Lyft To Uber: The Race Is On

Harry here.  I’m on vacation this week in Asia with my wife so I won’t be responding to e-mails (unless it’s urgent) until I’m back.

But today, RSG contributor John Ince recaps the week’s news.  The headline article about Lyft’s recent partnerships and competition with Uber is a long read but well worth it.

In this week's round up, John Ince covers the race between Lyft and Uber for dominance, the Jakarta protest, and more.

Lyft To Uber: The Race Is On

Sum and Substance:  Zimmer and Green never talk as if they’re playing for second place. In the past year, Green, the build-it CEO, and Zimmer, the market-it president, have doggedly unearthed a strategy that may well be clever and powerful enough for the company to carve out a strong competitive position.

As Lyft worked throughout 2015 to achieve parity with Uber on critical service details like price and wait time, it also developed a strategy to differentiate itself beyond being the “nice,” or quirky, ride-sharing service. “I always had this idea that we should try to find a few partners with similar values whom we could have long relationships with,” says Zimmer.

Between July and January, they put together three remarkable partnerships: with Starbucks; with an international coalition of leading ride-share companies, including China’s Didi Kuaidi; and with Detroit behemoth General Motors. Together these deals create a distinct picture of how Lyft can compete with Uber. Lyft’s goal: establish itself as a distinctive, values-based alternative—the Nordstrom to Uber’s Walmart, the Virgin to its rival’s United. 

“We didn’t get into this to replace taxis,” says Zimmer. “That’s just a $12 billion market in the U.S. We want to create an alternative to car ownership, which is a $2.15 trillion market in the U.S. alone.”

“We really do expect more change in the next five years than we’ve had in the last 50,” says GM president Dan Ammann, who brokered the deal with Lyft. This isn’t a pure technology play but a case of software meeting an established and mighty industrial sector. Consider the range of competitors involved in this particular transformation—not only Uber and Lyft but also GM, Ford, Tesla, Toyota, BMW, Volks­wagen, Apple, Nvidia, and Mobileye, among others—and the winner-take-all scenario becomes even harder to envision.

My Take: This good read – informative and insightful.   The gist of the article is that Lyft is playing a smart, long term game in its battle with Uber by building out partnerships with major players – Starbucks, GM, Didi Kuaidi and others while Uber spends it war chest trying to build / do everything by itself.  If history is any guide, Lyft’s strategy will at least put itself in a position to remain competitive with Uber for the foreseeable future.

A New Way to Commute – Casual Carpooling Live Now for Lyft in San Francisco

Sum and Substance:  Introducing Lyft Carpool, a new service that turns commuting into a more affordable, efficient experience for everyone. Lyft Carpool launches first in the Bay Area, in partnership with the MTC’s 511 Rideshare program, and will expand into new cities over time. “The unused seats in most drivers’ cars represent the biggest untapped source of transit capacity in the Bay Area,” explains Melanie Crotty, MTC’s Director of Operations. “We see the partnership with Lyft as a great way to harness both technology and brand identity to put that capacity to work.”

Solo commuters can now get affordable, nonstop rides without needing to drive. To ride, just tell the app when you want to arrive at work. It’ll match you with a Lyft Carpool driver who shares your commute route. Prices range from $4-10 and make Carpool a viable option for daily use. Lyft Carpool seamlessly manages each trip, so both drivers and riders enjoy the ride.

Beyond coordinating matching and sending trip reminders, Carpool provides two-way ratings, and secure messaging. As a Carpool driver, you’ll pick up one rider along your commute, join the carpool lane, and still get to work on time. You choose to drive whenever works for you. There’s no commitment, whether you commute to SF or in cities across the country.

My Take: Now this makes sense.  It’s a option that’s been long overdue.  Drivers sign up to carpool and have just one passenger and both know in advance all the logistics.  It eliminates the big unknown of being an Uber or Lyft driver: you don’t know where you’re going to end up.  You’ll only make $10 per trip, but that’s $10 you wouldn’t have had otherwise.  And because this is repeatable, I could see some real relationships developing out of this. Kudos to Lyft for coming up with this.

10,000 angry cabbies brought Jakarta to a standstill

Sum and Substance:  A massive protest on Tuesday morning paralyzed traffic in downtown Jakarta. 10,000 taxi drivers came out in a planned protest against ride-hailing apps like Uber and Grab, which they say have taken business away from them by encroaching on their space.  

