Lyft Closes $600M round at $7.5B Valuation | Hacker News Reader

Lyft Closes $600M round at $7.5B Valuation

bloomberg.com

104 pointsrayuela38 comments

Although 600M is not 500M, the new information probably isn't significant enough not to count as a dupe of https://news.ycombinator.com/item?id=14052556.

This is when Uber should go back to their investors, ask for $10B and just buy Lyft. Without Lyft Uber will have an easier time to become profitable and avoid a "race to zero" in cities when they compete against each other.

I imagine there might be serious anti-trust concerns with such an acquisition.

Why? Neither of those companies has anything even close to a monopoly.

Combined they likely have a lot of local monopolies even if they don't have a national or global one.

You mean places where there are no other taxi services, but where Uber and Lyft both have drivers?

It seems to me that neither the FCC nor the FTC consider 'local monopolies' as actual monopolies. See: ISPs.

Local monopolies are definitely not uncommon in the US. On a sheer numbers basis, it's very rare for small local monopolies to be pursued on anti-trust grounds, however the majority of US anti-trust cases are made up cases that don't resemble the Microsoft / AT&T / IBM type scenarios. They will occasionally go after small local monopolies, the abuse has to be so great it gets their attention however.

You can browse all anti-trust cases here:

https://www.justice.gov/atr/antitrust-case-filings?page=1

Here's a typical example, that is a million miles away from something like the Microsoft case:

https://www.justice.gov/atr/case/us-v-michael-p-barbour

You don't have to be a monopoly to be in violation of anti-trust laws. The Clayton Act says that they can block any merger or acquisition that would 'substantially lessen competition'.

Even though they wouldn't be a monopoly, it wouldn't be hard to argue that merging Uber and Lyft would substantially lessen competition.

https://en.wikipedia.org/wiki/Clayton_Antitrust_Act

Good point, that's something that might happen, especially because both are fairly open about using the money raised from investors to subsidize the rides.

Size-wise, especially in some locations Uber and Lyft now dwarf the regular taxi services. So you're probably right that this would at least be reviewed and likely flagged down, assuming that such local issues would be enough to raise that flag.

Would that not violate antitrust law? At this point, Uber and Lyft have basically created a market and become the two biggest players in it, and if the "race to zero" as you put it disappears, it's literally prices no longer being competitive and consumers paying higher prices.

I wonder if the overlap of drivers that do both Lyft and Uber would somehow make Lyft worth less to Uber than it would be worth to a different buyer.

I'd heard, anecdotally, that many (most?) Lyft drivers also drive for Uber.

The value for Uber acquiring Lyft is in eliminating it's only real competition, which is worth more than any number of drivers and users.

That's also why they'd have to pay a large premium over the current $7.5B valuation, such as the $10B suggested by parent.

I'm unaware of any transportation companies that could really afford to purchase Lyft.

Didi might be a contender.

Didi already has a non-compete pact with Uber (they acquired Uber's Chinese arm from Uber).

No - this only applies to Uber not operating in China. Didi can still compete with Uber in any other country.

Isn't Lyft only part of Uber's competition. Isn't it also competing against the viability of its own business model, i.e being able to subsidize rides with VC money until a fleet of self-driving cars is a viable replacement for it's drivers?

Imagine you're an investor in the last round who invested at $7.5 billion. Now, Uber buys Lyft for $7.6 billion. Are you happy with that return? Any sale, just by necessity really, would have to be for a significant premium.

>"I'd heard, anecdotally, that many (most?) Lyft drivers also drive for Uber"

I always make a point of asking the driver if they work for both and my informal polling has been overwhelmingly "yes" on the question of "do you work for both?"

I'd say many do, at least in the Bay Area.

I've been on rides before where, a few blocks from my destination, the driver will open up the opposite app to start polling for a new rider before even dropping me off.

This would be the greatest news app very for dozens of competitors. 2 years later one is another Lyft, and Uber blew another $10B.

The last thing that Uber needs is to basically say to their investors, "We have no ability to outcompete a much smaller competitor, we just have to buy them out."

I also think that people overestimate the effect that Lyft per se has on Uber's prices/margins. Uber competes not just with Lyft, but with other, smaller "use an app to get a ride" apps, and with taxis, public transit, using your own car, and not going to where you're going. Even if Lyft rolled up its operations tomorrow, I don't think you'd see more than a marginal effect on Uber's unit-profit/volume tradeoffs.

That would be the silliest decision for Lyft, as it is so close to taking over Uber. With the Google case hanging over them and all the bad press they've been getting lately, Lyft is catching up faster than ever. Why would they sell out now when they could potentially pass and take over Uber?

...Not to mention that a ton of staff would probably bail before working in the Uber "family".

And then consumers lose because uber has pricing control.

I have switched from Uber to Lyft due to Uber always wanting to track my location.

Background [0].

Android workaround: "turn off" App permissions > Location. On app load, you get a popup, but you don't have to give permission to use the app.

[0] http://www.npr.org/sections/alltechconsidered/2016/12/01/503...

So you have to enter your current location by hand, or toggle permissions every time you use the app? What a painful workaround - why not switch to another app at that point?

Reasons for me: 1. Uber's the only service in certain international locales. 2. You can always allow location (on load) and then deactivate when done with a few clicks. If you're not using the app all the time, not a big deal.

Same, except when Lyft has super high surge. When I must use Uber I manually enter my pickup/dropoff locations. So stupid of them to remove the "when in use" option, I can't imagine any use for that that is worth the risk of looking nefarious.

Just looking at their raises vs valuations

https://angel.co/lyft

Can the founders / employees even have 25% equity left?

I'd love it if AngelList (or someone else) could add a little dilution calculator/chart

That's almost impossible to know. Which shareholders have anti-dilution clauses and which don't is usually only known to other shareholders that have the same shareholder agreement. You'd need to know the exact captable before and after every transaction to know the dilution of the people that were already in.

I am very happy for Lyft! Would not be pretty if they went down and we are left only with Uber. Uber will start bullying even more.

If they can hang on until GM's driverless cars are ready for prime-time, they might have a real shot at surviving.

If they can hang on till [Uber fails].....

What with Uber doing their work for them this is no longer an impossibility.

The race to the bottom continues... in the meantime I'm enjoying all these nice VCs that are subsidizing my transport costs

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