While Lyft’s IPO announcement took center stage this week in rideshare news, it’s wasn’t the only thing going on in the greater rideshare world. This week, senior RSG contributor John Ince takes a look at driver safety, the ‘servant’ economy, and weird things passengers have left behind in drivers’ vehicles.
An Uber driver was stabbed to death in New York City, and it shows a big safety problem the company needs to solve [Business Insider]
Sum and Substance: A 27-year-old Uber driver was stabbed to death over the weekend, the police said. No suspect has been arrested, and rewards were being offered for information leading to an arrest. The company said it was working with the police in their investigation, but drivers have said the company should do more to protect them.
Drivers have complained to Business Insider that they often feel unsafe, given that the company does not perform background or identify checks on riders as it does for drivers.
Anyone with a credit or debit card can make an account to ride, even with a fake name, Business Insider has confirmed.
My Take: The rideshare companies double standard between drivers and passengers is no more clearly illustrated than on this issue of safety. Drivers are screened and background checks are performed. More importantly, the companies know they’re dealing with a real person with a traceable identity in the driver pool.
No such thing exists in the passenger pool. Anybody can create a fake identity and credit card. That’s what happened here. What are the companies going to do about it? We’re over 10 years into this rideshare experience and still, is this the best the companies can do to protect the drivers who make the companies what they are?
Stay tuned for an upcoming article we have on this topic, coming soon.
Here’s who’s getting rich from Lyft’s enormous IPO [Business Insider]
Sum and Substance: The S-1 paperwork for Lyft’s anticipated multibillion IPO is now open to the public, and it lists who the major shareholders are. These are the executives and venture investors who will reap a huge financial windfall should the public love the stock and drive the share price up.
While we don’t know exactly how much this IPO will enrich each one of the early investors until the shares are priced, Lyft has revealed how many shares these people own. Bankers reportedly expect the IPO to value the company between $20 billion and $25 billion, up from its last private financing round, which valued the company at $15 billion.
Here are all the people with sizeable stakes in the ride-hailing company:
Sean Aggarwal: 1.4 million shares – Trulia – Sean Aggarwal is probably best known in Silicon Valley for his roles as the vice president of finance for eBay, PayPal, and Trulia. But he was an early angel investor and adviser for Lyft (joining the board in 2016). And he’s the Lyft executive with the largest individual stake in the company, with just under 1.41 million shares.
Logan Green, cofounder and CEO – Green and cofounder John Zimmer began their collaboration in 2007 with a service called Zimride that helped people find carpools via Facebook. In 2012, they launched a ride-sharing service that used a mobile app called Lyft. It took off from there. Green is the second-largest individual shareholder among company executives. He owns just under 1.2 million shares of stock.
John Zimmer, cofounder and president – Zimmer spent a lot of time in college finding carpoolers to share his ride as he regularly drove from Cornell in upstate New York to New York City. He was introduced to Green over Facebook by a mutual friend. A week after they met, they were working on Zimride together, so the story goes. Zimmer is also the second-largest shareholder of stock among Lyft’s executive ranks, sharing that spot with his cofounder. He owns the same exact number of shares, almost 1.2 million.
Michael Seto – The Japan-based e-commerce powerhouse Rakuten poured $300 million into Lyft in 2015 as part of a broader, $530 million financing round, and Rakuten’s founder and CEO joined the board. Rakuten also bought more shares in subsequent rounds, making it the single largest shareholder of the company. Rakuten owns nearly 31.4 million shares, or 13% of the company, which are managed by its founder and CEO Hiroshi Mikitani.
My Take: Here’s the crazy thing about this IPO – all the people and entities cited in this article will be getting rich from the Lyft IPO, while Lyft (like Uber) has never found a way to make money from the operations of the business.
Lyft’s S-1 filing shows that they lost almost $3 billion over the last several years. Never mind. Investors apparently don’t care about profitability before an IPO. They only care about the prospect of profits at some distant point in the future – all based upon speculation. Such is the crazy world of finance, where real work (like what drivers do) barely nets enough for people to survive, while those who own equity are laughing all the way to the bank.
