Topic: Ride sharing
Uber Has Been Underpaying NYC Drivers, Will Pay Out an Average of $900 to Each (May 23, 2017)
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Ford Announces New CEO, Who Formerly Headed its Mobility Initiatives (May 22, 2017)
It might seem odd at first glance that I’m covering an auto industry leadership change, but it’s news that’s very much in keeping with the “Tech Disrupts Transportation” narrative here on the site, and the nature of both the troubles that prompted the move and the move itself are reflective of that trend too. Mark Fields, who has been CEO for the last three years, is being replaced by Jim Hackett, who has been running Ford Smart Mobility. Although this New York Times piece and others this morning are focusing on the fact that FSM and therefore Hackett has owned Ford’s autonomous driving initiatives, that’s only part of its remit, and that’s worth noting. It also owns in-car connectivity, mobility itself (which is the industry term for ride sharing and other new ownership and other business models for cars), and data and analytics, among other things. In other words, with the exception of electrification, it has owned essentially all of what’s next in the automotive industry. That Fields would have put all that in a separate division is perhaps the biggest sign that he underestimated how central these changes would be to the future of the company, and it also makes sense to put the guy who’s been running all that in charge of the company at this point. Hackett will need to bring these initiatives to the forefront of what Ford does, along with electrification, where it’s moved more slowly than other car companies, if he’s to help turn Ford around. But he’s taking over at a really tough time in both the company’s history and the US automotive industry.
Uber’s Relationship with Pittsburgh Worsens (May 22, 2017)
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★ Uber is Charging Dynamic Prices for Rides, Widening Gap with Driver Payments (May 19, 2017)
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Uber Partners with Transit App for Combining Ride Sharing and Public Transit (May 16, 2017)
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★ Waymo and Lyft Partner Over Self-Driving Cars (May 15, 2017)
The New York Times reported last night that Alphabet autonomous driving unit Waymo and ride sharing company Lyft are partnering around self-driving cars. There aren’t many details, but it’s worth noting that Lyft already has GM as an investor and partner, and GM has its own autonomous driving technology through its Cruise Automation subsidiary. But the brief Lyft statement on the partnership described Waymo’s technology as the best out there, which certainly matches my own perception but likely wasn’t well received at Cruise. But the partnership is a concession by Lyft that it needs its partnerships in autonomy to move much faster to compete in autonomous driving with Uber, which of course is developing its own technology, and a concession by Waymo that it likely won’t be building a ride sharing network at scale on its own. Even though the situation is complicated somewhat by Alphabet’s investment in Uber through GV, Waymo and Lyft certainly have a common enemy in Uber at the moment, and joining forces makes a ton of sense. Waymo has the autonomous technology but not ride sharing expertise or scale, while Lyft has the ride sharing scale but no expertise in autonomy. As I’ve said before, though a number of tech companies are trying to play in one of the three major shifts in transportation – autonomy, electrification, and mobility as a service – few are serious players in more than one of those domains. Partnerships are therefore going to be key for most of them, although acquisitions (including a possible eventual Waymo-Lyft acquisition) would be another eventual outcome.
Weekly Narrative Video – Tech Disrupts Transportation (Apr 29, 2017)
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Didi Raises $5.5 Billion to Help Fund International Expansion (Apr 28, 2017)
Chinese ride-sharing company Didi Chuxing has raised what Bloomberg says is the largest single funding round ever, apparently to help pay for a long-expected international expansion. Didi now of course owns Uber’s business in China and also received a billion-dollar investment from Apple last year, but has mostly stuck to its home market for now. People in the know have been saying it was going to start trying to build a business outside of China for some time, so this move isn’t that surprising, but it’s almost certain to bump up against its part owner Uber in at least some markets given the latter company’s international reach, which could get interesting. Big Chinese tech companies have mostly failed to expand much beyond China with the exception of those selling cheap electronics, and Didi will face an uphill battle in ride sharing markets internationally unless it partners with local players (possibly including Uber). I’m very curious to see which markets it goes after and how.
