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Comment by tptacek | Hacker News Reader

So is it reasonable to surmise that what's happening here is:

Lyft has a 1.2B cash reserve, ~400MM/yr in revenue, isn't profitable, and has now hit the end of the line on "unicorn" infusions at favorable terms. It's locked in a total war with Uber, which it cannot win or even stalemate while simultaneously shielding its reserves to keep an adequate runway to profitability.

So, since it can't win the race against Uber, its prospects are greatly diminished, and the greatest value it might hold is as someone else's strategic asset.

Or is it something more fundamental than that?

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I would add that their flanking Uber internationally (China) failed. Whoever purchases them would want some asset whose value isn't tied to fighting Uber head-to-head.

Perhaps the network could be valuable to Google? I notice that Waze seems to be inching in that direction, and perhaps they could get value from the mapping too.

The ride-sharing market seems to have network effects, which means the service with 80% of the market will get much more than 80% of the profit.

I believe Google has a not-insignificant stake in Uber already. Would be interesting to see them on both sides.

Google is in a really interesting spot:

- They own a significant stake in Uber via GV (formerly Google Ventures)

- They own Google Maps, which everyone relies on at the moment

- They own the most advanced self driving car and are closest to Level 4 autonomy

- They own Waze, and have a significant community there

In my mind they should acquire Lyft, let it run as is. Then when they are ready to go primetime with their self driving cars, start piloting them as a cheaper/free option within the Lyft app. If the pilot works, expand the cars nationwide and aggressively finance the fleet using their balance sheet.

What is really interesting about that is Google's ability to price it as a loss leader propped up by the ad business. They could even tie in a new AdWords extension to let people pay to have customers driven somewhere.

They could completely undercut Uber on price AND have better data sets.

I think at the end of the day Google will win this game with their self driving cars. Why they should buy Lyft and compete with Uber and lose billions of dollars, the better strategy is to get the self driving car first before anyone else and come in and crush Uber and Lyft and whoever is in the market. this will not get sued by driver and will not be under scrutiny by the regulators!!

We're getting to the point where the siloed web is causing serious problems for commerce and competition. The "network effects" you refer to are a symptom of laws like the CFAA, which make it illegal to get data hosted on someone else's server, even if you do it in a completely non-disruptive manner.

How would it have worked out if different companies could own stretches of the primary thoroughfare and forbid access to the employees and agents of their competitors? What if Google bought all the streets surrounding Apple and declared that Apple employees couldn't travel on them, lest they face legal action? That's essentially what we have happening online. Real competition is being seriously impeded by laws that allow companies to make it impossible to access data that the user has the right to access.

If we really see the internet as the Information Superhighway, we need to stop restricting access based on corporate interest. The data needs to be accessible. Only then will customers be free to choose the application they want to use based on how well it performs its promised functions, instead of based on its holding the relevant data hostage.

No, that's pretty much the scenario as I can see it. And to add to that, they're bleeding to death extremely fast. They have a matter of 12 to 18 months to find a buyer or they might as well close up shop. Each quarter that passes will diminish their financial position and lessen their bargaining power in the sale. If they wait toward the end of the time horizon, it'll practically become an expensive talent acquisition ala Jet.com.

Uber and Lyft are both vulnerable to self driving cars. They're hard to compete against when you need drivers-who-aren't-employees, but not nearly as hard to replace when you can just manufacture new cars.

Their app and scheduling smarts are valuable too, but won't be _more_ valuable when the drivers go away.

I think you miss the point. Just like Amazon disrupted themselves by pioneering ebooks with the Kindle to compete with physical books, along with streaming video against DVDs. Uber will disrupt themselves by introducing self driving cars[1]. They are not vulnerable, they are pioneering because they will have the platform to do it with.

[1] http://www.bbc.co.uk/news/technology-37117831

But their valuation may not hold. It is currently based on the defensibility of a monopoly position. That position is predicated on the network effect in a 2 sided market (e.g. Ebay). With autonomous cars now you are talking about defensibility from consumer brand + economies of scale in a commodity market (e.g. United Airlines).

If I understand you correctly, then that means they are screwed either way with regards to the valuation. Go driverless and the valuation may not hold, or don't go driverless and let someone else make them irrelevant.

Google and Tesla and GM and other actual car manufacturers quite literally have the "platform" to build on, not Uber. Self-driving cars are a lot harder to build than a ride-sharing platform.

If one of those companies were to launch a self-driving taxi service that cost half as much as Uber it wouldn't take long at all for it to utterly decimate Uber's business.

Good point. Time will tell I guess. Since you've pointed out that there are a lot of actual manufacturers working on self driving cars, for any second place players who don't enter the B2C taxi service market, the next obvious step is to licence the technology to someone like Uber. Then they can compete on supply and price.

The question is whether it's better for a manufacturer to enter the taxi service industry, or licence their technology and focus on direct consumer sales of the vehicles.

Well, Ford now see themselves creating a taxi service.

http://www.bbc.co.uk/news/technology-37106570

Why couldn't they compete?

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