7 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.
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.
- JoshTriplett 11y ago
  > 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 In that scenario, Uber should be charging you a penalty for the cancelled ride. > Right now, Uber can beat everybody on price and quality because they don't have to be profitable for a long time. I certainly hope they're not losing money on each ride right now.
  - toomuchtodo 11y ago
    > In that scenario, Uber should be charging you a penalty for the cancelled ride. Which would drive users to Lyft or other ridesharing services.
    - necubi 11y ago
      Lyft penalizes you $5 for cancelled rides after some amount of time, at least in SF. Also when the app makes a request on its own and you're not there.
      - fragmede 11y ago
        As does Uber - they'll charge $10 if you cancel after 5 minutes after the driver is assigned. http://blog.uber.com/2012/05/01/updated-cancellation-policy/ http://blog.uber.com/2012/05/01/updated-cancellation-policy/
      - georgeott 11y ago
        Uber charges the same $5 after 5 mins, if cancelled.
- toomuchtodo 11y ago
  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 [1]). Anyway! I see Uber going the way of webvan. Great proof of concept that VC money is going to burn through, followed up by some combination competitors, self-driving cars, and local/state government transportation agencies putting together federated/open APIs to perform the same services but in a regulated manner (or governments contracting with smaller players to perform the same services). No amount of VC is going to remove a government's ability to regulate transportation (Montreal, Canada impounded 40 Uber drivers' vehicles the other day [2]). Then again, it shouldn't. Transportation should be regulated, but not for monopolistic reasons. Anyone want to make a cheap long bet for funsies? [1] http://www.andresmh.com/nyctaxitrips/ http://www.andresmh.com/nyctaxitrips/ [2] http://www.cbc.ca/news/canada/montreal/montreal-taxi-bureau-has-seized-40-uberx-vehicles-1.3050713 http://www.cbc.ca/news/canada/montreal/montreal-taxi-bureau-...
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.
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.
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.

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.

JoshTriplett 11y ago
> 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 In that scenario, Uber should be charging you a penalty for the cancelled ride. > Right now, Uber can beat everybody on price and quality because they don't have to be profitable for a long time. I certainly hope they're not losing money on each ride right now.
- toomuchtodo 11y ago
  > In that scenario, Uber should be charging you a penalty for the cancelled ride. Which would drive users to Lyft or other ridesharing services.
  - necubi 11y ago
    Lyft penalizes you $5 for cancelled rides after some amount of time, at least in SF. Also when the app makes a request on its own and you're not there.
    - fragmede 11y ago
      As does Uber - they'll charge $10 if you cancel after 5 minutes after the driver is assigned. http://blog.uber.com/2012/05/01/updated-cancellation-policy/ http://blog.uber.com/2012/05/01/updated-cancellation-policy/
    - georgeott 11y ago
      Uber charges the same $5 after 5 mins, if cancelled.
toomuchtodo 11y ago
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 [1]). Anyway! I see Uber going the way of webvan. Great proof of concept that VC money is going to burn through, followed up by some combination competitors, self-driving cars, and local/state government transportation agencies putting together federated/open APIs to perform the same services but in a regulated manner (or governments contracting with smaller players to perform the same services). No amount of VC is going to remove a government's ability to regulate transportation (Montreal, Canada impounded 40 Uber drivers' vehicles the other day [2]). Then again, it shouldn't. Transportation should be regulated, but not for monopolistic reasons. Anyone want to make a cheap long bet for funsies? [1] http://www.andresmh.com/nyctaxitrips/ http://www.andresmh.com/nyctaxitrips/ [2] http://www.cbc.ca/news/canada/montreal/montreal-taxi-bureau-has-seized-40-uberx-vehicles-1.3050713 http://www.cbc.ca/news/canada/montreal/montreal-taxi-bureau-...

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.

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.

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 :)