Feb 19, 2020
Society's winners and losers of Uber and Lyft (it's a love/hate relationship) Read More 5 Stars for Convenience... 0 stars for congestion. The Uber and Lyft-led ride industry has made life easier for many: whether it's having a few too many margaritas with dinner, visiting a new city, or needing a ride to the airport. It's also never been harder in one way: traffic. Here's the low-down, based on studies summed up by the WSJ:
The Pitch: Uber/Lyft pitched themselves as ride-sharing apps (picture 4 strangers in a Prius heading the same direction). Five years ago, Uber founder Travis Kalanick said it would end congestion: "If every car in San Francisco was Ubered there would be no traffic."
The Reality: Congestion got worse. Most riders hail private cars — an estimated 70%-80% of rides in major metro areas are non-pool. Drivers in NYC and California cruise without passengers ~40% of the time. Though Lyft estimates 500K Americans gave up personal cars thanks to ride-hailing (not ride-sharing).
Negative effects take a back-seat... When you can get contact solution delivered to your door same-day by Amazon, you're probably not thinking about delivery vehicles congesting streets. Similarly, users of ride-hailing services are likely to think more about convenience than traffic or pollution.
The Takeaway:Fibbing about your mission can be a (disturbingly) successful strategy... The reality of ride-hail apps is more driving, more traffic, more pollution, more horn honking, more air fresheners. If we were woke sooner to Uber being part of a problem, not part of a solution, we may be less likely to have started Ubering. But now Lyft/Uber are here to stay, despite years pitching a mission that wasn't accurate.
Jan 22, 2020
Uber is letting some drivers set their own fares (to avoid paying them as employees) Read More I'm an app, duh... Uber, to the California government. Uber is now letting some CA drivers set their own fares as part of a test in response to CA's new gig-economy law (aka, AB5). The law forces companies like Uber, Lyft, or Postmates to treat workers as employees (give them sick days, benefits, etc). But Uber wants to prove its drivers are independent contractors. So it's made these changes:
Last month, Uber let CA drivers see where riders are going before deciding whether to accept or reject a ride (wasn't a thing before).
This month, Uber put a 25% cap on commissions drivers pay to Uber.
Now, Uber is letting drivers who pick-up/drop-off from airports in Santa Barbara, Palm Springs, and Sacramento price their rides up to 5X basic Uber fares (or charge as little as 1/10th).
It's a tech company, I swear... Uber's trying to prove it's just an app with independent drivers (nothing to see here), in an effort to dodge the 20%-30% cost increase that would come with turning their contractors into employees. The gig-law could also make rides pricier for riders, which could reduce demand for rides overall.The Takeaway:Uber's current pricing method is all about efficiency... 11PM Saturday rides are pricier than 10AM Sunday rides because surge pricing factors in demand. This new bidding-style pricing might mean higher fares for drivers, but could also mean lower fares if drivers compete for the cheapest price. This auction-like system is less efficient, but Uber is hoping it'll help prove that drivers have autonomy, and should therefore be treated not like employees. Dec 13, 2019
Lyft is launching a car rental service (it's a tough day for Avis stock) Read More Lyft or rent? Now, you can sorta do both... Lyft already changed taxis. Yesterday it launched a rental car service starting in LA and SF. As little as $35 a day gets you wheels for a weekend getaway, right through the app. Here's how Lyft is competing with rental OGs like Enterprise and Hertz:
Car-to-Car service: Lyft will actually pay for your rides (up to $20 each) to and from the rental car lot.
Lower age: You have to be 25 to rent a car in the US (or pay extra) — Lyft is ok with 22-year-olds and up.
Tank-friendly: You don't have to give away your firstborn child to fill up your tank. Lyft will top-off your tank post-Napa weekend, charging just the local gas price (no fee).
Clean machine: Lyft also has a leg up over car-share startups like Getaround and Turo, since you're not getting someone else's car (and forced to endure their BO).
The Takeaway:If it sounds too good to be true, it probably is... With all these perks at low costs, we're guessing this car rental scheme won't be profitable. Long-term, if they successfully snag your loyalty from Avis or Hertz, Lyft can increase prices to turn a profit. That's also the general plan for its core rides business... which is still unprofitable. Nov 4, 2019
Uber stock sinks 6% because it's on pace to lose $8B this year Read More Losing $543K per hour... Think about that. One time you lost nana's birthday check and you were inconsolable. Uber just told investors everything about its 3rd quarter, but it's hard to not focus on the $1.2B it lost. After losing $5B the previous quarter (that was higher because of one-time IPO costs), Uber's on pace to lose $8B this year. $8 billion.
It's Uber vs. Everybody... Investors piled into Uber for years with the hope it would become like Amazon — an unstoppable giant — but for transportation. In reality though it has enemies. Everywhere:
Competition: Lyft rose from the ashes of Uber’s scandals. Delivery apps are all over your phone. And self-driving car companies could unleash self-driver not-Uber fleets before Uber.