Let’s Not Be so Quick to Praise Lyft’s Promise of $10,000 Bonuses for Drivers [Gizmodo]
Sum and Substance: Ridesharing platform Lyft bought itself some goodwill in the wake of its initial public offering last week when SEC disclosures made it clear—as had been rumored—that the company would be distributing bonuses to select drivers. The number of drivers who might receive these benefits, however, may be vanishingly small.
“Up to $10,000 in cash bonuses” for qualifying drivers, as has been glowingly reported elsewhere, is nothing to scoff at, especially considering they myriad studies examining the lacking wages rideshare drivers pull in. But that money comes with strict requirements. Drivers “in good standing” (a phrase undefined in the SEC filing) who have completed a jaw-dropping 10,000 rides are only eligible to receive $1,000. At 20,000 rides, the bonus jumps to the aforementioned $10,000 with no sliding scale of payouts in between.
My Take: Let’s just say that Lyft got a lot of bang for the buck, with their gesture of rewarding the hardest working drivers with these bonuses in advance of their IPO. They received almost universal praise in the media, with very few reporters digging into the numbers.
Well, Gizmodo did, and what they came up with makes it look like there’s not a whole lot of ‘there’ there. Lyft, had they been fully transparent, could have also released numbers. They know how many drivers have logged 20,000 rides, and chances are that’s why they structured the bonuses like this, with no gradations in between 10,000 rides ($1000 bonus) and 20,000 rides ($10,000 bonus). If you’ve completed 19,999 rides, your bonus is still $1000.
That’s the way Lyft wants it. For a bonus program that won’t cost Lyft much at all, they sure got a lot of good press.
The Servant Economy [The Atlantic]
Sum and Substance: In March 2009, Uber was born. Over the next few years, the company became not just a disruptive, controversial transportation company, but a model for dozens of venture-funded companies. Its name became a shorthand for this new kind of business: Uber for laundry; Uber for groceries; Uber for dog walking; Uber for (checks notes) cookies. Larger transformations swirled around—the gig economy, the on-demand economy—but the trend was most easily summed up by the way so many starry-eyed founders pitched their company: Uber for X.
This micro-generation of Silicon Valley start-ups did two basic things: It put together a labor pool to deliver food or clean toilets or assemble IKEA bookshelves, and it found people who needed those things done. Academics called this a “two-sided market,” but to a user, it meant tapping on a phone and watching the world rearrange itself to satisfy your desires. Convenience drove consumer demand. Economic need and work flexibility drove the labor supply. At least in theory.
Now, a decade since Uber blazed the trail, and half that since the craze faded, we built a spreadsheet of 105 Uber-for-X companies founded in the United States, representing $7.4 billion in venture-capital investment. We culled from lists, dug in Crunchbase, and pulled from old news coverage. It’s not a comprehensive list, but it is a large sample of the hopes and dreams of the entrepreneurs of the time….
My Take: This is the article I’ve been wanting to write – a skeptical dive into the gig economy. It’s a thoughtful piece that asks the questions that very few in the power elite have been willing to ask. Are we using our capital in the right ways? Are we solving real problems in the tech world. Or are we just re-arranging numbers and stuff and skimming money off the top to benefit those who happened to get into the right deal at the right time? What do you think?
Lyft’s IPO Filing Should Frighten Investors And Infuriate Drivers [Forbes]
Sum and Substance: Last week, Lyft beat Uber to the IPO starting line by filing its S-1 registration with the SEC. The document provides a first detailed look at audited financial statements for the operational and financial performance of a major rideshare provider over the past three years…
The net effect is that while Uber and Lyft have created enormous value for consumers, propelling rapid growth, the ridesharing business model simply doesn’t generate enough profit to enable attractive compensation to drivers and sizable profits to shareholders. Lyft’s IPO filing corroborates this reality…
Editor’s Note: Len Sherman, who has been on RSG before, does a deep dive into Lyft’s financials in this article, and his findings aren’t pretty. It’s an in-depth article that goes beyond just “Lyft’s financials” into what these numbers actually mean for the future of the company.
Uber Annual Lost & Found Index [Bellhop]
Sum and Substance: The top 10 most unique items left behind in Uber vehicles.
Editor’s Note: This is a lighthearted video produced by Bellhop that goes through all of the (very) unique things left behind in Uber vehicles, including salmon heads and gold grills. Would you be happy to have any of these left behind in your car?
Readers, what do you think of this week’s round up?
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-John @ RSG
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