against iOS et al.
- buboard 7y agoi posted it with the title "Ubers lossed will be $4.5B" or something. not the title of the article but it's what grabbed my eye on twitter
- IGotThroughIt 7y agoUber eats is their golden egg. I think it was Stripe's Collison who said that their cohort of businesses - stripe, lift, uber et al - need to first build out their ecosystems then once done, a plethora of other business opportunities will emerge and that's where the profits will emerge from. For instance what uber eats is to uber, atlas and radar are to stripe.
- matwood 7y agoSure, but how long will people pay $10 to have a $5 hamburger delivered to them?
- ghaff 7y agoProbably as long as you have young affluent urbanites who grew up expecting they could get anything delivered to them or done for them without getting up from a computer.
- mattmanser 7y agoWe had these services before even in 2000. They failed then when the VC money run out, what has changed so much now?
- ghaff 7y agoNot that much. And food delivery in cities has been around long before the Web. Not sure having brochures from the local pizza places and chinese restaurants and making a phone call is all that different from doing it at a computer.
- TeMPOraL 7y agoIt isn't; it's only slightly more convenient from user's POV. But it offers an opportunity for a middleman to insert itself between the restaurants and the people making orders.
- 7y ago
- blunte 7y agoHere's my ignorant perspective as an outsider to SV: Starting with the late 90s, techies (good people, smart people, people who built things) got rich in a new, very fast way. Whether they were early investors in Netscape, employees of Microsoft, or one of the many who started companies which were then bought by giants, the result is that they came into money so big that they literally had it to burn. After the "how many Ferraris can I own" phase wore off, they continued doing what they loved - building and being involved in tech projects. This resulted in more financial successes, and more money. Early windfalls put them into new positions as investors. And frankly, by investing in a selection of start-ups, the outcome was almost certainly that at least one investment would pay off 1000x or more. This created more money. However, in many cases, these gains were artificial. The stock market creates play money which big companies can use to buy smaller companies, thereby "increasing" their perceived value - and thus their stock price, and thus their ability to go buy more. This is not sustainable, because eventually there isn't something big enough to buy to keep up the appearance of growth and increased value. My favorite example of this was WorldCom https://en.wikipedia.org/wiki/MCI_Inc https://en.wikipedia.org/wiki/MCI_Inc. MCI, for those old enough, was once a booming telco with the strongest internet backbone in the US. The got bought by a little Southern US company run by an aggressive CEO - Bernie Ebbers, who learned that acquisitions paid for with stock would increase the "value" of the company, which would increase the future buying power of the stock. I enjoyed a brief and completely ineffectual period of employment with MCI-Worldcom and got to see the dysfunction of the collection of gathered companies. Unfortunately for Ebbers, it was getting difficult to find companies big enough to buy that would make a measurable increase in perceived value. Sprint was the last big target, but that sale was blocked by the US because it would have created an internet monopoly. MCI-WC happily offered to buy Sprint without their internet component, but Sprint rejected that. Once the deal was off, the drag of poorly integrated companies all under one umbrella slowed the MCI-WC train to a stop. Then the investigations began, and we know how that turned out. I see this repeating, but starting with the early tech-millionaires. They have so much money, and they seek similar % returns, so they're willing to dump more money into more ambitious (or asinine) projects. But as those of us outside the madness can see clearly, it won't work. That's not to say that new ideas should get investment, and that's not to say that 1/10 success rate is bad. But keeping some sense is important, and it really appears that the "successful SV investors" have totally lost their sense. In the end, they won't be hurt; the foolish stock market investors will, as usual. They follow trends, they buy into unicorns when they're allowed to, and they usually come out losers. I would like to see a real shift in behavior from the current tech investment system. First, the supposed race to returns which causes some companies with a good idea to make terrible short term decisions (under pressure from VC partners) needs to stop. That is just a screwing and fleecing of other people which only serves the VCs. Second, if a company cannot become profitable in a few years (depending on the type of product/service), then the investment should stop or the company should make a huge pivot. Third, that VC money should be distributed more widely across education. There are a lot of very talented, motivated young people who could do great things if given some opportunities.
- dpflan 7y agoI'm not quite sure I understand the use of the word "Détente" in the title. Is this a détente between Uber and Lyft regarding ride pricing strategies? Or becoming less competitive towards each other?
- ghaff 7y agoThat was the obvious meaning I took away. But the article didn't discuss that angle at all. So I'm not sure what the headline is trying to say.
- nradov 7y agoThe same mutual funds own large portions of both Uber and Lyft. So while no one has proven any sort of anti-competitve collusion, I suspect investors may be pressuring both companies to scale back the direct competition.