Uber Rival Lyft Raises $530M, Will Beef Up IT

jfruh writes "Uber may seem like an unstoppable juggernaut, but its main carhailing service rival Lyft isn't giving up. The company just raised half a billion dollars in funding, much of it from Japanese investors. From the article: "Lyft has raised US$530 million in its latest funding round, and plans to use the money to beef up its IT staff, expand its footprint and boost existing services. Japanese e-commerce company Rakuten led the round. With the latest cash infusion, Lyft has raised a total of $862 million from investors. The ride-hailing company is now reportedly valued at $2.5 billion."

Comments

The next big bubble?

[pbjones]

I can't see that these companies can be so valuable.

Re: The next big bubble?

[Anonymous Coward]

For a national company, a couple billion ain't that much nowadays.

Also, inflation. Have you asked for your raise yet?

Re:The next big bubble?

[mjwx]

I can't see that these companies can be so valuable.

Its because they aren't.

The numbers quoted are what some analyst thinks that someone might theoretically pay.

The reality is once the "ride sharing" scam falls into a heap, these companies will be picked up for pennies on the dollar.

Re:The next big bubble?

[Anonymous Coward]

There's lot of money to be made in the taxi business. Uber and Lyft are asking up to half of what other cabs ask and their drivers still make money. If Uber itself is currently making a profit is another question.
Uber needs some competion, otherwise they become the new monopoly.
Push out all the competition, sometimes by setting prices that don't even make you a profit, like for example amazon.
Once you're the only one offering a service, jack up prices.

Re:The next big bubble?

[Anonymous Coward]

You can't see control of nearly all taxi service in nearly every city in the world to be valuable?

It's got so much money and potential in it that Uber has been flat out ignoring regulations and laws across the board in probably tens of thousands of jurisdictions and hardly anybody seems to care. Now, if someone actually gets the balls to point out their entire business model is illegal, they could fold pretty quickly, but this generation of companies has been shown that if you get big enough fast enough, nobody is going to stop you.

Re:The next big bubble?

[Anonymous Coward]

I think it's time we deal with Uber the same way more enlightened countries deal with prostitution: don't criminalise the prostitute, but criminalise the kerb-crawler and neuter the pimp. IOW:

1) Outlaw knowingly offering money for any improperly licensed taxi service - this wouldn't hit tourists scammed by the occasional unlicensed driver roaming the streets, but e.g. using the Uber app would be clear evidence of intent;

2) Make any such contract for services void, so the driver can take all the money as if it were a gift, providing no service in return. Since the money was a gift, Uber gets no share.

It is not possible in most places to make a living as an Uber driver (assuming appropriate insurance). It is very much the Objectivist approach to business ethics: each worker is a cog to be squeezed dry then replaced, while selfish, short-sighted customers are plied with cheap, black-market hits until the competition is drowned. Since this behaviour serves no purpose to society, society should not protect it.

Re:The next big bubble?

[stud9920]

Makes me wonder: in countries where prostitution and proxenetism are legal (Germany, Switzerland...), did anyone think of making a Uber for sex ?

Re:The next big bubble?

[JaredOfEuropa]

They have been told that their business model is illegal by judges in several jurisdictions. Over here they are still operating and just pay the fines (I think it's €10.000 a pop, no pun intended). But legislators are looking at Uber with interest as well: some are already trying to figure out if and how Uberpop's model could be made legal. They think a few small changes in the law and perhaps a few additional requirements for Uberpop cabs is all it takes.

I think the popularity of the service and the eagerness with which some legislators want to legalize it, go to show how much the existing taxi services are hated.

Re:The next big bubble?

[Paradise Pete]

The numbers quoted are what some analyst thinks that someone might theoretically pay.

There's nothing theoretical about it. They raised a bit over $500M in return for a bit over 20% of the company. 500M / 0.2 = $2.5B.
Like all companies, they are worth what someone is willing to pay.

Re:The next big bubble?

[tmosley]

It's not the ride sharing that's the scam. That works, and works well. It's the valuation that is a scam.

Calling ride sharing a scam today is like calling the internet a scam in 1999. Sure, its valued at bubblicious levels, but it is a good idea--one that isn't going to disappear. Your "pennies on the dollar" comment will likely be spot on, at least with Uber.

Re:The next big bubble?

[tmosley]

Uber drivers pay their taxes as does Uber. Uber also provides commercial insurance once the passenger gets in the car. The only thing they aren't paying for are the permits, which are bad and need to go away anyways. Uber is just forcing free market economics on governments that don't want it, and surprise surprise, prices plummet while service improves greatly. Get rid of the damn medallions and be done with it.

Re: The next big bubble?

[Anonymous Coward]

Paying for a ride != sharing.

Re:The next big bubble?

[petermgreen]

Like all companies, they are worth what someone is willing to pay.

And like all companies some sucker paying $x for y% of of the company does not imply that there is anyone who will pay $(x*y/100) for the whole company.

Re: The next big bubble?

[Anonymous Coward]

Agreed. Cities also need to refund the medallion fees for all taxi drivers who paid them since the beginning of time.

Re:The next big bubble?

[DroolTwist]

I live in a fairly large city. Called for a cab to take me to pick up my truck as I was alone when I got my new car, so I had to go pick up my old one. First cab decided not to show, apparently. Called another; after 45 minutes the driver calls and says he won't be able to make it as his shift is ending. So I wasted 2+ hours, and still no truck.

