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Unfortunately for Lyft, it's a winner-takes-all market: “First prize is a Cadillac Eldorado. Second prize is a set of steak knives.” At this point, with over $

Unfortunately for Lyft, it's a winner-takes-all market: “First prize is a Cadillac Eldorado. Second prize is a set of steak knives.” At this point, with over $1 billion invested, the most viable opportunity left for Lyft investors is to pressure Uber or someone else into acquiring Lyft. http://bits.blogs.nytimes.com/2014/08/12/accusations-fly-between-uber-and-lyft/ http://bits.blogs.nytimes.com/2014/08/12/accusations-fly-bet...

andy_ppp 11y ago
Love the reference... For those who haven't seen this, worth watching... "Coffee is for closers only." https://www.youtube.com/watch?v=v9XW6P0tiVc https://www.youtube.com/watch?v=v9XW6P0tiVc
- SilasX 11y ago
  Wha? The context is a guy using dubious (and increasingly dishonest) tactics to motivate a sales team, not a realistic scenario that illustrates the essential dynamics of winner-take-all markets. How does the context add to the GP's point? I don't think they were saying the dynamics here are the same as in GGR.
  - andy_ppp 11y ago
    I was providing context around the quote about a Cadillac Eldorado and a set of steak knives. I wasn't trying to make a further point!
jballanc 11y ago
I've heard this multiple times with no real evidence to back it up. Why? Why is it winner-takes-all? Natural barriers to entry? Nope, all you need is a half-way decent mobile app and some people with cars. Yes, the bigger your fleet the larger an area you can cover, but there's no need to serve an entire metropolitan area if covering just some of it is enough to turn a profit. (For example, if I were going to enter the ride-for-hire market in NYC today, I'd put all my drivers at JFK, Laguardia, and Times Square.) Artificial barriers to entry? There used to be, in the form of TLC monopolies and regulations around medallions. The nice thing about Uber's success, though, is that they're bearing the brunt of breaking down these barriers, leaving the path open for those that will follow. Network effects? Mmm...some, but only for those that travel frequently. That is, if you often find yourself in a new city, your first act might be to open the Uber app because you can count on them providing service in a new, unfamiliar local. I'd wager that's the minority of ride-for-hire customers, though. Each city has its own local mass transit, and there hasn't been a push to standardize across regions. (Though wouldn't it be nice if your Metro Card worked on BART?) On the flip-side, I see a lot of opportunity for new competitors to differentiate themselves. For example, let's say you decide to focus on the "regular customer": someone who travels roughly the same route most days of the week, a commuter or someone with a daily or semi-weekly appointment to keep. Imagine you could tune your service to get the same driver for these customers most days. Now you have a familiar face picking you up, who knows where you're going, what route you prefer, what station you like on the radio, etc. If I was that customer, I'd take that service over Uber in a heart-beat. So, again, why should it be winner-takes-all?
- dylanjermiah 11y ago
  I've also been asking exactly why it's a 'winner take all market' and have yet to receive a definitive answer. I'd like there to be a #2 even #3. Although I think Uber might be akin to Google in terms of market share, sitting at mid to high 60%.
- applecore 11y ago
  Uber is a software company that happens to have a network of cars attached; empirically, success in software always follows a power-law distribution.
  - jballanc 11y ago
    [citation needed] ...but seriously, on what are you basing the power-law distribution claim? And what exactly does "success" mean anyway? Market share? Revenue? Profitability? I know a number of small, yet very profitable software companies.
- pbreit 11y ago
  The barriers to entry are so high that it's nearly impossible for new entrants. The advantage of liquidity in both drivers and riders is very large. You underestimate this drastically.
  - jballanc 11y ago
    What does liquidity mean in terms of drivers and riders? I'm familiar with liquid vs illiquid assets, but how does that relate to something like customers or staff? If a competitor enters the market and offers a better deal for drivers and/or customers, it would be trivial for them to switch, no? There's no lock in beyond a free mobile app download, a username/password combo, and a CC on file. I think the only way that supply could present a barrier to entry is if you assume that for-hire rides are a commodity and price is the only consideration. It seems obvious to me that this is not the case.
    - pbreit 11y ago
pbreit 11y ago
While the market does have strong network effects, it appears that Lyft can gain a sufficient presence in an area to compete effectively with Uber. If it continues to differentiate the experience, I think it can survive as a strong, much smaller #2 (as you apparently might agree with the Glengarry quote).
prostoalex 11y ago
> Unfortunately for Lyft, it's a winner-takes-all market That does not seem to work out worldwide. GetTaxi and Yandex.Taxi are still leading apps in Moscow, Cabify and Hailo dominate Madrid and Didi Kuaidi enjoys its first-mover advantage in China despite Uber expanding in all those markets.

