Would Lyft iself have any value to Uber? Or would the value just be to take the largest competitor out of the picture, forcing others to start from scratch, without driver network, brand recognition etc?
At $2 billion, it would be an expensive shut-down for Uber, but probably worth it to kill their only serious competitor in the US and keep the network / data / et al. out of other hands. If Uber could give them equity as payment at a $60 billion valuation, that would easily be worth it.
beyond monopoly benefits, lyft's supply of drivers is probably still valuable. i don't think their rider base is that valuable to uber, since there is probably significant overlap. however, that rider base would be of value to another player trying to build their own platform, e.g. google
There is massive overlap of drivers, too, and it's incredibly trivial for drivers to sign up for a new service. (You might, at most, need a new inspection performed.)
Yeah another company hoping to get into the ride hailing game (like a car manufacturer) makes more sense to me as a buyer than Uber. Seems like a poor purchase today no matter what though.
This is like the economic twlight zone, when you see one overvalued company trying to rationalize the value of another. Why not pay 4 billion or 5 billion when you are playing with monopoly money?
If I were CEO of Uber, I would want Lyft to survive in order to avoid anti-trust issues.
I suppose Uber can point to taxi companies as competition, but at the rate those are dying off, and considering that Uber's app puts Uber in something of a new category, I would want to hedge my bets and keep Lyft around in case a regulator doesn't take the taxi argument seriously.
Microsoft still owns the majority (90%+) of the desktop market and the office market. They always had kind of crappy mobile os and that hasn't changed.
Sure but the smartphone space at the time was an insignificant percentage of the market. That's by far no longer the case now. Having a crappy mobile OS in 2000 is a magnitudes smaller problem than having a crappy mobile OS in 2016.
The best thing that could happen to Uber would be Lyft getting acquired by an unloved buyer other than Uber. Imagine Lyft becoming a Microsoft brand, or something Chinese, or the personal toy of some Saudi prince-investor who could easily be slandered with difficult to refute claims of terrorist support. Uber criticism would instantly stop being popular. Uber would be stupid to destroy this possibility by buying Lyft for themselves.
But on the other hand, not getting bogged down by legal resistance works a lot better when you are not perceived as the biggest asshole in the room.
AirBnB for example is facing some resistance despite having a very clean image, but I imagine it would be much more vicious if they had a reputation like Uber.
They are scoping the price range of Lyft for other buyers, a clever tactic.
However I'd place a big bet that Uber will not be sold self driving cars by car companies and they will slaughter them by launching their own services.
If you have a self driving car selling them to Uber rather than taking the profit for yourself is just stupid, much like selling bitcoin mining hardware - if it's worthwhile you might as well just let it make you money?
It's not like Uber have something special; maybe they'll remain carless and let the car manufacturers run their cars on Uber's network? Still the estimated returns Uber expects won't materialise because the car companies will still be able to dictate a price.
Lot's of companies sell things to other companies that they make an additional profit. I think it remains to be seen how vertically integrated the self driving taxi industry will look.
It depends on the value vs the difficulty of doing something vs the returns. For example selling CPUs to Apple is clearly great because they add so much value over what Intel have done themselves.
How hard is it for Tesla to build their own Uber for example - they have said they will allow you to do part of this at least so far right?
I'm just trying to think of a world where Uber don't win guaranteed. It's definitely me thinking out loud and I've been wrong before :^)
If they solve the self driving problem at the same time, competition wouldn't allow it.
But let's say Ford cracks the problem 18 months before anyone else. Ford could open up its own uber clone--or buy lyft. If I were ford that is what I'd do, since self driving cars may drastically reduce automanifacturing revenue.
My understanding is that Uber has all the self-driving software here and they are just using car manufactures to obtain cars with the kinds of on-board sensors and computer-control required to run their self-driving solution.
If autonomous cars will be on the uber platform, the autonomous rides will be very cheap. There is even more incentive for people to not own a car and instead use Uber. This means that there will be less customers demanding to own an autonomous car. The autonomous car manufacturers will have to sell to Uber.
That is offset by the convenience of owning an autonomous car which can drive you anywhere on the spot, with all your stuff already in it. If I owned an autonomous car that acted as my personal chauffeur, I'd only consider services like Uber or Lyft when flying out of town.
Your car would be able to drive home by itself after dropping you off... Or, if you removed your person belongings, it could log into a ride service pool and generate revenue while you are out of town.
> There is even more incentive for people to not own a car and instead use Uber
Sure, but if every company (think Tesla/Google/Apple/Amazon etc) eventually can build/buy autonomous cars and offer the same service, what competitive advantage would Uber still have? Their current network effect of matching drivers with customers is where most of their value is imho. If that disappears, then I really don't know why we still need Uber.
