Harry here. I’m in San Diego for a blogger’s conference so will be slow to respond to e-mail. But today, senior RSG contributor John Ince takes a look at Lyft’s vision for a self-driving future, an investor’s take on Uber and more.
Exclusive: Lyft Cofounder Lays Out His Vision of the Driverless Future [Time]
Sum and Substance: Lyft, the nation’s second-largest ride-hailing service, expects autonomous vehicles to account for a majority of its rides within five years, cofounder and president John Zimmer told TIME in an exclusive interview. Days after its chief rival Uber’s self-driving cars began ferrying passengers in Pittsburgh, Zimmer also said he expects car ownership will “all but end” in major U.S. cities in less than 10 years.
“There are already specific trips—whether it’s just on this street or just at this time in this perfect weather condition—that an autonomous vehicle could do today,” Zimmer tells TIME. And he believes that this is how the self-driving revolution will come to the masses: not by consumers swapping out their old cars for fully autonomous personal vehicles but by consumers paying for rides in self-driving cars they don’t own, with the type of trip restricted heavily at first and then growing more complicated as technology and regulations advance.
That is also the logic on which his five-year prediction is built. Because Lyft has data about where people’s trips tend to start and end, the company can estimate that a certain percentage of Lyft rides already lend themselves to self-driving cars. Such data also helps the company know where to focus their efforts for work like detailed street mapping, so that they can cover the biggest percentage of trips over the fewest miles. “We know in what order autonomous technology should be built, such that it covers more and more of those trip types,” Zimmer says. As of August 2016, Lyft was doing 14.6 million rides per month, triple their volume one year before.
My Take: Uber seized the PR initiative on driverless cars last week with their big media event in Pittsburgh. This week, Lyft co-founder and President John Zimmer fights back with his own PR initiative.
Without anything to show the media, he makes his splash by doing an exclusive interview with Time Magazine and making a news worthy prediction that no one can prove is wrong until they doesn’t happen. I have to wonder if John Zimmer chose the 5 year time horizon largely because it’s so far off in the future that he knows no one will remember his predictions if they fail to come true. For the longer version, see below.
The Third Transportation Revolution by John Zimmer [Medium]
Sum and Substance: … We’ve built our communities entirely around cars. And for the most part, we’ve built them for cars that aren’t even moving. The average vehicle is used only 4% of the time and parked the other 96%. Most of us have grown up in cities built around the automobile, but imagine for a minute, what our world could look like if we found a way to take most of these cars off the road. It would be a world with less traffic and less pollution. A world where we need less parking — where streets can be narrowed and sidewalks widened. … And it is within our collective responsibility to ensure this is done in a way that improves quality of life for everyone. The coming revolution will be defined by three key shifts:
1. Autonomous vehicle fleets will quickly become widespread and will account for the majority of Lyft rides within 5 years.
Last January, Lyft announced a partnership with General Motors to launch an on-demand network of autonomous vehicles. If you live in San Francisco or Phoenix, you may have seen these cars on the road, and within five years a fully autonomous fleet of cars will provide the majority of Lyft rides across the country. …
2. By 2025, private car ownership will all-but end in major U.S. cities.
As a country, we’ve long celebrated cars as symbols of freedom and identity. But for many people — especially millennials — this doesn’t ring true. We see car ownership as a burden that is costing the average American $9,000 every year. The car has actually become more like a $9,000 ball and chain that gets dragged through our daily life. …
3. As a result, cities’ physical environment will change more than we’ve ever experienced in our lifetimes.
So why should you care about changes in transportation? Even if you don’t care about cars — even if you never step into a Lyft or an autonomous vehicle — these changes are going to transform your life. … The end of private car ownership means we’ll have far fewer cars sitting parked and empty. And that means we’ll have the chance to redesign our entire urban fabric. Cities of the future must be built around people, not vehicles. They should be defined by communities and connections, not pavement and parking spots.
My Take: John Zimmer is really good at spinning a yarn. This is what he does in this long Medium post. By tying this think piece to a the Time exclusive above, he makes sure he’ll get some attention. Nothing in this article is especially noteworthy – except Zimmer’s three main predictions.
The predictions all seem to hinge upon economics. Zimmer says the economics favor “networked autonomous vehicles.” I’m not so sure the economics will work out in his favor. Who’s going to own these vehicles? Who’s going to maintain and repair them? Where will they be parked when not in use? Is this a business that Lyft really wants to be in? Who’s going to deal with the regulators? How much will all this cost?
When you add up all the associated expenses of networked autonomous vehicles, does this proposition really compare favorably with car ownership? What about the convenience factor? What about America’s love affair with personal cars? Meanwhile, for the moment at least, investors at least have another big dream to set off visions of dancing dollar signs in their head.
It Made Sense at the Time: Why I Passed on Uber’s Seed Round [Entrepreneur Magazine]
Sum and Substance: Did I pass on Uber’s seed round? Yes, but it’s worse than that. I never even bothered to listen to Travis’ pitch, even though I was repeatedly offered the opportunity. I then passed on Uber’s A Round as well, which I thought was valued too high, in light of the company’s progress.