I signed up for Uber, and had a car picking me up in less than five minutes. Got me to the dealership at almost 1/3 the cost of what the taxi would have been. I hope these services stick around, and put the overpriced and for me at least, useless cab companies out of business. I'll never call a cab again as long as Uber and Lyft are around. I also signed up as a driver, and on the weekends if I'm bored I'll give a few rides and make some extra cash.

Re:The next big bubble?

[MrVictor]

The plutocrats are so enamored with these companies because they basically eliminate the concept of traditional employment.

All these "sharing economy" app companies make you fill out a 1099-MISC if you want to work for them so you can be considered a contractor. Classifying workers as contractors is the real reason why these companies are able to drive out traditional competition. It prevents workers from forming unions and frees the companies from having to pay various taxes, workers compensation, unemployment, and health insurance. If the monied interests are able to buy enough congress critters to get this crap fully legalized, then you can bet your ass this style of labor abuse will be coming to a workplace near you.

Re:The next big bubble?

[MrVictor]

lol obvious shill is obvious

Re:The next big bubble?

[tlhIngan]

Uber is just forcing free market economics on governments that don't want it, and surprise surprise, prices plummet while service improves greatly. Get rid of the damn medallions and be done with it.

The problem is the free market sucks for utilities.

Uber works, but it's only working on cherry-picked routes and times. Taxis are heavily regulated not just in the drivers and licensing, but also in what they can do. For example, most taxis are required to pick up drunks and take them home, and dealing with a drunk is not an easy thing (think having to clean up your car afterwards). Likewise, most taxis must pick up their fares regardless of color, creed, or other discriminatory factor. And they have to cover the whole city - they may not want to go into a low-rent district, but if they accept the call they have to.

Uber drivers, though, are free to not do any of those things. If you don't wan to pick up some guy because he's black, just drive along. (In many places, a taxi driver doing this would be forced to call another taxi AND wait for that cab to arrive - they're not allowed to drive off).

Then again, taxi companies are evil. But I suppose it's OK when you find yourself partying on a Friday night and unable to get home because there's no taxis and uber isn't willing to pick up people who might throw up in the vehicle.

Re:The next big bubble?

[tmosley]

Nice job making a bunch of shit up there. Uber drivers don't know what the race of the requester nor their sobriety status when they accept the fare. They just know their first name.

And it's the cabs that just drive on by if you are black. This is extremely well known and you are communicating your intention to deceive very clearly by making up such a stupid bald faced lie.

Re:The next big bubble?

[gorzek]

It's interesting how, in a lot of ways, it's reversing worker specialization. In an economy where it's difficult to pick a field and stick with it because the job prospects are unreliable, enterprising workers are left with little choice but to sign up for various services that, essentially, offer them odd jobs of various kinds. Maybe you'll work as a Lyft driver for 3 hours today, do some freelance plumbing for an hour or so, write some website articles with the time between jobs, rent out part of your apartment on AirBnB so you can make the payment this month, etc. I suppose it's possible some people thrive on this sort of chaotic life, and more power to them if they do, but let's not pretend that eroding the work culture and especially the worker/employer relationship model that we developed over the 20th century is somehow a good thing for everyone. It overwhelmingly benefits employers who want to get paid and don't care one whit for what happens to the people doing the work.

Re:The next big bubble?

[Lord Ender]

Incorrect. In buyouts, offers are often made at significant premiums to the market value. In other words, companies are often worth much more than share prices indicate.

Re: The next big bubble?

[ranton]

Paying for a ride != sharing.

What are you talking about? If I share a pizza with a friend, we are both probably going to chip in for the cost. I may even pay a little more than 50% if my friend picked it up, since he put in more effort than I did. That is no different than sharing my car with someone and them paying me back for my gas, maintenance, capital costs, and my time.

The Lyft driver is not a cab driver in the same way my friend is not a pizza delivery man for picking up the pizza. Now when you have people buying a car specifically to pick up Lyft users and considers those fees a significant portion of his income, then they start to blur the lines between sharing and just being a business.

Re: The next big bubble?

[HairyReptile]

Except the Lyft driver isn't going to the same place as the person paying for the ride. She's servicing the rider. And I don't have figures, but I'm confident in saying that most of these drivers are getting a majority of their income from this.

These guys are bigger than Uber/Lyft

[Roblimo]

http://en.wikipedia.org/wiki/T...

HQ in France, tentacles all over the place. Taxis, limos, buses, light rail, catamaran ferries, etc. When this bunch starts noticing Uber, all we can hope is that they give Uber a dignified burial service.

Re: These guys are bigger than Uber/Lyft

[amicusNYCL]

When this bunch starts noticing Uber

You're thinking that a company with 95,000 employees that operates on every continent except Antarctica hasn't "noticed" a very disruptive 6 year old company in their industry? They must be pretty awful at their jobs then, no?

Didn't they already beef it up enough?

[bluefoxlucid]

We just barely avoided a hamburger shortage after the last time the giant cow smashing machine got all beefed up.

Needs the IT Boost

[TheNinjaroach]

I try to use Lyft over Uber whenever possible, but in the past few months I've gotten "our system is down" messages nearly every time of day or night. Their IT department could use the boost!

It's gotta be said...

[Chris Mattern]

DOST THOU EVEN LYFT?

Plenty of growth potential

[Fencepost]

I can't say whether they're overvalued, but there's definite growth potential beyond where they are now.

For example, how many municipalities in areas that they cover have "dial-a-ride" transport for seniors/handicapped? Could Lyft/Uber serve as a cross-municipality contractor for those, providing the same or better service at lower cost? Adding some specialized (e.g. wheelchair-capable) vehicles, plus being able to use their existing set of drivers where appropriate could lower municipality costs while giving better on-demand service to residents.