via Bloomberg
Lyft’s Rapid Growth Continues in Q1, While Losses Narrow (Apr 27, 2017)
Following Bloomberg’s exclusive on Uber’s financials for the end of last year, which were provided officially, it now has leaked numbers for Lyft for Q1. Those numbers, like Uber’s, show very strong growth, though the implication that this has come as a result of Uber’s troubles isn’t supported by other recent data. What’s really happening is that the whole space is growing extremely rapidly and these two companies are capturing the vast majority of that growth in the US. The big difference between the two is that Lyft’s numbers show smaller losses in dollar terms, while Uber’s showed growing dollar losses. Lyft’s recent aggressive expansion is probably going to slow its progress towards profitability somewhat, but that goal continues to look quite a bit closer for Lyft than for Uber.
via Bloomberg
Gett Acquires Fellow Ride-Sharing Company Juno for $200m (Apr 26, 2017)
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Alphabet’s Waymo Starts Testing Autonomous Cars with Passengers in Phoenix (Apr 25, 2017)
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Uber Struggles to Retain Drivers, Develops Plans to Do Better (Apr 20, 2017)
The Information has quite a bit of both data on Uber’s driver retention rates and on its efforts to do better in keeping drivers. The headline I’ve seen shared is that it retains just 4% of drivers, but that’s a bit misleading because it’s based on those that apply to be drivers, only 20% of which make it through that process. The more meaningful retention rate is the 25% of those who drive at least once for Uber who are still driving for it a year later. That’s still low, but far better than 4%. Still, Uber is sometimes compared to an early stage SaaS company, many of which exhibit the same low margins and high growth rates as Uber, and which generally become profitable over time as recurring revenue from earlier cohorts of customers offsets customer acquisition costs. Uber’s problem with such low retention rates is that it continually has to spend massive amounts to attract and retain drivers even as its business matures. In addition, better retaining those drivers going forward ultimately means paying them more, and if it’s also to reduce its subsidies for rides that’s going to mean large price increases, which in turn may well affect demand unless it’s squeezed out all its competitors by that stage, which seems unlikely. As such, even though VCs commonly scoff at the notion that Uber should worry about its lack of profits, I do think there are some legitimate concerns over its current finances.
via The Information
Uber Exec in Charge of Pittsburgh Self-Driving Test Quits (Apr 18, 2017)
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NYC Taxi Regulator Mulling Forcing Uber to Add Tipping Option in its App (Apr 17, 2017)
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Uber Shares Partial, Flattering Financial Data for 2016 with Bloomberg (Apr 14, 2017)
Uber’s financial results frequently leak through various online publications, and this year it seems to have decided to shortcut the process and speak directly to Bloomberg, which of course also gives it the opportunity to present the most flattering version of the numbers along with commentary. The highlights are that Uber grew revenues significantly year on year, but losses also grew. Uber emphasized that revenue growth outpaced growth in losses, but of course what you really want is for revenue growth to outpace cost growth, because that’s how you eventually become profitable, but that isn’t happening yet. Uber’s revenue growth was also helped by the different accounting treatment of UberPool rides (for which Uber records the full revenue as net revenue) versus other rides (for which it only reports its cut) which has the effect of making losses seem smaller in comparison to revenues, but is really just financial jiggery pokery. The headline financials shared with Bloomberg also exclude both the Chinese business, which was hugely loss-making for Uber, and various other items including car purchases (presumably as part of its autonomous technology testing operation). So these really are a pretty sanitized set of results, which nonetheless show significant and even growing losses.