Too bad, as the initial funding round has increased over 4,000 times in value, making a $250,000 investment worth more than $1,100,000,000. Nope, that’s not a typo. Two hundred and fifty thousand would have netted my firm more than one billion dollars. … Thus, while it is painful for a great investment to pass you by, the pain is wistful, not acute. Although Uber never pitched Rincon Venture Partners, we share a very good mutual friend with Travis Kalanick, Uber’s Founder and CEO. Our mutual friend mentioned to me over breakfast during the late summer of 2010 that Uber was raising a seed funding round. At that moment, I could have been one of Travis’ first pitches, if I had been curious to learn more.
In between mouthfuls of home-fried potatoes, I recall telling my friend (paraphrasing from memory – his and mine), “It might work in San Francisco, Boulder and Austin, but I don’t see it expanding beyond a few small cities with strong tech communities. If they try to move into Philly, New York or Boston, they’re going to get their throats slashed. …
There were two areas in which I greatly underestimated Uber: (i) its ability to create a robust, two-sided market and, (ii) its wily use of consumers to muscle its way into hostile markets. … Additionally, Uber initially focused on replacing limo-style town cars and thus appealed to a relatively small number of upscale riders who have smartphones and no worries about price. Although it was a brilliant market entry strategy, it contributed to my misunderstanding of the opportunity. I viewed their value proposition as a town car substitute, rather than appreciating the larger opportunity to eventually cannibalize the taxi market.
My Take: Focused on the nuts and bolts of being a good driver, most of us seldom consider the investor perspective on Uber. Yes, we complain about this and that, but for those who did get in on the early rounds of financing, Uber has been an amazing surprise and unquestioned home run. That kind of psychology feeds subsequent rounds of financing.
Although drivers may be in the dark about the investor’s perspective, maybe we know something that investors don’t know, too. I’ve still got a ton of questions about Uber as an investment and as a company. For starters, please someone show me that Uber has a sustainable business model. Yes, they’re a startup and startups often lose money in their early years. But Uber is losing money at a faster pace than any startup in history – $1.3 billion in the first half of 2015 – $1.7 billion in the first three quarters of 2014.
These numbers are not sustainable. And I don’t buy Uber and Lyft’s vision of the future – networked autonomous vehicles. (See Lyft’s articles above.) There are simply too many hurdles – technological, regulatory, psychological, economic and financial for true driverless cars to solve Uber’s basic problem.
Uber and Lyft simply haven’t figured out a way to make money yet and the timetables they’ve set for reaching profitability have not been met. The investor who penned this article, and passed on Uber’s early round, may yet have the last laugh. With the exception of private deals and small trades on secondary markets, most investor’s returns are paper profits. Until there’s an IPO, and a robust public market for Uber or Lyft stock, no one can affirm either company’s true value.
Could it be that most of the gains talked about by this investor are illusory? Time will tell on this one. I have no lock on the truth, but neither does Uber or it’s investors. Inside the investor echo chamber, it all makes sense. To Alice or anyone else outside the looking glass, it’s all very perplexing.
This money-saving tool tells you when to take an Uber, Lyft or taxi [Washington Post]
Sum and Substance: What’s the fare breakdown of your Uber ride? How competitive are Uber’s prices compared to Lyft’s? And how much money will your driver pocket on the trip? A new website from the Boston-based makers of taxifarefinder.com claims to have the answers. RideGuru, previously a component of Taxi Fare Finder, launched an independent site Tuesday, aimed at bringing transparency to the ride-hailing market, the company says.
“The innovation that rideshare and ridehail companies brought to the market is very impressive. While many welcome its emergence, it is also disruptive in a way, as it forced fast transitions to the market and left a lot of uncertainty and confusion among the consumers,” said Ippei Takahashi, president of parent company Unleashed, LLC, in a statement. “For example, the fare and payout structures can be complex, and the rules and regulations can be vague. Our mission is to bring transparency to the market by providing useful tools and informative resources, and through connecting people with rideshare experts.” RideGuru, a newly released app, displays ride-hailing fares in a dashboard-like interface. (screenshot: Faiz Siddiqui) The site’s main draw is its fare calculator, which is based on an independently devised algorithm. Users enter their location and travel destination and the site does the rest of the work — displaying the various ride-hailing options priced from lowest to highest.
It includes the gamut of options, from budget uberX and Lyft, to luxury options like Uber XL, Lyft Plus, Uber Black and Uber SUV. Uber already shows passengers fare estimates before they agree to a trip, but not for the range of available options. RideGuru’s fare charts are also useful for passengers concerned about driver compensation, and drivers (and prospective drivers) looking to understand how much they can earn. Uber drivers have long pushed for better pay and employee protections, particularly when it comes to their status as independent contractors rather than employees.
My Take: No doubt a valuable tool, but I’ve got questions. How do people find out about it? When they’re in a hurry will they take the time to compare prices? Surely some will, but I doubt it’s going to be a wave of people.
Readers, what do you think of this week’s stories?
-John @ RSG