If I speak into my wearable iEarplug in 2020 and say "Hey Siri, get me a car", would I really care about it being an Uber car?
It will be interesting to see how this ends up playing out. During stage 1, uber was able to win by scaling up driver and rider supply with enough balance to keep everyone happy enough to continue use.
Stage 2, the transition to the self driving vehicle, can be won by whoever is able to supply self driving vehicles at scale.
It is plausible that Google and Apple could create a ride marketplace for vehicle manufacturers. You press a button on your phone and a car shows up. This would provide a survival path for car manufacturers.
Another plausible scenario is cities converting to self driving "platforms" exclusively run by single companies such as Uber or Google. In the shorter term this could be a winning play because it makes the self driving automation part a little easier. Longer term this doesn't scale so well. However, if a larger company is able to get big cities to sell transportation rights there could be long term lock in. There will be big opportunities here in the next 5 years as municipalities continue to become more strapped for cash.
Google, Apple, Uber, Tesla, and BMW are the companies I'm watching closest right now. The big question may be what was more important -- have the rider/driver network first, actually manufacturing self driving electric vehicles (electric is important because emissions and air quality will win cities), or having the platform users use to hail vehicles (Apple and Google.) Uber could have a big IPO and buy a car manufacturer outright but I don't know if that makes much sense. Buying up assets of a bankrupt or bleeding car manufacturer seems more opportune.
and they can retrofit existing cars with their autonomous technology which they are doing today/planning to do in the future, they aren't using any of the autonomous technology created by the manufacturers with no plans to and there is plenty of cars they can buy today
Fair enough, looks like they agree with my assessment and have planned for it. Still like I say no guarantee of uber being on top - it'll be a race to build the cheapest cars that wins maybe.
Is someone doing uber buses to replace public transport?
If you have a self driving car selling them to Uber rather than taking the profit for yourself is just stupid, much like selling bitcoin mining hardware - if it's worthwhile you might as well just let it make you money?
Counter-example: High-Frequency Trading equipment manufacturers, like Metamako[1] and Arista Networks[2]. Their hardware enables HFT firms to make money, but they stay in the network equipment business instead of becoming HFT investment firms. This seems to have worked out well for both sides.
Lyft has $1.4 billion in cash, but Uber wouldn't pay above $2B? That seems quite odd - maybe the $2B refers to the value before including cash on hand, and that got lost in the "leak" somehow.
Well if you tried to liquidate ASAP, you likely wouldn't be left with that $1.4B on hand due to outstanding obligations, severance pacakages, legal fees, etc.
This is such an obvious ploy, it probably has the opposite of the desired effect. Uber would've been better served saying Lyft is worth less than their cash on hand because of burnrate / runway and fierce competition. By establishing a $2B floor in what is clearly a ploy, Uber is actually communicating that they obviously think Lyft is worth far more than $2B. They just helped establish an anchor of more like $6-8B. If you are Lyft or Qatalyst, this is an exceptionally easy case to make.
The only way this is smart is if they're hoping to help pump up Lyft's price as a comp for themselves, or if they hope to drain a buyer of cash/assets by overpaying for Lyft and thereby lessening their competitive resources under that buyer. Both are stretches and silly bets, though.
I think you're over thinking this. Suggesting that Lyft is worth a low price so that people think that means Lyft is worth more doesn't seem plausible. Why not just suggest that Lyft is worth $8 billion?
On the other hand, I could see Uber trying to devalue Lyft so that they could buy them for cheaper. Or so that Lyft has a hard time raising money at a higher valuation.
"Uber Chief Executive Officer Travis Kalanick has said privately that he would not support such a deal because he believes it would face intense regulatory scrutiny"
I'm saying that if Uber was trying to devalue Lyft, it's far too obvious a ploy. It won't work. They may as well have said Lyft is worthless-- it'd still be for obvious reasons, but at least that wouldn't have established such a high floor.
Any buyer reading this will assume that this means Uber thinks Lyft is actually worth upwards of $6-8B. As such, it is silly of Uber to have signaled this, unless they have a third-order effect they are hoping for (eg getting someone to overpay for Lyft). But I agree with you that that is unlikely to work... therefore, Uber is being silly here.
Lyft claims their cash on hand is around 1.4B so Uber just said the business (tech, staff, brand, and infrastructure) itself is about $600M or about 1% of its own valuation.
If your direct competitor told the press your company was worth $5... do you think that would mean it's really worth $5? Do you think they'd really believe that it's worth just $5, or do you think they might have an ulterior motive? Do you think a prospective investor or buyer would believe what your competitor said, if that investor/buyer was savvy with respect to competitive dynamics in the slightest?