via Bloomberg
Uber Had a Program Called Hell Designed to Undermine Lyft (Apr 13, 2017)
It sounds like this it has now ended, but Amir Efrati at The Information has a report that Uber used to run a program named Hell which was designed to undermine its major US competitor, Lyft. The program pretended to be multiple Lyft customers and was therefore able to track where Lyft’s cars where in an effort to lure drivers to drive exclusively for Uber. One interesting side effect was that Uber actually offered bonuses to these non-monogamous drivers compared to what it paid those who drove for Uber exclusivity, which must seem a little perverse to those loyal Uber drivers. Amir also argues that Uber’s misuse of Lyft’s app was a violation of its terms of service and might also have broken the law, though I doubt Lyft will sue over it. This certainly isn’t the first time we’ve heard about Uber engaging in underhanded tactics to beat Lyft – there were lots of stories a couple of years ago about Uber reps calling Lyft cars and canceling, or getting in the cars and then trying to get the drivers to switch. It’s all part of the win-at-all-costs mentality that has always prevailed at Uber, and which has had nasty side effects both for drivers and for its employees.
via The Information
Lyft raises more than $500m, giving it a new valuation of $6.9bn – Financial Times (Apr 6, 2017)
There were reports about new fundraising for Lyft a while back, and it looks like it’s now completed a decent-sized round at a significantly higher valuation than its last round a year ago. The FT article also suggests that Lyft has been benefiting from Uber’s recent troubles, though there’s actually been little evidence of that and some to the contrary. It’s still smart for Lyft to raise funding and fuel its rapid expansion in the US during this time, but there’s no guarantee that it’ll be able to gain meaningful share as a result given that it seems to have been able to do little of that even in what’s been a disastrous period for Uber on the PR front.
via Financial Times
Ride-hailing apps may help to curb drunk driving – The Economist (Apr 5, 2017)
This isn’t a particularly new idea, and in fact it’s one that ride sharing companies have used for some time now in trying to convince regulators to allow them to operate. But it’s always good to see real data behind an idea, and in this case it seems to back it up pretty well, at least in New York City. The data isn’t consistent across the boroughs, but there’s certainly a clear trend suggesting the introduction of Uber in the City did indeed reduce drink driving, which is obviously a good thing. That’s a nice counterpoint to all the negative news stories recently about Uber in particular and ride sharing in general (including the one I just shared about driver vetting).
via The Economist
8,000 Uber, Lyft, ride-hailing drivers fail new background checks in Massachusetts – The Boston Globe (Apr 5, 2017)
Massachusetts put in place a new law requiring drivers for ride sharing services to acquire a license, which in turn requires passing an extensive background check. Of the 71,000 existing drivers who applied, a little over 11% failed these background checks, in many cases because of issues with driver’s licenses, at least some of which should have been caught by Uber and Lyft. Those companies, in turn, countered that they either don’t have access to longer criminal histories or that they have deliberately ignored older offenses as a way to help people with troubled pasts move on. Though there’s some truth to the former point, the latter is at least partly spin. Sex offenders, of whom 51 were rejected by Massachusetts, have to register, and presumably blocking them from becoming drivers would be both easy and desirable, no matter how long ago the offenses. The Massachusetts law is stricter than in other states and as such helps highlight how the background checks the companies themselves conduct can miss potentially serious issues in drivers’ histories.
via Boston Globe
Lyft tests Shuttle, a commuter service that’s basically a bus – Mashable (Mar 29, 2017)
Though I think we tend to think of services like Uber and Lyft as disrupting the status quo in transportation, it’s sometimes amusing to watch them instead recreate existing models, as in this case, where Lyft appears to be creating what’s essentially a bus service. Now, it’s still different in that it’s not tied to set routes, the drivers aren’t professionals or employed by any municipality as most bus services are, and the pricing is unpredictable, so there may be both pros and cons to this approach. But the more adoption of ride sharing services grows, the more they’re going to emulate existing modes of mass transportation like buses, because those continue to be the most efficient and cost effective ways to get people from A to B, especially during commuting times. Whether they end up being better than traditional mass transit in the same way as the original ride sharing services were better than traditional taxis remains to be seen.
via Mashable