16 votes

Lyft files first for IPO in litmus test for the industry

6 comments

  1. [6]
    UniquelyGeneric
    Link
    Given that there won’t be any more investment from VC firms after the IPO, I wonder how ride hailing services will adapt to the lack of money injection they’ve been seemingly dependent on....

    Given that there won’t be any more investment from VC firms after the IPO, I wonder how ride hailing services will adapt to the lack of money injection they’ve been seemingly dependent on. Presumably the US market has been mostly saturated at this point so undercutting prices can’t garner new users, and with increasing pressure to pay a minimum wage, these services will inevitably increase their prices (if not mostly done already).

    NYC recently implemented a congestion pricing surcharge that has continued to make Lyft/Uber more expense (although this applies to taxis as well). I wonder, with the price of these services already on par with traditional taxis, and with constant pressure of a public company to increase profits, is the party over? How much do people value the convenience of app-hailing?

    I would assume that in the end the drivers will be the ones hurt the most, and with autonomous driving a seemingly distant replacement, are we past the golden age of ride-hailing?

    7 votes
    1. [4]
      vakieh
      Link Parent
      There's a case study in false saturation with TVs in economics/innovation. Every household in the US had a TV, so certain manufacturers decided to back off and start optimising for size and...

      Presumably the US market has been mostly saturated at this point

      There's a case study in false saturation with TVs in economics/innovation. Every household in the US had a TV, so certain manufacturers decided to back off and start optimising for size and quality. Then Sony comes along, realises 'has a TV' isn't saturation, because they can sell you a bedroom TV, then a kid's bedroom TV(s), now you want a TV for your caravan and then on the backs of your car headrests and you probably want a TV in your business's lobby and meeting room etc etc etc.

      Ride sharing isn't even potentially CLOSE to saturated in any market. You have a cap on the market as it currently exists, sure, but there's plenty of people who don't use it for whatever reason, and assuming the market as it currently exists is the market as it CAN currently exist is what causes companies to become dinosaurs and get outcompeted. What about doing ridesharing for school bus transport? Or link up with big sports directly? Hotel and airport/theatre/tourist attraction/conference centre/shopping strip deals? Those are all partnership/value add option.

      What about different market types - Uber does that a bit with X, Black, Pool, XL, etc. What about that lower end of the market (which as any innovation student can tell you is where disruption comes from) - you would want a better name, but what about "Uber Shitbox"? People who can't afford taxis, used to driving around in vehicles held together by a piece of duct tape, but need to get to their minimum wage job to keep a roof over their kids' heads? Ridesharing companies have strict quality standards and block out a large part of the potential market.

      Then you can go sideways: Lyft EnviroFriendly, for electric cars only. Rideshare long haul - or even sleeper trips. Rideshare package transport - Uber flagged this when they started UberEats, and cancelled UberRUSH. It is likely they will make an UberEbay or something as the Eats model worked much better for them than RUSH. UberEats also saw a move into bike couriers, which open up some potential sideways markets like office couriering.

      Then of course you can go up. Uber SuperLuxury or UberEvent something like that. Wedding transport in a limo, or if you're on a big anniversary holiday and want to sit and drink champagne on the way to a fancy restaurant. UberParty, with people movers and an inbuilt cleanup fee.

      Then there's weird shit you could do - Learner drivers need people sitting next to them while they get enough hours. Old people might want to drive around and talk to someone for no reason at all. Tourists might want a tour of the city.

      The potential for growth in the rideshare market is ABSOLUTELY INSANE. The only reason I'm not anywhere near it myself is because I find the ethical practices incompatible with what I can accept (and have contracted to uphold in a professional capacity).

      15 votes
      1. [3]
        UniquelyGeneric
        Link Parent
        I suppose my hold up on a “there’s an Uber app for that” is that you’re conflating industries that have existed for centuries, already squeezing out every single penny, to replace the...

        I suppose my hold up on a “there’s an Uber app for that” is that you’re conflating industries that have existed for centuries, already squeezing out every single penny, to replace the infrastructure that has existed (perhaps unloved) for decades.

        Sure, Uber has provided value to the general public, but the tangents they spin off aren’t as easily accessible as Uber Eats has been. I can’t trust a Joe Shmoe to deliver industrial grade parts to my warehouse if my operations are concerned about a few millimeter difference in product, but the guy delivering their product doesn’t know the difference between model numbers. These businesses need reliability AND liability to the unanswered “contractor vs. employee” debate that Uber does not want to entertain despite that they are the number one “gig-economy” employer in the world.

        You are right in your post that there are plenty of business ventures for Uber to investigate, and that Uber Eats is highly succcessful.
        That being said, Uber is dependent on “critical mass” social awareness, which also means that their A/B testing has to be limited to a predictive sample, which they can only get by profiling. While not particularly scary on its own, my fear that one company is collecting where/what you eat and where you travel scares me. While they aren’t competent enough to use this against me now (2019), one of these same avenues for measurement could lead to classification into social groups that are not oringally intended (e.g: halal food -> Islam, bohemian rhapsody -> lgbtq)

        2 votes
        1. [2]
          vakieh
          Link Parent
          2 issues with this. First, precision manufacturing has been making use of courier and national postal services the world over for many, many years. Second, quality is an optimisable function. You...

          I can’t trust a Joe Shmoe to deliver industrial grade parts to my warehouse

          2 issues with this. First, precision manufacturing has been making use of courier and national postal services the world over for many, many years. Second, quality is an optimisable function. You specify a certain level of quality, your competitor specifies a slightly lower level, and achieves a comparably lower cost. They are then able to price you out of the market for anyone who does not need your specific level of quality. This is one of the key mechanisms market disruption occurs by.

          I am not conflating industries, I am highlighting how the decomposition of independent services which had previously been lumped into indivisible industries gets broken up when tech enabled service providers show that decoupling. Why does a restaurant need to deliver food? You have the cooking, and the delivery - 2 services, not 1. Hell, in theory you could have a sit-down restaurant that cooked nothing itself, like a fancy form of food court with table service etc.

          The ethical hangups I agree with as I said.

          2 votes
          1. UniquelyGeneric
            Link Parent
            You might be interested in Travis Kalanick's new venture. I think it's a fair point that there's plenty of room for growth in the business of outsourcing overhead. Much in the same way that Amazon...

            Hell, in theory you could have a sit-down restaurant that cooked nothing itself, like a fancy form of food court with table service etc.

            You might be interested in Travis Kalanick's new venture.

            I think it's a fair point that there's plenty of room for growth in the business of outsourcing overhead. Much in the same way that Amazon created an empire by renting server space with AWS, it's no coincidence that Kalanick's business is called CloudKitchens. I guess the question prompted by Lyft's IPO is whether the growth in "cloud" transport services will be captured by an Uber/Lyft duopoly (similar to AWS/Azure), or if an upstart like CloudKitchens will eat everyone's lunch.

            2 votes
    2. masochist
      Link Parent
      Anecdote, here, of course, but I cannot overstate how much I value that convenience. Not having to deal with cab drivers (who mostly can't understand me and vice versa, who have defrauded my...

      How much do people value the convenience of app-hailing?

      Anecdote, here, of course, but I cannot overstate how much I value that convenience. Not having to deal with cab drivers (who mostly can't understand me and vice versa, who have defrauded my credit cards) or dispatch services (who say they'll send a cab that never arrives) has been worth every problem with Uber / Lyft for me. Note that the problems I have here are with the people. Take the people out of the system, as ride hailing services have, and most of the problems go away.

      3 votes