The battle between Uber and Lyft has taken an interesting turn over the past few months. Google, one of Uber’s largest investors, is looking more like a competitor (or at least like co-opetition), at least in the longer term.
The public markets are not as attractive as they once were (ask Twitter) and frankly given the latest expansion/burn numbers we are getting from Uber (em…sources), it would seem that Lyft would require a lot more than a simple/standard public offering to give it the ammo it requires to grow.
But the real value of Lyft, like Uber, is far beyond the labor/cost arbitrage riders get when compared to cabs and other modes of transportation. Some have argued that the dramatic growth (and success) of ride-sharing companies will force entire industries, such as automotive, trucking, logistics and even public transportation into radical transformation (kicking and screaming.) I’m guessing the public markets won’t really give Lyft what it needs to achieve its longer term potential. And god knows you don’t want Wall St. hammering at your margins when you are feeding the growth beast, investing in R&D, opening up new markets, etc.
So, in the interest of arm-chair quarterbacking, here are some other options for Lyft.
This makes sense. Amazon owns the front-end (product search/discovery/ordering,) the middle-layer (marketplace/checkout/payment) and the back-end (pick-pack-and-ship.) They rely on UPS and an army of smaller couriers for the last mile: getting the package to your door.
To grow, Amazon will need to get into new categories, many of which rely on precise last-mile delivery. Lyft gives Amazon the last mile, PLUS, imagine being able to shop/sample/discover products and services while catching a ride to work? A virtual “mall on wheels.”
Plus, Amazon could recruit shoppers to become drivers, for passangers and small parcel delivery. What kind of network scale would that be?!?
Unscientific Likelihood Score: 42%
Why on earth would a car maker buy Lyft? Two reasons:
Unscientific Likelihood Score: 4%
This one is more about survival and relevence. UPS and FedEx both have massive fixed overhead to run worl-class supply chain and fulfillment organizations. The move from large footprint, long-lead-time deliveries to smaller boxes (where the cost of shipping cannot be more than the value of the item, say… your lunch) with more immediate visits (think: Google Shopping Express) means that UPS and FedEx are missing out on the last-mile. Adding Lyft to either of these companies would create a very compelling offering to any company wanting to “scale down.”
Unscientific Likelihood Score: 13%
Airlines and rental car companies are getting squeezed. Hard. Operating margins have been declining for the past 10+ years, and only a few manage to make money (JetBlue and Southwest, and Enterprise) somewhat consistantly. Lyft, fully integrated into an airline or rental car company would give two industries with massive CapEx (and regulatory) costs an opportunity to fully bleed out their assets (squeeze every possible nickel), and also add a net new revenue stream.
Airlines would add $20–150 to each travel segment; not a small number when you consider what the average flight costs. Rental car companies could offer a car, a car and driver, or just a ride. They know fleet management and reservations (specifically around airports and hotels); with Lyft they would get signals all the way into residential and commercial locations, a huge new opportunity. Imagine a subscription service that included all the aforementioned modalities: pay $400/month, get 500 miles of group ride-share, 200 miles of private car useage, and 100 miles of personal (private) ride-sharing. Nice.
Unscientific Likelihood Score: 6%
I love this one.
Think about it: a Tesla + Lyft world will truly transform the balance of personal and business CapEx & OpEx. It moves transportation to the subscription economy; something that countless others have tried to do (with modest, little or no success; i.e. NetJet, RCI, BlackJet)
Tesla has already proven out their long-term vision: to change the economics of car ownership (by going direct, building out charging stations, guaranteeing residual values, and innovating in leasing/finance options.) Imagine a fleet of Tesla’s, zig-zagging the entire country. Moving people and packages. Elegently.
Lyft has a community that is as committed and passionate to their brand as Tesla has to its brand (for very different reasons.) Combined, they could radically change transportation. Period.
Unscientific Likelihood Score: 37%
So what’s gonna happen?
I have no personal insights or knowledge about what’s going on at Lyft. Judging by history, great platforms squeeze network-wide margins down (for the entire supply chain.) This means that drivers will start to get paid less, as the platform continues to grow. I would love to see Lyft’s brand, technology, and community of loyal users be part of a more impactful transformation: one that doesn’t become a race to the bottom.
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