51 comments
[ 3.3 ms ] story [ 114 ms ] threadI suppose Uber can point to taxi companies as competition, but at the rate those are dying off, and considering that Uber's app puts Uber in something of a new category, I would want to hedge my bets and keep Lyft around in case a regulator doesn't take the taxi argument seriously.
> However, Uber’s CEO is said to oppose an acquisition at any price due to antitrust concerns.
So pretty clearly, Kalanick agrees.
AirBnB for example is facing some resistance despite having a very clean image, but I imagine it would be much more vicious if they had a reputation like Uber.
However I'd place a big bet that Uber will not be sold self driving cars by car companies and they will slaughter them by launching their own services.
If you have a self driving car selling them to Uber rather than taking the profit for yourself is just stupid, much like selling bitcoin mining hardware - if it's worthwhile you might as well just let it make you money?
It's not like Uber have something special; maybe they'll remain carless and let the car manufacturers run their cars on Uber's network? Still the estimated returns Uber expects won't materialise because the car companies will still be able to dictate a price.
Is Uber building their own self driving car?
How hard is it for Tesla to build their own Uber for example - they have said they will allow you to do part of this at least so far right?
I'm just trying to think of a world where Uber don't win guaranteed. It's definitely me thinking out loud and I've been wrong before :^)
Car companies can't afford to not sell to consumers, that includes Uber. Market is just too big. They can't exclude Uber specifically either.
But let's say Ford cracks the problem 18 months before anyone else. Ford could open up its own uber clone--or buy lyft. If I were ford that is what I'd do, since self driving cars may drastically reduce automanifacturing revenue.
https://wikipedia.org/wiki/Anchoring
Sure, but if every company (think Tesla/Google/Apple/Amazon etc) eventually can build/buy autonomous cars and offer the same service, what competitive advantage would Uber still have? Their current network effect of matching drivers with customers is where most of their value is imho. If that disappears, then I really don't know why we still need Uber.
If I speak into my wearable iEarplug in 2020 and say "Hey Siri, get me a car", would I really care about it being an Uber car?
Stage 2, the transition to the self driving vehicle, can be won by whoever is able to supply self driving vehicles at scale.
It is plausible that Google and Apple could create a ride marketplace for vehicle manufacturers. You press a button on your phone and a car shows up. This would provide a survival path for car manufacturers.
Another plausible scenario is cities converting to self driving "platforms" exclusively run by single companies such as Uber or Google. In the shorter term this could be a winning play because it makes the self driving automation part a little easier. Longer term this doesn't scale so well. However, if a larger company is able to get big cities to sell transportation rights there could be long term lock in. There will be big opportunities here in the next 5 years as municipalities continue to become more strapped for cash.
Google, Apple, Uber, Tesla, and BMW are the companies I'm watching closest right now. The big question may be what was more important -- have the rider/driver network first, actually manufacturing self driving electric vehicles (electric is important because emissions and air quality will win cities), or having the platform users use to hail vehicles (Apple and Google.) Uber could have a big IPO and buy a car manufacturer outright but I don't know if that makes much sense. Buying up assets of a bankrupt or bleeding car manufacturer seems more opportune.
http://www.theverge.com/2016/8/18/12541672/uber-volvo-partne...
Investment from Toyota
https://techcrunch.com/2016/05/24/uber-and-toyota-confirm-st...
and they can retrofit existing cars with their autonomous technology which they are doing today/planning to do in the future, they aren't using any of the autonomous technology created by the manufacturers with no plans to and there is plenty of cars they can buy today
Is someone doing uber buses to replace public transport?
Counter-example: High-Frequency Trading equipment manufacturers, like Metamako[1] and Arista Networks[2]. Their hardware enables HFT firms to make money, but they stay in the network equipment business instead of becoming HFT investment firms. This seems to have worked out well for both sides.
[1] https://www.technologyreview.com/s/602135/high-frequency-tra...
[2] https://www.arista.com/en/solutions/high-frequency-trading
The only way this is smart is if they're hoping to help pump up Lyft's price as a comp for themselves, or if they hope to drain a buyer of cash/assets by overpaying for Lyft and thereby lessening their competitive resources under that buyer. Both are stretches and silly bets, though.
On the other hand, I could see Uber trying to devalue Lyft so that they could buy them for cheaper. Or so that Lyft has a hard time raising money at a higher valuation.
"Uber Chief Executive Officer Travis Kalanick has said privately that he would not support such a deal because he believes it would face intense regulatory scrutiny"
Any buyer reading this will assume that this means Uber thinks Lyft is actually worth upwards of $6-8B. As such, it is silly of Uber to have signaled this, unless they have a third-order effect they are hoping for (eg getting someone to overpay for Lyft). But I agree with you that that is unlikely to work... therefore, Uber is being silly here.
I'd say that's pretty devastating.