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Comment by jandrese | Hacker News Reader

It's pretty impressive that they've managed to lose that much money despite the fact that they are just running a website and an app.

Yeah, that's oversimplifying it, but it's not like they own factories or storefronts or need to buy access to expensive services or something. The vast majority of their "employees" are independent contractors with no healthcare or retirement benefits who get paid by the ride (so Lyft doesn't lose out when business is slow).

It seems like it should be a license to print money, but somehow they're losing cash hand over fist. Are they subsidizing rides all over the world?

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When starting out in a city, these companies often have a chicken & egg problem around getting to critical mass.

To solve this, they must offer guaranteed minimums to drivers to maintain an available network even with low ridership. Without that, passengers are unlikely to find an available ride and will easily give up on the app.

Those guaranteed minimums are expensive, but are true one-time costs. They are no longer needed once the network is established.

Their sales and marketing is 25% of their expenses, and it’s not clear to me how much of that is driver incentives. Even if they cut all driver incentives and marketing they’re still in the hole.

It looks like sales and marketing only includes driver incentive's due to driver referrals. Referrals are likely a low number compared to the 'guaranteed minimum' incentives used in new markets.

Looks like the other driver incentives may not be included in revenue?

>This four percentage point improvement in Revenue as a Percentage of Bookings was driven by greater efficiency and effectiveness of driver incentives, which contributed approximately two percentage points, increased service fees and commissions, which contributed approximately one percentage point and revenue from the Select Express Drive Partner program, which contributed approximately one percentage point.

Looks like the other driver incentives may not be included in revenue?

Revenue is money they take in. If they pay drivers a minimum it will be an expense. I’m assuming under “cost of revenue” or “sales and marketing”, since they don’t categorize drivers as employees but contractors.

See some of the AWS fees mentioned in the top comment on this thread. $300MM over 3 years is not a small amount of money.

Not to mention the salaries you need to pay to stay competitive in the bay area, they seem to have a sizable headcount (~1600 from a quick google search)

This is just wrong. Lyft has lots of driver hubs and massive costs for local operations and support.

Simple to use != simple to implement.

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