The drivers blocked traffic down main roads with their cars, and the sheer size of the mob also prevented cars from moving past the blockages. The protest, which is five times the size of a similar one last week, was meant to be fairly orderly and had sought police permission before being staged, but reports and social media accounts say it ended up turning violent. Drivers marching down the roads attacked other taxis they encountered for not participating in the protest, and cars were damaged in the clash. Some even showed up to the protest carrying weapons like parangs — a machete-style knife.

My Take: This is yet another danger in this line of business.  A driver never knows when they’re going to encounter an angry taxi driver, who, in Jakarta at least, might be packing a machete-type knife.

Uber reportedly bought at least 100,000 Mercedes Benz S-Classes

Sum and Substance: Quick recap: ride-sharing behemoth Uber is famous for connecting passengers with people who have their own cars. (Well, among other things.) Uber doesn’t own a fleet of cars for would-be drivers to use, which makes the fact that the company seems to have purchased least 100,000 Mercedes Benz S-Classes from Daimler all the more fascinating. What gives?

Germany’s Manager Magazin, which broke the story earlier today, was quick to point out one crucial similarity between the two companies: they’re both investing heavily in making autonomous cars a reality. After all, Uber more-or-less raided Carnegie Mellon University last year in search of its brightest software engineers.

A well-respected school in Pittsburgh might seem an odd target, but CMU’s National Robotics Engineering Center had a stunning concentration of technical know-how — just the sort of talent to help make cars that can “see” and steer him or herself. When all was said and done, Uber wound up with roughly 40 researchers that were once part of an oft-trumpeted partnership with the company and the school.

Mercedes, on the other hand, has been working for a few years now to build autonomous driving technology into its street-ready vehicles. The premium S-Class has been able to park, maintain safe distances from other cars in tight, stop-and-go traffic without the aid of a driver. It’s possible we could see Uber’s technical talent build more intelligent systems on top of Mercedes’ foundation, but that requires a level of access that a prestigious carmaker would easily shy away from. 

That’s what makes the number of cars Uber bought so important. Selling 100,000 S-Classes in one go is pretty crazy — that’s about the number of S-Classes Mercedes managed to sell in a single year. Prepare for just a little math: if we assume Uber worked out a sweet volume deal and got each car for $80,000 (suggested price in the US is about $95,000), that works out to an $8 billion price tag. That’s about €7.1 billion, or put another way, a full 8 percent of all the money Daimler made off of Mercedes-Benz cars in 2015. Point is, Uber might not just be buying sweet cars — it’s probably trying to buy some influence and openness.

My Take: This news has since been denied by Uber, but that doesn’t put it to bed.  Like the cockroach that just won’t die, Uber’s interest in self driving cars will keep on keeping on.

Why Uber & GM (& CarCos) will have a head-on collision

Sum and Substance: Between its $1 billion acquisition of Cruise and $500 million investment in Lyft, GM is hedging against major long term macro trends in the transportation business – on-demand mobility and autonomous navigation systems. These two trends disrupt the established 20th century industrial automobile complex: where lead times are in years, cars are bought and sold through an increasingly inefficient distributed system of dealerships.

The cars which were not-networked and not connected are now connected, and upgradable over the air – a trend that is only going to become remarkably commonplace. The world of tomorrow is about sensors, vision systems, machine learning and smarter battery management. It’s about an in-car experience that is adaptable and personalized — which is very far removed from the idea of what is a car today. Uber, at some point, decided to chase the self-driving car dream, not because they want to make cars, but instead they want to make machines that make Uber more efficient and profitable.

My Take: Om Malik, author of this article, has for several decades been is one of the most astute observers of technology – so pay attention to what he’s saying here.   He makes a lot of good points about the macro-picture, but he gets the micro-view wrong.  He’s never been an Uber driver and doesn’t understand the unique challenges involved.  He doesn’t get what Uber is all about.  He doesn’t understand all the intangibles that the driver brings to the equation.  He doesn’t get that the best sensors and vision systems and machine learning and battery management system won’t be able to help a drunk who has fallen asleep in the back seat of the driverless car get outside to his apartment.  He doesn’t understand how the driverless car is going to find its pax out of a crowd  spilling out of AT&T park after a ballgame.  The people who are expecting Uber to have a head on collision with car companies have become infatuated with technology and blind to the reality of what Ubering is all about.

Andre Iguodala Pranks Golden State Warriors Teammate Festus Ezeli

Sum and Substance: Check out this video of a Lyft ride where the driver picks up Golden State Warrior backup center Festus Ezeli, and the prank radio announcer tells him he’s just been cut.

My Take: Even if you’re not a Golden State Warrior fan, this is a pretty darn good April Fool’s Day prank. My only question is how much Lyft paid for it.

Drivers, what do you think about the week’s top stories?

-John @ RSG