andy_ppp 11y ago

Love the reference... For those who haven't seen this, worth watching... "Coffee is for closers only." https://www.youtube.com/watch?v=v9XW6P0tiVc https://www.youtube.com/watch?v=v9XW6P0tiVc

SilasX 11y ago
Wha? The context is a guy using dubious (and increasingly dishonest) tactics to motivate a sales team, not a realistic scenario that illustrates the essential dynamics of winner-take-all markets. How does the context add to the GP's point? I don't think they were saying the dynamics here are the same as in GGR.
- andy_ppp 11y ago
  I was providing context around the quote about a Cadillac Eldorado and a set of steak knives. I wasn't trying to make a further point!

jballanc 11y ago

I've heard this multiple times with no real evidence to back it up. Why? Why is it winner-takes-all? Natural barriers to entry? Nope, all you need is a half-way decent mobile app and some people with cars. Yes, the bigger your fleet the larger an area you can cover, but there's no need to serve an entire metropolitan area if covering just some of it is enough to turn a profit. (For example, if I were going to enter the ride-for-hire market in NYC today, I'd put all my drivers at JFK, Laguardia, and Times Square.) Artificial barriers to entry? There used to be, in the form of TLC monopolies and regulations around medallions. The nice thing about Uber's success, though, is that they're bearing the brunt of breaking down these barriers, leaving the path open for those that will follow. Network effects? Mmm...some, but only for those that travel frequently. That is, if you often find yourself in a new city, your first act might be to open the Uber app because you can count on them providing service in a new, unfamiliar local. I'd wager that's the minority of ride-for-hire customers, though. Each city has its own local mass transit, and there hasn't been a push to standardize across regions. (Though wouldn't it be nice if your Metro Card worked on BART?) On the flip-side, I see a lot of opportunity for new competitors to differentiate themselves. For example, let's say you decide to focus on the "regular customer": someone who travels roughly the same route most days of the week, a commuter or someone with a daily or semi-weekly appointment to keep. Imagine you could tune your service to get the same driver for these customers most days. Now you have a familiar face picking you up, who knows where you're going, what route you prefer, what station you like on the radio, etc. If I was that customer, I'd take that service over Uber in a heart-beat. So, again, why should it be winner-takes-all?

dylanjermiah 11y ago
I've also been asking exactly why it's a 'winner take all market' and have yet to receive a definitive answer. I'd like there to be a #2 even #3. Although I think Uber might be akin to Google in terms of market share, sitting at mid to high 60%.
applecore 11y ago
Uber is a software company that happens to have a network of cars attached; empirically, success in software always follows a power-law distribution.
- jballanc 11y ago
  [citation needed] ...but seriously, on what are you basing the power-law distribution claim? And what exactly does "success" mean anyway? Market share? Revenue? Profitability? I know a number of small, yet very profitable software companies.
pbreit 11y ago
The barriers to entry are so high that it's nearly impossible for new entrants. The advantage of liquidity in both drivers and riders is very large. You underestimate this drastically.
- jballanc 11y ago
  What does liquidity mean in terms of drivers and riders? I'm familiar with liquid vs illiquid assets, but how does that relate to something like customers or staff? If a competitor enters the market and offers a better deal for drivers and/or customers, it would be trivial for them to switch, no? There's no lock in beyond a free mobile app download, a username/password combo, and a CC on file. I think the only way that supply could present a barrier to entry is if you assume that for-hire rides are a commodity and price is the only consideration. It seems obvious to me that this is not the case.
  - pbreit 11y ago

pbreit 11y ago

While the market does have strong network effects, it appears that Lyft can gain a sufficient presence in an area to compete effectively with Uber. If it continues to differentiate the experience, I think it can survive as a strong, much smaller #2 (as you apparently might agree with the Glengarry quote).

prostoalex 11y ago

> Unfortunately for Lyft, it's a winner-takes-all market That does not seem to work out worldwide. GetTaxi and Yandex.Taxi are still leading apps in Moscow, Cabify and Hailo dominate Madrid and Didi Kuaidi enjoys its first-mover advantage in China despite Uber expanding in all those markets.