Politicians: California's new law could make Uber even more unprofitable by forcing it to pay drivers actual wages and benefits.
Restaurants: Yup, spots like Bareburger get 20% of their sales from delivery apps — but they're fed up with paying away 15% of those sales as fees to Uber Eats and its delivery rivals. The CEO calls the apps "a necessary evil" that he hopes to be rid of by next year.The Takeaway:Uber prefers you look at its sales growth instead... If you do, you're impressed by rides (revenues up 20%), Eats food delivery (+71%), and Freight (+81%!). Here's the problem: Uber's paying for all that growth. Competition forces it to dish out discounts and promo codes Oprah-style. So it's pledged to change things... in 2 years:
2021: That's the magical year when Uber CEO Dara Khosrowshahi says it'll become profitable. Funny — that's also when Lyft said it will stop destroying money and start making it, too. Sep 26, 2019
Endeavor cancels its IPO the night before it was supposed to happen Read More They're supposed to be celebratory... IPOs feel like graduation or getting your Instagram account verified. But 2019 — the year of the tech IPO — has been the opposite. Talent agency Endeavor just canceled its IPO less than 24 hours before it was supposed to happen. This is the entertainment company that repped Denzel and owns half of Ultimate Fighting Championship.
There are fewer rainbows out there for unicorns lately... That's why Endeavor dipped out. The share price that a company IPOs at matters to its existing investors — they own stock in the private company and want to eventually sell once it becomces public. Here's what's happened to stocks lately once they IPO:
Uber & Lyft are down 31% and 43% as investors wonder if they'll ever become profitable.
SmileDirectClub and Slack both had painful starts, down 36% and 42%.
Peloton is only 1 day in but already sweating.
WeWork is a whole different category — Its valuation was $47B the last time it raised money from private investors, and could be re-priced down to a $15B valuation (or less) when/if it IPOs.The Takeaway:Private markets were hype, public markets are reality... In 2017, SoftBank scrapped together $100B from insanely wealthy people, companies, and countries to invest huge sums in startups. The venture capital firm gave Uber, WeWork, and Slack gigantic checks to fund their growth, also driving their valuations up. But Wall Street's been more skeptical, slashing those valuations by hammering their stock prices. Now unicorns might wait to IPO until their chests grow profit hairs. Sep 12, 2019
California disrupts the disrupters, classifying Uber/Lyft drivers as "employees" Read More Flashback to Uber's IPO in May... Deep in its filing paperwork (aka "S-1"), Uber listed a nightmare policy scenario under the "risks" section:
“Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.”
That. Just. Happened... California's AB5 law (brutal name) passed late Tuesday to go into effect Jan. 1, pending the governor's signature (he said he'll sign). It requires Uber, Lyft, and other gig icons to grant full employee benefits, pay, and anniversary balloons to their drivers — that's instead of the 1099 form drivers currently get as independent contractors.
Uber's response = Not doing it... This seems destined for a legal battle. Here's how this law would be good and bad for the world:
The Good: Uber drivers would receive reliable (and probably higher) pay, benefits, and the opportunity to unionize.
The Bad: Uber claims it would need to schedule driver shifts, stealing their "drive when you want" freedom. The higher overall driver pay would also probably translate to higher prices for you and us riders.The Takeaway:Don't forget Uber & Lyft's dirty little secret... To transition from hugely unprofitable to actually make money, they've got 3 options:
Pay drivers less (not happening with this new law)
Increase prices for Uber rides
Replace drivers with self-driving car technology
#2 could happen because of this new law. The pressure to get to #3 will be even greater. Aug 7, 2019
Lyft shares jumped, but 2 other stories revealed its "de-wokeing" Read More "Use code EARNINGS to get 15% off your 1st ride"... Lyft jumped on word that revenues surged 72% to a new record high. But because those discount codes it dishes out to drive growth are getting expensive, we noticed its growing loss.
Last year’s 2nd quarter = Lyft lost $179M
This year’s 2nd quarter = Lyft lost $644M
The good news: That loss was huge, but Lyft thinks 2019 is its "peak loss" year — losses will shrink from here on out (and hopefully/eventually become profits).
But then we noticed 2 other stories... and both looked less good on Lyft. Together, they highlight a couple major issues that de-woke Lyft's previous wokeness.
It's not handling harassment well: If a driver bothers you, Uber's got a panic button that takes just 1 click to report – The Washington Post notes that it takes a bunch of clicks to reach Lyft's safety team (and their responses haven't been satisfactory).
Congestion — it's a problem: Uber and Lyft commissioned their own report on traffic. Turns out a whopping 14% of vehicle miles traveled in San Francisco are ride-hails — and ~40% of driver time overall is spent cruising around without riders.The Takeaway:Lyft had one advantage over Uber... Reputation. Uber owns more of the ride share market, offers more services (like Uber Eats), and has more big bets (like UberFreight). Lyft had a #DeleteUber reputation advantage that helped it gain market share last year. It can't afford to waste that. 
